Big Technology Podcast - What's Next For Our Crazy Economy — With Square Co-Founder Jim McKelvey

Episode Date: March 2, 2022

Jim McKelvey is the co-founder of Square, chair of the St. Louis Fed, and founder of Invisibly. He joins Big Technology Podcast to discuss whether the Fed should still hike interest rates given the markets' slowdown and the conflict in Ukraine. Stay tuned for a discussion of how Jim tolerates risk, why he's not building his new startup on the blockchain (aka: Web3), and a preview of our SXSW featured session: The Future of The Data Economy: Putting People First, taking place March 11 in Austin.

LinkedIn Presents Hello and welcome to the big technology podcast, a show for cool-headed, nuance conversation of the tech world ambiot. And our guest today is Jim McElvey. co-founder of Square, the founder of Invisibly, an independent director on the Federal Reserve of St. Louis. I don't think there's a person better suited to talk about the way that our economy is moving today than Jim. He has insight into everything going on with the fintech companies, but also sitting on the Fed. His perspective is pretty invaluable, given that they're about to

hike rates. It might take some of the air out of the economy. We'll talk about that in a moment. And then, of course, he's the founder of a startup right now. And this and, you know, this environment is going to be really interesting to speak with him about that. And of course, Jim and I are going to be at South by Southwest on March 11th. We're going to talk about the future of the data economy, putting people first. It's at 2.30 p.m. Central time in the Hilton, Austin, downtown. If you're going to be in Austin, please come check out the conversation. We'll preview that in the second half. But first, welcome to the show, Jim. Nice to see you again. Thank Alex. So I want to start with the economy because it's kind of,

You know, this interesting moment. You're on the Fed. So, you know, you have this great perspective on it. But up until a few months ago, we had this kind of rip-roaring economy. Every asset was going up, houses, stocks, basically anything that you bet on, it was going up. But now the air is really out of the system. The S&P isn't a full-blown correction. It's down around 10%. We have globally uncertainty with the situation in Ukraine. And, you know, who knows what's going to happen next? So question to you, is, is this really a time where the Fed wants to risk, you know, sending this into a tailspin and, you know, raising the rates now? It's a different environment than it was when, you know, we were, we were first talking about this stuff. Well, yeah, I mean, it's always a different environment. And first of all, I don't speak for the Fed. I'm the chairman of the St. Louis Fed, which is one of 12 regional offices. So I have a little bit of a voice in one of the 12 regions. But look, generally, this is an unprecedented situation. We shut down a healthy economy two years ago because of a pandemic.

So that's never happened before. We had a very functional, robust economy. We've been doing well for 12 years. And we had this health crisis and we decided to shut it down. The reason that's weird is because there's no economic precedent for that. So we don't quite know how to do it and undo it. So we've been watching the variables very carefully and have been trying to maintain this balance by not sending the economy into a recession. and maintain our mandates. So we're, you know, trying to keep the economy at full employment

and we're trying to keep prices stable. And inflation is way above the target right now. We're going to do something. And how do you think about the situation in Ukraine? Does that change the thinking at all? Because, you know, that could have an impact on your own supplies of things like oil and stuff like that. Oh, yeah. I mean, global economy. Yeah, go ahead. Yeah, I mean, it's a terrible humanitarian crisis. I mean, it changes minute by minute. So I've been watching the news. and I just feel so terrible for the people out there. But as far as what we can do in the West, I mean, we've got a few things we've got to worry about. First of all, we have economic sanctions, which those cut both ways.

So we're trying to manage those expectations. We have supply shocks to commodities, particularly oil and gas. We have massive global uncertainty that royals markets. So look, I think the best thing I can tell you about the Fed is it when I joined him six years ago. I was so impressed at the caliber of people who worked there. And none of these people are political. So when you join the Federal Reserve, you become politically neutral. So I'm not a Democrat.

I'm not a Republican. I am, you know, a neutral party, as are all the people there. And they really try to do the best they can. And we have really smart people making, I think, the sorts of decisions you'd like to see smart people making. So I've been super impressed. I like the Obama appointees. I like the Trump appointees. I like everybody who's joined the Fed, I think.

And we don't all agree, but we have really good informed conversations, sometimes arguments about things. And then we try to do what's best for the economy. So you're in pretty good hands. Okay. So I want to keep talking to you about this because you mentioned something that I found interesting, where you said that inflation is way above target. Now, there's a school of thought that the low interest rate, or zero interest rate policy, which makes money essentially free to borrow is responsible in part

for the inflation that we're seeing now. But there's another school of thought that says it's actually just the supply chain hiccup. There's something that I've spoken to folks working in logistics about that basically we're so relying on exports and that system had a hiccup as we went into the pandemic. Everything went offline. you know, and then it went online in a way that was massive as people started spending on goods, not experiences. And hence, we now have, you know, demand, massive demand for good, less supply. It's a typical supply and demand issue and little to do with the rate. So I'm curious when it comes

to rate raises, which we think, you know, might start next month, you know, is there a degree of certainty that this is actually going to impact inflation? Or, you know, is there a risk that it ends up throwing us into a moment where we have high inflation still and a stagnant economy, which, of course, is a worry. Well, you know, we haven't had that since the Carter administration, but hopefully that won't happen. Look, you know, there's a chance that it's going to be weird. We don't know exactly, although we do know pretty well. I would say generally, you know, you raise rates, you make money more expensive, you slow down the rate of business growth. Now, you're absolutely right about the supply chain. The supply chain has been sort of royally messed

up for the last two years. It's not going to be cleaned up probably for another year. So you're going to be living with sort of weird delays and chip shortages and part shortages. And I've got one company that imports glass into the United States. We rent containers and ship them all over the place. It's a mess. I can tell you personally, it's a disaster. But eventually that's going to snap back and things will return to more normal. And, you know, the invisible hand of the economy does tend to, you know, guide resources in the directions where, you know, like if I had an extra a billion dollars right now, I might be looking into building some container ships. Or maybe if I was a government, I'd be looking into opening up a few more ports or streamlining some regulations. And by

the way, all those things are happening. They're just not happening in real time. And these shocks occur in real time. And so you get these momentary disruptions. So how does the Fed then, you know, when it decides to make raises, decide that, how does it weigh these decisions? So you said it might get weird. Is there like some logic that it puts these decisions through, just have staff economists that are going to predict what's going to happen? Because, you know, even this Fed winking at these, or not even winking, but telegraphing the fact that these rate increases are going to come has really taken the full wind out of the economy. Yeah. And that's, that's really what it's part of the stock market, really. Yeah. Well, okay, so first of all, yeah, let's not mistake the stock

market of the economy. The stock market is not the economy. It's not even the economy for rich folks. you know, it's this sort of weird thing that we watch, but it has a lot of, you know, weird speculative behavior. And most people on Main Street don't care if the stock market is up or down. They care if gas prices are up and down. They care if they can get food. They care if their family's safe. They care about a lot of stuff that's, you know, it's sort of not reflected in the Dow. But as far as the way the Fed makes these decisions, there are a bunch of governors who, you know, meet in Washington and they get input from a tremendous number of economic variables. They have staff economists who study all these things. If you want to see some of

the stuff that the economists use, you can go to Fred, Federal Reserve Economic Data. That's out of the St. Louis Fed. And you can look at all the inputs that we look at. And then in addition to that, there are 12 reserve banks that are all sort of individually watching regional conditions. So I'm chairman of the St. Louis Fed, so we watch sort of the Midwest region, and we're reporting back. So what happens is a very full, nuanced view of the economy. And then, you know, what you said earlier was very profound, which is the Fed can say something and affect markets. And that's really a wonderful new tool that we had. You know, in the old days, we used to just, you know, sort of raise interest rates up or down. And then we took rates down to zero and couldn't go anywhere.

So we came up with this thing called quantitative easing where we could then do long-term asset purchases, which gave us a little more control. But it's really been in the last 10 years that the Fed has actually made stated policy another lever of control where the Fed can say, we are going to do this. And as long as you trust that we will live up to our words, those words have a lot of effect. And that's a new tool that we haven't had until really the last decade. because before, you know, 2020, 2010, 2011, I forget when it started, but certainly in the last 10 years, or I should say before the last 10 years, the Fed was sort of secretive about what it was going to do and what its policy decisions were. And so there's a lot of this guessing. And then when we come out with some move, like we'd rate its interest rates, the market sometimes wouldn't respond because they wouldn't know if we were going to stick with it. So being able to explicitly telegraph policy has a calming effect on markets and it's a wonderful tool. So there's not going to be any change now that the markets are down and there's the war in Ukraine.

Well, you mean not any change? In other words, are we going to not stop talking? No, I'm talking about, no, the rates, the rates are still going up. That's not my call. I mean, I've voted. I can't tell you how I voted. but I've voted. My vote's been tabula. I voted yesterday, as a matter of fact. Really? Okay. And we're not allowed to discuss what the votes are. But the Fed's policy has been pretty clear. And also, look, it's a changing environment. We didn't know if the Ukraine was going to get attacked or not.

Right. So how do you bake that into some retroactive statement? You want smart people who don't have a political agenda, who aren't beholden to Congress or some party making these decisions. That's about as good as you can do. And if you look at the results of, you know, the U.S. with a central bank versus the chaos we had before we had a central bank, I mean, I think you're a lot better off now. Yeah. So I mean, yeah, I'm not arguing to break up a central bank. I think that, you know, obviously it's important. When it comes to your votes, I'm curious, I imagine you have like a good percentage of your money in the stock market. So do you, how do you consider, I mean, even the fact that it's been telegraphed might have, you know, caused a hit for you. So how do you consider the impact to your, you know, financial standing when it comes to making these decisions? I don't worry about it, honestly, at all. I don't play markets.

I'm a very long-term investor. I'm a very stupid investor, honestly. The stuff that I invest in is likely to not work. When it does work, it tends to pay off disproportionately high, but most of the stuff I do doesn't work. Can you say a little bit more about that, like, or maybe give some examples? So you're not like an index fund complete person. No, no, no, no. I've got a few sort of safe investments because otherwise my wife had divorced me.

But when it comes to stuff that I do, I like taking risks on things. that don't exist. And if they exist, would change the world, but probably won't work. So as a matter of fact, and this is why everyone should come to our session. Yes. I'm going to have a reveal for the world about a new product that I tested for the very, very first time yesterday. It blew up in my face.

I mean, it was like one of those classic crazy, like the nutty professor experiments where you turn something on and all of a sudden, you know, the walls are coated with this gelatinous goo. That happened in my email yesterday when I turned this product up. But we're going to release it to the world at South Buy. And it's one of these things. I love it. About one in four people that I show it to go, oh, my God, this is fantastic.

The other three go, what the hell are you thinking? So that could be a total flop. If it's a success, great. If it's a flop, hey, I'm kind of used to that. Most of the things I do don't work. Can you give some examples of your failed experiments? When that's worked? Well, one that's worked, Square.

I mean, Square is probably the great one. I mean, Jack and I had no idea that little merchants were going to want credit card processing the way we envisioned it. It was a product for me. I mean, I was the first square user. It was basically built because I couldn't sell my glass. I mean, I couldn't take credit cards at my glass studio. And so we built this thing that I wanted, and then we released it.

to, I mean, the first lady who used it was a flower vendor in San Francisco. And then the next guy was a stunt pilot. A Russian stunt pilot was the number three user of Square. And we had no idea that people were going to want to use this product. Look, and this is sort of the theme that I get to in my book. So if you read the innovation stack, I'll save you 15 bucks right now. I'll just kind of cut to it. If you build something the world has never seen before, you have a totally different set of rules. It's like all the stuff that's normal in business somehow doesn't work in that space. And so that's the space where I tend to live. And it's uncomfortable, but it's also what brings us new things. So, yeah, most of my investments are disastrous. They're embarrassing. But when they do work, they're phenomenal. I mean, Square, I think for the first round of Square, it's paid off 1,000 to 1.

So a buck in gets you a grant. Not a bad. Not a bad thing. So can you give us an example of something that hasn't worked out? Dozens, dozens. I had an experiment fail last week. I was in Ireland doing some chemistry trying to develop a way to replace plastics and diapers. And we needed to make this new molecule and we had this system that we thought was going to work and didn't work.

A whole week of experiments, lots of mess, lots of just and that the stuff wasn't cross-linking. So you have a pretty high, you have a pretty high tall. learns for risk? Yeah, so I was trained as an engineer, and engineers basically spend their time on things that don't work, right? So if it works, you don't need an engineer, and I have always worked on things until they work. And once they work, I turn them over to others, because I'm not actually good at keeping

things running. For the listeners, Alex had to wait while I got this goofy mic set. up while we were recording today because I didn't have my mic set up. I'm terrible at that stuff. But I'm actually good. Like if you had to, if you had to build something and you wanted a team of people who were comfortable with the uncertainty that comes from not knowing, I'm a good team member. I'm a good guy to have when we don't know what the solution is. Once we know what the solution is, you probably want to be rid of me. So, you know, let's talk about the risk stuff a little bit more because I'm kind of curious about it. Do you have like a, what makes you comfortable

in uncertain situations? Is it just a training or do you do anything like do you meditate or do anything in your daily life that keeps you, you know, focused on that stuff? So how do you tolerate it without going nuts? Oh, wow. That's a great question. I think the best answer is familiarity. I don't meditate. I don't medicate. I'm really sort of lousy at all those things that are supposed to de-stress you. But I think in my case, I'm just familiar with what it's like, which is to say that I've put myself in so many situations where I don't know what's going to happen and I'm scared and uncomfortable that I'm familiar with that and I don't freeze up.

And this is sort of the big thing. So if you're a pilot, when they teach how to fly planes. So first of all, flying airplanes, do you fly? I fly. I'm a commercial pilot, actually. So I can actually put a uniform on and fly you across the country. But I'm afraid of flying. I've always been afraid of flying from the very first time I've been in the cockpit.

But what they teach you when you are a student pilot is to keep flying the airplane. You fly the plane. No matter if the engine's on fire, if the wing is looking like it's going to come off, If you're in a thunderstorm, if there's hail, if there's ice on the wings, there's, there's no reason to stop flying the plane. You have to keep doing it. And that's a familiar feeling for me in most areas where I'm doing stuff. It's not working. Things are going wrong.

People are upset. You know, when we started square, we broke 17 laws, rules, regulations, banking, you know, edicts. I mean, like we, there was no chance that that was going to work except for this tiny, tiny little glimmer of hope, which then it turned out to work. And I think here's the thing about risk. The reason your question is so profound is because your listeners are saying, well, how should I, how should I deal with risk? And what we've been taught is that there are those among us who are fearless. There are those among us who are, you know, sort of better than you are at handling these tough situation. So just go hide in your little cave and let the heroes do the tough stuff. And

that's a load of crap. In my studies, in the research I did for the innovation stack, in my personal life, I can tell you that the work is not done by heroes. It's done by people who are equally terrified of the situations that they're in, but they don't quit. So that's sort of how I look at risk, which is like given that I choose to do stuff that is likely to not work, I'm going to have a lot of failure. And I'm going to have a lot of times when things look bad. And if I can't handle that, I shouldn't do it. But that's how we get new things.

Yeah, we just had Kara Swisher on the show. And she spoke about how people making career decisions are often so afraid of, like, what happens if something doesn't turn out right. But oftentimes, you know, the worst case scenario isn't actually that bad. Yeah, look at Kara's career. I mean, you know, that's not a straight line. You know, the great careers bounce around. I mean, here's the thing. Very few things literally kill you.

So if it's not going to literally kill you, if it's just going to embarrass you or you're going to lose some money or you're going to lose some of your VC's money, that's okay. Right. So closing out this segment, I can't have you on without talking to you about what's happening in some of these financial stocks, the fintech stocks. So I just looked right before we jumped on the line. So Square's down 42% year-to-date. Oh, cool. So far's down 34% year-to-date. I didn't know.

It gets worse. It gets worse. Oh, okay. Go ahead. Keep going. Pay-Fal 46% down and a firm down 59%. Maybe you know what's going on. Maybe not, but I have to run it by you.

What the heck is happening there? Sector change, panic, herd mentality. I honestly don't look at the square stock price ever. Mm-hmm. Somebody told me it was down. I mean, like, you're the first data I have. I don't look at it. I have no idea what it trades at.

I don't honestly, I guess I care because a lot of people that square care. Right. But I get too nervous on a daily basis worrying about the stock market to handle the stock market. So I don't do that. I can't even handle Twitter. Okay. So, like, I don't do social media.

It's just too much noise in my life. But look, the companies you mentioned, those are all really good companies. They're well run. They're profitable. Now, they're not necessarily profitable all the time because they're growing so fast. They're pouring their money into growth, not into sort of paying dividends. But these are phenomenal companies. I'd love to own all of them.

So don't despair. But also, look, don't believe the hype. I mean, no tree grows to the sky. So I would not say that Square or any company should be your single stock. Although, I mean, if you look at my portfolio, Square is kind of my single stock. I mean, you know, it sort of outweighs everything massively. And that's how I like it. It's my company. I'm going to hold on to my company. Jim McElvey is here. He's the co-founder of Square, founder of Invisibly, author of Innovation Stack, and an independent director at the St. Louis Federal Reserve.

We will take a break and then come back to preview our South by Southwest panel, the future of the data economy, putting people first. I also have some questions for him about the square name change to block. And maybe we can talk about Web 3. So why don't we do that on the other side of this break? Hey, everyone. Let me tell you about the Hustle Daily Show, a podcast filled with business, tech news,

and original stories to keep you in the loop on what's trending. More than 2 million professionals read the Hustle's daily email, for its irreverent and informative takes on business and tech news. Now, they have a daily podcast called The Hustle Daily Show, where their team of writers break down the biggest business headlines in 15 minutes or less and explain why you should care about them. So, search for The Hustle Daily Show and your favorite podcast app, like the one you're using right now.

And we're back here on Big Technology Podcasts with Jimmy Calve. He's the co-founder of Square. He and I are going to be speaking at South by Southwest on March 11th at 2.30 p.m. at the Hilton Austin, downtown the panel topic is the future of the data economy putting people first it's a featured session at south by southwest so don't miss it if you're going to be down there um why don't we start with the name change jim what did you think about the name change from square to block does it like you know maybe square was your baby and now block is this different no squirrel was my baby we originally

named the company squirrel we pivoted to square when squirrel.com was uh we had squirrel.com and we found another payment system called Squirrel. So we switched to square. I like square as a name. I like block as a name. It's a little more 3D. It's a little more blockchainy, which is kind of the future, I think. And it also means an impediment, which is kind of negative. And I kind of like that. Like, what do you want to block? As a matter of fact, actually, my new product blocks things. So I'm going to reveal this at Southby at our session. Anyone who comes to Southby can see my new product. This is just a crazy thing. I sort of whipped up with myself and a couple of guys, but it blocks your email for you. Like it's a personal paywall for email. It's nuts. So look, as far as Square goes,

I think it's a good change because, look, Square, the company is different from Square the Payment System. So Square the payment system is keeping the name Square as it should be because people think Square is a payment system, you know, for merchants to collect money and manage their businesses. But what about Cash App? I mean, Cash App is person-to-person payments. It's this awesome product. It sort of needed its own brand title. That's a music streaming service. That's a way for artists to get money for their music and for us to connect to great music. And that sort of doesn't belong at a payments company. And then TBD, which our new division, which is doing sort of really cool stuff in crypto. I mean, that's sort of payment-like, but also kind of not. So we needed a

new name to denote the corporate overlord for all these sort of individually cool businesses. You said you like the idea that it's an impediment, which is interesting because that's like something you rarely hear someone talk about in business, that they're proud of something, you know, as a blocker. Yeah, I think. Sounds more like government than it sounds like the tech world. The tech is a world is all about efficiencies and making things seamless. Yeah, but not making everything possible. I think you want to curate. I think you want to.

allow some stuff and block other stuff. I mean, so what would your email be like if you didn't have spam blockers? Okay. It'd be terrible. What would your life be like if you had to talk to every crazy person who approached you on the street? I mean, what, like, I think filtering is an important part of a great life. And I choose to do a lot of things, but I also choose to do to not do a lot of things. Like, I explicitly don't watch network news.

I don't I don't read news particularly I don't that makes me feel good yeah I'm sorry man I can't handle it the 24 I think there is yeah there's a limit to how much news we should be consuming yeah so at what point you choose to block I mean look it's a cool name I mean is it the best I don't know does it have to be come on it's just a name look at our products don't don't worry about what we call ourselves and at least we can spell it you know that's right

but what do you think what name do you prefer block or meta A block. Yeah. That is a weird name. It is. It's a good lead in to the topic that we're going to be discussing itself by the future of the data economy. The description, I'm kind of curious what, you know, your perspective is here because the description says the current data economy is broken and monopolizes people's attention for all the wrong reasons, you know, aka maybe there should be some more blocking. Any economy that is people first by design will give more transparency and efficiency on all sides.

So can you elaborate on, you know, what your thoughts are on that part? Yeah. So what we've done is we've slipped into this weird world where we are becoming the products, which is to say that your attention is the thing that's packaged, bought, and sold. So anytime you use something online that's, quote, unquote, free, what you're really doing is you're selling your attention to this platform that turns around and packages you up with millions of others and sells that to advertisers. And it does this in a way that can be countered your interests for a bunch of reasons.

But the primary one is the information that it gives you back in return. So your feed, your news feed, your social feed, all that feed, it's not for your benefit. It's the way we feed a cow. Like I'm from St. Louis, so I got a friend with a feedlot. I hope you guys don't know what a feed lot is. It's a pretty terrible place. But it's where we take animals that are about to be slaughtered and we fatten them up. on corn and jelly beans and like basically like my buddy just bought a like a trainload of

expired jelly beans because it was cheap calories and you could shove into these cows. It was, I mean, that's that's what a feed lot is. Now it's free. You know, the cow's not paying for the corn or the jelly beans, but it's not in the cow's best interest. And the feed that we get from our news providers is in many times designed to manipulate our behavior. So they feed us the stuff they want to make us angry because they've determined at Facebook at least that if we're angry, we spend more time on Facebook. So Facebook's totally willing

to piss us off for their benefit. Now, is it good for you to go around upset all the time? Well, probably not. But it's good for Facebook to piss you off when it serves them. So that's what they do. I'm hoping we could build a different system. And the system that I envision is one where people take explicit control over what they consume and what they produce. and when I say produce, how they earn the money to access the content they want. So it shouldn't all be free. It should have tiny, tiny little price tags. These price tags should be handled by your agent, some invisible agent that follows you

around and negotiates on Alex's behalf. But if we had that system, it would be way more efficient and it would serve you. And in exchange for everything being free, you would just be rich. So if you're really rich, you don't need stuff to be free. So my idea is make everybody rich, then we don't need them to have stuff that's free. And is that product in development now? There are a couple of products. Yes, I've got two.

I've got two. They will both be announced. One, I'm probably going to announce at Mobile World Congress next week in Barcelona. And then the second big announcement is coming at South by. And there will be things you can play with and annoy your friends. So, Jim, I have to ask you because I've been covering Facebook and Twitter for a long time. And with these companies, we know all the problems that they have and sort of the emotions. No, we don't.

Well, we know a lot of that. You don't know a lot of them. Every time us a whistleblower jumps out. Not everyone. No, we don't know all of them. But let's say this for sure. But our viewpoint is saturated in terms of all the issues that they have. Like, no one is going around there saying Facebook or Twitter or TikTok is good for my health.

Let's agree on that point. True. Well, parts of it are. I mean, parts of it's not all negative. Not overall. The problem is that they've missed the chances to make positive changes. And they've made them, they've made the changes they've made to enrich themselves as opposed to improving the user experience, the person on the other side. Yeah.

For sure. That's the problem. Yeah. And I think that like people understand this. And even still, they go back to these feeds. This is what I'm getting at. You know, you could very easily like decide. to take a path that makes you happier or more educated by like picking up the economist or

National Geographic, but like people continue to turn to these feeds because whatever they do, they have a hold on folks. So if you're going to try to build the antidote to that, how are you going to sort of address that issue that, you know, you become something that's interesting, but also not, you know, these, these magazines that are largely ignored by the billion or two billion. I think Facebook has more than three billion people using its family of apps. We're going to force you to read the economist until you're happy. No, no, no, no, no, no. No, we're not going to do that.

Look, here's the idea. Here's the idea. It's really, really lightweight. So you're used to a feed, right? You're used to being a cow in the feed lot. You got a big bucket of corn shovel in your face, but that's what you're used to. You've been getting that for 15 years. Okay?

So we're all used to that. We're used to being fed. We're not used to having choice. So I don't want to be the cow. I want to be the guy in the restaurant ordering part. of the cow, you know, medium or error, please. But in a world where you have choice, it's going to feel a little strange at the beginning. But the first thing we're going to do is give you choice over this thing that you've taken totally for granted forever, which is news, your news feed.

We're going to replace that with your news menu. You're just going to be able to choose whatever you want from a massive thousands and thousands of articles a day in the English language. You're going to be able to choose. And that's it. No. big deal. You're going to choose no paywalls, no ads. So you're going to get access to this without any nonsense. That's all the product's going to be, just going to be effortless access to the stuff you want. And then we're going to show you what it's like to live in a world where you have access to everything and how amazingly cheap it is. A typical news article earns about a quarter of a cent for the publisher. That's one quarter of a cent. So if I said,

Hey, Alex. Per view, right? Yeah, per view. Yeah. So you want to read this thing. I mean, you're a journalist, right? You get this. Like, you know how much effort you spend, like crafting an article or, you know, actually

you're working on this podcast. Like, you do a lot of work to make this stuff good. You got to edit out all that stuff that went wrong in the middle of the podcast today. You know, when my internet dropped, this poor guy's got a bunch of work to do. We need to pay them, right? But the good news is you got so many people listening that it's inexpensive per serving. So the question is, if I had four articles that you wanted to read and I said, Hey, Alex, I'll give you a choice to not see a paywall, not see an ad for these articles. Would you be willing to pay two cents? Because if you pay two cents, you just double the amount of money the publishers make. Is that worth two cents to you? And you'd say, well, no, Jim, because two cents is a real pain in the ass to pay. But if I made it really easy, if I said, look, give me a buck and you could have 50 of them. That might be a good deal.

Or if I say, if you say, look, Jim, I'm never going to give you a dollar because I want everything to be free. I'd say, okay, well, here's an ad that's targeted for people like you. If you choose to watch this, that's worth 20 cents. Watch five of those. There's your buck. I mean, there's so many ways you can do it. Now, I'm not saying people have to do this. And I'm not saying most cows aren't sort of content in the feedlock.

I don't know what's like to be a cow. But I imagine myself in a situation where I have choice. and freedom and a situation where I'm being fed by a platform who's trying to monetize me, I'd rather be free. I'd rather have the choice, even if I screw it up, okay? Even if my choice is bad, I'd rather have that choice than have, you know, Facebook making it. Yeah, and it's kind of interesting because Facebook is intentionally moving away from news right now. It actually took off news from news feed and now it's just going to be feed, which is kind of

fitting your analogy. I love the fact that they've embraced the word feed, and I would like to take them to a feedlot in central Missouri sometime and see what that analogy actually manifests as. Yeah. So do you think Facebook is like the main competitor for the product you're trying to build? So actually, can you, I mean, I don't know how much your, or maybe Twitter is, I don't know how much you're willing to reveal, but can you kind of share how it works? Yeah, it's very, very simple.

So first of all, there's no competitor because we're. We're in a world that doesn't exist right now. This is the world of micropayments of tiny invisible transactions. That's why the company's called invisibly. You get paid for your attention directly, i.e., it's money to you. It's tiny amounts, but it is actual money. You pay for the things you consume. It's tiny amounts, but it is actually money.

And it's all handled invisibly because who cares about a quarter cent or a third of a cent or three cents for that matter? And look, this is an idea that's been around for a long, long time. A lot of people have had it, and nobody's ever made it work. So I'm not saying that it's actually going to work. But what we're trying to do is build things that are beautiful and allow you to feel in control. And the hope is, and this is really just, it's the same hope I had when we started at SquareLight. Like, I hope other merchants want to take credit cards. I hope other merchants are in the situation that I'm in.

I hope other readers and viewers are in the situation that I'm in, which is I'm sick of being told what to read. I'm sick of being fed and I want to exercise some control and I'm willing to pay a tiny amount for that either in my attention or you know with a credit card but either way I want to have that control and the hope is that if we build this system you know it's small and clunky at the beginning that people will join us and as people join us then we have the ability to on behalf of all of those people go out and negotiate so so what we know is this The platforms and the advertising machinery suck up 80% of the money right now in the media world, which is to say, guys like you who produce content earn one out of every five cents. And it's actually not even you because you're sort of a solo operation. Like imagine a corporation that employed you that would have to have a bunch of employees out doing work. It's pretty inefficient. We're starving the producers.

We're starving the people who actually do the work. They don't get the money. The money goes to these middlemen. And what are the middlemen produce? Well, I mean, I guess they got their own space programs now. But look, I'd rather have a dozen reporters, you know, on the ground figuring out what the hell's going on in my world. Like, I want to pay for my news. I want to pay for my entertainment, too.

Like, if you do something that entertains me, like, I want you to be rich. Like, I want the people who make my life good to be like the other people who make my life good. Like, I don't drive the cheapest car I could find. Well, actually, that's not true. I have a 95-accer Integra that I've had for 20 some years. But I don't want to have to drive that, okay? I mean, like, the fact that I drive a beater is more sort of a political statement than anything else. But I don't want to be forced.

into this world where I only have what the platforms are feeding me. And I don't want to be forced into a world where the producers that make the stuff that I love can't, like they have to have a second job. Like, I'm going to be a journalist or a writer, a creator, or a musician, and I have to have a second gig. That's nuts. If you make stuff I want, I want you to get most of my money. And if you make something great, I want you to actually get more of my money.

Like, I want to pay more for good stuff so that I encourage the creation of good stuff. I'm totally on board with that. You know, this is interesting because it sounds like a, you know, a Web 2.0 build. A lot of times people are saying, like some of the problems you're identifying, people are saying that you need to build it on the blockchain and make it Web 3, but you've just decided not to do that. Why is that? So the blockchain's its own weird thing.

It's highly inefficient. Like you couldn't do micro payments on the blockchain. It's just too, too slow, too expensive, too much carbon in the air. I mean, it's good for some stuff. It's great for other stuff, but it's totally inappropriate for this. The efficient way to do this, we're talking about trivial, trivial amounts of money. Now, in total, they could add up to something, but there was another company who was trying to do this on the blockchain and they just imploded. So it's not an appropriate use of that technology.

I mean, I'll use it if it helps, but we don't need it. Do you, does, you know, you're building a startup right now, does building it the way that you're building it and then, seeing the way that Web 3 has been implemented, like the blockchain-based programming language and programs built on top of the blockchain. Do you have less optimism that all these big Web 3 visions are going to work out given the fact that you're building something now and you're building it with the architecture that you just described? Well, look, I'm skeptical about everything, but I'm also hopeful. So it's this weird mix of, I don't think it's going to work, but I hope. it does. And, you know, we'll just have to see. I think Web 3.0 is this sort of vague term

that is stuck on anything that people don't understand about crypto. And I think that we are going to very rapidly see it evolve. And that's going to be interesting. And we're all going to be wrong to some extent. But if I need to build a product today, what I'm going to do is I'm going to look at the tools that are available today, use the ones that work. And when I need to I'm going to vent new tools. So one of the things that Invisibly is inventing is the idea of an invisible agent because what we realized is that in order for micropayments to work, people don't want to be bothered ever with this stuff. Like you want to live in the world, but you don't want to have to keep track of a quarter of cent here and a penny there. So we're having to build that

technology because it doesn't exist. And how do you make that agent responsive to the individual? Well, we're going to figure that out. I mean, we don't know yet, but we have to figure this stuff out. Look, anytime you build something where you don't get to copy an existing model, you end up in this weird world where you have to be very humble and understand that most of the stuff you're going to build isn't going to work, but that when it occasionally does, it'll be a big deal. For sure. If people want to check out Invisibly, is there a good place to sign up for a wait list or can they start using something now? Yeah, go to Invisibly.com. We're not going have anything really cool until Southby.

So come to our session at Southby. Like, I'm going to have something cool for you at Southby. I might have two cool things, but literally one of them blew up in my face yesterday. Is that the email thing? Yeah. Don't use it this week, right? It's actually out on the web if you wanted to find it. But don't.

Like, save yourself. Don't touch my product because it pissed off everybody I know yesterday. So let me experiment. I meant on myself a little bit and my friends first. But then by Southby, we should have something cool for you to play with. A couple of things. And my hope is that you'll try them and you'll get that little smile that I got the first time I got to use a search engine. So I'm old enough like I remember before search engines exist.

I remember the first time I used Alta Vista and I got to search the web. And I found something that I needed. I was like, my God, this is phenomenal. You know, so I'm hoping we get a couple of people that go, wait a second, I can actually tell the world what news to send to me as opposed to me being fed by the platforms or slammed in the face with ads and other crap or paywalled out of the stuff that I really want. I mean, I don't know if people, it's funny, people may be so over it that they don't care anymore. I don't know, but what we're building is, I think it's cool. Yeah. And look, these are, the best technology solves a real problem.

And these are real problems. And so, you know, it's, if it works, it'll be great. And I'm rooting for it. Yeah, yeah. It's great to have you on and talk about it. Thanks. I'm really looking forward to our session. This is going to be fun, man.

Me too. Let me plug it one more time. It's called The Future of the Data Economy, putting people first. It's on March 11th at 2.30 p.m. at the Hilton, Austin, downtown. Please come by, come say hi to us. It would be nice to see you listeners there in person. And the things that Jim is referencing the products that they're going to release,

if you sign up to big technology on Substack or through LinkedIn, I'll put them in the newsletter after they're announced. And I'd love to hear your feedback on them. So, Jim, thanks so much for being on the show. Really appreciate it. Alex, what a pleasure, man. Sorry about the technical glitches. No, no worries.

And yeah, I'm looking forward to our conversation at Southby. and hopefully we'll get a LinkedIn audio event also before then. So some people who want can be can tune in. I'll drop that in the newsletter as well. Thanks everybody for listening. Thank you, Nick Guatany for editing and mastering the audio. Thank you, LinkedIn, for having me as part of your podcast network and selling the ads. Really appreciate you guys there.

As always, we'll be back next Wednesday with an interview with a tech insider or outside agitator. Stay tuned and have a great week. Thank you.