Dwarkesh Podcast - Patrick McKenzie — Money laundering, big tech censorship, SBF & Japan

Episode Date: July 24, 2024

I talked with Patrick McKenzie (known online as patio11) about how a small team he ran over a Discord server got vaccines into Americans' arms: A story of broken incentives, outrageous incompetence, and how a few individuals with high agency saved 1000s of lives.Enjoy!Watch on YouTube. Listen on Apple Podcasts, Spotify, or any other podcast platform. Read the full transcript here.Follow me on Twitter for updates on future episodes.SponsorThis episode is brought to you by Stripe, financial infrastructure for the internet. Millions of companies from Anthropic to Amazon use Stripe to accept payments, automate financial processes and grow their revenue.Timestamps(00:00:00) – Why hackers on Discord had to save thousands of lives(00:17:26) – How politics crippled vaccine distribution(00:38:19) – Fundraising for VaccinateCA(00:51:09) – Why tech needs to understand how government works(00:58:58) – What is crypto good for?(01:13:07) – How the US government leverages big tech to violate rights(01:24:36) – Can the US have nice things like Japan?(01:26:41) – Financial plumbing & money laundering: a how-not-to guide(01:37:42) – Maximizing your value: why some people negotiate better(01:42:14) – Are young people too busy playing Factorio to found startups?(01:57:30) – The need for a post-mortem Get full access to Dwarkesh Podcast at www.dwarkesh.com/subscribe

Today I'm chatting with Patrick McKenzie. He is known for many things. On the internet, he's known as Patio 11. Most recently, he ran Vaccinate CA, which probably saved on the order of high four-figure number of lives during COVID. He also writes an excellent newsletter called Bits About Money. Patrick, welcome to the podcast. Thanks very much for having me. So what was Vaccinate CA?

In earlier 2021, we were quite concerned that people were making 2040, 60 phone calls to try to find a pharmacy that actually had a dose of the COVID vaccine in stock. and could successfully deliver it to them. I tweeted out randomly, you know, it's insane that every person or every caregiver is attempting to contact every medical provider in the state of California to find doses as a vaccine. California clearly has at least one person capable of building a website

where you can centralize that information and send everybody to the website. If you build that website, I'll pay for the server bill or whatever. And Carl Jung took up the gauntlet and invited 10 of his best friends and said, basically, all right, get in guys, we're going to open source the availability

of the vaccine in California, tomorrow morning. This is at like 10 p.m. at night, California time. And so I lurked down into the Discord where, of course, all medical infrastructure is built and gave a few pointers on, you know, making scaled calling operations. And then one thing led to another and ended up becoming this, the CEO of this initiative. At the start, it was just like this hackathon project of a bunch of random tech people who thought, hey, we can build a website, make some phone calls, maybe help some people find the vaccine at the margin. And it grew a little bit from there. We ended up becoming essentially the public-private partnership, which was the clearinghouse for vaccine location information

for the United States of America. That felt a little weird at the time and continues to. Okay, so the obvious question is, why was this something that people randomly picked up on a Discord server? Why wasn't this an initiative either by an entity delegated by the government or by, you know, the White House has or the pharmacies have a website you're going to sign up for an appointment? Oh, there are so many reasons. And, a whole lot of finger pointing going on. One of the things was that there were almost no actors anywhere in the system who said, yes, this is definitely my responsibility. Various parts of our nations, institutions, county level public health departments, governor's offices, the presidency,

two presidencies over this interval, which will become relevant. They all said, well, I have a narrow part to play in this, but someone else has to do the hard yards of actually like putting shots in people's arms. And someone, someone else is clearly like dealing with the logistics problem, right? And the ball was just dropped comprehensively. And no one at the time really had a plan for picking it up or didn't feel like it was incentive compatible for them specifically to pick it up right now. It would have been great if someone could do this, but just not me. Okay. So to explain the context and how important it was that people get vaccines at the time and how much these delays mattered, you can account for it obviously

in the amount of lives saved. You can even look at it in terms of when vaccine news was announced, much the stock market moved. It was clear it was worth trillions of dollars to the economy. Yep, that the vaccine be delivered on time. And so it should be priority number one that people know where the vaccine is. A sort of meta question is why are, I kind of heard about this problem for the first time when I read your article about this. Why is this? There's, there's a bunch of controversy after COVID about people pointing fingers about masks or different kind of protocols. why was this not people are getting called in front of Congress? Why were we not able to deliver the one thing that was needed to arrest the pandemic as fast as possible?

Well, folks, why don't we 27,000 words on this, my article in Works in Progress called The Story of Vaccinate, CA, goes into some of the nitty-gritty. Broadly, I think, a matter of incentives more than a matter of people choosing to do evil things, although I will say we did choose to do evil things. And we can probe on that if you want to. But if you look at like the federal government, specifically, the federal government institutionally learned one, I believe, wrong lesson, which has terrible consequences from the healthcare.gov rollout a number of years ago when Obamacare was first debuting. And the thing which many actors in the federal government and the political parties came away from is that a president can doom their legacy of their signature initiative if those bleeping

tech folks don't get their bleeping act together. And so the United States has decided, like, there is virtually nothing up to and including, like, the potential of national annihilation that will cause us to actually, like, put our chips behind making a software problem. That is somebody else who does not have to deal with an electoral mandate or getting called in front of Congress or et cetera, et cetera, somebody else's problem. Unfortunately, software is eating the world and delivering competence in the modern world requires being competent at software. And the United States, it will tell you differently. And there are wonderful people in the government who are attempting to change this. But broad strokes on an institutional level, the United States federal government has abdicated software as a core responsibility of the government. I understand why they didn't initially want to pursue this project.

I still don't understand the answer to the question of after everything went down now, why is it not more of a news item that this was a problem that was not solved? So I think we're memory holding a lot of things that happened in this. the pandemic. And I wish we wouldn't, partly because of political incentives and we're approaching an election year and because of the quirky way that the American parties and the candidates bounce off each other, it's no one's real incentive to say, okay, like, I would like to relitigate the mask issue for a moment. We told people that masks don't block or boring viruses. And we were quite confident of that. And the entire news media backed us up on it. And then we like 180 to a month later. No one wants to relitigate.

No one wants to relitigate California imposed redlining in the provision of medical care. And that was wrong and evil. But the party that is, was in the case pro redlining does not normally like saying that it is pro redlining. And the other party does not really consider that a hugely salient issue. And so, you know, there are no debates and no one is asking, you know, Governor Newsom. So when you got on TV and said that you were doing geo-fencing for the provision of medical care, geo-fencing in that context was the same as redlining. Can you explain your support for redlining?

And no one has asked newsome that question. Maybe someone should. But we're surrounded by the effects of incentives and the effects of iterated games. And sometimes they don't play out the way we would ideally like them to play out. Yeah. We can come back to this. I still don't feel like I really understand. So maybe it was that everybody has the blood on their hands.

And so that's so confusing. I think if you have other kinds of emergencies, like if you lost a war, I don't think you'd just brush it aside. The generals would have to come up in front of Congress and be like, what happened? Why didn't we get that battlefield? Actually, we just lost a war. If we didn't happen. If one goes over the history of military conflicts, I don't know how many people, losers on either side of the conflict ever actually did that reckoning of like, hey, could we attempt to win in the future? I think there was a broad lack of seriousness across many trusted institutions in American society in the government, in civil society, in the tech industry about really approaching this like a problem we want to win.

Yeah. And I think a wonderful thing about our country and our institutions is like on things that are truly important for us, we win and win outlandishly because we are a rich and powerful nation. And yet, like, this was obviously a thing where we should have decided to win and we fundamentally did not approach it as a problem that we needed to win. Okay, so going back to the object level here, one would think that instead of different people calling different pharmacies and asking whether they have the vaccine, the obvious thing that people who have not read your article would assume is that either there were just some company would build a platform like this. The government would build a platform like this. I guess you explained that the government didn't do it. The pharmacies might build a platform like this. And I want to meditate on the incentives that prevented random big tech company or Walgreens from building this. themselves. Can you explain that? Sure. So the federal government and the state government, the American governmental system is quite complex. And there were multiple distinct supply chains with multiple distinct technological systems tracking where these vials were headed all over the country. And there were many attempts at various levels of the government to say, hey, can we commission

a consultancy to build a magical IT solution, which will get these databases to talk to each other? And those largely failed for the usual reasons that government software procurement projects fail. Why didn't tech build it? I'm constrained on what I can say and cannot say. So I know a little more than this answer, but I will give you part of the answer. The tech industry, both at the level of like Appamagufi soft, which is my funny sardonic way to refer to like some of the most powerful institutions in the world. And many other places that hire, you know, many number of smart engineers who can build

the world's least impressive inventory tracking system. felt political pressure in the wake of the January 6 events in the United States. This is another thing that's gone down the rabbit hole, but in the immediate wake of the January 6 events, people in positions of authority very clearly tried to lay that at the feet of the tech companies. And internally in the tech companies, their policy teams, teams that are supposed to make the company legible to government and avoid government Yankees' permission to do business. And their communications teams, PR departments, told everyone in the company, Like, mission number one right now, do not get in the newspaper for any reason.

We are putting our heads down. And when people in those companies who work on public health, and a thing that might not be obvious to most people in the world is that, like, App Amagu, Booksoft, they're literally like teams of people who their job is public health health. Because they are the, like, the operating system with the world right now and the operating system of the world needs public health care. those teams said, hey, we've got this thing and other people in the company might have overruled them and said it would be really, really bad right now to have the tech industry saying we're better at the government's job than the government is. So shut that down. Okay. So that's so insane. It is absolutely.

The local incentives, like it makes sense in the meeting when you're saying it. And you are not in that meeting projecting, I'm going to cause tens of thousands of people to die at the margin by making this call. And yet, that call was made. Right. Okay. So there's two culpable actors here. One, you could say, well, the big tech companies for not taking the political risk. I think what is even more reprehensible is the fact that they probably correctly thought that appearing more competent than the government and saving tens of thousands of lives as a result.

will be held against them in a way that significantly matters for their ability to continue their other businesses. Now, okay, so suppose that they had built a software. Let's play with the scenario. And then what would happen? They would get hauled in front of Congress and explain why they weren't delivered even faster because of the ultimate bottlenecks in the supply chain because you can only manage. What would happen?

They build it and it's like better than the governance. So many things could happen. One, if you build a thing, this is sometimes been called the Copenhagen principle. of culpability. If you build the thing, various actors in our system will assume, okay, now your responsibility for not just the consequences of the thing you built, but for the totality of consequences of everything associated with the American vaccination effort. So you built the thing, oh, you big tech geniuses.

Well, what did you do about localization? You didn't do enough about localization yet. You hate name group of people here. Like, don't you see the disparity in death rates between demographic A and demographic B? Why haven't you fixed that yet? You have killed so many people. etc, et cetera, et cetera. And no one in government, no one who is making that moral calculation says, I have responsibility for killing people by doing nothing. The person who is doing anything

has the responsibility for killing people by taking up the burden of doing something. And it is a absolutely morally defensible thing, which you will see over and over and over again in our discourse. They get hauled in front of Congress, but it's not just because they made a sin of commission. It's also because if you're right, then after January 6th, they would be held in, there's one answer where it's like they touched the problem. And there's another where it's they did it better than the government could have. And those seem like two different.

Right. You touched the problem. And so you've immediately taken liability for any number of sins of emission because even at the scale of largest companies in the world, you have not allocated infinite resources to this problem. And also the stealing a march on the government and embarrassing us will be held against you. And so like you can point back to the. the Cambridge Analytica thing, where Cambridge Analytica is like shorthand for, there was this one

time back in the day where the news media in New York and the government in DC in places like it talk to each other a bit and convince themselves that a small team of people with the budget of approximately $200,000 have rooted the United States presidential election. Now, rooting the United States presidential election, perhaps on behalf of a foreign power, would be an enormously consequential thing. Good thing that did not happen in the world that we live in. However, people believe very passionately in that narrative. And as a result of that narrative, they did very aggressively attempt to clip the wings of tech and tech's core businesses, like say, advertising.

Right. There's so much that's crazier. Okay. One question you might have is we figured out that our, we couldn't delegate to big tech or any of the competent actors and that the native infrastructure that we had, that was specifically earmarked for dealing with public health emergencies, was extremely incompetent to the extent that Discord servers vastly outperformed them. Supposing that public health is not uniquely incompetent among the different functions that the government is supposed to perform

that don't get tested until the actual emergency is upon hand. How would we go about if the president cures this and is, let's say, concerned that the new, the people were running that nuclear, um, uh, nuclear bomb reaction aren't up to snuff or the earthquake reaction. Is there some stress that is tests that you can perform on these institutions before the thing goes down that you could learn beforehand, whether they're competent or not? If I look at like the experience of the last hundred years and a little more, back to the flu pandemic in 1918.

If you read histories of the flu pandemic, a vastly less wealthy, vastly less technologically sophisticated nation, uh, with many less people involved. in the actual like fixing out of this problem, competently executed on nationwide vaccine campaigns and other various measures. And so in some fashion, we should be urgently concerned with what decayed institutionally in the interim.

I think one of the things that health departments specifically faced is that if you had just given them these kind of vanilla vaccination campaign, maybe they would have been done better than they actually did. I'm not positive of that. I do think there are actually, And here I have to stop for a disclaimer. I think that people in county health departments did real important work.

I think they probably did work that saved lives on the margin. I do not think that the United States should be satisfied with our performance in 2020 and 2021. We should be very dissatisfied and we should get better for the future. And that requires recognizing that we underperformed by a lot. There was a political decision made that the successful administration of the vaccination was not going to be measured solely by saving lives. The prioritization schedule that we came up, which was Byzantine and complicated

and routinely befuddled professional software engineers and health administrators, and which I could not diagram out on a whiteboard, even if you paid me a million dollars to get it right on the first time, was downstream of the United States' political preferences. And so Schedule 1A versus 1B versus 1C was like in the first five seconds of the discussion dictated by medical necessity, but immediately

after that was about rewarding plums to politically favored groups. And so the one of the complexities of this is that the, you know, pharmacies and healthcare departments are not set up to discriminate along the axes of whether one is politically powerful or not, because that is not a thing that they have to do in most vaccination campaigns and not a thing that they have to do on the typical Tuesday of providing medical services. We asked them to do this like radically new thing, which is in part responsible for the failures that we had. If we had a much simpler tiering system, for example, we would have had more than 25% of

the shots successfully being delivered in the state of California in January of 2021. For people who are not aware, what was the political tiering system that you're referring to? Oh, goodness. So this was different in different places. And confusingly, different places in the United States use the same names for these tiers for different people. But in the state of California, Tier 1A comes before 1B comes before 1C, comes before the Tier 2, et cetera, et cetera. So 1A was descriptively speaking at the start, and this changed over time on like a day-to-day week-to-week basis, sometimes in mutually incompatible ways at the same time.

It was an entire mess. But descriptively, Tier 1A was, okay, healthcare professionals and a few others. and people above the age of 75, no, wait, we'll change that to 65. Tier 1B was, we're going to put a few favored occupational groups here and some other folks. And tier 1C was people who doctors think will probably die if they don't get the vaccine, if they contract COVID, but who have not appeared in Group 1A or 1B yet. And so who got 1A? Well, healthcare professionals, so like doctors administering the vaccine,

that sounds like pretty reasonable. So veterinarians, because veterinarians are like urgently required by society at the time, not so much because the California Veterinarians Association is good at lobbying. And that isn't just me alleging that. They sent a letter out to their membership saying, we are so good at lobbying. We got you guys into 1A. Congrats and go get your vaccine now. Have that on my website.

Okay. So like tier 1B school teachers were classified as tier 1B. Why? Because go figure teachers unions have political power in the state of California. and they said, well, we'll accept not being in 1A, but we are going no lower than 1B. And probably no one in that meeting ever said, like, I definitely think that 25-year-old teachers who are currently understand home orders should be in front of the line of people who will die if they get COVID.

So like, we made that choice. So then in your article you discussed that the consequence of that was not only the misprioritization of the vaccine, but the bureaucracy around allocating it according to these things. here resulting in 75-year-olds not having the capacity to fill out the pages of paperwork that required to decide what tier you're in. The state of New York commissioned a consultancy to administer to 75-year-olds a 57-page web application, which required uploading multiple attachments to check for their eligibility. And talk with a technologist, if you don't believe me, we try to remove everything from

a web page that people successfully get through it. Like, if you can make it two-to-form fields, that's already taxing people's patients. And you were asking people who might be suffering from cognitive decline or be less comfortable in using computers to do something which would like literally tax the patience and cognitive abilities of a professional software engineer. And that wasn't an accident. We wanted to do that. Why did we want to do that? Because it was extremely important to successfully implement the tiering system that we had agreed upon. Why was it extremely important to implement the tiering system?

Because that was society's prioritization. Was that the correct prioritization? Hell no. Right. Okay. Can we just count off everything? It just befat—so it's enraging not only because obviously people died, but because, like, nobody talks about it.

It was—there's all kinds of controversies about COVID, about whether, I don't know, a vaccination and side effect kind of things and whether the masking orders were too late, too early, whatever. And then the main thing about whether we got vaccines in people's arms on time because of these political considerations. So you're not allowed, yeah, go ahead. Can I jump in with one bit of optimism? We achieved something incredible, which was getting like the first cut of the vaccine done in two days as a result of many decades of science done by very incredible people.

And we successfully got that vaccine productionized in a year. We should have gotten it productionized in far less than a year. But the fact that we were able to do it in one year and not three was enormously consequential. And so we should feel happy about that, a little annoyed that we didn't have, you know, better protocols at the FDA in places to get that vaccine prioritized for testing much faster than was quite annoyed at the fact that like that was a political football and people probably made decisions that pessimized for human lives and optimized for like defeating a non-preferred political candidate. Are you talking about the fact that the vaccine was announced

the after the election results or something, right? Yes, I'm basically sub-tweeting that. Yeah. And I strongly believe that was a political decision, but I don't know. I'm just a software guy. So, okay, the particular kind of craziness that we had during this, during the 2020 and 2021 about equity and wokeness, how much was that uniquely responsible for the dysfunctions of this tiering system and geolocation slash redlining would basically if it was, if that happened in another year where there wasn't a bunch of cultural craziness, would have gone significantly better? It's difficult to ask that question because we were clearly in a unique time in 2020 and 2021 and yet, like, point to me in the year in American history in which American society was

truly united and had no social issues going on. And if people, like, counterfactually, like, point to say World War II, I will say, like, read more history there. But be that as it may. Was it the case that, like, strong societal feelings in the wake of, you know, George Lloyd's death in 2020 and the racial reckoning like strongly dictated policy. Yes, as a positive statement rather than a normative statement, that is absolutely the case. There's this thing we often say in the tech industry called bike shedding, which is if you're building a nuclear power plant and many people cannot sensibly comment on like what is the flow rate through the pipes to cool nuclear reactor.

But if you build a bike shed next to the nuclear power plant, it's very easy to have opinions on the color of the bike shed. And so in the meetings about the nuclear power plant, you will have a truly stupid amount of human effort devoted into what colors you should paint the bike shed. So it is very difficult for most people in civil society to successfully inject a vaccine into someone's arms, to successfully manage a logistics network,

to successfully build a nationwide information gathering system to centralize this information and pass it out to everyone. And we aggressively train the entire American professional manager class, starting at seventh grader earlier in decrying systemic racism, which, to be clear, is a problem. And so any discussion about what should we do with regards to information distribution, which goes out to a broad audience in the American professional managerial class who essentially call all the shots in the US system will almost invariably get bent to, I have no particular opinions on server architecture here, and nothing useful to comment.

what's our equity strategy? And the equity strategy dominated discussions of the correct way to run the rollout to the exclusion of operationalizing it via medical necessity. People brag about that fact. That fact is enormously frustrating to me. And if you say it with exactly those words and emotional violence, people will say, no, no, that's not exactly what we meant. But when they're talking to other audience, they say, no, this is absolutely what we mean.

Yeah, okay. So, I mean, even on that point, the, maybe the culprit here is a scarcity mindset involved here with caring more about the proportion rather than just solving the problem. This is one of those few times where we were genuinely up against a scarcity constraint. Like, you know, physical reality was there were a scarce number of vials and we needed to have a prioritization system. And some people who urgently needed the vials were not going to get them first. Everyone was going to get them eventually.

But the mad rush in our political system to dole out favors around the prioritization for those first vials exceeded the actual distribution and successful injection of the vials as a goal. Again, California reported to the federal government that it was only successfully injecting 25% of its allocation. It had the most desirable object in the history of the world. And rather than adopting any sensible strategy for getting it into people's arms was bickering over who should get it first. We should be outraged about this and we're mostly not. I don't even know what to ask the next because it's so obviously outrageous. And there's no clear answer at least to me of why there isn't more outrage about it. Also, what the solution to it is, I mean, literally in the exact context of what would we do the next time there's a penitial.

It's not clear to me that we've learned the lesson, let alone the broader lesson of if there's a different kind of emergency, if there's some isomorphic emergency, what would our state capacity better? And you mentioned the point about 100 years ago we have maybe would be able to deal with this problem better. I don't know. What changed? One of the things that America used to do is when the federal government lacked state capacity for something. It would say who in civil society or private industry has capacity for this and then say, congratulations. By order of the president, you are now a colonel in the United States Army. Like, what do you need to get it done, sir? And that was an option.

That was an option that was not taken. But, you know, I will play no fights in either of the two administrations that both individually made terrible decisions. But, you know, plausibly, some more enlightened counterfactual administration could have gone to Google and said, who is literally your best person for solving the data problem that they currently find themselves in? Great. Will they accept a commission as colonel?

Great. here's an order from the president. You have a swearing and ceremony starting in 30 seconds. And you will present your project plan tomorrow. And again, like the successful project plan was made by a bunch of like rank amateurs at this topic on Discord in the course of a couple of hours. And similarly, like they're, you know, this is like one part of the huge overall vaccination effort. But you could imagine going to Amazon and saying like, hey, Amazon, we hear you're pretty good about. getting packages between A and B. This package has a really hard thing about it. It has to be

cool as it's delivered. That's like a totally unsolved problem in material science, right? And Amazon would say, we literally do that every day. Back in December, people were getting on the night in the news and saying this is going to be an unprecedented logistics challenge because the vaccine has to be kept at ultra-low temperatures, which are the same temperatures at which milk is transported. We understand how to do cold chain logistics. So Amazon would correct that misperception. They say, oh, you guys seem to know what you're doing. We have an absence of that here. Congratulations. Here's your colonel uniform in the United States military. And now your job is we are going to give you a CSV file every day interface with this other colonel, please,

from Google, on like where this thing needs to go and you get it there on time every time. And if you can't get it there on time every time, like call the White House. And we will like find you political cover is what a functioning system would have done. Granted, the American system is dysfunctional its own way. I think another thing that's been underdone in the course of the last couple of years is looking internationally, I don't know if any country anywhere with vastly different political systems is happy with the outcomes that it got. Some were obviously vastly better than others, but there are journals of like comparative

international politics and why are those journals writing anything but like who succeeded at what margins and who did not and what do we? we learn about like the proper functioning of political system, civil society, and like the United States consider it as one like hugely complex machine. No, that's a really interesting point. I actually asked Tony Blair, Tony Blair Institute, they were recommending to the British government different ways of distributing the vaccine. And they made the obvious recommendation that you should give everybody one dose now and

then do the second dose later. You know, obvious things like this, which would save lives. British government didn't do a good job there. no government. I think it's actually a very interesting question. There's governments all across the world which have very different political systems. They have hopefully, I don't know, different infrastructure radio next to this. Why did nobody get this right? So on the like give people the catchphrase for this was first doses first. Yeah. That was not the procedure in many nations which have many smart people in them. And it was not the procedure in the United States until I think, you know,

first doses first. You can like sometimes trace policy. back to individual blog posts. And so to the extent that one can be traced, I think it was Alex Tabrock on Marginal Revolution, who's right, this is very obvious and overdetermined. If we want to win at this, like first doses first is objectively the correct policy. And after, you know, this like ping ponged around the political system for a while

and they, you know, talk to medical experts and et cetera, they were like, yeah, yeah, it turns out that, you know, this is the equivalent of like saying, you should probably consume calories at some point in the typical week. That is better than not consuming calories. Well, we checked with the medical experts, and it took six weeks of eating. But they definitely agree. Eating beats not eating for living.

So we're going to do that now. And on one hand, like, it is a genuine strength of the United States that, like, you know, he's not just actually some rando, but relative to like the topic in question, And some random on the internet wrote up a 2000 word blog post and we stopped doing stupid things. We could have stopped doing the stupid thing sooner. Yeah. That doesn't answer the question of why, like nobody got it right. If you think there's something particular to the late stage bureaucracy that we have or something, maybe another country is fresher.

But even the countries that have more authoritarian models who can just, you know, crack down or something, they did abysmally as well. They made errors often in many cases that were worse in America's. There's like so many countries, Patrick. Why did none of them get it right? I'm under-informed on much of the international comparison, partly because in 2021, I was sort of busy. But I remember Israel, for a variety of institutional reasons, having a broadly functional response

on this, in particular around end-of-the-day shots, which end-of-the-day shots are in the grand scheme of things a minor issue, but they're a good, like, quick heuristic for, do you have good epistemic on this at all? Okay. You know, physical reality of the COVID shots is there's five, eight, or ten shots in a single vial. That single vial is, uh, goes bad after 12 hours. That is a bit of an oversimplification. It doesn't actually go bad, but for, for essentially regulatory reasons, we have to pretend it goes bad after 12 hours. It can't be resealed. Okay. So, if you, vaccinate two people, then the other shots are on a timer, and those shots will decrease in value to zero after how many hours are remaining on the timer and then get thrown in the trash can.

So, quick question to test if you are a rational human being. At the margin, would you prefer giving a shot to the most preferred patient in your queue of patients who needs for medical needs? Or, like, the trash can. You prefer the most preferred patient. Now, follow-off question. Would you prefer giving it to the least preferred patient or the trash can? You still give it to the human rather than the trash can.

And Israel adopted the policy of like if the shots are expiring, forget the tearing system, forget anything else. Literally walk out into the street and say, I've got the COVID shot. I need to administer it in the next 15 minutes. Who wants it? And in the United States, we had a policy ban on doing that. We said, no, to protect the integrity of the tiering system, to like, you know, embrace. our glorious cause of health equity, you should throw that shot out. And that policy was stupid. And it was announced by governors proudly in December in front of news cameras. And then a couple

weeks later, reality set in and they were like, people told them, sir, turns out that throwing out the vaccine is stupid. And the governor did not go on the nightly news again and say, I gave a, you know, a very confident policy speech a month ago in front of this news camera where I said that I would prosecute anyone who gives out end-of-day shots. But, but he literally said that. He literally said that. Oh, man, this is almost a direct quote. And you can see the actual direct quote in my previous writing on this, but I will not just prosecute

people. I will go aggressively to try to maximize the reputational impact to your firms and your licenses. Yeah. Like, we were pointing metaphorical and when it came down to it, literal guns at physicians in the middle of a pandemic for doing unauthorized medical care. Crazy. But, you know, when the system corrected, it did not do. It did not correct all the way. The governor did not go out and say, hey, that thing I said a month ago was effing insane.

I take that back and apologize. You know, it was like, okay, we're going to like quietly pass out the word. That's no longer the policy, but we don't want to own up to the mistake. and people in say like the regulatory departments of pharmacies make rational decisions based on the signals that you are giving them and the rational decision of pharmacy makes is not okay we've been quietly past the word that the old policy is persona and grata but can we really trust the quiet word here one because like do we trust that this actor is not going to change their mind in two weeks and consequence us for something we authorized today just throw out the shots and pharmacies did not

cover themselves in glory. A lot of pharmacists did. Some pharmacists did. But pharmacies, like institutionally, we deliver almost all the medications for almost all the diseases routinely in America. We cannot blow up either that like position of societal trust or our business results over one drug for one disease. And so throw out the shots and make sure we can still delivering medical care in California tomorrow. That I understand how that decision was made. We should not endorse that decision. There were individual acts of heroism by particular pharmacists who said, essentially in as many words to us when we called them and said, hey, what's the procedure for getting the shot? Okay, an individual like the one you just described

cannot formally get the shot right now. So I would tell that individual to go to the county website, tell whatever lies are necessary to get an appointment with me. They come in for an appointment and I will inject them rather than verifying the lies that were on the appointment card because basically F's rules, I swore noth. Honestly, I don't know where to begin with some of these things. Okay, I want to understand a bunch of the things. First of all, can we just go back to 25% of the vaccines that were allocated to California were actually delivered in people's arms?

Literally the entire world economy was bottlenecked on this, right? It's like. So if you want another funny. anecdote and then asked some people in positions that might know. So how real do you think that 25% number is? And they said, well, the good news is in addition to being incompetent at delivering the vaccine, we're also incompetent and counting. So it was probably a bit of an undercount. I'm like, oh, so the good news is like the true count was like 100% or 95% or something. Well, no, not nearly close to that. But we got better at counting after the governor

yelled at us because he was embarrassed. We were the 48th state and nation. Counting the item, which is a bottle. Like, where are it? Where's the thing? that is going to like rescue us from the thing that is destroying the world. We had, so like pharmacies, generally speaking, could today, if you ask, you know, someone deep in the bottles of pharmacies accounting department, could you by the end of business today give us an account of like how many bottles of aspirin the pharmacy has physically in the world? By the end of the day, they would have a shockingly accurate number for that.

It wouldn't be exact, but it would be like shockingly accurate relative to that number is like truly millions. If you could say like, break it down by address, please. Like, where are they physically present in the world? Yeah. Easy problem. You know, like managing inventories of drugs, that's what we do. The United States could not do that and did not perceive that to be an urgent problem to be solved.

I mean, I do want to ask you about the actual finance and software stuff at some point, but I think this is like such an important. I mean, the world is Bacheros stand still. We still haven't learned a lesson. So I'm just going to keep going on this topic because I still don't understand the. Okay. So here's another question that's sort of related to this. You have many rich tech industry friends. and I read your article and you're saying,

we're trying, I'm filling out these grants for 50K, her, and that's like taking up all my time, and I'm trying to raise a couple hundred grand here, a couple tens here. And I'm thinking to myself, how is this not as trivial a problem as, hey, XYZ, if you give me a money that you can find

between your couch cushions, we will save thousands of lives and get the world economy back on track. How was raising money for this hard? Or why was it hard, you know? So, again, like trillions of dollars are on the line. The United States is spending tens of billions of dollars or more on its COVID response strategy. Like the true biggest issue is like,

why is it come down to like Patrick McKenzie's ability to fundraise in the tech industry for us to like have a system here? Okay. Bracketing that. Like the tech industry underperformed my expectations for what the tech industry should have accomplished here. There were some bright spots and less bright spots as regards to the fundraising project. For those of you who don't know, the total budget of this project was $1.2 million, which is not quite couch cushion money, but is not large relative to the total amount of resources that the tech industry can deploy on problems. And in some cases, I looked at my email this morning to refresh my memory. I sent a CEO at a particular company, and then I'm not going to name

people, but they're welcome to claim credit if they want to claim credit. I email the CEO at a particular company, hey, I saw you like to tweet about this on Twitter. I'm essentially raising a seed round except for a 501c3 charity. And, you know, we urgently need money for the this, here's a two-page memo. And I sent that email at 4.30 p.m. And 4.30 p.m. California time. And he got back to me, there was some internal emails of like routers to this person, routed to this person.

He run that by blah, blah, blah. 9.30 the next morning, he said, I'm personally in for $100,000 out of my own pocket. My banker is going to contact you as a wire cleared the same day. So, yay for that. On the, like, yes, less EA side, like, tech is not exactly a stranger to having bureaucracies. And in some cases, it was a matter of like, oh, indicatively, we want to support that, but we have a process. And that process went on for six weeks. And by the time six weeks was over, it was May and not to the credit of funders.

By May, most people in the professional managerial class who had prioritized getting a vaccine for themselves and their loved ones had succeeded at that. And they said, okay, so the vaccination supply problem pretty much solved, right? I'm like, no, it is not solved right now. It is solved for the people who are smartest about working the system in a way it was not solved for even them back in January. But there are many people who are not yet vaccinated. They say that's a vaccine hesitancy issue. No, it is not merely a vaccine hesitancy issue. It is still the case that there are logistical problems.

It is still the case that people don't know that you can just Google the vaccine now. It is still the case that around the edges of the American medical system in places that are like underserved, etc. People don't have it or they can't get transportation, et cetera, et cetera. You should continue funding this team for the next couple of months so that we can do what we can around the edges here. And I was told, again, you know, people can do what they want with their own money. And I understand that charitable founders, funders have many things. It's just like, okay, relative to the other places we can put money to work in the world, further investment in the American vaccine supply situation as of May and looking forward doesn't make sense for us.

could you do it in another nation? And we said like, okay, we're the American effort. We have some advantages here. We would not have them in the other nation. We did talk to people there. We tried to see if we could help a team there or go there, et cetera. But we don't see that there's a path to positively impacting the problem there in a way that there's manifestly a path to positive impact here. And we lost that argument.

We didn't get the money. The last $100,000 in was my daughter's college education fund. Oh, my, okay. Look, I agree that it shouldn't be up to tech to solve this huge society-wide problem. But given that nobody else was solving it, I still don't understand. Have you gone back to any of them or have any of them reflected on? Yeah, maybe I should have just wrote you a million dollar check and saved you all this hassle so you could have got back to business. So, you know, ultimately I'm the CEO, like responsibility for fundraising lies with me.

And so like I thought any number of things about how could I have done that better, how could I have strategized? You know, I did not stop fundraising efforts, but I stopped lighting up new conversations for a number of weeks because I thought, okay, we've got we've got the $2 million that we need to run this till the end of August. And that's my sort of internal target for the point at which it doesn't quite stop being useful. But it starts like actually being, you know, a question down the margins where it's not a question until the end of August. So could I have done better probably. Some of the folks in the broader effective altruist community, I'm not a member, but I've read a lot of stuff that they have written over the years and I broadly consider them positive. They are the but four cause of vaccinate CA, but ask me about that in a moment. But some EA funders talked to me after my piece about it had come out and said, this is physically painful to read.

We wrote bigger checks with less consideration to projects that had far less into success. Why didn't you just ask us for money? And like the answer there was twofold. One, I thought I had high quality introductions and a high quality personal network to people who were likely already going to fund it. And so I didn't light up additional funding sources. And two, like, this is a true answer. I'm a flawed human who has a limited number of cycles in their day and was running a very,

very complex operation. And it literally didn't occur to me, hey, maybe those people that have been making a lot of noise about writing a lot of money for pandemic checks would be willing to write a pandemic check. which that was not entirely an irrational belief for me because I had reached out to people who were making a lot of noise about writing money for pandemic checks. And they said, not in the United States, not in May. And I thought, oh, well, if I light up a conversation totally cold with someone now, it's likely to just get a know again.

I should try to scrimp and save and break the piggy bank for my daughter's college education fund, which, by the way, she'll go to college folks, no worries. But it's a, like, how far down the list of like plan A, plan B, plan C, we were down to like plan C at that point. I'm just to be clear, I'm definitely not blaming you. It goes back to the Copenhagen. No, but I should blame me a little bit because I should be rigorous about my performance. I think, you know, you go back to the commission versus omission.

It's like the exact same reason that we shouldn't have blamed Google if they got involved. I did that to themselves and maybe made a mistake. It's like, come on. To remove the bottleneck that was basically stopping all global economic activity and for causing millions of debts, you had to, in your, for the action you were taking about it, take money on your Erica, daughter's college fund. It's so insane. And I, so can I say this isn't like there's a positive takeaway here?

So there actually is a positive takeaway in that there is one tiny actor who understands that he is unitary control over some decisions who is capable of like betting boldly on those without a huge amount of process when it is important to bet boldly on things. things. Not to shoot my own horn here, this is literally what happens. So, like, on the first day, we're getting in Discord together and there's a bunch of infrastructure where we have to sign up. We have to, like, you know, get hosting, yada, yada, yada. And there's a, like, annoying mechanical step at this point where it's like you have to put down a credit card for a potentially unbounded expense. And people were like, okay, you know, there's a list of things

that we want to do. But since there is no money here, you know, like, I'll take this one and you take this one and after I like heard this conversation go on for two minutes. I said, this is not a conversation we should be having. Here is a like a debit card for my business, which have just spun up on the back end because like this is literally my job, which has $10,000 on it. Spend the $10,000 on anything that accelerates this project. There is no approval process. There is not, don't get a receipt. Don't worry about the paperwork right now. And why did I do that? Because we were like doing things like, well, you know, okay, there's like a scrape up, like the information about where I

hospitals exist and what their phone numbers are. It's probably like scrapable from the internet for free or we could buy a commercial database, but that's like a stupid amount of money. It's like $2,000. I'm like, relative to the importance of this project, $2,000 is a trivial amount of money. Just spend the $2,000 immediately rather than spending like four hours writing a scraper. And we don't think about that in government procurement and in charities. We have some sacred virtues about like you must minimize waste. You must minimize opportunities for corruption. You must maximize for like the funders of the charities for their like, you know, line item, support individual things that charities buys.

And those sacred virtues conflict with winning. And at the margins where they conflict, we should choose winning. We should choose human lives over reducing corruption. Like, and one of the few things we are reflecting on is the tremendous amount of waste and fraud. that happened in the like PPP loans and other Corona stimulus things. And I'm like, okay, I'm not just saying this to be contrarian, folks. We should be glad there was waste in like COVID stimulus. If there was no waste, we were clearly not choosing the right margin to focus our efforts on.

So by the way, for the people who don't have context on how much money typically goes around in Silicon Valley, they think, oh, 1.4 million, how hard should that be to raise? If you right now, given your reputation, like literally treated out, I'm not going to tell you my idea, but I'm raising $50 million seed around or something, I would be like, that's going to get filled. I think people don't understand. I have friends who are 16 years old who have some GPT wrapper and they don't have to worry twice about raising $1.4 million. Not trying to brag folks, just telling you like the reality of Silicon Valley and also the reality

I put in a document. And I misapplied the, like, I have some knowledge of how seed funding would work if I attempted to raise seed funding for a for-profit company. And I thought originally, like, we're probably going to be charitable, but I'm going to pitch this to people as essentially like a seed investment, which they expect to like spend all the money as quickly as possible and go to zero while driving the total addressable market of the company to zero. But I'm bum. This is what passes for humor with me. And so I told folks pretty confidently in the first couple of days, I'm pretty sure I can get us $8 million. And then I was actually able to deliver around 1.2 after far more tooth pulling. But like, yeah, descriptively, if I was asking for a seed stage investment, if I wanted to get $8 million wired by tomorrow, I think I could probably do that.

And that is a civilization inadequacy because like can literally get $8 million for a blank check for something that has a profit motive behind it. But if I write on the check, hey, we want to fix the manifesting ability of the United States to figure out where the COVID vials are, that blank paper becomes less valuable by the fact of writing that. So maybe on reflection, I shouldn't, I just shouldn't have told people and said, oh, the blank check company was, you know, this thing. And we're making it a 501c3, which some ethics issues than that, but the ethics issues are less bad than allowing people to die. Yeah. Okay, so the last episode I released, at least while we're recording this, was about within AI, a former AI researcher who thinks that the field is progressing in such a way that you will need to nationalize the research in order to protect America national security.

And when I hear this about the inability of the government to keep track of vials of COVID vaccines, or to get them in people's arms, should, for any other emergency that we might be worried about, whether AI, I don't know, the fallout of a nuclear war or something, should we just discount any government response to zero and then just, if your plan requires some sort of competent administration by the government, discounted to zero. It has to be something on the side. So discounting to zero is like the opposite of wisdom here because we didn't accomplish zero.

we accomplished a extremely impressive thing in aggregate, which vastly underperformed like the true thing that we were capable of. And so we have to keep both of those parts of the equation in our minds at the same time. I think that people in tech need to become radically more skilled than interfacing with government. To the extent that it is, you know, we have some manifest competency issues in government right now. We can't simply, you know, sit out here and gripe about this on podcast. podcasts and etc., etc.

Like, we've got to go out and do something about it. Yeah. And there was a, I think it's been reported that there was a meeting among like tech leaders in early in the vaccination effort where a bunch of people got in a room. Like, this is going terribly. I hope someone fixes it. And like, I hope someone fixes it is no longer a realistic alternative. I think we have to be part of that solution there.

Partly it's like having, you know, higher fidelity models for how Washington works than simply, oh, they're bad at everything. It is important to understand that the government has some manifest competence issues. It's also important when working with the government to understand telling the government to its face you have manifest competence issues is not the maximally effective way to keep getting invited to the meetings. I was very religious about not criticizing anything about this Californian response effort in 2021 because we needed to be in the room where it happens.

And that was a choice made. I'm not 100% happy with that choice, no, but we kept some relationships that we really needed. And I'm not saying, don't criticize the government, obviously, but be strategic about the sort of things, like play like you were attempting to win the game. And, you know, on the government side, one, like dispelling the massive bug field that surrounds software, this is going to be a part of the future, whether you're like it or not, we need to get good at it. We can no longer accept incompetence at this as the, like, routine standard of practice.

Washington to, you know, it is enormously to the United States credit that we have an extremely functional, extremely capable tech industry. Maybe we shouldn't treat it like the enemy. Putting that out there. Again, this is the thing the United States has done before. Like, there are laws in place. There are decades of practice. We could put a colonel's uniform on somebody.

Like, think seriously about doing that next time. do I think we have institutionally like absorbed all the correct lessons from this? No. When I see like after action reports, the after action reports praise a lot of the things that people think

are like very important for maintaining their political coalition. Which were either not productive or anti-productive. And they fail to identify things that were the true issues. And to the extent that they identify things that were the true issues the sort of recommended action is well I hope someone fixes this next time

and it's no longer sufficient like the default case is that the ball will be dropped and goodness those of us who were involved in accident A CIA kind of dread what we call the pet signal where God willing there will not be another like worldwide pandemic killing millions of people as long as we live

if there is one like we know what numbers to text to get the band back together society should not rely on us as plan A. How did this happen? I mean, the point about gripping a podcast, that's heavily what I'm doing. But I just, maybe you're humble to say this yourself, but I do want to commend you for, there are very few people, I think, who kind of, you tweeted it out.

There were probably other projects that other people could have taken up that were not taken up. In this case, you tweeted it out. You saw that there was a thing that could be done. And you did it. You like quit your job and you did this full time. You even what this and the reason you had to div into your kids college fund was because somebody who had promised a donation didn't follow up on it. Right. So effectively every time that the, we had, you say, a verbal green light with regards to money, I would advance the company, the charity.

Charities are companies, by the way, folks. I don't know if that is obvious. It was Call the Shots Incorporated. So I would in advance call the shots the money that was sort of soft committed before the money would actually arrive in the bank. And the theory that like this accelerates our impact. We should always choose acceleration over other things like say minimizing credit risk. And then, you know, some of the people who had like soft committed did not actually end up wiring money at the end of the day. And I was like, oh, shoot.

Well, you know, choices now are either don't run the last payroll or do run the last payroll and, you know, do not recover the money I've advanced the company. Well, okay. You know, do run the last payroll. Did you end up recovering it in the end? No. End up being a donation from me personally to the effort. What the fuck. That is the least important part of the story, folks.

Sure. But overall, I'm just like, like, kudos isn't obviously enough to commend. to convey what I mean to say here, but like, I mean, yeah, I'm glad you did that. And I'm grateful. Like, four-figure amount of lives, you're just like, it's hard to sort of plot that on a graph and make sense of what that means. But if I can be pretty explicit at it, you know, to the extent kudos are deserved to anyone, you know, Carl Yang for taking up the torch and finding like 10 people in tech industry who would jump into something at 9 o'clock. Those 10 people, the other board members, the hundreds of volunteers, the team of about 12 people who,

worked out full-time for very full definitions of full-time, virtually ceaseless for five, six months. And there were other projects in civil society. There were many people doing this as their day jobs. The American response effort is not one small group of people anywhere. It's the collection of all these things bouncing off of each other. And I think, like, you know, I'm happy about our individual impact. I'm happy that if you, like, descriptively speaking, If you Googled for the vaccine at any point like vaccine near me, after a certain day, you know, before a certain day there was no answer. After that day, there was an answer.

That answer came from us. A little dissatisfied that that didn't come from like people with, you know, vastly more ability to have caused that to happen much earlier. But like the ultimate takeaway is not about this, you know, a little tiny piece of the puzzle. It's how can we make the total puzzle better next time. Yep. So as you can tell by now, patio 11 is somebody who loves. digging into the weeds of how the financial system actually works. And so it goes to figure that he

used to work for this episode sponsor, Stripe. Stripe is how millions of businesses around the world move money and accept payments. And one of the advantages of Stripe scale is they can invest in fractional optimizations, which are not viable for individual businesses, but add up to massive revenue and conversion increases. For example, last year, Stripe Shave 3,000. 300 milliseconds off the render time for its payment links. You can think of Stripe as an entire company full of patio 11s dedicated to making sure they can figure out how to make the payment rails work smoothly for you. And that's why technology companies like Amazon and Open AI and even traditional companies like Ford and Hertz choose to partner with Stripe. Now, back to my conversation with former Stripe, Patrick McKinsey.

Okay, let's talk about some finance. So you write, in addition, you know, saving thousands of lives to vaccinate CA, what you've been doing over the last year or two is writing this finance newsletter, which is very excellent called Bits About Money, and you explore the plumbing in the financial system. My first question about this, crypto at its peak was worth $3 trillion or something like that. If you buy the cryptoskeptic perspective that you have, how do we think about this number? What does it represent? Was it just the redistribution of wealth from savvy people or from dupes to savvy people or to the extent that useful applications didn't come out of this $3 trillion? What does it represent?

So I think I have two broad perspectives on this. One, people often treat the market cap of something. It's like implicitly that is some sort of cost on society. I think the true cost of crypto has been that anytime one engages in attempting to do a productive enterprise. Some actor in society has said, okay, I will stake you with some of society's resources, which these resources are rivalrous. They cannot be applied to any other things society needs in the hope that you will produce something that is worthy of being staked with us. How much if we spent on crypto, not on trading tokens around, but on building infrastructure and spending rivalrous resources that we can't get back, whether that's, you know, GPUs or A6 or electricity that could have gone to other things in China but went into mining or the time of talented and intelligent people that could have been building other software products.

expose instead building crypto. That number is in the tens of billions or hundreds of billions of dollars. What do we have to show over that tens of billions or hundreds of billions of dollars? I am very crypto-sceptical and I could give you an answer to that question. I think crypto-like fans would not like to hear it from me. So I prefer Vidalik Boudarin's articulation of this question from 2017. He asked at the time it was a 0.5 trillion, trivial number, only $500 billion in market cap. He said, have we true? And I'm paraphrasing a tweet thread. Have we truly earned this number?

How many of the unbanked have we actually banked? How many distributed applications have a meaningful amount of value doing something which is meaningful? And he has about six other meditations on this. And I think, you know, like, crypto folks certainly aren't accountable to me. In some manner, you're not even accountable to Budren, even though he's, you know, a clearly like a leading intellectual in the community. you're accountable to like producing positive value in the world. But like what is the answer to Budron in in 2024? How many of the unbanked have we truly banked?

What is the best use case for crypto right now? Once crypto has a responsive answer for that, that is sized anything like proportionate to the hundreds of billions of dollars, tens of billions or hundreds of billions of dollars of resources that we've staked crypto with, I think crypto people should feel enormously proud of that accomplishment in some future where it hypothetically arrives. And in some future where that hypothetically arrives, you have my sword. I will love your initiative. However, for the last many years, we have been saying, you can still get in early, you can still get in early, you can still get in early, you can still get in early, because the value has not arrived yet.

And so that is my like capsule summary on crypto 14 years in. We've staked a group of talented people who are very good at giving a sales pitch with tens of billions or hundreds of billions of dollars. And look at what we have built. This would be a failure in any other tech company. Capital F failure. So either like radically pivot and unfail it, or maybe we should stop continuing to stake you with money. So two potential responses from the crypto-optimistic perspective.

One, I have people who help me with a podcast who are around the world, not that many, but like the couple I have around the world, I have a clip editor in Argentina, I have a shorts editor in Sri Lanka. And all of these people have asked me, I haven't prompted them. I asked them, how should I pay you? And they say USDC. And so maybe it wouldn't be that much harder for them to set up a wise account. But I think it's notable that all of them prefer the just how should I get paid.

The first answer is a stable coin. Absolutely. That is evidence. And, you know, like some tech savvy people have a. good payment rail, and well, they have a payment rail that they did not have access to 15 years ago. But like at the cost of tens or hundreds of billions of dollars, you know, like counterfactually, if one had thought like, okay, we really want to work on debt payment rail specifically. Another way one could hypothetically have, you know, deployed $10 billion is on like the best

funded lobbying campaign in history in the United States to work on like AML and KYC regulation to allow more easy transfers money worldwide. But why doesn't that be compared against the best possible counterfactual use case? It's a sins of commission versus omission again, where it's like on the margin it made things better. Don't judge it by like hypothetical worlds. Just like keep in mind that hypothetical worlds might exist, judge it by like the actual realized utility at the moment relative to the amount of resources is consumed. The second point is if you look at, for example, the dot-com bubble, literally close to a trillion dollars were invested in laying out the fiber and the cable for this artifact that now you consider it's the most valuable. a thing that humanity has built.

And at the time, reasonably people, a lot of the companies that built this went boss. There was a bubble-like dynamic where many of the investors who spent the capital to build out this infrastructure weren't paid back, didn't see immediate use cases from what they'd built. And they had just, the bubble had sort of served as a shelling point to that in the future, get things rolling. And that was hundreds of billions of dollars, a trillion dollars. Tens of billions of dollars. If in the future or something cool comes out of it and it's a useful use case, that's probably

worth it, right? Cool. At what point do we get to say that didn't happen? A trillion dollars? Like, at what date in the future do we judge, like, someone has been right or someone has been not with respect to, we have created, like, you know, people in crypto have very confidently stated in various places that this is the next iteration of the internet. This is, you know, will revolutionize the world, not just how payments are conducted, but it will be like a fundamentally new computing architecture. Okay. Like at what day do we compare notes on whether that claim was accurate or not?

Does 2030 seem like a reasonable year or too far? It seems like reasonable to me. Can I make a prediction of what is said in 2030? You can still be early. Crypto has created like huge amounts of things but is not achieved anywhere near its true potential. Please invest our new crypto starter. And like let's check back in 2030 folks. Like please, you know, at tweet me if, if I'm,

I'm wrong in 2030. I will happily eat crow. I want to eat crow. Crypto people are like, how couldn't you be interested in programmable money? I'm like, I'm interested in programmable money. Obviously,

money is programmable money. But my friends who are trying to sell me on this since 2010 weren't wrong. This should like totally smash my interest based on what I usually find like intellectually edifying. And I don't not find crypto intellectually edifying. I actually think there are some interesting things that have come out of the movement. But I find a computer built in Minecraft out of Redstone to be intellectually edifying.

And it's a wonderful educational device for people who don't understand how a CPU works. And I'm not proposing to use the like, Redstone emulated computer in Minecraft to be like the next computational infrastructure for the world. Because that like fairly obviously will not work very well. So another answer of what the value here is, listen, we want some sort of hedge against, and I think this is actually kind of reasonable argument. I actually don't buy the capabilities that have been unlocked by crypto, but I do by the argument that we want some kind of hedge against the government going crazy and K-A-Y-C-A-ML

leading to state surveillance, all the compliance departments in the banks just like start seeing if you've been to political protest and debanking you. And it may seem unlikely, but it's good to have this alternative rail, which keeps the system honest, given that there's an alternative. And if things go off the rail, is this a worthwhile investment? A couple of times, I mean, society as a whole can't even count that low in terms of the other resources that it spends. So it's a good hedge against that kind of outcome.

So I'm actually much more sympathetic to crypto people in this folks than they expect most people who have a traditional financial background to be. I think it is descriptively accurate that the banking system and all companies, which are necessarily tightly tied to the banking system, which might be all companies. Let's come with a central example. So that's the second set first, are a policy armor of the government. And I think whether people articulate that in exactly those words or not varies a little bit, but when you have your mandatory compliance training, You'll be told in no uncertain terms that you are a policy arm of the government. And I feel for crypto folks that say that things like, this feels like, you know, warrantless search and seizures of people's information in like very undirected drag net fashion.

And some somewhat complicated thoughts about this. So the modern edifice of know your customer, KYC and AML anti-money laundering dates back to the BSA Bank Secrecy Act in the United States, which was late 1970s, early 1980s. And at the time, the federal government in the United States was like strictly rate limited and how much attention it could give to K.YC and AML. And so maybe because we thought we had very limited state capacity at the time, like the government would make rational decisions. And maybe it will go after like 10 or 100 enormous white collar crooks and drug trafficking cartels a year and not surveil down to literally everyone in society. But the regulations we wrote and have continued right. and have continued tighten on over the years, do effectively ask for like transaction level surveillance

of every transaction that goes through a bank. And so it is the actual practice, and this is not a conspiracy theory. I'm making nothing up, folks. This is like acknowledged that the actual practice in banks is that they have descriptively about as many intelligence analysts as the American intelligence community has who get this scrolling feed of alerts

that are generated by automated systems. And for each alert, they either go, Don't worry, don't worry, don't worry, don't worry, don't worry, don't worry, don't worry, millions of these alerts every day. And then for some tiny percentage, they say, oh dear, this one might actually have been a problem. I'm going to write a two page, two to four page memo and file it with the financial crimes enforcement network. And in all probability, no one is ever actually going to read that memo.

But we have an intelligence community-sized operation running in banks to write memos that no one ever reads. Right. Because some tiny portion of those memos. will be useful to law enforcement in the future. And if you would explain that trade in like a presidential debate in the 1980s, I find it extremely unlikely that any part of the American policy would say, yeah, yeah, I want to buy that. Could we perhaps spend tens of billions of dollars on it?

But we did that. And so to the extent I'm like extremely copacetic with crypto folks on this point, A, like this thing factually exists in the world, I agree with you that it does. B, in an ideal world, I don't think this thing would exist. I agree with you. There are very real, like, you know, privacy first. And then, however, crypto has this habit and, you know, people who are good at sales have various sales pitches that they give to various people.

And crypto will, actors within the crypto ecosystem will talk an excellent game about privacy as long as number goes up. And when you say, but you can choose between like being tied into the banking system, which is necessary for a number go up or you can choose privacy. They will say, excellent, I choose number go up. But there's different protocols. You can use the ones that allow privacy if you care more about privacy. Right?

Yeah, and descriptively, that is a very tiny portion of crypto. Also, to riff on what you were saying about the analysts, that number as many as would be an intelligence agency, these apparatchiks who were connected to the government's policy, just analyzing each transaction, as soon as the government gets the competence to run an LLM across each of these millions of queries. Right. This is like a legitimate worry because as we, you know, this is funny in the echoes of like we have extremely low state capacity for this thing that we didn't think was important, which was,

you know, successfully administering vaccines. But we do have extremely high state capacity with regards to running the security state. And if they successfully manage. to get their technological Duxa Nova in order, which there are plus and minuses there, but they have built some things that are extremely impressive technologically, and then just run it on this data set that we've passively been producing. The sort of implicit ongoing invasion of privacy is much worse than we kind of baked into the system in 1980 when it would have been people going down to archives, the look at things

in microfiche to try to do this. And I mean, I'm not even necessarily making a point of crypto here, but I think it's worth meditating on the fact that the default path for this technology is that a very smart LLM is going to be looking at every single transaction that is electronically, aka every single transaction ever, and it's intelligent enough to sort of understand the implications how it connects to your other transactions and what's the broader activity you're doing here. And maybe this is just a broader point about how it's a step back from crypto and finance for a moment.

Sure. I think this is one of the least understood things about the tech industry where we have this this societal level question that is not being addressed directly but it's being addressed by misunderstood proxy questions on taking as written

that the finance industry is a branch of government in a meaningful sense should the tech industry also be a branch of government and we don't ask that question directly we have asked instead things like should the tech industry be responsible

for minimizing the spread of misinformation etc., etc. And there was the an injunction issued in a court case last year on the 4th of July, which I find oddly aesthetically motivating. The court case is Missouri et al versus Biden at all. But the argument made in the court case, which the judge accepted, which is extremely well supported by the record in front of him, is that various actors within the United

States government puppeted the tech companies and used that. as catspaws to do, frankly, shocking violations of constitutionally protected freedoms like the freedom of speech and that there were like not on the level of we've built this, you know, unaccountable, hard to inspect system of LLMs and heuristics and we started like turning off a lot of people's feeds in Facebook, but like, no, like there was an individual person in the White House who was sending out emails like, when are you going to address me on this tweet guys? We can't have things like this anymore, et cetera, et cetera. Again, a feature of the United States, we are very good about keeping records and transparency

and having a functioning legal system. And the record before the court is like, I was following along as this was happening and what was happening was much worse than I understood to be happening. An example of something like, as we were growing up as children, would you ever think that the United States federal government would tell, I believe it was the state of Missouri, hey, you have town halls where like citizens can come in and speak their mind and advocate for their policy preferences. And you probably have a civics class and talk about like the First Amendment and things. Yeah, someone said something we don't like in a particular town hall.

Take down the recording from YouTube. That happened. That is a violation of the Constitution of the United States. That is against everything in the traditions and laws and culture of the United States. That is outrageous. And yet it happened. And we have not repudiated the notion of using tech as cats' paws or using, in some cases, this is like literally written in the decision, by the way, which I would urge everyone to read. There was an individual and a non-governmental organization, which was collaborating with the governmental organizations in doing this, which said, to get around, I'm not quoting exactly, to get around,

Legal uncertainty, comma, including very real First Amendment concerns, comma, in our ability to do this. Rather than doing it in the government

directly, we are outsourcing it to a bunch of college students who we have hired under the auspices of this program. Like, what? Like, one,

just as a dangerous professional here, you've violated the character from the wire, Stringerbell. Stringer Bell's dictum on the wisdom of taking notes on a criminal

conspiracy. But you literally wrote that down. In an email. The outrageous part is not that you wrote that down in an email. The outrageous part is you, like, with full knowledge of it, engaged in something that is outrageously unconstitutional, immoral, illegal, and evil to the applause of people in your social circle.

And everyone involved in the story thinks that they're the good guy in it. If you write that email, you are not the good guy in the story. I okay so on that by the way so what is your sense of what the judicial and result of deliberations on this will be I think there will be a limited hangout and walk back of some particular things and do I predict that and probably you know there does exist an injunction I predict that that continues to happen in the future What do I know I'm just the software guy but do like people want to achieve power? the tech industry descriptively has power because it is good at achieving results in the physical world.

This is certainly not going to be the last time that someone desiring power thinks like, okay, can I force you to give me the power that you have accumulated? And like that is, you know, ultimately, like this is fundamentally political decision about how we construct our democracy and we should make good decisions about that. Well, I mean, maybe that's the crux here, which is that through the story, you illustrated the vaccineate CA and the lack of accountability that showed in our institutions. The idea that you're going to go back to Congress and get them to pass some law that says, oh, we're K.YC. AML. We realize that without alums, it's going to be a bad deal with regards privacy. We're going to roll that back. We don't like that the collusion between tech and whoever's in power and being able to dictate what can get taken off the platform.

And we think about that free speech, we're going to pass laws and take that back. there's no sense in which there's society comes to a consensus and here's the privacy concerns we have. Here's the free piece of concerns we have. So at least one argument goes, the solution has to be that you just go off a rail, you start a new rails for these kinds of things that cannot be constrained in this way. And it's not a matter of just changing the KYC law or that's just not, that's implausible given the manifest. So. So. So.

So. So. I don't accept that that is the only thing, uh, possible. for us. I don't accept that the United States is incapable of doing nice things. We can't accept that. We have to be optimistic about the future. Otherwise, what are we doing here? And, you know, in the tech industry, like, we know it is not like a physical law of reality or of large institutions that one cannot make systems that work. Making systems that work is the job. We have a few existence proofs. We should increase our engagement with government on, you know, like, hey, state capacity, we can help you build some of that stuff. Also, you know, Constitution of the United States is a document. We feel like kind of attached to that document. We understand like, again, incentives rule everything around us. Tech industry was in early 20-21, very concerned about being told in no uncertain way by

people in power. If you embarrass us, we'll end you. And the one thing in the record, judicial record of this case is that the White House Routinely, White House and other government actors routinely overreached and ask the tech companies we would like you to censor this and this and this and this. And the tech company said no in a bunch of cases. And so like continuing to negotiate for the right outcome rather than the one that people in power merely want is important. There are some things that will feel unfortunate and maybe a little bit outside of the like our true sweet spot of what we would want to be doing on Tuesday. in the tech industry where like maybe we have to ratchet up the amount of public policy advocacy

that we do lobbying is a dirty word in the tech industry it probably shouldn't be maybe we you know not just lobbying but like when the do not embarrass that sort of came down and people were getting very quiet about the fact of feeling constrained by this maybe we should have spoken out more and spoken more boldly about it maybe when it was like the routine case that's the White House was, you know, telling Facebook, Twitter, et cetera, et cetera, everyone knows the names. Companies like on a tweet by tweet communication by communication basis and also with regards to broad rules that affected the entire of the citizenry of the United States and residents of the United States and also everyone else in the world because these are the operating systems

in the world. Like giving direct orders on there's a certain kind of free speech, rather, there's a certain kind of speech act, which we find vexatious. And we would like you to stop that everywhere. Like, very plausibly, you should get on the nightly news and say, I've received the following email from the White House that says, we should stop this everywhere. Like, if you point a gun at me, I will comply with this at the point of a gun. That is what it will take.

But it almost requires civil disobedience in the sense of, if you're right about the earlier statement that in 2021, there are going to be serious political repercussions on the tech companies. So, okay, so say that that's right. And then they published this email, like, here's what the White House just sent me to take down the tweet. And now Twitter's market cap has just collapsed because people realize the political implications of why Jack Dorsey just got up and said at the time. So then the solution is that you need to take companies to basically sacrifice their capacity to business in order to, I mean, maybe that is a solution, but like that's not a story about optimism about the ability of the US government to solve problems this way.

You need to have a risk tolerance, right? Like we, every business everywhere, including the financial industry, including the tech industry, is like balancing various risks. And the risk tolerance was like poorly calibrated. The, you know, one can achieve results in the world by doing things like embarrassing government officials. And, you know, like embarrassing a person in a position of authority is not a zero-risk behavior. It is relatively low risk in the United States relative to other places. That was extremely important for vaccinate C8. People thought at the beginning, are we going to get in trouble for publishing true

information about vaccine availability that will embarrass the state of California? I said, I have a very high confidence that no matter what we do visa the state of California, that you cannot get in serious trouble in the United States for saying true things. you know, the First Amendment exists. We have backstopping infrastructure here. And if push comes to shove, we will shove back and we will win. And like, this is just me as a guy who like took the same civics course that everyone took and does not have like a huge amount of resources relative to say like the entire tech industry. Like maybe we, you know, need to have a certain amount of intestinal fortitude like a okay.

you've asked us to do something. You've threatened us with taking away all the wonderful toys and the great business models that makes this an extremely lucrative area to work in and to sacrifice a value that is very important for us to continue to do that. No, we're going to fight you on this one. And the comms trained part of me is like, don't use the word fight. We are going to collaborate with stakeholders across civil society. to achieve an optimal outcome balancing the multiple disparate and legitimate interests of various arms of the government and civil society and blah, blah, blah, blah, blah. Sometimes that requires fighting.

We should fight when it does. On Tyler's podcast, you said something like America doesn't have the will to have nice things and Japan does. But if you think about... In some ways, yes. If you think about your own essay about working as a salary man, you're working 70 hour weeks and you're killing yourself to get that marginal adornment on. the products you're making. Isn't it more efficient? Isn't it better that we have a system where we put in 20% of the work to get 80% of the results? We spend the rest of the effort on, I don't know, expanding the production possibilities frontier. And it's good that we don't have the will to have a nice thing as we just get it done. I don't think these trade off against each other at the relevant margins. I, you know, nothing about culture is monoconsational. Also, I don't think culture is a, like, sufficient explanation for some of the differences that are achieved in the United States versus the Japan, for example. There's a great book making common sense of Japan by a person whose name I'm

blanking on at the moment. An argument he makes in it persuasively at length, which I don't think is 100% true, but it is more true than most people in that well-informed on either side of the Pacific belief is that when people say they do this because it is Japanese culture, what they're often saying is, you know, I usually have a model for why people do things driven by incentives. And I understand this incentive, this incentive, this incentive. And then there's some error term in this equation that I don't understand. I'm going to call that error term culture. I think culture is a real thing in the world, to be clear.

But I often think that we reach for that error term far faster than we should. So as my minor observation about culture, with respect to, you know, there are places in pockets of the United States that have the will to have nice things. And often they discover sometimes surprisingly that the only thing you need to do nice things at the relevant margin without spending more money without having people like kill themselves over 90 hour weeks for the entirety of the career. You can just choose to have nice things. Let's choose to have nice things.

Let's not be embarrassed about choosing to have nice things. So you understand all this financial plumbing. If you were an investigative reporter, what is the thing you're looking at that the average reporter or at some newspaper wouldn't know to look at to investigate a person or a company or a government institution. I have an enthusiasm for the minutia of banking procedure in a way that few

people have enthusiasm for the minutia sometimes banking procedure causes like physically observable facts to emanate into the world. And if you know that those facts are going to emanate, then you can have a claim made about a past state of the world. I did this

thing or I did not do this thing. And that claim will, if it is true cause metadata in other places and you can look for the metadata. This is actually how a lot of frauds are discovered because the fraud is basically the definition of fraud is you're telling someone a story. The story alleges the fact about the world. The story is not true and you're using the story to extract value from them. Most frauds will allege facts about the physical world. As the physical world gets more and more mediated by computers, as it gets increasingly sharded between different institutions.

There will often be institutions who are not under control of the fraudster, who have information available to them, which will very dispositively answer the question of whether the alleged fact happened or not. And as a reporter, understanding how institutions and society interact with each other

and the physical reality of, okay, if this thing happens as alleged, then these papers will be file, then these API costs will be made, et cetera, et cetera. And then, you know, like doing the core job of reporting and like finding people at the institutions who will tell you the truth. As an example of this, Mount Cox many years ago was, insolvent. And that fact was widely rumored but not reported, presumably because the, you know,

global financial news industry didn't find it convenient to have some. someone call into the Japanese banking system, I ask the right questions in the right way. The CEO of Mount Cox alleged on Bitcoin talk that the reason that they were not able to make outgoing wires was because they had caused a distributed denial of service attack on their bank's ability to send foreign currency wires. That bank was Mizaho. Misoho was the second largest bank of Japan. Many people at say well regarded financial reporting institutions in New York City, find it incredibly exotic and difficult, and maybe in some ways kind of unknowable to extract facts from Mizehole, which there are addresses.

FedEx will deliver letters to them. They have phone lines. We also have fax machines. We love our fax machines. Like, could you send a fax to anybody at Mizeau and say, hey, quick question. Are you sending like wires today? and Mizeho would like receive the facts. I'll get it kind of physically and say

in response to your facts earlier, yes, we are still sending wires because we are the second largest bank in Japan. Do you have another easy to answer questions for us? You know, like financial reporting, drop the ball on just asking like individuals that Misa Ho's simple questions about reality. Maybe you should do that next time.

And like to the extent that you understand like, okay, like one, understand that the CEO is giving out gold on Bitcoin talk under his own name, where these are like obviously reportable statements, the statements of alleged facts about material reality and maybe like chase down the truth value of that. That's hard. It's so much easier to just like repeat what he says on Twitter and say, as said by this person on Twitter and then like quote the Bitcoin price feed.

But reporting is hard. Like be good at it. Why aren't Churchill's doing this? Because they should have an economic incentive to dig to the bottom of this, right? And so we should have a deluge of financial. information from short sellers who called banks and traced through the API calls. Yeah, that is an ongoing interesting question. I think short sellers provide an enormous service for the world in like being essentially

society's best solution of financial fraud. And yet they fail to detect lots of them. Like they're, you know, and not just throwing short sellers or reporters or anybody else on the other than those. I failed to detect SBF's various craziness, despite having sufficient information available to me as a well-read person on the internet to have detected that. Like, where were the freaking wallets? Everybody, like, assumed someone else was looking at it, essentially. So that's one reason.

Like, short sellers often assume, like, okay, you know, I need to find a, like, first get put on the paths of something and have a differentiated point of view. And then, like, another issue for short sellers is you have to find an instrument and you have to find another side. of the trade to successfully do that. And there was, without being expert on Bitcoin micro mechanics, it was difficult in size to make the trade. Mount Cox is insolvent right now, other than like pull money out of Mount Cox, which people were definitely trying to do. I got a number of interesting business proposals in the 2012-ish time frame from people who said,

hey, you're an American and you clearly understand like international banking and you live in Japan, could I, like, cause you to get some yen and have you wire that to me in America? And you can take a percentage. And I said, I really don't like where this is going. And I said, well, there's this company. And I've got some money over there. And they can send yen, but they can't send dollars. And I'm like, is that because they don't actually have the money?

And they're like, no, no, no, it's a Japanese banking thing. I'm like, no, it's not. You know, Japanese banks are very good at sending wires. And they said, no, no, no, it's really this thing. This is totally clean. I'm like, you would not be having this conversation with me. if it was totally clean. You need a money launcher.

I will not be your money launderer. How hard is money laundering? If on one hand, you mentioned earlier the state capacity that banks have where every transaction is analyzed and flagged and if it's notable enough, they write a report about it, how sophisticated does the cartel need to be in order to move around seven-figure amounts of money, let's say? So the definition of money laundering is like extremely stretchy and like Taffy. and there's a spectrum of people, much like there's a spectrum of sophistication and financial fraud,

there's a spectrum of sophistication and money laundering. So if you want to look at probably the most sophisticated money laundered in history, he's currently a guest of the U.S. government, but wherever SBF is staying. He was sophisticated? Oh, this is a disagreement I have with a lot of people. SBF was extremely sophisticated. Like a person, not just SBF. I think people like identify him uniquely, right?

They identify the inner circle uniquely as being a fault here. There was an entire power structure there, which was extremely adept at figuring out how power worked in the United States and exercising it towards their own hands. And then it blew up. But until then, goodness, like, you know, they decided we need regulatory licenses. They're called money transmission licenses in the United States. and those are done on a state-by-state basis. They got 50 regulators to sign off on it, et cetera, et cetera. Like there are many objective indicia of them being very good at their jobs until they lost all the money.

But it was more about politically getting people to look the other way rather than we figured out how to structure the wire in a way that won't get flagged. It's not merely a matter of getting them to look the other way. But if you go back to the original SBF interviews where he's telling the founding myth of Alameda, he says like very loudly, you know, the reason why I got this opportunity to, you know, The reason why I got this opportunity to do Bitcoin arbitrage between Japan and the United States is because I was able to do something that the rest of the world wasn't. I was able to, he doesn't say this in this many words. I will say it.

So born a Japanese bank because you need that as like one of the pieces to run this Arab. And then I pulled tens of millions of dollars out of this. I don't think people like really listen to what he was saying there. And he literally says in the interview on Bloomberg, if I was a compliance person, this would look like the sketchiest thing in the world. This looks like it's obviously money laundering. because it is money laundering. And then, interestingly, Michael Lewis retells this story, and he locates a story in South Korea rather than in Japan.

And some people who are involved, say, we tried it in South Korea and Japan, which people would, like, pull on more threads there. Like, there's still lots of that story that we don't know. But anyhow, how sophisticated you have to be to launder tens of billions of dollars round? SBF did that. So, like, that is A bar for sophistication. He was eventually caught. He was not caught for laundering tens of billions of dollars around.

He wasn't even under suspicion for laundering tens of billions of dollars round. SBF was Tethers banker. Alameda research, you know, one of the parts of like the corporate shell game that they were playing, moved tens of billions of dollars of cash around the financial system, largely under like full color of law on behalf of Tether to move it from wherever Tether had it, goodness knows, or wherever their buying customers had it to, I think at the moment it's mostly at Cantor Fitzgerald. Some shoe has to eventually drop there. I will eat a lot of popcorn when it does, but be that as it may. There's many other ways to launder money.

You can do things like, let's say I establish a shell corporation, and I buy a piece of real estate in New York City, and then I rent that real estate out to people, and I collect a stream of rents from that, and that money looks clean because there is an excellent business. It's my shell corporation that is run. this real estate that really exists to a totally legitimate person, this money is clean. And the money that I like put into the system to buy it to buy this on behalf of the Shell Corporation, I'm just going to like wire it to a lawyer and the lawyer is going to answer any question from the bank with, I don't know where it came from, I don't have to tell you, I'm a lawyer, it's a real

estate transaction, what do you want for me? In one sense, that's money laundering. If the like original, you know, money was the proceeds of crime. In another sense, that's how every real estate transaction goes down at those scales. And so, like, often, like, skill facility at money laundering is one facility at operating in the economy, plus, you know, willingness to do that to hide the proceeds of some other crime. Mm-hmm. I think I would be really good at money laundering. I'm glad I haven't done it professionally.

But, it's fascinating intellectually. Previous communications departments I worked at probably, would, like, explicitly anti-endorse that sense. Sure. What can one do? It's a... We are really confident that you're not laundering money. I would be much wealthier if it was. Well, a separate topic, but when you look, you emphasize that people tend to undercharge

for the products they serve. If you have identified somebody who actually does charge for products where they can get away with, what psychologically do they have that the rest of us don't? So I think interesting, here is one of those places where culture is not necessarily merely the error term, but is actually descriptive in some ways. without pointing fingers at particular examples because it gets contentious, there are some cultures in the world that institutionally have adopted more of a, how do you put it, pro-capitalist, pro-mercantilist, etc., less of an ingrained skepticism regarding like earning money

and accumulating resources as a goal. And there's other cultures which have an extreme ingrained skepticism about earning money and accumulating resources is a plausible goal. And those cultures generate people who have very different negotiation strategies. And when you, like, impact people with different negotiation strategies against, like, the reality of a well-operated,

I don't know, Google, for example, they arrive at very different numbers. What's the... Is it Amy Choir who wrote Market Dominant Minorities piece about... A book about that subject, et cetera. Like, one of the things in that is that you know, like, all people are equal in the eyes of God and hopefully in the eyes of the law,

but like not all cultures like physically make the same decisions with regards to the same facts on the ground, and that causes some disparity outcomes. And so that is one tiny part of that thesis, which I don't, I actually a lot of books, I don't necessarily endorse every word in every book that I read, but I think there is something to that. I think another thing is that, you know, there's a certain personality type cluster, I guess you would say, of people that got into tech. And many of us, it is over-advanced that the tech industry and the pathologies of the tech industry are caused by the nerd versus jack distinction in American high schools. Heavily over-advanced.

Amount of truth to that? Not zero. And like many of us were, you know, we came up, we feel we were largely getting beaten down by the system around us. we were not worthy, yada, yada, yada. And then we have carry those issues into our professional lives. And some people work their way out of it quickly. Some do not. Some people work in, you know, they, for class and et cetera reasons, go to institutions like

Stanford and hear from, I don't know who you hear things from if you go to Stanford. Because I certainly didn't go there. But I don't know, an elder fraternity brother that says, yo, bro, this is the way the world works. You really got to negotiate when you get in the offer with, when you get in your discussion with Google. I've talked to so many brothers. and they don't negotiate. And so the ones that do make a whole lot more money. You're like, wow, good for that.

Most people don't like get that talk from their elder fraternity brother because they do not go to Stanford or don't have an elder fraternity brother. And so like until vaccinate, CA, the most important thing I'd probably done professionally was writing a piece on the internet about salary negotiation that gets subtitled, make more money, be more valued, which is just an exhortation for descriptively, mostly young people who had some of the issues I had when I was young. and growing up like, hey, you're allowed to negotiate. That's not a moral failing if you have no less right to the marginal dollar than a company has to the marginal dollar. Like, go get it. And then you can put it towards all sorts of interesting ends. 500,000 people a year read that piece and it's now 12 plus years old.

I keep a folder in Gmail about who has written and said, I got $25,000 to $100,000 per year more as a result of reading this piece. I used to keep a spreadsheet. I stopped keeping the spreadsheet after it ticked into the eight figures. I'm like keeping the spreadsheet was just an ongoing source of stress for me. Eight figures? Yeah. Per year.

Like you would assume that 500,000 people read it per year. Some take the advice. Most who take the advice probably don't write me to say, hey, I took the advice. Thank you. And maybe I miss some emails, yada, yada. So like the true economic impact is probably larger than that. There are probably people who have like the inverse of that spreadsheet where it's like, darn it, we got quoted a petty 11 against us again.

But like because you know, we got these numbers and there's only like a few firms in the tech industry that do have scaled hiring. Anyhow. Okay. There's less people today who are in their 20s who had prominent software businesses than maybe 10 or 20 years ago. Having been in the software industry last 10, I don't know how when you started exactly. Is your sense that this is because the nature of software business. businesses has changed, or is it because the 20-year-olds today are just less good? I've met many young and talented people over the course of 20 years in the software industry,

and young and talented. I think one thing that is partially explanatory is that when there's a new frontier that opens up, the existing incumbents, both in terms of institutions and in terms of people with deep professional networks and personal resources and similar, or like do not immediately grab all the value in that new thing. It's Terra Nova. And so to the extent that tech is no longer Terra Nova, I think you would expect less people who are less resource who are younger, et cetera, to rise to the heights of prominence in tech.

To be clear, not as to heights of prominence in tech. And when I ran companies, I was not running companies like some other guests as podcast run companies. It was bingo card creator. I was making bingo cards for elementary school teachers while living next to a rice paddy in central Japan. But that's kind of like my dominant hypothesis.

There are, you know, some things that are affecting the youth that I think are negative. I think some products that the tech industry has created do not maximize for the happiness or productivity of people that consume those products, TikTok, etc. But, you know, I continue to be bullish about the youth and I have two children who knock on wood will accomplish things in their lives. And so I'm intrinsically skeptical about, oh, the kids these days, they're just bad kids. How much do you worry about video games as a method, as a sort of wireheading that somebody like you, but 20, 30 years ago, or 20, sorry, now has access to Factorio and we'll just wirehead themselves to that instead of making a really cool software product. How much should we see this in the productivity numbers?

Oh, goodness. I don't know about the productivity numbers generally. I do know that Steam keeps the counter of how much I am playing video games in any given time. And the knock on what I've accomplished a few things in my career. And also, against that, what was my Steam counter up to? So, Steam didn't include World Warcraft. World of Warcraft was at least 1,000 hours. For me, Victoria recently was 750.

And then if you, like, some over 20 years, I've probably played video games for 4,000, 6,000. hours. And so that's, you know, two to three years of professional effort if one thinks that it trades off directly with professional effort. But do you? Because if you then include every single young guy who's a nerd and often they, you know, how much will be worried that a bunch of their productive time is going to video games instead of making the next software business? I worry at least about a little bit about it for myself. One of my, so I recently started working for an executive assistant. And one of the first suggestions that he gave was that, hey, Patrick, will you friend me on Steam so that I can see how much you're playing in any given week.

And so if you're like not making your priorities happen, we can have an honest discussion about priorities. You've got a very, um... That's really good advice, given that I spent far too much time rat-hulling on Factorio relative to my true preferences. You've got a really confident DA. Go, Sammy, go. The, uh...

Hey, boss, can we have a honest conversation invite? I don't know if I'm inserting those words into his mouth, but the suggestion was genuinely his and he heard you know on the one hand factorial a wonderful game actually think factorial matters far more to the world than most video games do but that's an entirely different piece that i'm trying to write at the moment be that as it may have you read burns piece on this the factorial mindset yes i love many things spurn rights i think i luckily have a differentiated point of view on this one so i will hope to get it out to the internet someday but um you know on the one hand i loved it i think factorial space exploration

mod specifically was the best video game ever played uh and you I spent 750 hours on that over the course of a year. And I was on sabbatical and recharging from six very hard charging years at Stripe and also running the United States vaccination location information effort. But there's a question of like at relevant margins. Are you maximizing for your true values? And I was like, a little worried about that. And so now my EA checks on me. Do I worry about it for other people?

I will say that when I was young and a world of, Warcraft Raid Guild leader, who spent a thousand hours on that, that it was a substitute advancement ladder for me. The actual job was working salary man in central Japan gave me no scope of control over things. And I thought, if I was a startup CEO, I could make decisions right now. I could build something awesome, but I don't have that ability. And I don't see myself as being the kind of person who could become a startup CEO. So if I can't be satisfied in my nine to five in terms of making things happen in the world, at the very least, I can make sure we kill the dragon in two hours get, don't stand in the fire.

Come on, team leaders, you need to make sure that people are equipped with the resist gear before they get there. Oh, we're having internal spats about allocation of resources. Like, we need to have a better DKP system. By the way, World of Warcraft Raid Guilds and all other places where intellectual effort comes together in the video game community are much more sophisticated than people give them credit for. When I started vaccinate CIA, I told.

people. My sole prior leadership experience is having 60 direct reports in a raid guild, and that's true. And also, like, we don't rat hole on the subject, but, like, there are parts of vaccinate CA that are very, very definitely downstream of the, like, intellectual efforts about managing raid guilds specifically. That's really interesting. There are multiple people internally who are like, yep, like, we are running the raid guild playbook right now. But be that as a may. Like, you can do something with your life. like choose to do something with your life.

And then if you want to play a reasonable amount of video games, then play a reasonable amount of video games. And then like with respect to individual people, I sometimes worry that you kind of get into, I've struggled with depression at some points in my life. Many people struggle with underdiagnosed, under treated depression. I think sometimes you get into a self-destructed spiral

measured against like your true values and similar, values and preferences where, due to depression and other factors, you aren't making as much progress on the true goals you do. You use video games as an escape from that, and not just video games, books, television, etc., etc. There are many poisons available in life. You pick your poison, use that to escape. The amount of effort you put into the poison causes you to have less effort available to do the thing, so you get less good results than things.

So helping people out of those self-reveillance. destructive spirals is something that we as a society could stand to get much better at. Speaking of Verde, by the way, I noticed that a bunch of my favorite writers are finance writers. There's you, Byrne, Matt Levine. Is there some reason why finance has hogged all the writing talent? I think there are many good writers in the world. Derek Thompson, for example, has written some, he's a chemical engineer and he's written some things which I barely understand.

I have enough of an engineering degree to appreciate half of the chemistry, and I can't appreciate the full totality of why uranium hexafluoride or whatever is a terrible substance to work with. And he has some excellent writing on why that is a terrible substance to work with? But the broader question being, why does finance have a greater concentration of writing talent? And not just about current bloggers, but, you know, finance histories are some of the best history books out there, the Bethany McLeans and so forth. And I'm curious why this is. Is it just an intrinsically more interesting subject? There's some path dependence. If I had ended up working in a water treatment plant,

I'd be writing about water treatment plants because I like writing. And I am positive. I know enough about myself to know that a discussion about how Alam works in water treatment plants, which is something I read when I was like six, that could totally captivate me for multiple years on end. And I would write about that if I was captivated by it. I agree with the point Matt Levine made once, which is that finance and the tech industry,

have for a while been a relatively reliable way to turn intelligence into money. Many good writers are very intelligent. Not all people who are very intelligent or good writers. I think it is a skill that more intelligent people could learn. But simply if we create an incentive system which will tend to allocate, not yours truly, but descriptively like a lot of the country's top brains into particular fields where they will become experts at those particular fields, I would expect also a lot of. of the writing talent to be there because good writing is good thinking that's a paul graham quote i think

but uh is broadly true speaking of which so you you went to japan because if i remember this correctly you thought that after the dot-com boom that the programmer alone um demand will diminish and it will require some combination of skills separate from and you weren't the only one there were many other people who thought this way the wall street journal said it and the wall street journal had never been wrong in my experience as a 19 year old didn't know anything But separate from the object level of predictions that you might have gotten wrong about the software industry, at a meta level, what was a mistake you made? Did you just not into, how would we characterize that? Sure.

So I had a whole lot of rigor chasing a decision that had no basis in fact. So believing in the Wall Street Journal that all future engineers would be hired in places like India and China and not the United States. And so there would be no future engineering employment in the United States. I made a spreadsheet of like, okay, here are the languages. my university teaches. Here's my best estimate of the number of people in that country who speak it, Americans who speak it, the amount of their software that gets sold here, amount of U.S. software that gets sold there, blah, blah, blah, blah, multiply these together, sort by column H descending. And this is like larping and having rigor here. But it felt like a good decision-making process

to me in the time. Now, the meta discussion is like, don't larp it having rigor, actually have rigor. But what would that look like in this context? What was you done differently? Ultimately happy with the decision I made, although, like, as presented is the wrong decision. The, I'm happy about it for other factors about life. Working in Japan as a young engineer, there are some very rough parts about that. But, like, on a middle level, maybe this is an early opportunity to trust institutions less than trusts, like, systemically viable reasoning patterns more. Like, okay, the Wall Street Journal has asserted.

assuming I'm remembering this article, right, and I'm pretty sure I am because it was a flexion point in life for me. The Wall Street Journal has asserted that no future Americans will get hired at software companies. Assume this is true. What happens in the American software industry? And maybe I did not have enough knowledge to, like, conflate predict that at the moment, but I can't constantly predict some things now.

Like, software companies are going to start to break as older engineers age out of the engineering population and they have no one coming up to replace them, et cetera. Like, the industry institutionally must hire people every year. And hiring freezes are necessarily temporary as a result of that. That's, you know, as close to the law of physics as one can have. So, like, if you are telling me something which says the law of physics have been suspended and will be in the future, like, don't agree to that. How would I learn the law of physics?

Like, I did not know anyone in software engineering at the time, which is partly why I was getting my advice from this from the Wall Street Journal. But if I had been slightly more agentic about it, I was at a research university in the United States. I could have found someone who knew someone who was in the software industry to explain this to me. Couldn't you use that same logic to say that the journalism jobs won't go down because senior journalists he'll have to be replaced by a new journalist. And that's true, but that doesn't take that many people to study journalism. And it actually would have been a bad call to major in journalism and pursued that as a career. But the fundamental thesis was that for journalism is that the total size of the population.

is decreasing in journalism due to structural factors. And the Wall Street Journal's thesis was not simply that the size of the pie would decrease in the wake of the dot-com bust, which I don't think they even got as far as articulated in that, although it's been 25 years, but was more like, oh, you know, companies will maximize for cost of labor, et cetera, and therefore ship out all the jobs. I see, I see. You've emphasized that founders should do more A-B testing. That's like one of the main themes of your blog.

if you go back through it. So they should over, they're under-optimizing on this. What do they tend to over-optimize on? So interestingly, I was the marketing engineer earlier in my career and really thought that that was important.

And in terms of like high-level advice, I would give a founder, I would probably tell them a little bit about marketing engineering, but wouldn't spend 95% of my time talking about that, unless that was explicitly what they brought me in on. Founders spend too much time on playing house and chasing status

are both two sort of like well-known pitfalls. where you can get addicted, which is not quite the right word, your incentives will draw you into playing the role of the CEO of a successful company. Before your actions have earned the company its level of success, like the fundamental nature of early stage businesses is that an investment in you is not a vindication of what you have achieved. It's an advance on your future accomplishments and you need to rigorously pursue actually making those future accomplishments. And there's many ways to rigorously pursue it. Talk to more users, write more software, make something excellent, get more people to use it,

get better at selling it, et cetera, et cetera. That's an important strain of Silicon Valley culture. I'm glad we have it. I'm glad we are popularizing it to as many places in the world, including to me in central Japan. And yet, you know, there are always other games that are going on. And those other games are less important, but they are very, very attractive games. not video games here

but why don't you go to a conference why don't you meet more interesting people why don't you show up at the best parties etc etc showing up at the best parties does not at most margins increase the number of users you talk to it doesn't write functioning code

like do those things that actually matter and and some distractions like proudly wave I'm a distraction from everything that matters and some don't some definitely like say I'm real work I definitely feel like real work

and they're just not. And so don't do the things that don't matter, which sounds vacuous and yet. Okay, I want to go back to vaccinate CIA, and I want to close the loop on one question that I've had that I don't know if we got a good answer to it that I think is important, which was, suppose you're the president of the United States. Maybe you're a new one, so this one's been replaced, and you're looking back on what happened. if you personally were president, what is it that you're doing to bring accountability to what happened and making sure that in a future crisis, which might look different than COVID, things are ready to snuff. Maybe you like fire the right people, but beyond that, there's a lot of different things that could go wrong. How do you make sure that we're ready for them?

One cultural practice of the tech industry that I think it would be more salubrious for the broader civil society to adopt is the concept of blameless postmortems. We talked about earlier about who to blame for various failures, et cetera, et cetera. I broadly believe that there is some amount of blame which performs useful societal purposes. And then beyond that, like the diminishing returns set in pretty quickly. And we are, you know, the magic word in Washington is accountability. We want accountability for failures, et cetera, et cetera. People are terrified of accountability.

and that causes there to be fields of distortion around things that actually happened, mistakes that were actually made, opportunities that were not pursued, and similar. And so changing our general practice about how we accomplished accountability towards the direction of, okay, first, let's get a dispassionate record of what actually happened. It's less important that it was a, you know, disnamed official, it's less important that it was under this legislative authority. etc, et cetera, et cetera. What did we do? Okay. Now, how did what we do lead to the outcome that we got? Given that what we did led to this outcome, what could we have done better? Okay.

What are, like, given that there are these things that we could do better, how do we, like, inject that back into the currently running system such that the next time this happens, we don't do the mistake again. sometimes that will involve in someone losing their employment, although hopefully not that frequently. A non-zero amount that is important to say. But there's many things that we post-mortem of the experience. I don't know if we have like several thousand hours of time to go over all of them. There should be an inquiry. It's an easy thing to say. Like let's at a minimum.

Ask all involved parties. Hey, can you write down the history of the COVID experience? just passionately like record dates times actions taken we we want it to be to be truthful and comprehensive and highlight what you think is the most important part about this like that is step one like maybe we ask for step one and then try to get to step two yeah final question what are you going to work on next I don't exactly know what will be my next big professional uh splash in I've been on semi-sabatic close here I've been writing bits about money but bouncing between like 20 and optimistically 80% productive relative to what like 100% productive looks like to me.

I might do a software company next. I might raise a small VC fund, not entirely decided, might do something entirely different. At the moment, kind of focusing on family-oriented things and our family immigrated from Japan to the United States and are going through all the fun adjustment issues. and I'm partly I focused very much on career and other things over the course of the last eight years. And I'm rebalancing that to help them on this adjustment and then figure out whatever happens for the next chapter of life. Excellent. Patrick, thanks so much for coming on the podcast. Thanks very much for having me.

Hey, everybody. I hope you enjoyed that episode with Patrick McKenzie. As always, if you did, the most helpful thing you can do is just share it. Send it to your friends, group chats, Twitter, wherever else. It's also helpful if you can leave reviews and ratings on Apple Podcasts, Spotify, YouTube, wherever else you listen. And of course, as you can tell, I'm doing ads on the podcast now. So if you're interested in advertising, go to dwarkeshpatel.com slash advertise. Other than that, I'll see you on the next one.

Cheers.