Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Albert Wenger: Union Square Ventures – Towards the Knowledge Age and the World After Capital

Episode Date: March 31, 2020

What will the World look like when capital is no longer scarce? In his book, World After Capital, Albert Wenger makes the case that technological progress throughout the ages (foraging, agrarian, industrial) brought a change in scarcities. As society transitions from the Industrial Age to the Age of Knowledge, scarcities will also shift – human attention will become our most valued scarce resource.Albert Wenger is a Managing Partner at the VC firm Union Square Ventures. A graduate of Harvard and MIT, he holds a Ph.D. in Information Technology. Before joining USV, he founded several companies in the aughts, and was the President of del.icio.us when the company was sold to Yahoo! in 2005.Topics covered in this episode:His motivations for writing “World After Capital”How the properties of near-zero marginal cost and universality are unique to the digital ageHuman attention as the primary scarce resource in the Knowledge AgeThe shift towards the Knowledge Age and the role of capital in the futureCovid19 as a catalyst for positive societal change, and things like universal basic incomePotential upsides for crypto in the current economic crisisThe asymmetry between technological progress and privacyEpisode links: Union Square VenturesWorld After CapitalContinuations by Albert WengerPutting the Economy in Suspended Animation: A ProposalWorld After Capital: Laying a Foundation (Regulation & Self-Regulation)Albert Wenger TwitterReset Everything Virtual Conference – April 29thSponsors: Status: A multi-purpose communication tool that combines a peer-to-peer messenger, secure crypto wallet, and web3 browser - https://status.im/This episode is hosted by Brian Fabian Crain & Friederike Ernst. Show notes and listening options: epicenter.tv/333

This is Epicenter, episode 333 with guest, Albert Wenger. Hi, welcome to Epicenter. My name is Sebastink with you. Today, our guest is Albert Wenger. Albert is a partner at Union Square Ventures. They're a New York-based early-stage VC firm, and they've invested in companies like Twitter, Tumblr, Etsy, Kickstarter, and many others. Albert is a graduate of Harvard and MIT and holds a PhD in information technology. Now, before he joined USV, Albert founded several companies in the early aughts, and he was the president of Delicious, which I'm sure you'll remember as the great bookmarking service in the early 2000s. I certainly used it a lot.

So one of the main motivations for getting Albert on the podcast was his book, World After Capital. In his book, he explores the shift from the industrial era to the knowledge era. Now, I haven't read the book, but after listening to Brian and Frederica's excellent interview and, preparing this intro, I think I'll spend the rest of the day doing just that. So the book explores technological progress throughout civilization and how each era has caused a shift in scarcity. So in current times, Albert makes the argument that following the industrial revolution, capital became scarce. But as we shift towards a fully digital society, scarcity will move to our attention. Anyway, I'll stop there and let Albert walk you through the thesis of his book. But

it's available for free at world aftercapital.org. So I encourage you to check that out if you want to read it. He also blogs at continuations.com and recently posted an article in which he proposes that the economy should go into suspended animation for the duration of the COVID crisis, which is something that I'm largely in favor of. So here's what you'll learn in the interview. Albert's background and what he did before USV, the motivations for writing World After Capital. How the properties of zero marginal costs and universality, specifically in the area of computing, are unique to the digital age, human attention as the primary scarce resource in the digital age, the shift towards the knowledge age and the role of capital in the future,

COVID-19 as a catalyst for positive societal change and things like universal basic income, the potential upsides for crypto in the current economic crisis and the inherent asymmetries between technological progress and privacy. So on the topic of COVID-19 and the potentials for this crisis to have hugely positive impacts on the world long term, I'm fully on board with the idea that society has the opportunity to hit a massive reset button. And that's why we're organizing reset everything. It's a virtual event. It's taking place on April 29th. And we will explore the last. lasting policy effects that the current crisis will have in the areas of economics,

healthcare, labor laws, border controls, personal privacy, but also things like post-corona, collaboration, and societal norms. We'll be announcing the first speakers to confirm very soon, so please go to reset everything. Dot events to save your seat. Once again, it's happening online on the 29th of April, and we're super excited to be organizing this event and looking forward to seeing you there. Before we go to the interview, I'd like to tell you about our sponsor for today's episode, Status. Of course, the Status mobile app launched recently in the Apple App Store in Google Play Store. Please go there and download

it. And once you've installed it, join the public channel, hashtag Epicenter, come and say hi, and we'll even give you some free S&T tokens to get started and register your status E&S name. So status is a secure, private communication tool that combines a DCS. centralized messenger, a Web3 browser, and a crypto wallet. It strives to be a secure communication tool that upholds human rights and privacy. With status, your messages and your identity are your own. There's no phone number. There's no email address. There's no bank accounts. Messages are truly private because status leverages the Whisper protocol, which is the peer-to-peer chat protocol on Ethereum. There are no servers and therefore your messages belong to you. You can also safely send,

store and receive crypto, including ERC 20s and some ERC 721s. There's also a DAPB browser where you can navigate and utilize the growing ecosystem of decentralized applications from within status without being tracked. So to check out status and the growing ecosystem of apps and protocols they're working on, go to statusnetwork.com, and to download the app, go to the Apple App Store and Google Play Store and search for status. And with that, here's our interview with Albert Wenger. We're here today with Albert Wenger, who's a partner at Union Square Ventures, a very well-known venture capital fund in New York. Albert's written a wonderful book called World After Capital that we're going to speak about today. A lot of the ideas are super timely, you know, a lot of the kind of economic and global change and pandemic that we're going through at the moment.

So thanks so much for joining us today, Albert. Great to be here. First of all, hear a little bit about your background. So many people will be familiar with unions, go ventures. What did you do before and how did he end up becoming venture capitalist? I always like to say I became a VC

because I was a bad operator. And people think I'm joking, but it's entirely true. I started a company while I was getting my PhD at MIT. I started a company because this whole web thing was exploding and I was working on my dissertation and I was like, oh my God, there's like only three people ever who will read this.

That's my three thesis advisors. And maybe that's even questionable. What am I doing? And so I started a company late 96, early 97, internet healthcare space. Ultimately, got it funded, recruited a management team and so forth that seemed to be going really well for a while. But I realized in doing it that I was not really cut out to be an operator.

But I thought startups were a really amazing aspect of capitalism, that you could go start something that people would give you money for it. And so I was like, well, the other way I could maybe be involved with us, that might be a better fit for my personality is to be a venture investor. And from that realization, which I sort of had in like 98, it took me basically 10 years to actually be a GP at Unuscore Ventures. And I don't want to bore you with the details of that,

but it's a fairly circuitous route that involved starting my own fund, unsuccessfully, trying to start another fund, also unsuccessfully, and doing something else in between, also unsuccessfully. and then eventually doing something successful, which was delicious with Joshua Schechter and then joining Union Square Ventures. I think that's super interesting. So that happened in the mid-notice,

and you've been a managing partner since, but as our listeners will note, this was way before blockchain actually emerged. So you did Web 2 investing to start off with. When did blockchain come to your attention and what did you find notable about it? Because Union Square Ventures was one of the first VCs that actually,

started investing in this space. I'm trying to recall exactly who first pointed me in the right direction. And I actually think it may have been Naval, who I've known through Angelist. We've talked about Angelus on and off for years. And I wound up becoming a personal investor in Bologi's crypto mining startup. So that was fairly early days. And it took me a while to really wrap my. head around it, but I think relatively early on the conceptualization that I came to and that

I think also we at Union Square Ventures really developed was this idea that if you think of a two-by-two where on one axis you have whether control is centralized or decentralized, and on the other axis you have whether data is consistent or inconsistent. In this two-by-two matrix, there was one basically quadrant, which is the decentralized control consistent data quadrant that simply didn't exist. There was no solution for it until the Satoshi white paper came along with the Bitcoin paper. And so that is how we think of the fundamental breakthrough that blockchain represents is decentralized control and yet consistent data. And I think we realized relatively early on that that was a fundamental breakthrough. It doesn't

matter what your consensus protocol is. Some consensus protocol that achieves that, that is a breakthrough. And so we wrote early on about Bitcoin as a protocol as opposed to just Bitcoin as money. And I think we've stayed fascinated with it since. We wound up being quite fortunate to invest early on. We led the Series A in Coinbase. I believe that was in 2012 or maybe 13. To us, it's a fundamental innovation.

It's advancing knowledge that lets us do something that we previously weren't able to do. Now, it raises lots and lots of questions about what exactly we're going to do with that, which we can maybe get into later. But it's sort of an ability to do something. I think of these abilities like heavier than air flight is a great example. We couldn't do it, couldn't do it, couldn't do it, and then suddenly we could do it. Similarly here, it's not that people hadn't been thinking about decentralized consistent data, but we couldn't do it.

It was when Satoshi put these different pieces, the hashing and the public key cryptography and so forth together in just the right kind of way that all of a sudden we were able to do it. Cool. Yeah, we definitely want to get back, kind of revisit the crypto topic towards the end after you've spoken a little bit about your book, World After Capital. So your book is available online. We'll link to it in the show notes, of course. Anybody can read it for free. It's also sort of a work in progress. and I think a kind of a collaborative product.

Tell us a little bit, how did you decide to write this book? What was the motivation behind it? So it started probably at this point, five-plus years ago when I started sort of giving talks about how digital technology is different. And I had the sense that a lot of people were misunderstanding digital technology. They were essentially conceptualizing it as computers or machines, and we've had machines, and so there's nothing new here. It's just another turn of the crank of the industrial age, really.

And I thought that was fundamentally wrong, but I hadn't really wrapped my head fully around why I thought it was wrong and how it was wrong. And then as I kept working on it, at one moment, and I remember this very, very well because I was walking down Mission Street in SF on the way to a meeting. I sort of had this epiphany where it all kind of keeps, came together and that epiphany also produced the title of the book World of the Capital.

And the idea is really quite simple, which is that basically every big age of humanity has a defining scarcity. And then humanity invents some technology, and that technology shifts what that defining scarcity is. Homo sapiens emerged roughly 250,000 years ago, and for the longest time, Homo sapiens were foragers. In the forager age, the defining constraint was food. You'd try either found enough food or it had to migrate or it started. And then roughly 10,000 years ago, we created a bunch of knowledge and that included figuring out that you could take seeds and put them in the ground, figuring out that you could irrigate those seeds, figuring out that you could domesticate animals, a whole bunch of interlocking inventions

which together gave us the agrarian age. And that set of technologies shifted the constraint. The constraint no longer was food directly, but suddenly became land. Arable land. How much arable land do you have? And if you had enough Arab land, you could build sort of a flourishing agrarian society. And then only a couple hundred years ago, we had the Enlightenment. And with the Enlightenment, we had scientific breakthroughs.

We figured out chemistry and physics, the ability to make steam power and then electric power, to do mining, to make processed materials. And all of that gave us the industrial age. And the constraint shifted again. It shifted from land to capital. And when I say capital, in this context, I mean physical capital. Who can make factories and produce cars or put railroad infrastructure in place and erect buildings. That became the binding constraint. So those were the three big ages, and we're going to get to the next age in a second. The important insight was that each time when we shifted the binding constraint, we also radically changed the way humanity lives. So when we went from the foreriture age to the agrarian age, we went from being migratory to being sedentary.

We went from living in very flat tribal societies to living in extremely hierarchical agrarian societies. We went from being promiscuous to being monogamous-ish. We went from having animistic religions where every tree, every animal, maybe even a rock had a spirit in it. We went from that to theistic religions. So we really changed just about everything about the fundamentals. of what it means to be human, we changed that in that transition. Now, fast forward to the transition from the agrarian age, the industrial age, we again changed pretty much everything.

We went from living in the country to living in the city, from living in large extended families to living in nuclear families or no families. We went from having lots of commons to mostly private property, including private intellectual property. And we even changed religion again. We went from what's called a great chain of being theology, where the theology, where the theology where the religion kind of tells you, look, you're a farmer. I mean, I tell you I'd be the best possible farmer, but you'll never be a noble person because you just weren't born

that way. We went from that to the Protestant work ethic, which is like, the harder you work, the better off you'll be. It doesn't matter. There's no limit, basically. That had been the progression. And now comes along this thing called digital technology. And I think the fundamental misunderstanding is where people think, well, digital machines are just machines like those and dustal machines, not recognizing that these digital machines and digital technology has two properties that are fundamentally absent from all preceding analog technology. And those two properties are zero marginal cost and universality. Zero marginal cost is quite easy to understand.

You know, on YouTube, the martial stream of a video costs nothing. The YouTube servers are already up and running. The network is already powered up. My laptop's already powered up. I'm already connected to the internet. So there's literally zero discernible cost from watching yet another video. In the physical world, like the actual laptop on which I'm viewing this, which is very much a physical object, if I want another laptop, that costs a lot of money to produce. So there's something fundamentally different around marginal cost in the digital world.

And a lot of economic theory was built on the idea that marginal cost was greater than zero. And so when you get to marginal cost equals zero, you have a kind of divide by zero. You have sort of an infinity built and a lot of existing theories break down. And then the second aspect of digital technology is what I call universality. So universality is this laptop, which we're currently using to have this conversation and use Zoom, with a different piece of software, I can run a spreadsheet on it. With a different piece of software, I can do some deep learning on it and so forth. If you take a toaster, a toaster is just a toaster.

It's going to toast, toast, hopefully, if it's working. it's not also going to make coffee. So universality is, again, a property that we didn't have until we came to the digital age. And now the coolest thing is that these two properties can actually be combined. So you can have basically universality at zero marginal cost. What does that mean? Well, it means, for example, if we figure out how to write a diagnostic program that can help diagnose disease, we can run it on computers.

That's the universality part. Any computer will be able to do that part. but we can also then provide it at zero marginal cost. And so this is fundamentally deeply, deeply different from what had come before. It's as deeply different. It's as big a transition as the transition from the forage age to the agrarian age

and from the aggrarine age to the industrial age. What then is the new constraint? In the book, the argument I make that the new constraint is human attention. What is it that we're paying attention to? And so my view is that we need to change just about everything about how humanity lives, exactly the way we've changed just about everything about how humanity lives two times before.

And everybody who has been approaching this from an incrementalist position, which has been almost all the politicians, who are all like, well, let's have a little change of the interest rate here, and let's have a little retraining program over there. All these incrementalist approaches are fundamentally flawed because they don't recognize that this is a shift that is of a complete, completely different magnitude, and it's more of the magnitude of these big two prior shifts that we've experienced.

Where do you think we are currently in this process of transitioning to the knowledge age? So what has already occurred and what do we still have to do? Yeah, so I think the thing that's already occurred is that the industrial age already has stopped working. And I think there's a number of ways we're seeing that. I would say the election of somebody like Trump or Brexit are power. by the fact that the industrial age already stopped working maybe a decade, maybe as far as two decades ago for a lot of people. What I mean by stop working is that people were all the sudden no

longer seeing why they were doing all of this. It seemed like a very small group was reaping all the benefits and a rather large group was stagnant. And in the U.S., we can see that very clearly, you know, with even like the wealth and income distribution, but also just when you look at how fulfilled people think their life is. So I think there was a whole generation or several generations where it was very clear that your purpose was, you know, you were going to get this, go to school, go to college, get a job, have a longstanding career at one company,

have a nice place, much nicer than your parents did, have all the amenities of consumer life, you know, a microwave, a television, air conditioning, and so forth. And that was all very, very clear. And all of that started breaking down, I'd say, somewhere between 10 and 20 years ago, maybe even early science a little longer than that. And so where we are is we are in the transition, but the problem that we're having is we're lacking a narrative of where we should be going.

There's no narrative of what the future could or should be like. And because that narrative is lacking, I call it a narrative vacuum. That's why we've got all these people coming in and saying, well, I've got the answer. The answer is we go back to the past. Trump's program is one of Make America Great Again, which is this idea that we can somehow go back to a past where the industrial age was working beautifully for everybody. And, you know, Germany is not that different. Whenever I go to Germany, there's talk about industry 4.0. And it's just this idea that we just need another turn of the industrial age and everything will be fine again.

And even if you take somebody like ISIS, this may sound like an extreme comparison, but again, I think they're able to recruit a lot of people because a lot of people don't have purpose in their life. And for them, they don't want to go back 40 years. They want to go back 400 years. But it's still roughly the same idea, right? It's just like there was a past. The past was glorious. You don't have a purpose in life. reestablishing this glorious past is now your purpose. And it's easy to recruit people to that

because people want a purpose in their life. So by having created this narrative vacuum, we've made it possible for all sorts of awful people to collect forces in the world and a big thrust for writing World After Capitalist to try and put out a possible, positive narrative about the future that we can get to, what I call the knowledge age. So I believe we need a positive view of a place in the future that we can get to so that people's purpose can be to build this future world as opposed to going back to an imagined old world. You mentioned that in this future world, attention is going to be this scarcifying. Why is that?

And what does that look like? Attention is a very fundamental scarcity in the sense that for all of us, no matter how wealthy we were even that Bill Gates, for example, can't go back and change what they paid attention to yesterday or for the last decade, right? However much attention they pay to their own purpose in life, to their friends and family, to big topics of the world, we can't change that. And we're seeing that in an extraordinarily tangible way right now. All the attention that we collectively as humanity didn't pay to infect us disease

is now catching up with us dramatically, right? And it's not like we didn't have warnings. SARS was roughly 20 years ago. That was a coronavirus. MERS was roughly 10 years ago. That was a coronavirus. We had two major, major warnings. And yet, the collective amount of attention,

human attention across the world that was focused on preparedness for this event was de minimis, which is why we're now caught completely unprepared. So it's that fundamental scarcity. None of us, right now, no amount of money in the world can go back and fix that lack of preparedness. We have to now scramble and try and make it up and we will scramble and we will try and

make it up, but at huge cost, human cost, that was utterly avoidable. Attention is already in that way that you just described scarce today. Why is that scarcity going to become kind of the one of dominant importance as opposed to other ones. Yeah, that's a great question. It becomes the dominant one because capital is no longer scarce. So, I think this idea of the shifting of scarcity is, it's when you overcome one scarcity, that's when the new one really asserts itself, right? So when we went from the agrarian age to the industrial age, it's not like we stopped the need for food. We still needed food. It's just that we were able to produce sufficient food. I'm not arguing that food is abundant, by the way.

It's a very precise definitions of that in the book. But food is sufficient. We can feed everybody. And in fact, we can do it with shockingly little relative percentage of resources in terms of human attention, for example. So you go back to the 1780, let's say. Nearly 80% of human attention in the U.S. was dedicated just to feeding ourselves. And that left about 20% for everyone. everything else. Today, that's like sub 5%, basically. So that didn't go away. We still need to feed ourselves. Same thing for capital. It's not like we no longer need to build houses and cars and so forth. It's just that we can build sufficient housing in cars for everybody. And there's no better way to see that than to look at China. I mean, China can literally like stamp entire

cities of the ground in the space of a couple of years during this coronavirus. coronavirus crisis, they built entire hospitals in the span of days. So our ability to provide housing and transportation and so forth is not the binding constraint anymore. We have sufficient capital and sufficient means of producing capital. So that's why I'm saying the really big issue now is attention. And the reason it's such a big issue is because the system that we've created in the industrial age, which is the market-based capital allocation system,

It does an amazing job at turning financial capital into physical capital, which is why we have all these extraordinary capabilities. And which is why, actually, we will now ramp the production of mass and so forth quite quickly, sadly, very much too late. But we have that ability and we will crank out a lot of that stuff now. The point, though, is that that market-based system is not at all adequate. it. In fact, it is detrimental to the allocation of attention. And I can explain why that is, maybe, but I should see where you want to take this with questions. I have a tendency to go on for too long, so you should feel free to interrupt me at all times. Okay, let's talk about this in a bit. So for now, I want to stay on the abundance of capital. Not abundance, sufficient. We have sufficient

capital. It's not abundant. Abundant would mean that I can snap my fingers and, you know, the replicator produces my next cup of coffee. That would be abundant capital. We're not there. Sufficient capital. So I agree that if you zoom out enough, that is certainly true. But if you actually zoom in on particular people, the reality for most people today feels very different. So there's a lot of people who are in debt who are struggling to pay bills, you know, people who start companies struggle to find funding. So where's the disconnect between these experience and, you know, the sufficient present of capital in itself?

So when I say sufficient, I mean sufficient in aggregate, there are lots of distributional issues. Amarty Asen, who was a famous development economist, was one of the first to early recognized, for example, that when people were starving in the world, that this was not a problem of their not being enough food. It was a problem of distribution product. In many of these big starvation crises, fortunately we haven't had one in some time, but in most of those big starvation crises, it was just lots of food here, no food here, and often a difficulty getting from here to there, often sometimes logistical, but often corruption base. Sometimes the food would literally be sitting rotting in the harbor while people were starving

just outside the harbor. So absolutely, same goes for capital. We have distribution issues around capital. I want to point out, though, that I think it's important to disconnect our views of financial capital from physical capital to a certain degree. financial capital is an important intermediate product on the way to physical capital, but we don't eat dollar bills, we don't drive around in gold bars. So it's true that there are big income and wealth distribution issues, but they don't necessarily impact, terribly impact our aggregate availability of capital. That doesn't mean we shouldn't work on fixing those problems,

but I think how we work on fixing them should be informed by understanding where we want to go, not where we are today. So there are different solutions to the income and wealth distribution problem depending on whether you believe you should try and stay in the industrial age or whether you believe you should go to the knowledge age. So for example, in the U.S., Bernie Sanders was running under a program of saying the government should provide a job for everybody. That's very much a being caught in the industrial age type thought,

whereas the thought of saying, hey, the government should pay everybody a basic income, and let them do whatever they please is very much a thought of how do we get past the industrial age into the knowledge age. One thing I'm curious about here is let's say we get to this knowledge age. What is then the role of capital? Does it still have a role and how does it change from the role it has today? No, absolutely. It's similar to we still have agriculture.

We still need food. We still are going to need to allocate capital to financial capital. we still will need to allocate it to the production of physical capital. The best analog I have is what I was talking about a little earlier when I mentioned that in like 1780, 80% of human attention was focused on agriculture so that 20% of human attention could be focused on other things. I think today, 80 plus percent of human attention is focused on what I would call economic activities.

So, you know, having a job, getting paid for that job. If we get the transition into the knowledge aid right, then 50 to 100 years from now, we'll be looking back and seeing, oh my God, we were all caught up. 80 plus percent of all human attention was caught up in economic activity. It's now shrunk to whatever 10 percent or 20 percent or some small number. That doesn't mean that it will go away entirely. It just means it will shrink. And what will take place instead is it'll open up a huge amount of human attention for non-economic activity. So what are examples of non-economic activity?

A lot of research, fundamental research, is non-economic activity. Taking self-care is non-economic activity. Taking care of family, children, friends is non-economic activity. Fixing much of the environment is non-economic activity. So there's one of these sort of silly things that people always say is like, oh, we'll never run out of jobs. The much better way of thinking of this is we'll never run out of interesting things to do. It's just that many of those really interesting things are non-economic things. And when I say non-economic, what I mean is that they're not governed by the price system.

And in fact, they cannot be governed by the price system because there are things for which prices cannot exist. And so that's what I mean by non-economic activity. We have to free a lot of human attention to be able to participate in activities to allocate attention towards things that do not have a price attached to them. Today, we use markets to determine what kind of activities are worth doing. How are you going to determine what's worth doing in the knowledge age? The beauty is that if we take some of the steps that I describe in the book for getting to the knowledge age,

so I'm talking about economic freedom, informational freedom, and psychological freedom, and we can go into depth on those. But if we do this, then I think people will be quite free to figure out which of these many interesting challenges they want to pay attention to. And I have no doubt that properly freed up, these challenges are so interesting and fascinating. I mean, let's give some examples, like working on infectious disease, working on space travel, working on restoring the environment. I mean, many of these are like absolutely fascinating challenges. I think we'll have absolutely no shortage of people to work on this. And sometimes people say, Albert, you're not, you're not, you're not,

if this will not happen. I'll give one very good example. Mathematics is a field in which you basically have, you can't get patents, you can't copyright it, you can't really get wealthy. I mean, yes, a few people peel out of mathematics and go into finance, but for the most part, people do mathematics for a love of mathematics. And also there are some prize mechanism, there's some recognition mechanisms, which can be quite important. And yet we've had an extraordinary flourishing of mathematics over many, many years now. When you go today to high school, even to college, the math you learn is all the math that had been invented by like 1850 or so. All the math that we've invented since, which is just huge realms of mathematical thought, you don't even get to

until you get to graduate school. So math is a perfect example of an activity that's largely a non-economic activity, and yet we have no shortage of people who are working on mathematics. So these freedoms that you think are kind of prerequisites for us to really making that possible so that people can kind of function in this way? One of the things I talk about is where is a lot of our attention today trapped? It's trapped in what I call the job loop. And right now we're seeing a huge disruption to this job loop because of the coronavirus and because of lockdowns.

But the job loop for most people is, you know, you wake up, you go to work, you do that so you can earn a wage, you need to earn the wage because the only way you can live, it's how you pay for your rent, it's how you pay for food, and you have very little time left for other things, very little time to take care of yourself, to take care of your children,

very little time for any of these non-economic things that we just talked about. And most of the money that you earn, you spend, again, on things that are being produced by other people who are also in the job loop. So most human attention today is trapped inside of this job loop. And so a lot of the freedoms that I talk about relate to freeing the attention out of that job loop.

And the first one of those is economic freedom, which is some form of universal basic income. And that's the idea that government simply pays everybody some amount of money. And we can talk about whether it has to be government. There's some interesting crypto projects where people are trying to construct cryptocurrency systems that don't rely on government that would provide a basic income. but there's some mechanism by which you receive a recurring income stream, and that income stream is enough for you to take care of basic necessities. I propose in the book that in the U.S., this should be something like $800 a month,

and people always go, well, $800 a month. It's nothing. Like, what are you even talking about? Like, nobody can live in Manhattan for $800 a month. And the answer is absolutely you can't live in Manhattan for $800 a month, but you also don't need to live in Manhattan. One of my sort of favorite charts to critique is this chart that shows that by 2050, everybody will live in cities. It's just taking a current trend and extrapolating it without asking why that's happening.

Well, it's happening because for most people, you cannot earn a living anywhere other than the cities. Now, some of us are fortunate. We can work remotely. If you're a designer or a coder, you can live almost anywhere and make money. But a lot of people need to live in a center of economic activity to be able to live. The second year of universal basic income, people could move to places where it's extremely cheap to live. And then people say, but people won't do that. And I say, no, we absolutely know that people do this.

And we know it because we have some people receiving a basic income today, and they're called pensioners. And what do pensioners do? They move to a place where it's cheap to live. Absolutely, we have to see this as a fundamentally liberating construct. It liberates you to walk away from a bad job, walk away from a, bad living situation like a bad spouse, walk away from a bad city, walk away from cities altogether. So it's fundamentally, deeply, profoundly liberating economically. The second big freedom I talk about is informational freedom.

And that has to do with the fact that we all walk around with a supercomputer in our pockets. Each of our supercomputers can speak to all the other supercomputers that each of us is carrying anywhere around the world. It's an extraordinary capability, completely mind-blowing. And yet there's something very strange that happens, which is, you know, when I activate my phone and I go to its home screen and I tap on any of these app icons, at that moment, that app completely takes over the supercomputer. I'm reduced to my thumbs or whatever you use for tipping on that glass screen

and my eyes and the wit wear between my ears. And that supercomputer now just works for Facebook, Twitter, Google, who have you. It's just a bizarre situation and it's one that we fundamentally need to change. We need to make it so that this computer works first and foremost for me and represents me and I can use its compute power to whatever way I see fit and I can use it to intermediate my interactions with all these services. There's a lot more ideas to informational freedom. There's also ideas around rolling back the extent of copyright, rolling back the patent system to a degree and so forth. And there's also some very controversial thoughts in there about privacy

that we can maybe get to later. But very fundamentally, it's about who controls computation. And then the final freedom I talk about is psychological freedom. And that's just a recognition that our brain did not evolve in an environment of this information overload. Our brain evolved in an environment where when you saw a cat, there was an actual cat. And now I can show you an infinity of cat pictures. We all need to develop some kind of practice, some kind of mindfulness practice, that lets us stay in control of our own brains so that in this era of information overload,

we aren't just slave to whatever stimuli are thrown at us through the screen, but we can literally have the ability to look at it and go, okay, I'm going to take a breath, I'm going to think, I'm going to engage my rational thinking faculties, and my rational thinking faculties might tell me that right now it's actually time to go out. outside and take a walk and just put the computer down. So that's very important. These three freedoms also interact with each other in very important ways. And I believe if we worked on developing those

freedoms, that would let us somehow move into the knowledge age. So in the book, I'm not saying the knowledge age is people doing exactly this. I'm saying let's work on these freedoms so that individuals and then communities, which are made up of individuals, can find their own path and figure out how to navigate this transition. I think anybody who says, I know exactly what the knowledge age will look like. It'll be flying cars and whatnot. It's sort of like, you know, asking peasant farmer to imagine what, you know, the industrial age would look like. Or even asking people in the industrial age, like if you had told people we would all have these, they would have said it's crazy. It can't be done. So I'm not trying to speculate much about what the knowledge age

will look like once we're 50 or 100 years into it. I think it's incredibly hard to, even imagine what it would be. I'm just talking about how do we make it so that we can adjust into it. So speaking about like adjusting into this new age, one of the things you mentioned was that both the, you know, the transitions we had before each time was accompanied with, you know, war, violence and there was, you know, it was a very maybe painful process, even if what came afterwards was pretty positive. So what do we do here? Like how do you see this transition play out? You also think we have to expect war and violence? Are there things we can do to prevent that? Mark Twain has this great quote, which is history doesn't repeat, but it rhymes. And so I do think

the prior transitions were extremely violent. So when we went to the agrarian age, the agrarian societies basically wiped out all the forage societies. I mean, there are hard. hardly any left around the world. And this happened quite rapidly. So once agriculture was invented, the forages got wiped out very, very quickly. And then, of course, going from the agonage to the industrial age, that transition involved multiple revolutions, very violent revolutions, French revolution, for example. It ultimately required two world wars.

And even after two world wars, we weren't entirely done because we still tried the experiment of communism. We still killed lots of people in Russia and in China before getting to kind of into the industrial age. I believe that we are going to repeat, we're on track to repeat the same mistake, it's going to take a different form. We're seeing one example of that form right now. You know, it is entirely possible. In a way, we're lucky with the coronavirus, it could be much, much worse. I mean, it's bad, but it could be much, much worse. This thing could have a 20% fatality rate or 30% fatality rate, right?

So the threat that I'm mostly focused on however it's the climate crisis. We're very, very far behind on the climate crisis, and I think that the transition to the knowledge age, the sort of violent portion right now, my best candidate for where that will come from, what the motor of that will be is the climate crisis. Now, in the book, I talk a little bit about why this happens. I think it happens because when you get to the end of an age, the people who are in power are the people who control the previous scarce resource. And because they control the previous scarce resource, they see everything that the new age

can do through that lens. So when we got to the end of the agrarian age, the people were in power where the people controlled land. It was the aristocracy, it was the church. and when they saw what the industrial age could do, when they saw what industry could do, they didn't think, oh, here comes the industrial age, oh, the constraint has shifted, oh, it's about capital.

They thought, oh, my God, I can have tanks and battleships so I can have more land. And I think we're making that very same mistake in just a slightly different pattern, which is the market system has worked so well, and the people who are in charge politically who hold power, who will power, are people who either control capital directly or indirectly,

and we think about everything through the lens of capital. And so when we see computers and the digital technology, we don't think, oh, here comes the knowledge age, we're like, oh, how can I have more market cap? How can I have more financial wealth? How can I take the existing system and have even more time and attention allocated to it as opposed to less time?

And I think we see this, you know, even if we look at the current discussion of the various bailout measures, most of them are squarely aimed at retaining the existing system and propping up markets and propping up financial assets. Thankfully, there's some discussion now this time around also around implementing a UBI, which I think would be a very forward-looking measure. But so I think the reason these transitions happen so violently in a way is because we're just focused on the wrong thing. And right now we have the sort of dominance of markets and we think all problems can and should be solved by markets. Now, silver linings on the coronavirus crisis. First silver lining, some discussion of UBI as a measure during the lockdown. I think second silver lining may be a recognition that markets' ability to deal with problems is limited, that there are problems, primarily problems of the allocation

of attention, where markets don't work. If we were to recognize this, then maybe silver lining, we can recognize that the biggest problem that we're not allocating enough attention to is the climate crisis. So if this, coming out of this crisis, we realize, hey, there's this other huge crisis, much more slowly moving, but much more inexorable and much more dangerous, ultimately, that we're not paying enough attention to, that would be a pretty awesome thing. High price to pay, but it would be a good thing. Let's move on to current affairs in a bit.

I just have one more thing that I would like to clear up before we do. So you said, basically, we need to take care of three basic freedoms before we can actually get this knowledge age, right? So basically economic freedom, I understand. So basically implementing a UBI or something similar to actually allow every person to have their basic needs met. Then psychological freedom, I think I also understand. And it's basically, I take that to mean knowing what your values are and what's good for you and understanding yourself.

But I have questions as to informational freedom. So you said the moment I actually open an app on my phone, it's no longer my phone, but basically Facebook or Google or whatever, whoever the app is built by controls my phone. And I think I know what you're getting to, namely that human beings are extremely easy to manipulate and values being extracted out of me or out of whatever I'm looking to do. How do you propose we combat that? How do you propose we get to an age of informational freedom? Well, let me first say very briefly why I think informational freedom is so central.

So I believe that the job loop where we work and spend our wages on stuff that other people who work make needs to be replaced with the knowledge loop. The knowledge loop always has been operating, but I think we need to just have way more attention on the knowledge loop. The knowledge loop works where you learn something, use that to create something new, you share that new thing, that new thing that you've shared other people can use to learn and so forth. And pretty much all human progress is premised on the knowledge loop. And I believe that in order for the knowledge loop to really be able to flourish in the digital age, we need this to have this informational freedom. And so, for example, it's wonderful that we have the Creative

Commons movement. It's wonderful that we've had open source licenses, right? So open source licenses are a great example where we've made an intellectual breakthrough on how to kind of roll back some of the traditional thinking around intellectual property through a new licensing scheme. And all of a sudden, I can take code, I can learn how this code works, I can modify that code and I can reshare it, right? Same for creative comments. I can find a creative comments image, for example. I can maybe, it's an image maybe explaining a physical process or Pythagorean theorem. I can go improve that image, I can reshare my improved image.

So those are very clear examples of how more informational freedom can help fuel the knowledge loop. Now, how does that relate to these devices? Well, these devices are our portal to the world of information. And right now, what's happening on these devices is that other people primarily control which information is surfaced to me. So let me give a good example when I'm intimately familiar with because we were investors in the company. That's Twitter, right?

So I follow quite a few people on Twitter. And right now, really my only option is to use the Twitter client and have the Twitter client decide what my timeline looks like. And Twitter makes a lot of interesting decisions. For example, the other day, during this corona crisis, I was harding a tweet. Now, I'm very old school. For me, the heart is still the star. It's just like, I want to remember this tweet. This tweet is somehow important.

It's not for me. I like this tweet. And I was hearting something about chloroquine as a potential treatment. And then I get a DM from somebody else saying, hey, you're spreading misinformation on Twitter. I'm like, I'm spreading misinformation. It first didn't even register. And then I realized, oh, my liking something was added to other people's timeline by Twitter's algorithm. So this is a perfect example of where everybody has a supercomputer, but our own.

Our timelines are centrally controlled. Why do we worry so much about Twitter's algorithm? Well, it's because there's only one algorithm, and we're just recipients of that algorithm. We can't run our own algorithms easily. I should very easily be able to download a piece of open source software that's somebody else's program that I can tweak parameters off that gives me my preferred Twitter feed. There should be thousands, potentially millions of Twitter algorithms. And then, of course, we immediately realized that would dramatically reduce the power of Twitter.

And this interesting little historical titbit here, Twitter, of course, started out as an API only. It was just a service in the cloud. Twitter didn't have any official clients. There were lots of third-party clients. And it was only when a company that was called Uber Media, and Uber Media was started by Bill Gross and Idealab, and it was buying up a bunch of Twitter clients, and it was kind of threatening to fork the network. And at that moment, Twitter kind of blinked and was like, oh, my God, we can't have that happen. And so we're going to have all these official clients, and we're going to just completely clamp

down what anybody else can do programmatically. And at that moment, we lost Twitter as the programmable network, and we went to Twitter the programmed network by Twitter. So I believe the answer to your question is APIs. Everything needs to have an API. anything that's out there, I ought to be able to program. And that includes Facebook, Twitter, et cetera. And that's not such a crazy idea.

If you look at the Open Banking Initiative in Europe, every bank account needs to have an API. And it's very clear that when my bank account has an API, I have more power than my bank, because I can now authorize third parties to monitor my bank account on my behalf. Or I can sort of say, hey, I want to use this financial product

that's offered by a third party, and I don't need to ask my bank for permission. And just the same, I shouldn't have to ask Facebook or Twitter for permission to program Facebook or Twitter. I should just be able to do it. Yeah, that's definitely one of my favorite ideas that, you know, I've seen a few times maybe also Fred Wilson write about. And I think it is a very cool idea in terms of like how do you actually deal with these massive tech monopolies, like Facebook and Twitter and how can you actually go in a positive direction. And since this is a crypto podcast. one of the amazing things about the blockchain world that many of us are trying to build

is that everything has an API. Everything is programmable. Everything is composable. So I don't need to ask anybody for permission in the kind of blockchain world, the non-permission world that I think we at Union Square Ventures think is the interesting part of the world. If there's a smart contract out there, I can interact with that smart contract. I can program that.

I can wrap it in any which way. I don't need to ask anybody for permission to do so. And that is a fundamental break from Facebook, where in the absence of legislation requiring Facebook to open up its API, I can't fully program Facebook. In fact, we're living in a world where there are multiple laws that if I try to fully program Facebook would make that illegal, right? So if I took my device and I took Facebook's APK

and I extracted Facebook's keys so that I could now write my own client, I would be breaking three different laws in the U.S. Two of those laws have mandatory federal prison sentences, right? So we have created laws that completely protect that power of those huge, centralized digital players, which is why it's exciting to think that in addition to maybe changing those laws, we might also be creating a separate new world where those laws don't matter because everything is programmable to begin with.

In a digital age that kind of lives of network effects to a certain age, corporations kind of tend to grow more or less without bounds because it's really difficult to actually create a competitor product. It's Metcalf's law, right? The value of the network goes with n squared. If you actually think that further, I mean, what we used to do is we have antitrust laws and basically if you have one Facebook and it becomes too powerful, you just split it up and say three Facebooks

and you'll have Facebook one, two and three because of network effects that's inherently an unstable situation. One of those Facebooks is probably going to grow again and the other two are probably going to shrink again. What these permissionless systems also let you do is they let you turn the users into shareholders. Facebook Inc. as a company doesn't really exist anymore

whether it be a Dow or something else. It's kind of something, a platform that's between the users. How do you feel about that? The way I've thought about it is there's network effects which are a very positive thing. We like the fact that we can reach everybody on a network. That's a good thing, right? We don't want to partition those networks. So the question then is who gets to capture that network effect and who gets to control it? And in the traditional world, so far we have captured by a central for-profit player.

In the blockchain world, we potentially simply have a network that just exists. There are definitely lots of difficult questions around governance. I don't necessarily like the idea of shareholders per se, because it could just be that the network is just out there without the economic benefit. It might be so thinly distributed the economic benefit that thinking of shareholders might be the wrong analogy. it's really more about the capture of the network effect, which is also why mandatory APIs are so powerful. If you have mandatory APIs, again, Facebook would still be Facebook,

but it would be able to capture much less of the power of the network effect. And so I very much believe personally that we will need both. We will need to invent this new world that we're all working on, but we also will need to regulate the existing centralized, players by applying mandatory APIs to them. And the reason I believe that is that I think so much activity and so much attention is captured in those networks today that it will not migrate. The new systems we're building would be sort of a small thing off to the site.

And its ability to really grow and really have more activity live in it would be severely constrained as long as those other systems don't have mandatory APIs. A good example of that is lots of people are building decentralized micro-blogging platforms and decentralized social networks and so forth. But at the end of the day,

if I can't program this device and these other networks so that I can sort of easily access it and I don't want to have to keep track in my mind. Am I connected to Brian on this network and Frider Ricke on this other network? I have a machine that can take care of that for me, but only if that machine can program all those networks.

And so I do think it's not an either-or. I don't think it's, let's just build crypto and all will be good. The existing systems are very large. They're here to stay, and we need to properly regulate them also. So one thing, I guess that's sort of at the intersection of what you talked about now and, you know, in terms of crypto and decentralized networks, but then also, you know, maybe the UBI topic a little bit. So to me, it seems like that one of the things that's going to happen with this coronavirus is that we're just on track of a massive expansion of government.

And, you know, in all kinds of ways, right, whether it's bailouts that might go from, you know, it used to be the banks in 2008 to, you know, now it's going to be like airlines and maybe their hotels industry and maybe small businesses, right, like a complete bailout of. of everyone to, you know, fiscal expansion to massive central stimulus to maybe central banks buying directly shares and corporate bonds to surveillance, right? Maybe to like spread the, you know, track virus spreads. So, you know, at the same time, I think what you're, well, you know, you're almost at this knowledge age that you're kind of painting is an age where there's much more maybe self-determination and, okay, there is this UBI, but it's not, it feels very different from kind of of the current trajectory, even though UBI is now being discussed. I definitely think I'm a believer in smaller government personally.

And certainly I think we're doing way too many things at too high a level of aggregation, right? I mean, I think there's lots of things that we're not paying attention to this fundamental principle of subsidiarity, right? So subsidiarity is sort of that, you know, decisions ought to be made at the level where they can and need to be made for this particular issue, right? So if we're talking about like the global atmosphere, for example, we actually are lacking bodies that could make those decisions at a global scale and saying, look, this type of emission, for example, will be taxed globally. So we're missing that. But then if you come one layer down, you know, existing federal governments have way too much power. Like we saw this in the corona crisis here in the U.S.

the federal government was claiming the right, basically, to do all testing. It's completely absurd. Like lots and lots of labs at the ability to conduct this test. And they were basically saying you can't do that. I mean, it's a great example of way too much power in the federal center. Like, why would an academic lab, why shouldn't they be able to run COVID-19 tests? But what's the path towards actually going there? Well, I think the path towards making government smaller again.

that's difficult. People don't give up power all that easily, right, once they have it. And federal governments won't give up power quite that easily. Let me talk about the European Union for a second. Then we can talk about how we might get there. I mean, you know, I grew up in Germany, and I was very pro the European Union project, and I still think the project makes sense.

But again, I think from a subsidiarity principle, I think the EU got involved in regulating a lot of things that don't actually make sense to be regulated at the EU level. And I think some of the resistance that Brexit was able to catalyze against the EU and that I think is not going to go away was a reaction to the EU regulating certain things that are just unclear that they need to be at all regulated at the EU level. How do we get there? Well, so I do think that one of the big underestimated powers of UBI is that it will free people up for one very important non-economic activity and that's organizing, right? So right now, a lot of people don't have time to be politically engaged. They don't have time to be educated about issues.

They don't have time to protest. They don't have time to write to legislators, to run for being a legislator. So my theory of change here is that if we can get something like UBI, it will actually unleash a lot of political change. And that change will over time reduce the power of things. government's, but it's a long road. I don't think there's any shortcut there. And sort of one more question on this topic. So what's your take on what the impact will be of sort of to use some of the terms that I used before in terms of talking about the digital

age, right? You have this idea of a zero knowledge, marginal cost thing. To me, it almost feels like the way central banks are treating money is like a zero marginal cost thing. You can just create more of it. Well, yeah, let's start about a couple things. So the first thing is I do think we're making a lot of mistakes right now on how we're dealing with this crisis. I wrote a blog post on Saturday where I sort of say, look, what a lockdown is is basically a forced pausing of markets, right?

And so when you have that, we should also pause, basically, we should put the economy in kind of suspended animation. And so I think we should just basically for some very well-defined duration, because we're seeing in China, we're already seeing an uptick of economic activity again. Once you have the right testing infrastructure in place, you can start letting people go back to work. You just need to be able to test frequently and test lots of people. So in that short interval between the virus hits, you kind of get on top of it, and then you have testing. While we sort of lock down the economy, I think we should simply suspend things like rent payments and mortgage payments and interest payments and all these other things. And we should allow small companies to suspend wage payments. And then we should, instead of wage payments, have a UBI.

If you think about most small businesses, right, like you think about your corner deli or a restaurant, If they didn't have to pay rent and they didn't have to pay their employees, they would be totally fine. And just, you know, you do this for two months and two months later, everything restarts. And everything just gets shifted back by two months. So if you lease was up, you know, whatever, next June, it'll be up next August instead, right? So there won't be a catch-up. It's just as if those two months we were all in suspended animation, we just all wake up and it's just, you know, a lost time period. I think that would be a much better approach than what we're currently trying, where we're sort of saying,

gee, we're going to keep running everything. Everybody's going to owe every payment, and we're just going to supply money. Okay, so that's one thing. When it comes to central banks, my favorite way of creating UBI is, in fact, to print money. We've printed lots of money since the 2008 financial crisis. In the U.S. alone, the Fed has created $4 trillion of new money. It's just that the way we've chosen for that money to enter the economy is through the fractional reserve banking system.

So the Fed essentially creates the money, and it creates it in the economy. account of banks, and then banks get to decide where to put the money. So I believe that the easiest path to UBI is just everybody has an account with the Fed, and then when the Fed creates money, it creates it in our accounts, and it enters the economy through us instead of entering the economy through the banks. Now, of course, there's a limit to how much money you can print. And I do think, I've been buying Bitcoin. The reason I've been buying Bitcoin is because I think we're going to relearn the lesson that there's a limit to how much money you can print the hard way, which is we're going to print a lot. We're going to print a bit.

much and then we're going to have a big inflationary shock. I think there's a lot of money when we can print. The world has become fundamentally deflationary. Technology is a deflationary thrust. It makes everything cheaper. And so we live in a world where technology provides a deflationary force that allows us to print a lot of money, but there's a limit to how much money we can print. And so to get the proper UBI system, we probably need to be printing money by giving it to people, but then we also need to find large pools of money and start sucking the money. And so, to get the back out and that can happen through taxation that can happen through potentially negative interest rates or demurage or some mechanism by which we hoover up excess money so that's all doable

I think we're going to learn the lesson again the hard way because we're going like well gee we've printed a lot of money already and there's been no inflation we've printed four trillion dollars and no inflation so let's print another four trillion dollars but at some point that breaks you can't print unlimited amounts of money because the value of money is as we all know it's a it's like an point that exists in our minds and that equilibrium point, if we all decide that too much money has been printed, that equilibrium point can shift very dramatically. Yeah. I mean, in terms of there's been no inflation, I mean, you could say there has been very much

inflation just of asset prices. There's maybe not as much inflation of consumer prices. Yes, absolutely. I think that's totally correct. We've certainly seen that all around the world. Yeah. But then I think what's happening right now, I just don't see any way that this is not going to lead to inflation, right? Because now, I think it's become politically so, you know, so impossible

to only bail out the bankers, right? So now they have to basically distribute this much more widely. And then in addition, if you have a de-globalization, which is also going to have inflationary pressures. I don't think anybody knows when that equilibrium shift occurs, right? So you've got this very strong deflationary force. If you had asked me, I mean, frankly, let's just go back to the 2008 financial crisis. I was very concerned that putting a trillion dollars into the economy would lead to inflation, as were lots of other people. I mean, there were lots of some of the smartest fund managers where inflation is coming,

they were going long on things like gold, et cetera, there were inflation hedges. And it didn't show up. And it wasn't one trillion, it was four trillion in the U.S. alone. Never mind the ECB, never mind China, right? So I just don't think anybody knows we could double it and we could still be not seeing inflation. I don't know. What I do know is when you don't know, you want to be anti-fragile, right? And so everybody should have some amount of crypto,

and I would say in particular Bitcoin in their portfolio, because that's how you construct an anti-fragile portfolio for inflation to recur, maybe a long-tail event, but when it happens, it'll be quite brutal and it might destroy a lot of value in a lot of other assets. And so having a portfolio that's anti-fragile will require having some things in it that would perform well in a high-inflation environment. And I believe Bitcoin is one of those things. Anti-fragile is often taken to mean uncorrelated, right?

So basically, and basically this has been the narrative for Bitcoin for a long time. But for the first time, in as long as I remember, basically two weeks ago on, you know, Black Thursday, we actually saw crypto prices tumble along with the NASDAQ. and the Dow Jones by like 40%. Does this kind of impact your narrative, or does it still hold? Not at all. I don't think anti-fragile and uncorrelated are at all the same thing. Correlations, especially in these asset prices, over short periods of time,

are driven by all sorts of endogenous factors built into the system. So, you know, people were speculating with hot money. They were speculating across multiple assets. They got caught. They had to liquidate whatever. they could liquidate. I think those correlations are driven by things that are endogenous to the overall financial system. Anti-fragility to me exists around certain long-tail events. What happens to your portfolio when those events occur? Is your entire portfolio decimated

or are parts of your portfolio actually improving? And so any one event in the short term having correlation to me is not all that informative about that. So especially because the event against which I think this provides anti-fragility isn't the event that occurred. Thank you. Let's go to the final topic that we want to talk about before, crypto. So I don't know whether you saw it, but Yuval Nor Harari published an article in the Financial Times this weekend on life after the corona epidemic. And you have gone on record saying you're anti-privacy.

I mean, you can basically, this is a very crude portrayal of what you have said. So basically, please correct me. How are we cautions that we must and sacrifice privacy for control, but should instead appear to individuals' reasons? The reason why he actually wrote this was because in Israel and also in the European Union by now, mobile company or cell phone companies have actually given over the movement data of the people who own the cell phones to the government in order for them to kind of see where people are moving and how the corona epidemic could be constricted if at all is still possible. So I see how it's

totally useful being able to track movement patterns of people. But do you think we are crossing a red line here and we won't be able to go back after the state of emergency has ended? lots of stuff wrong with Harare's FTPs. Let's start with the one thing that's right. It's definitely right that whenever we grant emergency powers to government, we want to be thoughtful about it. In the U.S., you know, we infamously created the Patriot Act in the wake of 9-11, and that has a lot of really bad things in it.

And Harari's right to point out that some of those things tend to, if not initially conceived, right, tend to stick around. I believe that this crisis is quite different and also would lend itself to doing things that are very timebound. So, for example, an easy thing to do is to say these measures are in place for as long as the World Health Organization declares as a global pandemic. So, I mean, you could sort of put hard demarcations on it with the Patriot Act, it was like, as long as terrorism is a problem. Well, who's going to declare the terrorism is no longer a problem? Right. So we didn't even from the get-go, we didn't create a mechanism for how to undo things.

You know, certain other acts take better care of this. Like, you know, lots of nations have some law that allows government to command resources during a time of war. And there's usually a fairly precise way to say this is when we're at war and this is when we're no longer at war. So, first of all, I think that, yes, we should be careful when giving government emergency powers. But I think we also have examples of how to do it right and how to actually timebound it properly. Second thing is this virus is actually a perfect example for why privacy and technological progress are incompatible. So the fundamental argument that I make is that there's a fundamental deep incompatibility between privacy and technological progress. And so if you go back to us living in the forager age, right, basically foragers, you know, tribes might not come in contrast.

with other tribes for long periods at a time. And so what one tribe was doing was kind of not known to other tribes. And at that level, there may not have been privacy between individuals in the tribe, but between tribes there was in a way a lot of privacy, right? But there also wasn't a lot of technological power of transmission, right? Today, I can get on a plane and fly to China and pick up a virus and bring it back. There's a huge amount of power for a single individual and the acts of a single, individual to dramatically change what's happening around this individual for the worst.

And there's unfortunately a fundamental asymmetry built into the universe in the form of entropy, right? So very few arrangements of atoms make my body as a functioning body for Albert Vanger, and very many of them make nothing. And it took 53 years to create this body, and it will take, you know, if I get exposed to the virus and they have a bad case, it will take a few days to destroy all of it. That is a fundamental asymmetry. Very few things have structure and are animated and are alive and carry knowledge, and very many things don't. And so as our technological ability grows, unfortunately, our power to destroy grows faster than our power to construct.

And that is a fundamental asymmetry. And so if you think more about a virus as an example, my wife and I, we are investors in a company in New York City that makes synthetic viruses. You can do this today with basically off-the-shelf technology. You can make synthetic viruses. Why are we investors in this company? Well, because synthetic viruses are a great way to target cancer. We think it's probably the best shot to cure cancer. But it also means that kind of what those people are doing,

society should have a pretty good window into it. It should a pretty good window into are the people who are making synthetic viruses, making synthetic viruses to cure cancer, or are they making synthetic viruses to make a more, higher fatality rate version of the coronavirus, right? So in sci-fi, there's this notion of an ender, right? An ender's game, it's literally named after that. With enough technological capability, a single individual could end all human life. And so as technological power grows, ex post-enforcement isn't that useful. And so privacy, which then requires ex-post-enforcement,

enforcement is detrimental to our ability to have technological progress. And coming back to Yuval's piece, I think it's just an idiotic piece because how are we going to get back to work? The only way we're going to get back to work is by massive testing. If you look at what happened with the Spanish flu, the Spanish flu came in two waves. The second wave came, well, first of all, there was obviously a lull in the summer, but the second wave came when people were trying to get back to economic activity. And the same is going to happen here. We're not all going to be affected when this lockdown comes down. When we go back to work, if we don't have a massive testing infrastructure in place, and if we don't actually give the government the power to say,

you've been tested and you have to stay home, we're going to just reinfect everybody. And this whole thing will have been for nothing. I mean, obviously we can't reinfect people who became immune during the first go-around. But you kind of see how this is the perfect example at every level, a virus is the perfect example at every level for why there's a fundamental disconnect between privacy and technological progress. And so to me, and I gave a big talk about this at Bloxback Berlin, it's not that privacy didn't serve an important purpose. We have to understand what is the purpose that privacy serve and how can we achieve those things and largely it was a freedom preserving thing. And I believe that economic freedom, informational freedom,

and psychological freedom together can amount to way more freedom than privacy was able to provide you. I know many people who think they're private today, but who are terribly obsessed with what other people think about them. And their self-censorship of what they say and what they do isn't because government is surveilling them.

For most people, it's because they give a shit about what their neighbors think. And they came way too much about what their neighbors think. When we started homeschooling our kids, lots of people said, oh, this sounds amazing. And when we said, well, why don't you do it? They're like, I don't know, it's just weird and it's going to come off weird. And what are other people going to think if we tell them our kids don't go to school?

That's what helped people back. So I just think when we think about that one of the central reasons why we have privacy, it had a lot to do with freedom, I think there's lots and lots of ways to be very free, but not have privacy. And I know that's very much an outlier opinion. By the way, one other thing about Yuval Harari's piece, at the end, the whole piece is about how we have to come together as humanity and fight us as one from the guy who wrote an entire book basically saying how all narratives are equally valid and trashing humanism. What? What a hack. He's a hack. He's a hack who writes incredibly well. Let me just say he's got great turns of phrase, very smooth writing, but the ideas are basically third-rate inconsistent ideas. You had it here first.

I've already tweeted it too. So basically, do you think there's a fundamental difference between different kinds of privacy? So basically say, I, like most other people, don't own an invisibility cloak. So basically, when I go out, my neighbors can see that I go out. When I go grocery shopping across the street, the cashiers at the grocery shop, they'll know what I usually buy and they know my name and they know my kids' names. And that's not the sort of privacy that I'm worried about. The sort of privacy that I, and I think also many other people are worried about, is the one that creates an enormous difference in power.

So basically, say, if the state knows everything about you, or if Google or Twitter or Facebook knows everything about you, you become incredibly easy to manipulate. Humans are very simple beings. I mean, so basically, even if I just know like 20 things about you, I can probably come up with buttons that I would have to push in order to actually get you to orient yourself in a certain world. Right? And do you think that's not a danger? No, absolutely that's a danger. Everything I'm writing about is how to shift more power back to the individual. It's all about we want to take power away from government. I talked about smaller government earlier.

We want to take power away from large corporations. We want to give that power back to individuals. We want to give that power back to individuals and the communities made up of those individuals. Economic freedom, informational freedom, psychological freedom, are all about empowering the individual. So I think that's absolutely crucial. It just turns out that actually privacy in many ways right now, if anything is being used to deeply enshrine and deeply ingrain and solidify the existing power imbalance.

So what are we doing in the name of privacy? In the name of privacy, for example, Apple says you can't install any software on your device has to go through the Apple store. That's how we make sure you stay private. So we're using privacy and then we're putting secure elements on all these phones. Nobody knows what goes on inside secure element. You just have to trust it. Of course, we're using all those secure elements to make sure that I can't program my phone. So we're actually making it harder rather than easier to modify the code that's running on a phone or to inspect it or to see what it's doing. So let me give you another example. Face recognition and cameras. Do we really want to go down the

path where we regulate what I can do with my camera on my phone, what I can do with cameras that I deploy, it's only going to ingrain the power of the state more deeply. Yes, the state can deploy surveillance cameras, but we can also deploy these cameras, this whole concept of surveillance and transparency. I think that obviously we need to work extremely hard on preserving, restoring democracy, democratic processes. We've already given the government way too much power. But much of what's being done in the name of privacy today has detrimental effect. What did GDPR do?

GDPR made Facebook and Google more powerful. It consolidated the power. We predicted this. Lots of people predicted this. It's exactly how it happened. The California Privacy Act is going to do the same thing. When you see the large players not protesting, you should wonder why. They don't protest it because they know it is good for them.

If they didn't think it was good for them, they would protest it. In the US, we passed this terrible law called Fasta. We used trafficking, which who is going to say something against trafficking, against measures of trafficking? I mean, trafficking terrible. So who would say something? We used that to blow a hole into Section 230. Everybody predicted that it would hit a lot of people who need access to information online, that access has gone away as predicted. Again, Facebook did not protest. Why? Facebook knew it would be able to comply.

So, and we're going exactly the wrong direction. Why are the big companies not worried about antitrust law? Because they realize that it's going to be some milk-toast antitrust decree, and they'll be just fine. If we said, hey, Facebook, you've got to have an API for everybody? You bet they would protest. Oh, yeah. because it would severely constrain their power.

Yeah. And yes, does it create a privacy problem? I mean, look at it. They said, oh, the reason we can't have the API is because it creates a privacy problem. So what we're doing right now, it's like it's the perfect example of the path to hell is paved with good intentions.

I 120% believe that the people who are fighting for privacy have good intentions. The net outcome so far has been the consolidation of power in the hands of Facebook and Google and the hands of the government, for that matter. Okay, cool. So we want to go to sort of a last topic, which comes a little bit back to the larger question of, you know, where does knowledge age is going and the role of capital. So you're, you know, venture capitalist and you wrote a book about, you know, the world after capitalism, which is, of course, slightly ironic. No, no, the world after capital. Not after capital. After capital. After capital. Yeah. So first of all, how does this kind of framework that you have and think,

about where the future is going, how does that inform your approach to investing in companies today? Yeah, a lot of the things that we have invested in at Union's Gerventures are things that I believe help move us towards the knowledge age. One aspect of the knowledge age I described earlier is the knowledge loop is where you can learn things, create things, share things. We've invested in a lot of things that make learning easier, for example, Duolingo, Code Academy, Skill share, a Quizlet. Sharing, we've invested in a lot of things that make sharing easier. Twitter does make sharing easier than ever before. Creating, we've invested in a number of tools that let people create new things. And like Splice is a very good example of that.

You can create new music, just download sounds and instruments and create new music. So I believe a lot of the things that we have invested and will continue to invest in our things that will help move us to the knowledge aid. It's very important. Just like agriculture and food didn't go away, innovation and capital and building new things and needing to finance us, none of those things are going to go away. I'm looking for a world where those things take up less of our attention than they two today, but I'm not looking for a world where this go away.

Once you've transitioned into knowledge age, what's your job going to look like? Oh, I think my job can still be around finding people who need to, raise money to finance something that otherwise wouldn't exist and that I believe when it does exist will be a good thing for the world. So I don't think my job is going to change. I'm very lucky that way. So Union Square Ventures is invested in a number of blockchain projects. So you were pretty early to the space. So you invested in Coinbase, Protocol Labs, Dapper Labs, Al-Grand, R-Weev, Blocksec, Numeri and probably also others that I'm forgetting. Are Weef.

Are we've? Oh, yeah. And so what are your selection criteria? What do you look for in blockchain projects? We tend to have fairly specific ideas around things. So we invested in Algorand because, you know, we were looking for a proof of stake system and one that would have fast finality and one that would, we believe, maintain a high degree of decentralization over. time. So we tend to have very specific things that we look for. Are we, we had been looking for this idea of permanent storage. Again, we think that's kind of a almost integral building block. We invest in block stack because we had been thinking a lot about identity and end user self-severent identity. So our approach tends to be to have specific ideas. We often then write and talk about those ideas and then find projects that are a match to those. Cool.

You also invest in crypto funds, which I found unusual. So you invested in polychain, metal stable, multi-coin and placeholder. So why do you choose to do that? Well, we did that at a time when custody really was an unsolved problem. And we didn't want to develop a lot of custody capabilities at Unusquare Ventures. ourselves. It was also at a time when it was very hard, there was a lot of, there was explosive innovation, and it would have been very difficult for us to get on top of as many projects as we were able to, with this more decentralized, more networked approach.

I don't anticipate that we will invest in more crypto funds going forward. I mean, never say never, but it's now that custody is becoming essentially easy for somebody like us, where we can use Coinbase custody and we don't need to self-custody, I think it'll become a lot easier for us to invest directly in token projects and not need to worry about how we're going to take care of those tokens. So one final question here. When you look at the crypto space and people building startups and decentralized networks, you know, what's the thing that I think people tend to really miss

or, you know, see the wrong way or you wish they would maybe pay more attention or approach differently? I don't know that there's any one thing. I do think we're very much in the early stages of this. You know, I do think that when we are in the early stages of something, there's often a tendency for sort of literal translation. And it's sort of like, I had this thing in the pre-blockchain world. And so I want to have exactly this thing in the blockchain world as opposed to thinking,

okay, what problem did this thing solve? and what's the native new way of solving this? And also, what is the sort of native new set of capabilities and what are the new things that I wasn't able to build at all in the old world that I can build with this new thing? So I think it's early days. I think there's a lot of promising stuff happening. And as far as Unscore Ventures is concerned,

I do think we are going to shift our attention more to finding things that are at the application layer of blockchain. I think our infrastructure portfolio is pretty broad and pretty full at this point. So I think it's an exciting time for people who want to work on applications of blockchain. I think infrastructure really is, feels like it's coming into place. I should say that when the dust settles, I don't think there's going to be a lot of foundational chains. So I think there's going to be a big shakeout. There's lots of people trying to build foundational chains.

And I think that there won't be a ton of foundational chains. There'll be more than one, but I think there'll be fewer than it doesn't. What do you think will be the winners? Well, we've made some investments accordingly, but talk to me again in like five years. Okay, cool. Well, Albert, thanks so much for coming on. It was a huge pleasure to speak with you. I really enjoyed the conversation. Thank you, Fridericke. Thank you, Brian. Thank you for joining us on this week's episode. We release new episodes every week. You can find and subscribe to the show on iTunes, Spotify, YouTube, SoundCloud, or wherever you listen to podcasts.

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