We’re seven minutes in and we’ve produced absolutely nothing that will go in the show.
Here comes Sax, waking up with his commentary.
When Freeberg is criticizing you for being too negative, you’re in a dark place, Sax.
I’m actually angry at Sax for not publishing my AMA from the other night while he publishes
an Evolved content. His app crashed.
We had such a crowded room. We had over 2,000 people in the room for like four hours.
It was crazy. It was like the original days of Clubhouse.
Everyone I know that was trying to get in was texting saying they couldn’t get in. So
it definitely capped out, right? I know. Well, we hit some scalability.
You may want to buy an extra server, Sax. Cheap f***.
Weren’t you the same guy who was responsible for scaring PayPal?
No, that was somebody else. That was eBay. They sold it before it scaled.
No, that’s not true. We had huge scalability challenges at PayPal, too.
It seems like a theme. Yeah, the theme is when you have an
app that’s breaking out, you hit scalability challenges. It’s called a high class problem.
2,000 people is not a high class problem. It’s a trickle.
It’s 2022. 2,000 people participating in the conversation
is a challenge. I haven’t written code in 20 years.
Here’s what you do when you get to 1,000 people coming to the room.
That’s a lie. Everybody else is in passive mode.
You’ve never written code ever. Of course I have.
Of course I have. That’s a lie. That’s a lie.
Come on. Be honest. Oh, yeah. It’s actually been 25.
The last time I wrote code was Lotus Notes.
So there have been three cheating scandals across poker, chess, and even competitive fishing.
I don’t know if you guys saw the fishing one, but they found weights and fillets during a fish
weigh-in, and then everybody wants us to check in on the chess and the poker
scandals. Chess.com just released their report that this grandmaster has been suspended.
They have evidence he cheated, basically, in a bunch of
tournaments that were, in fact, for money. He denied that he had done that.
But he had previously cheated as a kid. They now have the statistical proof
that he was playing, essentially, perfect chess.
They’ve outlined this in hundreds of pages in a report.
Sax, what are your thoughts on this scandal in chess?
Magnus Carlsen finally came out and explained why he thought Hans Niemann was cheating. Basically,
he got the strong perception during the game that Hans wasn’t really putting in a lot of effort,
that he wasn’t under a lot of stress. It’s his experience that when he’s playing the top players,
they’re intensely concentrating, and Hans Niemann didn’t seem to be exerting himself at all.
So his hackles were raised and got suspicious. Then he has had this meteoric rise, the fastest
rise in classical chess rating ever. I guess he had gotten suspended from chess.com in the past
for cheating. So on this basis, and maybe other things that Magnus isn’t telling us,
Magnus basically said that this guy is cheating. I think that maybe the interesting part of this
is that there’s been a lot of analysis now of Hans Niemann’s games. I just think the methodology
is kind of interesting. So what they do is, they run all of his games through a computer,
and they compare his moves to the best computer move. They basically assign a percentage
that Hans matches, a correlation matches the computer move. What they found is,
there were a handful of games where it was literally 100%. That’s basically impossible
without cheating. I mean, you look at the top players who, through an entire career, have never
had a 100% game. Chess is so subtle that the computer can now see so many moves into the future
that nailing the best move every single time for 40, 50, 100 moves is just…
And in chess, which a human really can’t do that well, is that there are positional sacrifices
that you will make in short lines that pay off much, much later in the future,
which is impossible for a human to calculate. And you saw this, by the way,
when I think it was the Google AI, the DeepMind AI that also played chess. So the idea that this
guy could play absolutely perfectly according to those lines is only possible if you’re cheating.
Right, exactly. So there were a handful of games at 100%, and then there were tournaments where
his percentages were in the 70-something plus. And so just to give you some basic comparison,
Bobby Fisher, during his legendary 20-game winning streak, was at 72%. So he only matched
the computer for best move 72% of the time. Magnus Carlsen, playing at his best, is 70%.
Garry Kasparov, in his career, was 69%. And then the super GMs category are typically in the 64%
to 68% range. So I think it’s really interesting, actually, how you can now quantify, by comparing
the human move to the best computer move, who’s playing the best. It provides a way to assess who
the greatest player ever is. I actually thought that it was Magnus, but now maybe there’s a
basis for believing it was Bobby Fisher, because he was at 72% and Magnus was only at 70%. However,
look, the idea that Hans Niemann is in the 70s, 80s, or 90s during tournaments would be,
you know, just an off-the-charts level of play. And if he’s not cheating, then we should expect
over the next couple of years, that he should rapidly become the world’s number one player
over the board. You know, now that they have all this anti-cheating stuff, right? So it’ll be
interesting to see what happens in his career now that they’ve really cracked down on, you know,
with anti-cheating technology. I have a general observation, which is these people are complete
fucking losers. The people that cheat in any of these games don’t understand this basic,
simple idea, which is that trying is a huge part of the human experience. The whole point is to be
out there in the field of play, trying. And it’s basically taking the wins and the losses and
getting better that is the path. That’s what’s fun. Yeah, once you actually win, it’s actually
not that much fun, because then you have this pressure of maintaining excellence, that’s a lot
less enjoyable than the path to getting there. And so the fact that these people don’t understand
that makes them slightly broken, in my opinion. And then the other thing is, like, why is it that
we have this strain of people now that are just so devoid of any personal responsibility,
that they’ll just so brazenly take advantage of this stuff. It’s really ridiculous to me,
they don’t. It’s really sad. These people are pathetic. They’re really pathetic.
This is but it is really interesting how they caught him and running this against the computer.
Here’s a chart of his scores in these tournaments. Oh, here is this first chart is how quickly he
advanced, which was off the charts. And then the second chart that’s really interesting is
his chess.com strength. So if you don’t know chess.com, it has become like a juggernaut in
the chess world, especially after that HBO series came out, a lot of people subscribe to it, I
subscribe to it, I like to play chess there. And man, you look at the chess strength score there.
He was just like, perfect. And then the number of games he likely cheated. And you can see the
last two columns, he’s basically cheating in every game. Queen’s Gambit. Yeah, great show on Netflix.
And he said he didn’t cheat in any of the games where they were live streaming,
but they’ve proven that wrong. Sax, how does he cheat in person then?
That’s the thing no one really knows. And I don’t want to overly judge until they have
hard proof that he was cheating. I mean, look, here’s the thing he was never caught in the act
is just that the computer evidence, you know, seems pretty damning. And I don’t know how they
prove. I don’t know how they prove that he was cheating over the board without actually catching
him doing it. And I don’t, I still don’t think anyone really has a good theory in terms of how
he was able to do that. Well, it’s not just in the look, look, the fishing thing, Jason,
which was crazy. I think Friedberg shared the video, this guy was in a fishing competition,
and they basically caught these fish, and then they put these big weighted pellets inside the
fish’s body. They even put like a, you know, chicken breast and chicken fillets inside of
the thing so that they would. You know, then there’s a poker now poker in poker, everybody’s
afraid that there are ways in which you can read the RFID and some of the cards and some of these,
you know, televised situations and front run what the what the playing situation is so that you know
whether you’re winning or losing. And again, I just asked the question, like, is it is it is this
are things that bad that this is what it gets to, like, we all play poker, the idea that we would
play against somebody that would take that edge. It’s gross. It’s really makes me really sad. So
disappointing. Yeah. One observation might be that across all three, because I’m trying to find some
common thread across these, but it could be that there was a lot of cheating going on for a long
time. And maybe the fact that we do have so much digital imagery that’s live on these things now,
and so much coverage, and everyone’s got a cell phone that suddenly
our perception of the cheating in competitive events is becoming more tuned, whereas maybe
there’s been a lot of cheating for a long time. And it’s just kind of coming to light. I mean,
we didn’t have a lot of live streaming in poker. Who knows? I mean, we could probably ask Phil this
or Keating, but like, for how many years? Well, there was visions. Yeah, there was tons of cheating
and online poker. Yeah. And online poker. Remember, like people are using these like software programs
that would track the hand history. Yeah. Yeah. Exactly. So. So it help you assess whether the
person might be bluffing in that particular situation. Yeah, like he has superhuman memory.
So I don’t know if you guys I don’t know if you guys watch Twitch, like video games, like Fortnite
or whatever. But there are like players that have been accused of using the screen overlay systems
that basically more accurately show you and drive the mouse to where an individual is on the screen
so you can more accurately shoot them. And so there’s software overlays that make you a better,
you know, competitive video, tell you what the through line is. And then this stuff basically
became like, so now what’s interesting is now there’s eye tracking software that people are
using on Twitch streams to see if the individual is actually spotting the target when they shoot,
or if the software is spotting the target. Yeah, they’re called reverse aim bots. They’re
aimbot. Yeah, yeah. And like reverse cheat the whole thing. And I think what’s interesting is
just that there’s so much, you know, insight now so much more video streams, so much more. I mean,
think about all those guys at that competition. Yeah, and there’s cell phones, and they all video
this thing happening. Yeah, I think 10 years ago, that wouldn’t have been the case. And there
wouldn’t have been a big story about it. And so there was a theme you wanted to, there was a I
think the theme is is pretty obvious, which is that there’s been an absolute decay of personal
responsibility. People don’t feel like there’s any downside to cheating anymore. And they’re not
willing to take it upon themselves to take a journey of wins and losses to get better at
something they want the easy solution. The easy solve the quick answer, you know, that gets them
to some sort of finish line that they’ve imagined for themselves will solve all their problems. The
problem is it doesn’t solve any problems. And it just makes them a wholly corrupt individual.
Yeah. Okay, so let’s talk about this Hustler casino live cash game play. There’s this woman,
Robbie, who is a new player. Apparently, she’s being staked in a very high stakes game. She’s
playing this guy, Garrett, who is a very, very known winning cash game player.
And it was a very strange hand on the turn, all the money gets in. She says she has a bluff catcher,
then she claims that she had a thought she misread her hand. Now people are saying that
the poker world seems to be 7030 that she cheated. But people keep vacillating back and forth.
There was a lot of weird words salad that she said that she had a bluff catcher,
which would normally be an ace. Then she said she thought she had a pair of threes. And then
she immediately said afterwards that he was giving her too much credit. They confronted her in the
hallway, she gave the money back because she supposedly loves production. So all this stuff
sounds very weird. One side says, Okay, well, this is happening because she’s a new player.
The other side is saying, somebody was signaling her that she was good and giving her just a binary
you’re good. Because if you are going to cheat cheating with jack high in a situation where you
just put all in for a two and a quarter million dollar pot seems very suspect. I don’t know if you
guys watch the hand breakdown, where does everybody stand on a percentage basis, I guess, if they
think she was cheating or not, because we this is not definitive. Obviously, it’s not like they cut
it open and found the ball bearings. It’s not it’s not so obvious in that situation. But I think the
way that that line played made no sense. Did not mean she was holding a jack four. And I guess in
her previous hand, she had a jack three, and there was a three on the board. So if she misread her
hand for 10 1093. No, but you would have but you would have you would have had to call the flop.
So I’m thinking what? Yeah, no, I get it. The hand makes no sense. But I’m just trying to find a
logical explanation. And that jack three explanation, somebody kind of fed that to her. And
then she changed her story to that. So this changing of the story is the thing I was sort of
keyed on Friedberg is why does she keep changing your story? Is it because she’s embarrassed?
Maybe she’s had a couple of beverages or whatever. Or she’s just a new player. And she’s embarrassed
by her play and can’t explain it. She can’t explain the hand history. All of the things
you’re saying are probable. I don’t think that Yeah, I don’t think there’s any data for us to
have a strongly held point of view on this. I’m just looking forward to us all playing live. Yeah,
HCL poker live October 21. Minus David Sachs, unfortunately, to mop J. Cal Gerstner, Stanley
Tang, Phil Hellmuth. So we’re gonna be playing on the same stream. We’re gonna be playing on the
same screen, same table. I figured out how to hack into the video stream for the car. I just
got my RFID sunglasses as well. I’m gonna read all your shitty hands, J. Cal, I’m gonna take your
money. And I’m gonna get some I tell you, my my for my 40th birthday sky organized poker in Tahoe,
okay. And, and we brought in the team from CBS. That was the present. We’re fine. And they taped
it as if it was being broadcast with whole cards and commentators. And we edited it into a two day
show. It was an incredible birthday present. I it was it’s one of the greatest things that that
anybody’s ever given me. I appreciate there was a one hour block, where somebody at the table said,
Okay, guys, how about we do a cheating free for all? Yes, where you could look at each other’s
cards. And you know, you could sort of help somebody else, switch cards, whatever. In that
one hour, our beautiful home game of friendship became Lord of the Flies. I have never seen so
much hatred, angling, mean behavior. Oh my god, it was incredible. All that humans are capable of.
So I hope that we never, we never we never see cheating in our game. Yeah, well, we’ll see how
it goes on October 21 at HCL poker live. I’m excited. I can’t wait. It should be a lot of fun.
It should be a lot of fun. Oh, and we’re not having any official 100 stuff. But the fans,
some of the fans who were at the all in summit 2022 are doing their own 100 episode 100 meetups
on October 15, I think, all in meetups.io. So there are fan meetups happening in Zurich,
and a bunch of other places. I’m going to FaceTime into some of them and just say hi to the
fans. You know, it might be like 10 people in a bar somewhere. I think the largest one is like
Miami or San Francisco are going to be like 50 people or something. We should all that actually
be kind of fun. I’m basically I told them to send me an invite and I’ll FaceTime in any anytime.
This is next week. When is this? The 15th? I think this is occurring. Yeah, October 15. It’s a
Saturday, the Saturday after the 100th episode, people are doing these all in meetups.io. What’s
next? Earlier this week, it was reported that Elon contacted Twitter’s board and suggested that
they move forward with closing the transaction at the original terms and the original purchase price
of $54.20 a share in the couple of days since then. And even as of right now, with some news
reports coming out here on Thursday morning, it’s it appears that there are still some question
marks around whether or not the deal is actually going to move forward at 5420 a share because Elon
as of right now the report said is still asking for a financing contingency in order to close and
there’s a lot of back and forth on what the terms are. Meanwhile, the court case in Delaware is
continuing forward on whether or not Elon breached his terms of the original agreement to close and
buy Twitter at 5420. As we know, leading up to the signed deal or post signing the deal,
Elon put together a financing syndicate, a combination of debt investors as well as equity
co investors with him to do the purchase of Twitter at $54.20 a share. So the 40 some odd
billion dollars of capital that’s needed was committed by a set of investors that were going
to invest debt and equity. And there’s a big question mark now on whether or not those investors
want to or would still consummate the transaction with Elon given how the markets have turned,
and given how debt markets are trading and equity markets are trading. So Chamath, I’d love to hear
your point of view on what hurdles does Elon still have in front of him? Does he still want
to get this done? And is there still a financing syndicate that’s standing behind him at the
original purchase price to get it done? It’s a great question. Maybe the best way to start is
Nick, do you want to queue up what I said in August 25? The lawsuit really boils down to
one very specific clause, which is the pinnacle question at hand, which is there is a specific
performance clause that Elon signed up to, right, which, you know, his lawyers could have struck out
and either chose not to, or, you know, couldn’t get the deal done without. And that specific
performance clause says that Twitter can force him to close at 5420 a share. And I think the
issue at hand at the Delaware Business Court is going to be that because Twitter is going to point
to all of these, you know, gotchas and disclaimers that they have around this bot issue as their
cover story. And I think that really, you know, this kind of, again, builds more and more momentum
in my mind that the most likely outcome here is a settlement where you have to pay the economic
difference between where the stock is now and 5420, which is more than a billion dollars,
or you close at some number below $54 and 20 cents a share. And I think that that is like,
you know, if you had to be a betting person, that’s probably and if you look at the,
the way the stock is traded, and if you also look at the way the options market trades,
that’s what people are assuming that there’s a seven to $10 billion swing. And if you impute
that into the stock price, you kind of get into the $51 a share kind of an acquisition price.
Again, I’m not saying that that is right, or should be right. That’s just sort of what the
market says. Yeah, so so it turns out that, you know, sort of like that kind of guesstimate turned
out to be pretty accurate, because the stock today is at $51 a share. So I think that the
specific performance thing is exactly what this thing has always hinged on. And I think that there
was a realization that there were very few outs around how that contractual term was written and
agreed to. So there is an out in the contract. And that out says that I think it’s by April,
if, if the deal doesn’t get done by April, then the banks can walk away from their commitment to
fund the debt. And if the banks walk away, then Elon does have a financing contingency that allows
him to walk away. So the actual set of events that have to happen is those two things specifically,
get to April, so the banks can pass and say, we’ve changed our mind, market conditions are different.
And then Elon is able to say, Oh, you know, the banks just walked away. Right now, the banks,
if you look at all of the debt that they’ve committed to, what they committed at a point
in time when the debt markets were much better than they are today. In the last, you know,
six or seven months, since they agreed to do this, the debt markets have been clobbered,
and specifically junk bonds and a bunch of junk bond debt, the yields that you have to pay. So
the price to get that kind of debt has skyrocketed. So roughly back of the envelope math would tell me
that right now the banks are offside between one and $2 billion, because they’re not going to be
able to sell this debt to anybody else. So I think the banks obviously want to weigh out. The problem
is their only way out is to run the shot clock off until April. So I think that’s the dance that
they’re in right now. Elon’s trying to find a way to solve, you know, for the merger. I think Twitter
is going to say, we’re not going to give you a financing contingency, you have to bring the
banks in and close right now. And then we will not go to court. Otherwise, we’re going to court.
And so I think it’s a very delicate predicament that they’re all in. But my estimate is that
the equity is probably 20% offside. So it’s not a huge thing. He can make that up because he can
create equity value like nobody’s business. The debt is way offside by a couple billion dollars,
which is hard to make back. But I think in the end, you know, given enough time, they can probably
make that back. The best off in all of this are the Twitter shareholders. They’re getting an
enormous premium to what that company is worth today in the open market. And so I think this
deal is going to close is probably going to close in the next few weeks. And had you bought Twitter,
when we were talking about it in August, you would have made 25% in six weeks. And you know,
if the deal closes at 54, you would have made, you know, a third of your money in eight weeks,
which is, you know, very hard to do in a market. If you’re a GP at one of the funds,
like Andreessen or Sequoia, and you had made this commitment to Elon, or even Larry Ellison,
a couple months ago, do you fight against closing at 5420? Do you stick with the deal
and support him? I mean, what do you do given that the premium is so much higher than where
the market would trade it at today, some people are saying the stock should be at like 20 bucks
a share or something, the average premium in an M&A transaction in the public markets is about
30%. So and I think the fair value of Twitter is around 32 to 35 bucks a share. So, you know,
it’s not like he is massively, massively overpaying. And so, you know, I would just sort
of keep that in the realm of the possible. So like, if you take $35 as the midpoint,
fair value is really 4550. So yeah, he paid 20% more than he should have, but he didn’t pay 100%
more. So it’s not as if you can’t make that equity back as a private company, particularly because
there’s probably $10 of fat in the stock. If you think about just opex, right in terms of all the
buildings they have, maybe they don’t need as many employees, maybe they revisit salaries. You know,
one thing is when I looked at doing an activist play at Twitter, I think I mentioned this five
or six years ago, one of the things that I found was at that time, Twitter was running their own
data centers. And you know, the most obvious thing for me at that time was like, we’re going to move
everything to AWS. Now, I don’t know if that happened. But I’m sure that if it hasn’t, just
bidding that out to Azure, GCP and AWS can raise, you know, three or $4 billion, because I’m sure
those companies would want this kind of an app on their cloud. So there’s all kinds of things that
I think Elon can do as a private company, to make back, maybe the small bit that he overpaid. And
then he can get to the core job of rebuilding this company to be usable, or this product to
be usable. But look, I’ll just speak as a user right now. It has been decaying at a very, very
rapid clip. And I think that his trepidation and closing the merger, in part also, even though he
hasn’t said it has to do with the quality of the experience. It’s just degraded. It’s not as fun to
use as it was during the pandemic, or even before the pandemic. So something is happening inside
that app that needs to get fixed. And if he does it, he’ll make a ton of money,
sort of like what happened with Friendster and MySpace and any social networking app over time,
the quality degrades. If it’s not growing, it’s shrinking. And it gets if it’s if it’s not growing.
And also if the product hygiene isn’t enforced in code and product hygiene, in this case, are this,
you know, spam bots, you know, the trolling, it can really take away from the experience.
Yeah. I mean, interestingly, like, if you think back to the original, the starting days,
the original days of Twitter, I don’t know if you guys remember, you would send in an SMS to
do your tweet. And then it would post up and other people would get the SMS notification.
And it would crash all the time. And the apps were the app was notoriously crashing. It was
poorly architected at the beginning. And some people have argued that Twitter has had
a cultural technical incompetence from the earliest days.
I think that’s a little harsh. So I do think look, Twitter was known for what’s called a fail whale.
You know, they used to have these fail whales constantly. And they did hire people that
attempted to try to fix it. I remember the the funniest part of when I went in there and said,
Here’s my plan. And here’s what I want to do is literally a day or two later,
the head of engineering quit. I can’t remember who his name was, but he was just out the door.
But it is a I think it is a team that has tried its best. That probably at the edges,
definitely made some technical miscalculations. Like I said, at that time,
the idea that any app of that scale would use their own data centers made no technical sense
whatsoever. It made the app laggy. It made it hard to use it made it more prone to downtime,
to your point. But that being said, I would be shocked if they haven’t made meaningful improvements
because the stack of the internet has gotten so much better over the last seven years. And so
to your point, David, if they didn’t take advantage of all these new abstractions and
mechanisms, mechanisms to rebuild the app or to rebuild search or to rebuild, you know, how,
you know, all these infrastructure elements of the app work, I would be really surprised because
then what are they doing over there? Yeah, well, look, I mean, to the point earlier,
besides the product points, there was a really good tweet. I liked that said, For what it’s
worth, I think Elon will show us just how lean the Silicon Valley advertising companies can be run.
At the very least, it’ll be an interesting thought experiment for spectators. Because if he does go
in and actually does significantly reduce opex and headcount, and the company does turn profitable,
and he can grow it, well, it’ll really, by the way, it’ll really be a beacon for financial big
companies. Yeah, from a financial perspective, there is $10 a share in opex cuts that he should
make right away, just so that he is economically break even. And he looks like every other M&A
transaction, you know, you paid a 30% premium and you bought a company, there’s a lot of margin of
safety there if Elon does that. So to your point, there probably is. And there probably needs to be
a meaningful riff at Twitter. I’m not saying it’s right. I’m not saying it’s, you know, and I feel
for the people that may go through it. But from a financial perspective, the math makes sense for
him to do that, because then he is a break even proposition on a go in M&A transaction. And I
think that there’s, there’s a lot of intelligent financial sense, so that all the debt holders feel
like he’s doing the right thing. And all the equity holders, particularly see a chance for
them to make a decent return here. All right, well, let’s move on. This is a great conversation
between Chamath Palihapitiya and Dave Friedberg about the Twitter transaction. And now we’re
being rejoined by our besties. Yeah. How was your cappuccino? J Cal? That was great. I have I have
I have a nice cold brew here. A nice iced cold brew and a nice drip coffee. I’m working but
I’d love to talk about topics. I’m not being subpoenaed or depositioned about.
We will have a lot to say in the coming weeks.
I love to talk about topics that my lawyers have advised me not to talk about.
How brutal how eerie was our prediction? 51 bucks a share. It is exactly where the
stock is right now. That’s eerie. Yeah. All right. Lots of advances. Let’s keep going.
Yeah. Speaking of Elon Tesla AI day was last week, I actually went it was great. This is a
recruiting event where what did you do after Phil Helmuth and I went and I drove Phil Helmuth home.
The end. No, it’s a great event. And it is essentially a giant recruiting event. Hundreds
of AI. Sorry, I’m sorry. I’m sorry. Can we just talk about Phil Helmuth non sequitur in the group
chat about Ken Griffin? I mean, oh, yeah, well, he’s just like, I made a joke about his net worth
and why he responded. What is going on? We were talking about the most serious of topics and he
just comes seven seconds to fill. It’s what’s going on. Seven seconds to fill. By the way, I
was texting with Daniel Negreanu. He did an incredible podcast. If you guys with Lex Friedman,
if you haven’t listened to it, the Daniel Negreanu pod with Lex is incredible. But I was joking with
Daniel that there’s a section where he’s talking about the greatest poker players of all time.
And if you look in the bar of YouTube, it shows where the most viewership was. And it was exactly
the 30 seconds he talks about Helmuth. And I said to Daniel, this must have been Phil rewatching it
over. I put it on loop. I went to bed with it like it was ASMR to put him to bed. Oh,
great. Talking about him. Sorry, Jacob. Sorry. No, no, it’s all good. So anyway, the event was
super impressive. Elon only spoke when he showed the optimist, the new robot,
he’s building a general purpose robot that will work in the factories. It’s very early days.
But they showed two versions of it. And he said he thinks they could get it down to $20,000. It’s
going to work in the factory. So it’s actually got a purpose. And obviously, the factories already
have a ton of robots. But this is more of a robot that will benefit from the general or the the
computer vision. And the AI, the narrow AI being pursued by the self driving team. This is like
two and a half hours of really intense presentations. The most interesting part for me was
they’re building their own supercomputer and their chips. And the dojo supercomputer
was really impressive at how much they can get through scenarios. So they’re building every
scenario of every self driving, I actually have the full self driving beta on my car, I’ve been
using it. It’s pretty impressive. I have to say, if you haven’t used it yet, I feel like AI is
moving at a pretty advanced clip. The past year, if you haven’t also seen meta announced a text
video generator. So this is even more impressive than Dolly Dolly, you put in a couple of words,
Friedberg and you get a painting or whatever. This is put in a couple of words and you get a
short video. So they had one of a teddy bear painting a teddy bear. So it looks like you’re
going to be able to essentially create a whole movie by just talking to a computer. Really
impressive. Where do you think we are? Friedberg in terms of the compounding nature of these narrow
AI efforts, you know, obviously, so poker chess, go, Dolly GPT, three, self driving, it feels like
this is all compounding at a faster rate. Or am I just imagining that? Yeah, look, I mean,
it’s interesting when when people saw the first computer playing chess, they said the same thing.
I think any time that you see progress with a computer that starts to mimic the predictive
capabilities of a human. It’s, it’s impressive. But I will argue, and I just I’ll say a few words
on this. It’s I think this is part of a 60 year cycle that we’ve been going through.
Fundamentally, what humans and human brains do is we can sense our external environment,
then we generate knowledge from that sensing. And then our brains build a model that predicts
an outcome. And then that that predicted outcome is what drives our actions and our behavior.
We observe the sun rise every morning, then we observe that it sets. And you see that enough
times and you build a predictive model from that data that’s been generated in your brain.
That I predict that the sun has risen, it will therefore set, it has set it will therefore rise.
And I think that the computing approach is very similar. It’s all about sensing or generating data
and then creating a predictive model. And then you can drive action. And initially,
the first approach was just basic algorithms. And these are deterministic models that are built.
It’s a piece of code that says, here’s an input, here’s an output. And that that model is really
built by a human and a human designed to design that algorithmic model and said, this is what the
predictive potential of this software is. Then there was this term called data science. So as
data generation began to proliferate, meaning there was far more sensors in the world, it was
really cheap to create digital data from the physical world, really cheap to transmit it
really cheap to store it really cheap to compute with it. Data Science became the hot term in
Silicon Valley for a while. And these models were not just a basic algorithm written by a human,
but it became an algorithm that was a similar deterministic model that had parameters,
and the parameters were ultimately resolved by the data that was being generated. And so these
models became much more complex and much more predictive, finer granularities, finer range,
then we use this term machine learning. And in the data science era, it was still like,
hey, there’s a model. And you would solve it statically, you would get a bunch of data,
you would statically solve for the parameters, and that would be your model and it would run
machine learning then allowed those parameters to become dynamic. So the model was static.
But generally speaking, the parameters that drove the model became dynamic as more data came into
the system, and they were dynamically updated. And then this era of AI became and that’s the
new catchword. And what AI is realizing is that there’s so much data that rather than just resolve
the parameters of the model, you can actually resolve a model itself, the algorithm can be
written by the data, the algorithm can be written by the software. And so with a with AI example,
so poker playing an adaptive model, so people, so you’re playing poker, and the software begins
to recognize behavior, and it builds a predictive model that says, here’s how you’re playing.
And then over time, it actually changes not just the parameters of the model,
but the model itself, the algorithm itself. And so AI, and then it eventually gets to a point
where the algorithm is so much more complex that a human would have never written it.
And suddenly, the AI has built its own intelligence, its own ability to be predictive
in a way that a human algorithmic programmer would have never done. And this is all driven
by statistics. So none of this is new science, per se, there’s new techniques that all on their
underlying use statistics as their basis. And then there’s these techniques that allow us to build
these new systems of model development, like neural nets, and so on. And those statistics
build those neural nets, they solve those parameters, and so on. But fundamentally,
there is a geometric increase in data, and a geometric decline in the cost to generate data
from sensors, because the cost of sensors is coming down with Moore’s law, transmit that data,
because the cost of moving data has come down with broadband communications, the cost of storing data,
because the cost of DRAM and solid state hard drives has come down with Moore’s law. And now
the ability to actually have enough data to do this AI driven where people are calling AI,
but it really is the same. It’s part of a spectrum of things that have been going on for 60 years.
To actually drive predictions in the in the world is really being realized in a bunch of areas that
we would have historically been really challenged and surprised to see. And so my argument is,
at this point, data played a big role. Yeah. Yeah, we’ve over the last decade,
we’ve reached this tipping point in terms of data generation, storage and computation
that’s allowed these statistical models to resolve dynamically. And as a result,
they are far more predictive. And as a result, we see far more human like behavior
in the predictive systems, both physics, both those that are, you know, like a like a robot
is the same as one that existed 20 years ago. But the way that it’s run is using the software that
is driven by this dynamic model. And that data allows for a better answer.
Okay, I have two things to say. But one, the first one is a total non sequitur. So use the
term data scientists, do you know where the term data scientists came from?
As classically used in Silicon Valley, it came from Facebook. And it came from my team in a
critical moment. This was in 2007. I was trying to 2008, I was trying to build the growth team.
This is the team that became very famous for getting to a billion users. And, you know,
building a lot of these algorithmic insights. And I was trying to recruit a person from Google.
And he was like a PhD in some crazy thing like astrophysics or particle physics or something.
And we gave him an offer as a data analyst, because this is what I needed. At the time,
this is what I thought I needed an analyst, you know, to analyze data. And he said, absolutely
not. I’m offended by the job title. And I remember talking to my, my HR, you know, business process
partner. And I asked her, like, I don’t understand what is this? Where’s this coming from? And she
said, he fashions himself a scientist. And I said, Well, then call him a data scientist. So we wrote
in the offer for the first time, data scientists. And at the time, people internally were like,
this is a dumb title. What does this mean? Anyways, we hired the guy, he was a star. And,
and that title just took off internally. It’s funny, because parallel, we started climate
corp in 2006. And the original, the first guy I hired was a buddy of mine, who was a 4.0 for
applied math from Cal. And then everyone we hired on with him, we called them the math team. And
they were all applied math and statistics, PhDs. And we called them the math team. And it was
really cool to be part of the math team. But then we switched the team name to data scientist. And
then it obviously created this much more kind of impressive role, impressive title, central
function to the organization. That was more than just a math person or data analyst, as I think it
may have been classically treated, because they really were building the algorithms that drove
the models that made the product work, right? Peter Thiel is a very funny observation. Not
funny, but you know, observation, which is, you should always be wary of any science that actually
has science in the name, political science, social science, I guess, maybe data scientists,
you know, because the real sciences don’t need to qualify themselves, physics, chemistry, biology.
Anyways, that’s, so here’s what I wanted to talk about with respect to AI. Two very important
observations that I think is useful for people to know. The first one, Nick, if you throw it up here
is just a baselining of, you know, when we have thought about intelligence and compute capability,
we’ve always talked about Moore’s law. And Moore’s law, essentially, this idea that there is a fixed
amount of time, where the density of transistors inside of a chip would double and roughly that
period for many, many years was around two years. And it was largely led by Intel. And we used to
equate this to intelligence, meaning the more density there was in a chip, the more things
could be learned and understood. And we used to think about that as the progression of how
computing intelligence would grow, and eventually AI and artificial intelligence would would get to
mass market. Well, what we are now at is a place where many people have said Moore’s law has broken
why it’s because we cannot cram any more transistors into a fixed amount of area,
we are at the boundaries of physics. And so people think, well, does that mean that our ability to
compute will essentially come to an end and stop? And the answer is no. And that’s what’s demonstrated
on this next chart, just to make it simple, which is that what you really see is that if you think
about, you know, supercomputing power, so the ability to get to an answer, that has actually
continued unabated. And if you look at this chart, the reason why this is possible is entirely
because we’ve shifted from CPUs to these things called GPUs. So you’ve you may have heard companies
like Nvidia, why is companies like Nvidia done so well, it’s because they said they raised their
hand and said, we can take on the work. And by taking on the work away from a traditional CPU,
you’re able to do a lot of what Friedberg said is get into these very complicated models.
So this is just an observation that I think that we are continuing to compound knowledge
and intelligence effectively at the same rate as Moore’s law. And we will continue to be able to
do that because this makes it a problem of power, and a problem of money. So as long as you can buy
enough GPUs from Nvidia or build your own, and as long as you can get access to enough power
to run those computers, there really isn’t many problems you can’t solve. And that’s what’s so
fascinating and interesting. And this is what companies like OpenAI are really proving, you
know, when they raised a billion dollars, what they did was they attacked this problem, because
they realized that by shifting the problem to GPUs, it left all these amazing opportunities
for them to uncover. And that’s effectively what they have. The second thing that I’ll say very
quickly is that it’s been really hard for us as a society to build intelligence in a multimodal way
like our brain works. So think about how our brain works, our brain works in a multimodal way, we can
process imagery, we can process words and sounds, we can process all of these different modes,
text into one system, and then intuit some intelligence from it and make a decision,
right. So you know, we could be watching this YouTube video, there’s going to be transcription,
there’s video, voice, audio, everything all at once. And we are moving to a place very quickly
where computers will have that same ability as well. Today, we go to very specific models and
kind of balkanized silos, correct, solve different kinds of problems. But those are now quickly
merging again, because of what I just said about GPUs. So I think what’s really important about AI
for everybody to understand is the marginal cost of intelligence is going to go to zero.
And this is where I’m just going to put out another prediction of my own. When that happens,
it’s going to be incredibly important for humans to differentiate themselves from computers.
And I think the best way for humans to differentiate ourselves is to be more human,
it’s to be less compute intensive, it’s to be more empathetic, it’s to be more emotional,
less emotional, because those differentiators are very difficult for brute force compute to solve.
Be careful, the replicants on this call are getting a little nervous here.
They’re not processing that that was an emotional statement.
Do not want to process that one. Well, I to your point, during this AI day,
they were showing in self driving, as you’re talking about this balkanization,
and trying to make decisions across many different decision trees. You know, they’re
looking at lane changes, they’re looking at other cars and pedestrians are looking at road
conditions like fog and rain. And then they’re using all this big data to your point, Friedberg
to run tons of different simulations. So they’re building like this virtual world on Market Street,
and then they will throw people, dogs, cars, people have weird behaviors into the simulation.
It’s such a wonderful example. Imagine that system. Here’s a horn. Yeah. Well,
you hear a horn. So clearly, there’s some auditory expression of risk, right? There’s something
risky. And now you have to scan your visual field, you have to probabilistically decide
what it could be, what the evasive maneuver, if anything should be. So that’s a multimodal
set of intelligence that today isn’t really available. Yeah. But we have to get there if
we’re going to have real full self driving. So that’s a perfect example, Jason, a real world
example of how hard the problem is, but it’ll get solved because we can brute force it now with,
with chips and with compute. I think that’s going to be the very interesting thing with the robots
as well as all of these decisions they’re making, moving cars through roads, all of a sudden,
we’re going to see that with VTOLs, vertical takeoff and landing, you know, aircraft, and we’re
going to see it with this general robot. And everybody wanted to ask you a lot about general
AI, you know, the Terminator kind of stuff. And his position is, I think, if we solve enough of
these problems, Friedberg, it’ll be an emergent behavior or an emergent phenomenon, I guess,
would be a better word, based on each of these cities crumbling, you know, each of these tasks
getting solved by groups of people. You have any thoughts as we wrap up here on the discussion
about general AI and the timeline for that, because obviously, we’re going to solve every
vertical AI problem in short order. I spoke about this a little bit on the ask AMA on Colin
on Tuesday night. Once sax gets it out, you can listen to it. But I really have this strong belief
that servers crash. There’s no way this episode drops. Okay, yeah, you guys can try to download
the app, but it might crash. So just be careful. So here’s, here’s my my court.
Friedberg that you were 10 times more popular than J Cal. So it was unexpected levels of traffic.
Well, you had you did have an account with 11,000 followers. I mean,
you’re right, Jake, I will put you on that account next time.
Yeah, please. I’m starting from zero.
Yeah, that’s fair. That’s fair.
Yeah, look, my my court thesis is I think humans transition from being,
let’s call it, you know, passive in the system on earth to being laborers. And then we transition
from being laborers to being creators. And I think our next transition with AI is to transition from
being creators to being narrators. And what I mean by that is, as as we started to do work on earth
and engineer the world around us, we did labor to do that we literally plowed the fields, we walk
distances, we built things. And over time, we built machines that automated a lot of that labor.
You know, everything from a plow to a tractor to a caterpillar equipment to a microwave that
cooks for us, labor became less, we became less dependent on our labor abilities. And then we got
to switch our time and spend our time as creators as knowledge workers. And a vast majority of the
developed world now primarily spends their time as knowledge workers creating and we create stuff
on computers, we do stuff on computers, but we’re not doing physical labor anymore. As a lot of the
knowledge work gets supplanted by AI, or as it’s being termed now, but really gets supplanted by
software, the role of the human I think transitions to being one of a narrator, where instead of
having to create the blueprint for a house, you narrate the house you want, and the software
creates the blueprint for you dictate. And instead of Yeah, and instead of creating the movie and
spending $100 million producing a movie, you dictate or you narrate the movie you want to see,
and you iterate with the computer and the computer renders the entire film for you,
because those films are shown digitally anyway, so you can have a computer render it. Instead of
creating a new piece of content, you narrate the content you want to experience, you create your
own video game, you create your own movie experience. And I think that there’s a whole
evolution that happens. And if you look, Steve Pinker’s book, enlightenment now has a great
statistic, a set of statistics on this. But the amount of time that humans are spending on leisure
activities per week has climbed extraordinarily over the past couple of decades, we spend more
time enjoying ourselves and exploring our creative interests than we ever did in the in the past in
human history, because we were burdened by all the labor and all the creative and knowledge work
we have to do. And now things are much more accessible to us. And I think that AI allows
us to transition into an era that we never really thought possible to realize where the limits are
really our imagination of what we can do with the world around us. And the software resolves to the
automation resolves to make those things possible. And that’s a really exciting kind of vision for
the future that I think AI enables
Star Trek had this right, people didn’t have to work and they could pursue things in the holodeck
or whatever that they felt was rewarding to them. But speaking of jobs, the job reports for August
came in, we talked about this, we were trimming 300,000 jobs a month. We’re wondering if the other
shoe would drop a boy did it drop 100 over a million jobs burned off in August. So without
getting into the macro talk, it does feel like what the Fed is doing, and companies doing hiring
freezes and cuts is finally finally having an impact. If we start losing a million, as we
predicted could happen here on the show. People might actually go back to work and lift and Uber
are reporting that the driver shortages are over, they no longer have to pay people spiffs and stuff
like that to get people to come back to work. So at least here in America feels like we’re turning
a corner. Do we want to go? Can we let’s talk about the marijuana? Yeah, breaking news. Biden
just did. Yeah, yeah, I was gonna say, we got a couple of things we really want to get to here.
Ukraine, section 230. And then this breaking news. We’ll pull it up here on the screen.
While we’re recording the show, President Biden says, and I’m just going to quote here. First,
I’m pardoning all prior federal offenses of simple marijuana possession. There are 1000s of people
who are were previously convicted of simple possession, who may be denied employment,
housing or educational opportunities. So my pardon will remove this burden is big news.
Second, I’m calling on governors to pardon simple state marijuana possession offenses,
just as no one should be in a federal prison solely for possessing marijuana. No, we should
be in a local jail or state prison for that reason, either. Finally, this is happening.
Third, and this is an important one, we classify the marijuana at the same level as heroin and
even and more serious than fentanyl makes no sense. I’m asking Secretary burr, but Kara and
the Attorney General to initiate the process of reviewing how marijuana scheduled under federal
law. I’d also like to note that as federal and state regulators change, we still need important
limitations on trafficking, marketing and underage sales of marijuana. Thoughts on this breaking
news. Is this giving the timing on this is kind of midterm related. This seems is this is this I
guess, is this a politically popular decision to do? I think so. I mean, look, I support it. So
Biden finally did something I like. I mean, I thought that we should decriminalize marijuana
for a long time, or specifically, you know, I agree with this idea of descheduling it. It
does not make sense to treat marijuana the same as heroin as a schedule one narcotic.
This doesn’t make any sense. It should be regulated separately and differently. Obviously,
you want to keep it out of the hands of minors, but no one should be going to jail, I think,
for simple possession. So I do agree with this. And I think the thing they need to do,
I don’t see it mentioned here is they should pass a federal law that would allow for the
normalization of let’s call it legal, legal, you know, cannabis companies. So companies that are
allowed to operate under state laws, like in California, should have access to the banking
system, should have access to the payment rails. Because right now, the reason why the legal
cannabis industry isn’t working at all in California is because they can’t bank, they
can’t take payments. So it’s this weird all cash business that makes no sense. So listen, if we’re
not going to criminalize it as a drug like heroin, if we’re going to allow states to make it legal,
then allow it to be a more normal business where the state can tax it, and it can operate in a
more aboveboard way. So federal mandate is what you’re saying the federal mandate,
I think it’s could still be regulated on a state by state basis. But I think you need
the feds to bless the idea that banks and payment companies can take on those clients,
which states have already said, are legally operating companies. And right now they can’t.
And it’s a huge gap in the law. So maybe that’s the one thing I would add to this. But I don’t
have any complaints about this right now, based on what we know from this tweet storm. And I would
say, this, by the way, was an about face. This was an about face by Biden. Yeah, do you know what
the polling data says? I mean, is there? I’m assuming there’s big support in kind of the
independence in the middle. For this was 70%. At one point. Yeah, yeah. So So look, this,
to me, this is the kind of thing that Biden should be doing with the 5050. Senate finding these sorts
of bipartisan compromises, right? So yeah, I look, this is good news. As far as I’m concerned,
why hasn’t this happened in the past? Like, what’s been the political reason that other presidents
Obama even didn’t that have similar ideology? Like, why? But why? Does anyone know why this
hasn’t been done in the past? There was rumors he was going to do in the second term. They just
didn’t have the political capital. Why to do it? Why? I don’t want to fire. Yeah, the pardon doesn’t
require political capital. I think it’s probably the perception that this is soft on crime in
some way, or there wasn’t enough broad based support. As David said, I mean, I think the
the United States population has moved pretty meaningfully in the last 20 years.
That’s off, look at the chart here. You know, we were talking about 2000, it was only 31%.
And then you look at 2018. It’s up at 60 plus percent. So when people saw the states doing
it, and they saw absolutely no problem, you know, in every state, and I think what people will see
next, that’s a Gallup poll. That’s a Gallup poll. You’re saying? Yeah. So I mean, it’s increased
dramatically. MDMA, psilocybin, and some of these other plant based medicines, ayahuasca are next,
and they’re doing studies on them. Now, I don’t want to take away from how important this is for
all the people for whom this will positively impact. I just want to talk about the schedule
change for marijuana. As a parent, one of the things that I’m really, really concerned about
is that through this process of legalization, getting access to marijuana has frankly become
too easy, particularly for kids. At the same time, I saw a lot of really alarming evidence that the
the intensity of these marijuana based products have gone, you know, I think it’s like five or
six times more intense than they are 50 or 100 much higher, right? So So it’s no longer, you know,
this kind of like, you know, do no harm drug that it was 20 years ago. This is this could be
actually, David, the way that it’s productized today, as bad as some of these other, you know,
narcotics. So in June of this year, the Biden administration basically made this press release
that said the FDA is going to come out with regulations that would cap the amount of nicotine
and cigarettes. And I think that was a really smart move, because it basically set the stage
to taper nicotine out of out of cigarettes, which would essentially, you know, decapitate it as a
an addictive product. And I think by thinking about how it’s how it’s dealt with, what I really
hope the administration does is it empowers the FDA, if you’re going to legalize it, you need to
have expectations around what the intensity of these drugs are. Because if you’re delivering
drugs, OTC, and now any kid can go in at 18 years old and buy them, which means that 18 year olds
are going to buy them for 16 year olds, 16 year olds are going to get fake IDs to buy them for
themselves. You need to do a better job so that parents you’re helping parents do our job. Here’s
what you need. Shouldn’t it shouldn’t be like alcohol? If alcohol is 21, then of course,
fine, but even alcohol, David, you know, that there are there are, we know what the intensity
of these are, there are labels, and there’s warnings. And you know, the difference between
beer, they’re getting wine versus hard alcohol. But let me just give you some statistics here,
Chamath. If you think about the the cannabis in the 90s. And prior to that, there was very,
you’ve been a ton of studies on this in Colorado, it was the THC content was less than 2%. And then
in 2017, we were talking about, you know, things going up to 17 to 28% for a specific strain. So
they have been building strains like Girl Scout cookies, etc, that have just increased and
increased. And then there are things like shards, and obviously edibles, you can create whatever
intensity you want. So you have this incredible there, you know, variation, you could have an
edible that’s, you know, got one milligram of THC, you got one that has 100, or you could have a
pack of edibles. And you see this happen in the news all the time, some kid gets their parents
pack or somebody gives one, and the kids don’t know. And this dabbing phenomenon combined with
dabbing is like the shards like this really intense stuff. Combined with the edibles is
really the issue and the labeling of them. So you got to be incredibly careful with this. It’s not
good for kids, it screws up their brains. And so yeah, be very careful. I have a zero tolerance
policy on this stuff. I don’t care if it’s legal or illegal. Like I don’t want my kids touching any
of this stuff until it’s not for kids, obviously. Yeah. But you also should not until they’re until
they’re 35 or 40. And even then I hope they never do it. But But I need some help. And I’m not sure
I’m the only parent that’s asking you can’t have this stuff be available effectively sold like in
a convenience store. No, no, that’s not gonna happen where there isn’t even labeling at least
like cigarettes are labeled. It’s very clear how bad this stuff is for you. Or do you guys have
any feedback on the job report or anything? They’re all going away when when the when the AI wins?
Well, that’s why I brought it up is like, we’re now going to see a potential, you know, a situation
where jobs go away. And a lot of the stuff like even developers, right? Don’t you think Freeberg
developers are going to start development tasks? No, I designed tasks going to be AI based.
Everyone assumes a static lump of work. I think what happens particularly in things like developer
tools, is the developer can do so much more. And then we generate so much more output. And so the
overall productivity goes up, not down. So it’s pretty exciting as these. And remember, like,
like we were talking on the AMA the other night, Adobe Photoshop was a tool for photographers.
So you didn’t have to take the perfect photograph and then print it. You could, you know, you could
use the software to improve the quality of your photograph. And I think that that’s what we see
happening with all software in the creative process is it helps people do more than they
realize they could do before. And that’s pretty powerful. And it opens up all these new avenues of
interest and things we’re not even imagining today. Alright, so SCOTUS is going to hear two
cases for section 230. The family of no Hema Gonzalez, a 23 year old American college student
who was killed in an ISIS terrorist attack in Paris back in 2015. Remember those horrible tax
is claiming that YouTube helped and aided and abetted ISIS. The family’s argument is YouTube’s
algorithm was recommending videos that make it that makes it a publisher of content. As you know,
it’s section 230 common carrier. If you make editorial decisions, if you promote certain
content, you lose your 230 protections. In court papers filed in 2016, they said the company quote,
no only permitted ISIS to post on YouTube hundreds of radicalizing videos inciting violence, which
helped the group recruit, including some who were actually involved in the terrorist attack. So they
have made that connection. Well, look, let’s let’s be honest, we can we can we can put a pin in this
thing. Because I think it would be shocking to me if this current SCOTUS all of a sudden found it
in the cockles of their heart to protect big tech. I mean, they’ve dismantled a lot of other stuff
that I think is a lot more controversial than this. And so you know, we’ve we’ve basically
looked at gun laws, we’ve looked at affirmative action, we’ve looked at abortion rights, sorry,
well, I mean, I think as we’ve said, I think we all know where that die is, unfortunately going
to get cast. So to me, it just seems like this could be an interesting case where it’s actually
nine zero in favor for complete for completely different sets of reasons. I mean, if you think
of the liberal left part of the court, they have their own reasons for saying that there are 230
protections for big tech. And if you look at the far right, or the right leaning parts members of
this of SCOTUS, they have they have another set of do you think you’re gonna make a political
decision not illegal? No, but even even in their politics, they actually end up in the same place,
they both don’t want the protections, but for different reasons. So there’s a reasonable
outcome here where, you know, Roberts is gonna have a really interesting time trying to pick
who writes the majority opinion. There was a related case in the Fifth Circuit in Texas,
where do you guys see this Fifth Circuit decision, where Texas passed a law imposing
common carrier restrictions on social media companies, the idea being that social media
companies need to operate like phone companies, and they can’t just arbitrarily deny you service or
deny you access to the platform. And the argument why previously that had been viewed actually as
unconstitutional was this idea of compelled speech that you can’t compel a corporation to
support speech that they don’t want to because that was a violation of their own First Amendment
rights. And what the First, the Fifth Circuit said is no, that doesn’t make any sense. Facebook or
Twitter can still advocate for whatever speech they want as a corporation. But as a platform,
they if Texas requires them to not discriminate against people on the basis of viewpoint,
then Texas has the right to impose that because that doesn’t, their quote was that does not chill
speech. If anything, it chills censorship. So what’s the right legal decision here in your
mind, putting aside politics, if you can, for a moment, putting on your legal hat,
what is the right thing for society? What is the right legal issue around section 230,
specifically in the YouTube case? And just generally, should we look at YouTube? Should
we look at a blogging platform like medium or blogger? Twitter? Should we look at those as
common carrier? And they’re not responsible for what you publish on them. Obviously,
they have to take stuff down if it breaks our terms of service, etc. Or if it’s illegal,
I’ve made the case before that I do think that common carrier requirements should apply
on some level of the stack to protect the rights of ordinary Americans to have their speech in the
face of these giant monopolies, which could otherwise deplatform them for arbitrary reasons.
Just to, you know, just explain this a little bit. So historically, there was always a debate between
so called positive rights and negative rights. So where the United States start off as a country
was with this idea of negative rights, that what a right meant is that you’d be protected from the
government taking some action against you. And if you look at the Bill of Rights, you know,
the original rights are all about protecting the citizen against intrusion on their liberty
by a state or by the federal government. In other words, Congress shall make no law,
it was always a restriction. So the right was negative, and it wasn’t sort of positively
enforced. And then with the progressive era, you started seeing, you know, more progressive rights,
like, for example, American citizens should have the right to healthcare, right? That’s not
protecting you from the government. That’s saying that the government can be used to give you a
right that you didn’t otherwise have. And so that was sort of the big progressive revolution.
My take on it is I actually think that the problem we have in our society right now
is that free speech is only a negative right. It’s not a positive right. I think it actually
needs to be a positive right. I’m embracing a more progressive version of rights, but on behalf of
sort of this original negative right. So and the reason is because the town square got privatized,
right? I mean, you used to be able to go anywhere in this country, there’d be a multiplicity of
town squares, anyone could pull out their soapbox, draw a crowd, they could listen.
That’s not how speech occurs anymore. It’s not on public land or public spaces. The way that
speech political speech, especially occurs today, is in these giant social networks that are that
have giant network effects, and are basically monopolies. So if you don’t protect the right
to free speech in a positive way, it no longer exists. So you not only believe Wow, that YouTube
should keep its section 230. You believe they YouTube shouldn’t be able to D platform as a
private company. You know, Alex Jones as but one example, they should have their free speech rights,
and we should lean on that side of forcing YouTube to put Alex Jones or Twitter to put
Trump back on the platform side your position.
I’m not saying that the Constitution requires YouTube to do anything. What I’m saying is that
if a state like Texas or if the federal government wants to pass a law saying that YouTube, if you
are say of a certain size, you’re a social network of a certain size, you have monopoly network
effects, I wouldn’t necessarily apply this to all the little guys. But for those big monopolies,
we know who they are. If the if the federal government or state wanted to say that they
are required to be a common carrier, and they cannot discriminate against certain viewpoints,
I think the government should be allowed to do that because it furthers a positive right.
Historically, they’ve not been able to do that because of this idea, because this idea of
compelled speech, meaning that it would infringe on YouTube speech rights. I don’t think it would,
I mean, Google and YouTube can advocate for whatever positions they want, they can produce
whatever content they want. Yeah, but but the point that I think section 230 kind of makes
this point as well, is that they are platforms, they’re distribution platforms, they’re not
publishers. So if they want, so especially if they want section 230 protection, they should
not be engaging in viewpoint discrimination. So now there is a rub here. Can I just say,
can I just say, go ahead your explanation, David, your explanation that you just gave before
was so excellent. Thank you, that it allows me to understand it even more clearly. That was really
so trim off. Do you think the algorithm is an act of editorialization? Yes, yes, yes, yes. And so
then should YouTube look guys, at the end of the day, let me let me break down an algorithm for you.
Okay, effectively, it is a mathematical equation of variables and weights.
An editor 50 years ago was somebody who had that equation of variables and weights in his or her
mind. Okay. And so all we did was we translated, again, this multimodal model that was in somebody’s
brain into a model that’s mathematical, that sits in code. You’re talking about the front page and
I think New York Times Yeah, and I think it’s a fake leaf to say that because there is not an
individual person who writes point two in front of this one variable and point eight in front of the
other, that all of a sudden that this isn’t editorial decision making is wrong, we need to
understand the current moment in which we live, which is that these computers are thinking actively
for us, they’re providing this, you know, computationally intensive decision making and
reasoning. And I think it’s, it’s pretty ridiculous to assume that that isn’t true.
That’s why when you go to Google, and you search for, you know, Michael Jordan, we know what the
right Michael Jordan is, because it’s reasoned, there is an algorithm that is doing that it’s
making an editorial decision around what the right answer is, they have deemed it to be right.
And that is just true. And so I think we need to acknowledge that, because I think it allows us,
at least to be in a position to rewrite these laws through the lens of the 21st century.
And we need to update our understanding for how the world works today.
And you know, Chamath, there’s such an easy way to do this. If you’re tick tock, if you’re YouTube,
if you want section 230, if you want to have common carrier and not be responsible, what’s there,
when a user signs up, it should give them the option, would you like to turn on an algorithm,
here are a series of algorithms, which you could turn on, you could bring your own algorithm,
you could write your own algorithm with a bunch of sliders, or here are ones that other users
and services provide, like an app store. So you Chamath could pick one for your family,
your kids, that would be I want one that’s leaning towards education and takes out conspiracy
theories takes out cannabis use takes out this one. It’s a wonderful what you’re saying is so
wonderful. Because for example, like, you know, this organization, common sense media,
yes, I love that website. Every time I put in a movie, I put common sense media decide if we
should watch it. Or like an I use it a lot for apps, because they’re pretty good at just telling
you which which apps are reasonable and unreasonable. But you know, if common sense media
could raise a little bit more money and create an algorithm that would help filter stories in
tick tock for my kids, I’d be more likely to give my kids tick tock when they turn 14. Right now,
I know that they’re going to sneak it by going to YouTube and looking at YouTube shorts and all
these other things, because I cannot control that algorithm. And it does worry me what kind
of content that they’re getting access to. And you could do this, by the way, Chamath on the
operating system level or on the router level in your house, you could say I want the common
sense algorithm, I will pay $25 a month $100 a year for it, we are put it on your side, and then
any IP that goes through it would be programmed properly. I want less violence, I want less sex,
you know, whatever I think we are as a society sophisticated enough now, yes, to have these
controls. And so I think we need them. And so I think we do need to have the right observation
of the current state of play. Friedberg, where do you sit on this? Do you think the algorithm
should be? I don’t, I don’t, I don’t really have 230. Yeah, I, I don’t fully agree with sex on
the monopolistic assumption. I think that there are packet, I think that there are other places
to access content. And I think that there is still a free market to compete. And it is possible to
compete. I think that we saw this happen with Tick Tock, we saw it happen with Instagram,
we saw it happen with YouTube, competing against Google Video and Microsoft Video. Prior to that,
there has been a very significant battle for the attention of kind of being the next gen of media
businesses. And we have seen Spotify compete, and we’re seeing Spotify continue to be challenged by
emerging competitors. So I don’t buy the assumption that these are built in monopolies. And therefore
it allows some regulatory process to come in and say, hey, free speech needs to be actively
enforced because they’re monopolies. This isn’t like when utilities laid power lines, and sewer
lines and and trains across the country. And they had a physical monopoly on being able to access
and move goods and services. The internet is still thank God knock on wood open. And the ability for
anyone to build a competing service is still possible. And there is a lot of money that would
love to disrupt these businesses that is actively doing it. And I think every day, look at how big
Tick Tock has gotten, it is bigger than YouTube almost, or will be soon. And there is a competition
that happens. And because of that competition, I think that the the market will ultimately choose
where they want to get their content from and how they want to consume it. And I don’t think that
the government should play a role. sacks rebuttal to that you buy that? Well, so not all these
companies are monopolies. But I think they act in a monopolistic way with respect to restricting
free speech, which is they act as a cartel, they all share, like best practices with each other
on how to restrict speech. And we saw the the watershed here was there when Trump was thrown
off. First, Twitter made the decision. You know, Jack, I don’t know if it was Jack, but basically,
Jack said it wasn’t him. Actually, he said it was the woman who was running it specifically.
Jack later said it was a mistake for that. Yeah, yeah, Jack actually said it was a mistake. But
in any event, Twitter did it first. And then all the other companies followed suit. I mean,
even like Pinterest and Okta, and Snapchat, like officially
Facebook, YouTube, everybody.
But Trump was actually on Facebook, he wasn’t on all these other companies, they still threw him
off. So they all copy each other. And Jack actually said that in his comments where he
said it was a mistake. He said he didn’t realize the way in which Twitter’s action would actually
cascade. He said that he thought originally that the action was okay, because it was just Twitter
deciding to take away Trump’s right to free speech. But he could still go to all these
other companies. And then all these other companies, basically, you know, they’re all
subject to the same political forces. The leadership of these companies are all sort of,
they all drink from the same monocultural fountain. They all have the same political biases,
the polls show this. So the problem with Freeberg is, yeah, I agree, a bunch of these companies
aren’t quite monopolies, but they all act the same way. I hate to say it, but I agree with you,
Jack. I’m agreeing with you. Yeah, the collective effect is of a speech cartel. So the question is,
how do you protect the rights of Americans to free speech in the face of a speech cartel that
wants to basically block them? Go ahead, Freeberg respond. Here’s my argument. My argument is that
these are not public service providers, they’re private service providers, and the market is
telling them what to do. The market is saying, and I think, I think that the pressure that was
felt by these folks was that so many consumers were pissed off that they were letting Trump
rail on or they were pissed off about Jan six, they were pissed off about whatever,
whatever the current fat is, the trend is, they respond to the market. And they say, you know
what, this is cross the line. And this was the case on public television, when nudity came out,
and they’re like, Okay, you know what, we need to take that off the TV, we need to because the
market is telling us they’re going to boycott us. And I think that there’s a market pressure here
that we’re ignoring, that is actually pretty, pretty relevant, that as a private service
provider, if they’re going to lose half their audience, because people are pissed about one or
two pieces of content showing up that they’re acting in the best interest of their shareholders
and in the best interest of their platform, they’re not acting as a public service.
Look, I love market forces as much as the next libertarian. But I just think that fundamentally,
that’s just not what’s going on here. This has nothing to do with market forces as everything
to do with political forces. That’s what’s driving this. Look, do you think the average
consumer, the average user of PayPal is demanding that they engage in all these restrictive policies,
throwing off all these accounts who have the wrong viewpoints? No, that has nothing to do with
that has to do with the vocal minority. It’s a small number of people who are political activists
who work at these companies and create pressure from below. It’s also the people from outside,
the activists who create these boycott campaigns and pressure from outside. And then it’s basically
people on Capitol Hill who have the same ideology who basically create threats from above.
So these companies are under enormous pressure from above, below, and sideways. And it’s 100%
political. Hold on, it’s not about maximizing profits. I think it’s about maximizing
political outcomes. That is what the American people need to be protected from.
Now, I will add one nuance to my theory, though, which is, I’m not sure what level of the stack
we should declare to be common carrier. So in other words, you may be right, actually,
that at the level of YouTube or Twitter or Facebook, maybe we shouldn’t make them common
carrier. And I’ll tell you why, because just to take the other side of the argument for a second,
which is, because those companies do have legitimate reasons to take down some content.
I don’t like the way they do it, but I do not want to see bots on there. I do not want to see
fake accounts. And I actually don’t want to see truly hateful speech or harassment.
And the problem is, I do worry that if you subject them to common carrier,
they won’t actually be able to engage in, let’s say, legitimate curation of their social networks.
However, so there’s a real debate to be had there, and it’s going to be messy. But I think
there’s one level of the stack below that, which is at the level of pipes, like an AWS,
like a Cloudflare, like a PayPal, like the ISPs, like the banks. They are not doing any
content moderation, or they have no legitimate reason to be doing content moderation.
None of those companies should be allowed to engage in viewpoint discrimination.
We have a problem right now where American citizens are being denied access to payment
rails and to the banking system because of their viewpoints.
You’re saying AWS shouldn’t be able to deny service to
the Ku Klux Klan or some hate speech group?
I think that they should be under the same requirements the phone company is under.
So when you frame it that way, the question is like, look, I could frame the same question to
you, should such and such horrible group be able to get a phone account, right? And you’d say,
no, they shouldn’t get anything, but they have that right.
That has been litigated, and that’s been pretty much protected by the Supreme Court. You know,
even if it’s a government conferred monopoly, the Supreme Court has said, okay, listen, like,
it’s not violating one’s constitutional right, for example, if your water bill gets terminated
without you getting due process. And the inverse is also true. So
for whether we like it or not, that, Jason, that issue has been litigated, I think.
I think I think for me, again, just like practically speaking for the functioning
of civil society, I think it’s very important for us to now introduce this idea of algorithmic
choice. And I don’t think that that will happen in the absence of us rewriting section 230 in a
more intelligent way. I don’t know. I don’t know whether this specific case
creates enough standing for us to do all of that.
But I think it’s an important thing that we have to revisit as a society because Jason,
what you described as having a breadth of algorithmic choices over time, where there
are purveyors and sellers, could you imagine that’s not a job or a company that the four of
us would ever have imagined could be possible five years ago, but maybe there should be an
economy of algorithms. And there are these really great algorithms that one would want to pay a
subscription for, because one believes in the quality of what it gives you, we should have that
choice. And I think it’s an important set of choices that will allow actually, YouTube as an
example to operate more safely as a platform, because it can say, listen, I’ve created this
set of abstractions, you can plug in all sorts of algorithms, there’s a default algorithm that
works, but then there’s a marketplace of algorithms, just like there’s a marketplace of ideas.
I don’t discriminate and let people choose.
This is the decentralized model, like if it was on a blockchain, if all the videos,
all the video content was uploaded to a public blockchain, and then distributed on distributed
computing system, then your ability to search and use that media would be a function of a
service provider you’re willing to pay for that provides the best service experience.
And by the way, this is also why I think over time to sex to kind of sex and I are both arguing
both sides a little bit. But I think that what will happen, I don’t think that the government
should come in and regulate these guys, and tell them that they can’t take stuff down and whatnot.
I really don’t like the precedent it sets, period. I also think that it’s a terrible idea for YouTube
and Twitter to take stuff down. And I think that there’s an incredibly difficult balance that
they’re gonna have to find because if they do this, as we’re seeing right now, the quality of
the experience for a set of users declines, and they will find somewhere else, any market will
develop for something else to compete effectively against them. And so I that’s why I don’t like the
government intervening, because I want to see a better product emerge when the big company makes
some stupid mistake and does a bad job, and then the market will find a better outcome. And it’s
just it’s messy in the middle. And as soon as you do government intervention on these things and
tell them what they can and can’t take down. I really do think that over time, you will have
limit the user experience to what is possible if you allow the free market. And this is where the
the industry needs to police itself. If you look at the movie industry with the MPAA, and Indiana
Jones and the Temple of Doom, they came out with the PG 13 rating specifically for things that were
a little too edgy for PG. This is where our industry could get ahead of this, they could
give algorithmic choice and algorithmic app store. And if you look at the original sin, it was these
lifetime bans, like, Trump should not have been given a lifetime ban, they should have given him
a one year ban, they should have had a process and overreached, we wouldn’t be in this position.
But Jason, when you talk about when you talk about like having a industry consortium, like the MPAA,
what you’re doing is formalizing the communication that’s already taking place already happening
between these companies. And what is the result of that communication, they all standardize on
overly restrictive policies, because they all share the same political bias.
But if they did it correctly, it’s all in the execution sacks, it has to be executed properly,
like the movie industry, it doesn’t matter, you’ll end up with the same problem as having
the government intervene, if you have the government intervene or private body intervene,
any sort of set standard intervention that prevents the market from complying, I disagree with you,
I think you can create more competition if the government says, Okay, folks, you can have the
standard algorithm, but you need to make a simple, you know, a simple algorithm that’s
you need to make a simple, abstracted way for somebody else to write some other filtering
mechanism and to basically you so that users can pick our users. Yes, I don’t like it.
What the MPAA did was, I don’t understand why you don’t like why isn’t that more choice?
Because as a product person, as a product company, I don’t want to be told how to make my product,
right? If you’re not on YouTube, you have you have an algo,
you’re now saying that there is this distinction of the algo from the UX from the data. And my
choice might be to create different content libraries. For example, YouTube has YouTube
kids, and it’s a different content library. And it’s a different user interface. And it’s a
different algorithm. And you’re trying to create an abstraction that may not necessarily be natural
for the evolution of the product set of that company. I would much rather see them figure
it out. That’s not a good argument that again, if you were not a monopoly, I would be more
sympathetic. But because like somebody, somebody’s feelings would get hurt, a product managers
feelings will get hurt inside of Google feelings, but there’s not the reason to not protect free
speech. I think you’re unnaturally disrupting the product evolution. And I don’t flock. That’s
what it that’s what happens when you’re worth $2 trillion. And when you impact a billion people
on the planet, when you start having massive impact in society, you have to take some
responsibility. And those companies are not taking responsibility. If you’re not super,
super, super successful, it’s this is not going to affect you. So you’re not nothing to worry
about. You’ll see you’ll see apps offshore, and you’ll see tik tok and other things compete
because they’ll have a better product experience. Because they know,
no, no, nobody’s going to create a new Google because they’re downranking one to 10% of the
search results for a great, great, some accountability. Hold on an ideal world companies
like Google and so forth would not take sides in political debates to be politically neutral,
but they’re not. You look at all the data around the political leanings, the people running these
companies, and then you look at the actual actions of these companies. And they have become fully
political. And they’ve waded into all these political debates with the result that the
American people’s rights to speech and to earn have been reduced. You have companies like PayPal,
which are just engaging in retaliation, basically financial retaliation, purely on based on what
political viewpoints they have. Why? It’s not like face. It’s not like PayPal needs to be in the
business. Let’s continue this conversation. We’re not going to stop calling it calling AMA.
If they can get some servers over that, or maybe so you got to raise some money sacks for this app
and get some more service. Alright, listen for the dictator who needs to hit the loo to do a
number two. Yes, I am the world’s greatest moderator. Friedberg is the sultan of science.
And David Sachs is the prince of peace. See you all next week on the episode. Wait, wait,
is this 98 or 99? No, it’s 99. It’s 99. Only one episode left. Wayne Gretzky. Get it while
enjoy while less that we’re wrapping it up here. All right. We’ll see you all
next time. Have a great movement. Bye bye. Let your winners ride. Rain Man David Sachs.
We open source it to the fans and they’ve just gone crazy.
This is my 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 useless.
It’s like this like sexual tension that they just need to release somehow.