Invest Like the Best with Patrick O'Shaughnessy - Eugene Wei – Tech, Media, and Culture - [Invest Like the Best, EP.118]

Episode Date: January 22, 2019

My guest this week, Eugene Wei, has one of the most interesting backgrounds of anyone I’ve had on the podcast. He worked at Amazon early in its life, was the head of product at Hulu and Flipboard, and head of video and Oculus.   Our conversation is about the intersection of technology, media, culture. We discuss Eugene’s concept of invisible asymptotes: why growth slows down (for both companies and people) and how some can burst through. I’d list more of the topics, but we covered so much that you should just listen.   Finally, I’ll say that after spending a day with Eugene (including a wildly interesting dinner with Eugene, past podcast guest Sam Hinkie, and future podcast guest Kevin Kwok) that he is the type of uniquely interesting and kind person I am always searching for and one that I wish I could bet on somehow. If you know more people like this, reach out and suggest them for this podcast. Now, enjoy our conversation.   For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag   Show Notes 1:38 - (First Question) – Idea of cuisine and empire             1:52 – Cuisine and Empire: Cooking in World History 4:20 – Key takeaways from the Defiant Ones Documentary 8;25 – Being convinced to buy a sports coat 11:10 – The concept of invisible asymptote 17:43 – How the medium shapes the messaging and the impact of cameras everywhere on society             17:48– Invisible asymptotes             17:56 –  Selfies as a second language 22:57 – Proof of work in building a social network 32:51 – Magnification of inequalities in digital networks             34:01 – The Lessons of History 36:47 – His thoughts on the media industry’s impact on society as a whole 39:42 – His time at Hulu 44:48 – Places where video could replace text 47:30 – The need for media for any business looking to grow             49:35 – Amusing Ourselves to Death: Public Discourse in the Age of Show Business 53:08 – Personal asymptotes 57:19 -  Habit building and goal setting 1:00:29 – Travel recommendations 1:03:24 – Movie recommendations 1:08:16 – Product recommendations and what makes them indispensable             1:10:44 – Creation: Life and How to Make It 1:13:23 – Thoughts on the art of conversation             1:14:59 – The Most Human Human: What Artificial Intelligence Teaches Us About Being Alive 1:18:30 – Kindest thing anyone has done for Eugene   Learn More For more episodes go to InvestorFieldGuide.com/podcast.  Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag

Hello and welcome, everyone. I'm Patrick O'Shaughnessy, and this is Invest like the Best. This show is an open-ended exploration of markets, ideas, methods, stories, and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfield guide.com. Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaunacy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.

Clients of Oshonacci asset management may maintain positions and the securities discussed in this podcast. My guest this week, Eugene Way, has one of the most interesting backgrounds of anyone I've had on the podcast. He worked at Amazon early in its life was the head of product at Hulu and Flipboard and head of video at Oculus. Our conversation is about the intersection of technology, media, and culture. We discuss Eugene's concept of invisible asymptotes, why growth slows down for both companies and people and how some can burst through. I'd list more of the topics, but we covered so much that you should just listen. Finally, I'll say that after spending a day with Eugene, including a wildly interesting dinner with Eugene,

past podcast guest Sam Hinky, and future podcast guest Kevin Kwok, that he is the type of uniquely interesting and kind person I'm always searching for, and one that I wish I could bet on somehow. If you know more people like this, reach out and suggest them for this podcast. Now, enjoy our conversation. So we're going to jump all over the place because, again, of your kind of smorgasbord of interests. And this notion of travel is a good excuse to talk about your idea of cuisine and empire. So walk us through that concept. It was inspired by a podcast I had heard about this book, Cuisine and Empire. You know, I had just realized that, you know, when I was younger, music really felt like it was the heart of culture in America.

music was where young kids turned to express their sense of rebellion, to protest things like the Vietnam War, you know, music was, you know, like punk rock and all of that was the way that people sort of would choose bands and music to express their point of view on the world. And I realized that now, you know, food has sort of become that for a variety of reasons. One is, you know, certainly the advent of the internet and television. channels like the Food Network started to make celebrity chefs into celebrities. You know, we used to only know the names of restaurants growing up, but nowadays you can talk to many people who are into food. They'll be able to name who the chef is behind a particular restaurant and all of that. And my notion there was just that we are constantly in this cultural battle to find sources of scarcity. And, you know, music and music experiences used to be more scarce. I remember an age when I would try to collect rare LPs or things like that. It would be like a huge find if you went to some weird record store

in some weird small city and found one of these mythical LPs that you couldn't find easily. Music, like concerts and things like that were these coveted tickets that you would go to and all of that. And at that age, you know, music just wasn't reproduced the way it is now. But now we live in an age of Spotify and, you know, there were the CDs before that, which is just printed in mass. And so it no longer became hard to track down any piece of music. Whereas food experiences, especially at the high end, are really scarce. You know, the French laundry or, you know, if you take any three-star Michelin restaurant,

they usually only have two seatings at night. Only a certain number of people can roll through that. And so for you to be able to say, hey, I went and had that meal is a badge of honor that you can hold out. It's a scarce accomplishment. And so I think that we will always continue to fight that battle because humans are status-seeking by nature. And so we're always trying to find that thing that gives us the edge over another

person when it comes to status. And food has really become that for many people. It reminds me of another interesting thread that you were pulling on, which is your impressions from watching the documentary The Defiant Ones about Jimmy Iivine and Beets and Dr. Dre would love kind of the key takeaways. because one of the things I want to spend a lot of time on is this notion of scarcity, marketing, identity, signaling, et cetera. So what were your primary takeaways from the defiant ones?

Well, one meta point was just that I think more things that might only be books in another lifetime should be turned into small videos or documentaries, especially if they involve very charismatic and famous people. So a couple of things about the defiant ones. one was just around the marketing of beats headphones, the whole conception of it. So, you know, prior to beats, people who are headphone nerds might debate the, you know, like frequency roll off of high-end headphones and all of that. And so I was really struck by the scene where, you know, Dr. Dre and Jimmy were trying to

figure out, hey, what's the state of the art in headphones right now? And they assembled a whole table full of all the leading headphones. And they were trying them on. And to paraphrase, they were basically like, these things look terrible. I would not want to wear one of these things. I don't know why anyone would buy one of these. And if you look at the high-end headphone market before then, it really was like a relatively small market, not a lot of differentiation in market share, no clear leaders. And so I think Jimmy, with his marketing expertise, his great insight was, well, hey, we have to make these things culturally significant status signifiers.

And if you look at them, they really should be that. You know, Apple recognizes this even before Beats with their marketing for the original iPods. How did they do it? They marketed these silhouette images and these posters with these white headphones because that was the most distinctive thing. If you look at the things that are the best status signifiers for humans, it tends to be those things that are most visible that we have on us at all times. For women, it can be purses, right?

Because you're always carrying it on you. and so it's always visible. Headphones are very visible, especially the white apple ones, which stand out in sharp relief against clothing and everything like that. So Jimmy is like, hey, we've got to make our headphones look hot.

They've got to look different than all these other headphones. And so today, you know, if I go on a plane and I see someone walk on with a pair of beats, headphones around their neck, I always recognize them from a distance. That's important.

But second, he's like, let's borrow from the cultural scarcity of all these famous musicians and stars that I know. I need to get these headphones into pictures. onto as many famous people as possible. And he did that. And so in the documentary, all these musicians are complaining about, oh my gosh, Jimmy, with his headphones, I'd go to a meeting with him and he'd be like, wait, wait, before you leave, put these headphones out. I'm going to take a picture of you and post this to Instagram or, you know, and share this

out publicly. And it was brilliant. In fact, you know, beats headphones got banned by some of the sports leagues. Best thing ever. Best thing ever, right? You know, the whole idea that bad publicity, there's no such thing as bad publicity, it usually holds. And that's, that's one great example of it. So I think that was one of the just meta points there. Another one that I thought was interesting from that documentary was just what separates some experts and people. What's a way to identify talent? And I was always just struck by how Drey was listening to these demo tapes and found Eminem. He heard the time. He heard the time. tape and he was just like, wait, stop, who is that? Let's fly this person out, you know. And

you hear that. And obviously, there's selection bias in these stories in hindsight, but I've seen it enough in business and other venues where I do think there's something to that. There are certain people with that gift for spotting talent in a crowd or spotting something distinctive that stands out. And in the arts world where, you know, you might argue that it's just sort of a lottery-style distribution of outcomes, if you had that little bit of edge, it would be a huge advantage. Can you tell that story about being convinced to buy a sport coat and in your travels and why that is kind of an interesting experience? And that will be a good segue into the idea of invisible asymptotes. So I was in Milan for the first time a couple years back. And I was traveling

through Italy for five weeks. And everyone had told me Milan is kind of the fashion capital. I had wanted to go there really just to go see an opera at La Scala. But I decided to also walk around to all the luxury stores and just check them out since that was such a huge part. I mean, they're all over. They're like, they line the streets there. The thing about these high-end luxury boutiques is when you walk in, there's very little clothing on display. I mean, stores are very minimalist. And I walked in and I was convinced that I wasn't going to buy anything. I didn't really see anything that looked like anything I would wear. And this sales, person walked up to me and she was like, oh, you know, what are you looking for? And I was like,

well, I don't really know. I was just kind of walking around and checking out the town. And she started chatting with me, just sort of looking me up and down. And she was like, you know, I have a thing that I think you might like. And so she went back to, you know, some store room and brought out this sport coat, which I looked at it and I was like, well, that pattern's a little bold. I don't know if that's like quite me. But she had me try it on in front of a mirror. And then she started talking about why it fits so well, you know, how it spoke to a certain part of my personality that she had sensed in just chatting with me. You know, you know, I know that I was being sold on something. And yet it was just so polished a presentation and so convincing that after her whole spiel, I was like, you know, I really do want to own this forecoat.

And so I ended up buying it. And, you know, when I was at Hulu, I would go on sales calls sometimes. with our ad reps. And you know, when you go on a sales call with the best sales rep on your team, it's absolutely a great lesson in what sales is all about. This whole idea that they say in poker, play the player, not the cards. Salespeople will tell you, you know, you're selling to that person, not your pitch. Best salespeople go in and they don't just go into some spiel. They're actually trying to understand the client and what their needs are first, and they're adapting the story to that just the same way that salesperson in Milan did to me. And I think in tech, we have this

obsession these days with big data. If you just get enough data, you just crunch enough of it, you will just figure out what people want. And I just think that we often lose sight of the idea that there are other paths to making the sale or satisfying a customer need that take a different approach that aren't like deterministic from big data. It's a great excuse to get into this big, hairy concept of invisible asymptotes, what that concept means for businesses, for people, maybe how to identify them. I'd love to spend a few minutes here. So start by outlining what that concept is and maybe how you first came up with it.

The concept of invisible asymptotes is just that in business, we traditionally speak of successful businesses as going through what's called the classic S-curve. So in the beginning, you're sort of like, you're not growing really, and then you figure out some product market fit and your business starts. growing sharply. And so that's sort of the bottom starts to go up in that classic hockey stick style. And then eventually businesses growth slow. And we have a lot of talk and a lot of cases and a lot of people obsessing over how to get that initial product market fit because that's something that almost all startup entrepreneurs struggle with. And it's very hard. Most new businesses

fail. I had been at companies which had grown up and gone past product. market fit and then had hit the top shoulder of the S curve where the growth flattens. And I just didn't feel like enough people spent time thinking about why does that happen, you know, and how does that happen? So I wanted to write about it. And my piece really, you know, what brought it up to me was very early on at Amazon when we had done surveys of customers. And we surveyed two sets of customers.

One, customers that did buy from us, we actually wanted to know why they didn't buy more from us. The other side of customers were those who had never bought from Amazon at all. And, you know, obviously to figure out what your total addressable market is, you have to understand why people don't buy from you. Most companies in the Valley nowadays do a lot of market research panels, surveys, focus groups. And there is a tendency to focus on, well, look at these people who do use our product. Let's listen to what they're saying. And I'm actually always fascinated by the people who don't use your product. I think there's a lot of the people who don't use your product. I think There's just much more to learn from the people who don't use your product and to figure out,

in your mind, how to segment the market into people who will use your product and won't. But the concept of the invisible asymptote is just that there is something that causes you to hit that top shoulder in the S curve. And it's often invisible to you, but it is an asymptote on the growth of your business. And without figuring out what that is, you won't ever break through that barrier. And so I talked about a number of different companies that I thought were hitting different invisible asymptotes. And one reason I think the concept is important is if you identify the wrong cause of that flattening of your growth, you will chase a bunch of solutions that will have no

effect on your business. And I think one of the most powerful things that any business can do is to clearly figure out why their growth flattened, why certain people don't use your product. And it's often very different than what you think. And the reason is that, when we hear from customers that do use our product and why they love our product, it's just so flattering to hear that type of thing. And it often resonates with our own belief of our own products value because we are also usually customers for the products we build. And the thing is that can deceive you because those very reasons might be exactly the

reasons why other people don't like your product. You and I had chatted about Twitter earlier. That was one of the companies I used as an example. I actually think the interface of Twitter, the style. of its presentation of its content is hugely massively appealing to a certain type of person. But on the flip side, it's also very, very unappealing to another set of people. And so there are a number of other examples that I go through. But I think that's just the most important thing is that it can be very hard to segment our

brains this way to understand that, wow, the way we've built our product is so appealing and perfectly tuned for product market fit for the segment. that we selected to, but it's exactly built incorrectly for all the other people who don't use it. You gave some examples like Amazon. It's an interesting one where maybe those were identified and not necessarily removed, but just avoided that through other means, new S-curves were begun, new businesses started. So what do you think is shared in common by businesses that are able to maybe identify or blow through these things? Well, one thing that's interesting about Amazon and also a lot of Chinese tech companies, for example, is that they're in many

lines of business. We don't tend to see that much in the American tech scene. You know, most American tech companies, even the largest ones, focus on a couple sweet spots. Amazon is the closest to some of these Chinese tech companies like Tencent and Alibaba and whatnot, which seem to be in a gazillion lines of business. You know, when I was over in China, I met with some folks from a company over there called May-Tuan, which kind of started as like a Groupon clone type of business, and now has over 200 lines of business. You know, they have drones. that were kind of food delivery robots. They have like a Yelp-like site. There's just like movie tickets, you know, all sorts of just disparate businesses, like kind of like an old school conglomerate.

And if you look at Amazon, they're like that also. And I think there's just this sort of very pragmatic focus on what is the customer need and how do we solve that? And in a lot of the lines of business that they're in, there is usually a very practical answer to that question in each line of business that they're in. And Amazon has always had as its mission to be the world's most customer-centric company. So there is this sort of like deep attuned focus to what the customer needs and wants, which is a little different, I think, from the approach of genius inventor in a room thinking of something that the customer doesn't even realize they want and coming up with something from scratch, which I also think is a beautiful story. And we love those stories of

individual geniuses like the Steve Jobs of the world that just figure out this is what customers need before they even need them. But the other type of business is often seen, I think is less sexy. We're just like, hey, here's a bunch of customer needs. They're very obvious. Let's just go solve them. And so I think there is that in common. And it wasn't surprising to me when I was in China that, you know, Jeff Bezos is kind of the patron saint for tech companies there. I saw posters of him, quotes from him hanging in most of the major tech companies, you know, hallways and elevators, because I think they are very sort of Amazonian. Many of the companies that you profiled in that excellent long article, which people should

definitely read were kind of media, social media type companies. So Snapchat, Instagram, Facebook, Twitter, et cetera. And in the second post, you wrote about this concept of the role the selfie is playing in kind of our society. And of those networks, I think that I see the Instagram effect on society the most often because maybe it's my age and I, like, I just missed it in terms of the importance and the signaling and everything. But it seems, Instagram seems like a really neat, a neat one to spend a few minutes on to get your ideas behind how these things, kind of the medium is the message idea, like how these things shape our behavior, consumer behavior, and kind of how we act. Well, I think cordial of that is first understanding and believing in, and I think most people

believe this, is that humans are a social creature and that we are status seeking by nature. A lot of signaling theory derives just from that very simple observation. And I have more thoughts on this, which will probably be the subject in my next post. But if you consider the history of humanity and how we sought out status in different social structures through our job, in our family, you know, at school and all those different things. We had one set of sort of contained surface areas in which we would pursue higher status. What the internet and social media has done, essentially, is they've increased the surface area of status seeking to a digital realm, a virtual realm, and vastly expanded that surface

area. So when you look at young people on Instagram or, you know, Facebook before that or Snapchat or any of these things, you realize that almost every post could be described as a form of signaling in one way, shape, or form. Instagram, by being sort of photos only, I think speaks to the most efficient way for young people to seek out status in the world. Snapchat is another thing that's interesting, which we should talk about afterwards. But I think that we have a younger generation which grew up with smartphones that have a camera

in it by default. So they have a camera with them at all times. I think the behavior shift is monumental and it's something that's just not discussed often enough, which is that young people realize that communicating quickly is most efficiently done by a photograph or video and not by writing text. I actually think if you go back to caveman days and you'd give them cavemen, these smartphones with cameras built in an event, nothing else except the camera, I think visual language would be sort of the first language for most people in the world rather than text. That's not to say text doesn't have its advantages in many ways. It's just that photos are, you know, they say a photo's worth a thousand words. There's some truth to that. You can express a lot in a photo with your face,

the expression. And so if you look at a young person and how they message their friends and you count up the percentage of them that are photos or videos like snaps versus text messages, and then you do that same thing for an older generation, like my generation. You'll see that's almost exactly the opposite. Young people mostly use photos and everything to communicate. Old people tend to tap out a text message on a virtual keyboard. And so I think Instagram just came along at the right time where they jumped to that transition. You know, Facebook had started with text status updates and had added photos later,

but it's always been a mixed medium social network. Instagram was like, oh, this is a photo. only social network. Not only is that more accessible to more people, it's more appealing to young people, I think. And so essentially, you know, what I said in my invisible asymptotes piece was that Instagram is a photo entirely composed of advertisements, you know, not just the official ads, but all the photos that we take in post of our lives. This is the meal I just ate. Look at this beautiful place I just went on vacation. Look at what my husband or wife just got me for my birthday. Look at what my kids made me breakfast and bread for Father's Day or Mother's Day.

All these things are little advertisements of our life. So the things that people say that are both good and bad about social media all stem from this is that we have these massive, massive networks where people have realized it's more efficient to actually compete for status in these virtual worlds than it is in real life. And that's especially true for young people. young people before they have a job in the world, before they've gone to college and maybe like they don't have a car, they don't have a job title, they don't own a home yet. But what they can do and what they are very good at is is getting status virtually. This is why, you know, I, when I'm on Snapchat or Instagram and then I compare my posts to those of really young people, it's just ridiculous, right? They'll post a

random selfie and get like 500 likes. It's an astonishing number. I will carefully compose a beautiful photo from my vacation and get, you know, maybe like a couple dozen likes. It's just, you know, they grew up in this, this game, this status game, and all their friends are playing it also. It's just a different world. Yeah, it's amazing. I mean, I think the best episode or one of my favorite episodes of that show Black Mirror was the one that it's taken this to an extreme, where it literally is, it becomes its own currency. And back to your idea of scarcity, the goal becomes the accumulation of like social currency through, you know, like ratings of, each other and feedback mechanisms. I mean, it's kind of crazy the extent to which this could go.

You mentioned you were writing about it or thinking about writing about it. Maybe preview some of those ideas a little bit for us. I'm not a big crypto zealot or expert by any means, but I actually think this is where crypto makes for a beautiful metaphor. So if you looked at the original Satoshi Nakamoto white paper and you look at ICOs, what's interesting is they have this like proof of work hurdle, something you have to do to mine for this currency. And it just, you know, when you describe it to the normal person, they're like, this is so absolutely bizarre and weird. Why is this? And there's a number of reasons. But I actually think the parallels to starting a new social network are there in that if you start a new social network, what are you doing?

You're setting up some structure where you have some proof of work hurdle. And by having, Having your users do this proof of work, they can mine essentially what's like a social capital currency. So let's take Instagram, for example. Let's call it Instagram coin. When Instagram was created, and they created this network, what was their proof of work hurdle? It was this. You have to take a beautiful, interesting square photo. If you do so, you will mine Instagram coin. And how do you redeem that coin. It comes in the form of likes. It comes in the form of followers and, you know, comments and just sort of engagement with your work. And so you had all these people essentially mining Instagram coin by doing this. Facebook and any social network has some weird a proof of work thing.

If you look at musically in the beginning, musicly was like, hey, how do you demonstrate proof of work here? You have to create kind of a lip sync little dance sketch to these music tracks that we've licensed and posted it to our feed. And just like any cryptocurrency, it's much easier to mind this in the beginning when the network is sort of young and hasn't built out. Like, if you are one of the people who was on Twitter's recommended follower list way back in the day, the difference in the number of followers you have versus the next person is, it's exponential. Like I know a few of those people who are on that list, they have like a million followers or something, right? You know, here are people like you and me are like working hard trying to get followers

these days grinding, writing these beautiful tweets. But, you know, that's never going to happen again. And that's because as networks expand over time and just as, you know, cryptocurrency gets mine more and more and there are more people, it gets harder, right? Because there are more people competing for it. There's just less of it to give out. And so I think it's really important. Why do some social networks succeed and others don't? I think it's hard to come up with a proof of work that's unique that can actually distinguish among a user base. Like, I think you can't create a network if you don't have some proof of work that separates users out from another.

Like, if every person who posted on Twitter got exactly the same number of likes, like, it doesn't matter what you wrote, you'll get a million likes. It wouldn't be a fun game to play. And I think back to, this goes way back. If you go back to early Twitter, pre its growth, and I was an early user of Twitter, everyone was just posting kind of what were like conventional status updates. The stuff that people always joke about. Like I just had, you know, a baloney sandwich for lunch and stuff.

They're like very few likes. My first tweet was way back in 2006 or seven was doing my taxes. And then I didn't tweet again for like a year. And my next tweet was a year later and was also doing my taxes. Like no engagement. I was just like, what is this network? And people often remember that as a friendly, fun time on Twitter. But actually, that wasn't even a business.

There's nothing there. There was no potential energy. So the proof of work is the structure that creates the potential energy in a network. And for me, what caused that for Twitter was the creation of these two sites. There was one called Fave Star, and I think the other was called Favored. And what they did at the time, they were like global leaderboards for tweets. They said, these are the most like tweets across all of Twitter. And when I saw that, for the first time, I was looking at what a really good tweet.

tweet look like. And a lot of it was comedy back in the day. The style of sort of like single punchline comedy that's very common on Twitter now. There's like no setup. It's all contextual. It's just the punchline. And what that did was it created a status leaderboard and it turned Twitter into a game. And it's the game that we play today, right? Which is get the most likes. And how do you do that? Well, there's a whole bunch of ways to do it. But back in that day, it was to write a funny one-liner. And then later it became post a really interesting like fortune cookie like thought or quip. And there's another form which is post a link to an interesting article. Now we have the quote tweet like clapback.

You know, you can dunk on like Donald Trump or somebody like that. You know, like there's all these forms, right? But what mattered was that there was a sense of status and competition embedded into the network that created all the potential energy. You know, when celebrities like Justin Bieber and those folks, came onto Twitter. They brought all their inherited real world social capital into the network and created this sense of separation. Remember when there was the erase to the million followers? You know, it, I can't remember Ashton Coutherty. And Ashton Coucher- Yeah, yeah, yeah, right?

Like, that energized it. The funny thing is that Facebook had that from the very beginning because Facebook started off as only for people with Harvard email addresses. It was already, like Harvard, the most sort of canonically elite institution in the United States. United States and you could only get into this social network if you had one of the email addresses. That meant from the beginning there was a status game in Facebook and the way it spread through the Ivy Leagues and all of that, right? And so musically was interesting. Musically came along. I thought it was an interesting case because their proof of work was different enough that there was a whole class, a whole generation of young women who are like, this is a network where I am

uniquely qualified to actually win status versus some famous. is VC on Twitter, right? Like, I'm disadvantaged on Twitter. But on musically, I can kill them in this game and I can accumulate a ton of followers. And so they migrated over to Musically in mass. And so I think all social networks have this proof of work. And to tie it back to my asymptotes theory, the proof of work not only distinguishes who are the winners on your platform, but it also governs the ultimate size that your network can grow to. So the problem for a musically will always be well, there are only so many teen girls in the U.S. who are willing to dance around in their bedroom and do one of these lip sync sketches. I don't know you that well, but I don't think that's something

that you would spend your time doing. It's not something I would spend my time doing. There's some people who won't do that, just like there's some people who won't enjoy writing little 280 character quips on Twitter. And so every network almost by definition chooses the ultimate size. If you look at the largest network in the world, Facebooks, the we chats, they almost always have to generalize out their proof of work function over time to attract more users. Facebook, if they had stayed at, hey, you can only post text status updates, how large do we think they would be if they had never added photos or videos or all these other things that they do? You know, we chat.

If they hadn't expanded from messaging into doing payments and all the, you know, like gazillion lines of business they're into, wouldn't be as large as they are today. So you'll almost always see the largest social networks broaden out over the first. time. The problem, of course, is that, again, status and the scarcity of status is the potential energy that governs the heat. I like to think of it. You just know, you just know some networks are hot. They're growing quickly. Everybody's on them competing. As you broaden out over time, as you make everything easier to do and accomplish on your network, in a way that status-seeking game loses some of its heat, which can be fine, I think, if the network becomes massively

useful. You know, I think, for example, on WeChat, yeah, it may not be as fun or as hot now on WeChat to compete for status. On the other hand, you can't live without it in China. You use it to pay for things, pay your bills, pay everything. And so if a social network can go really far out on the utility access, that's almost always the path that large, large social networks have to take. I think Instagram, Snapchat, all the networks eventually are going to be like, well, the status game has gotten a little old, how do we remain relevant in the customer's eye? We have to graduate to becoming super useful in their lives. Because as you know, status games are fragile by nature. I think there's something here to the idea of, and this was the idea that like Sam Hiki and I

had discussed, that to refresh these status games on social networks, you almost need some mechanism to clear out old money or the equivalent of old money. If you have these people on Twitter who accumulated millions of followers back in the day, but no longer tweet. You got to reset it. You got to reset the game in some way. Someone new has to come along and feel like, hey, this game isn't rigged. I actually can become famous on this network also, which is a hard thing to do the way that status accumulates typically on social networks.

But I think you'll start to see social networks think about that more and more over time. One of the questions I was looking forward to asking you was about this tendency for inequalities to be magnified in digital networks. So if you look at history, like if you go read Will Durant's lessons of history, a very short book, one of the big sign waves through history is this equality inequality pendulum. And everything that you've described just now really highlights how easy it is to magnify stuff when it gets digital. And you've described effectively inequalities. In this case, for social capital, you know, obviously there's been a lot written about financial capital inequality and things of this nature, power inequality.

What are your thoughts there about? And maybe it's the resets that solve this. and it's a self-correcting mechanism. But what are your thoughts about digital and its tendency to magnify these things? Well, we clearly have this winner-take-all dynamic that it's a result of a number of things that came about when the internet came about.

We used to, it's funny, when people used to talk about network effects back in the day, and they wanted to teach what network effects were. They would always use companies like Cisco when they would talk about the telephone network. But what we're living through now is the largest network effects businesses

in the history of the world. I laughed because when I was in Amazon, one of my research projects was, hey, let's research to see if Amazon could be the fastest growing company in history. It was like, it turned out to be this really hard problem back then for me to actually research.

I didn't even ultimately conclude what was the largest growing company. But what I do know is that since Amazon, which probably was at the time the fastest growing company in history, there have been many, many other companies that I have far exceeded that hurdle. You had Groupon, you had Uber.

These companies now that... Scooter companies now. Oh, yeah. That hit like a billion dollars in revenue in just like no time whatsoever. And, you know, why is that? Well, we all have these smartphones that are connected to the internet at all times. We have these massively connected social networks like Facebook and Twitter that allow information and ideas to travel more quickly than ever.

And so we've taken network effects, which are this sort of like concept that worked in small segments of business and just amplify it to agree we've never seen in history. And that creates these runaway winner take-all effects, which we're still grappling with. For example, there's this whole debate about antitrust. How do you deal with tech companies? What's the equivalent here? Yeah. How do you deal with it when the consumer welfare criteria for defining a monopoly actually doesn't apply to these huge network effect companies?

And what do we do? Do we want there to be companies that have such strong network effects that effectively shut out all competition? And you have that same effect on social networks. You have the runaway celebrities who gain so many followers that it becomes sort of a self-fulfilling prophecy. So I think just as social networks have to grapple with that, antitrust law has to grapple with the idea of, well, what are the downstream harmful effects of companies with massive network effects? I think the strongest argument probably you can make is that there's some element of first mover advantage combined with network effects that is partially a function of luck.

And if we believe that, then we may be sort of cutting off a lot of future competition, which I think is always healthy for markets just because some company will always get lucky, will always be the first mover in some massive network effect business, and we'll always run away with that. Now, there are probably a number of different ways to deal with that problem depending on line of business. Always, I think the preference is to let markets sort things out, to let some competitor come along and disrupt that. But, you know, I do think there has to be some thinking done around this idea of, wow, okay, luck plus first mover equals massive network effect, like runaway winner. Is that healthy? Do we want that? And how do we control that to encourage more entrepreneurs,

more people to come along and innovate and do different things on top of, to push sort of like progress forward, to push the markets forward? I'd love to move to the topic of kind of three topics all in one, and you can choose which direction to go. You mentioned before we started recording, you're interested in media, generally speaking. You've mentioned a few times your time spent at Hulu, and you've written quite a lot about your interest in, I think, love of movies. So tell me how those three kind of things intersect, maybe what you did and learned at Hulu, and how you think about kind of what to do next, given those interests. Sure. So we spoke earlier about my interest in different media types and sort of my sense of the power of photos and videos versus text as a communication medium.

So we're already seeing that, right? We're seeing a young generation grow up that are much more visually literate and comfortable with that. And I think that's important because in traditional American schooling, video as a form of language isn't really taught. We're taught writing and grammar and all of this, which, and we have this very powerful cultural association with text and literacy with knowledge and being, you know, one of the liberal elite, for example.

And I think we have a sort of anti-intellectual bias against video as an art form. But actually, video is just like any communication medium, sort of neutral in its base conception. It's just about how you use it. And I actually think we have plenty of evidence that indicates that video is actually way more appealing than text. You know, if you look at the number of books that are solely chair, the number of books that are read, the truth that not a lot of people like to admit is that most people don't read. Most people don't read very much. If you wonder, if you look at the New York Times bestseller list, and you ask how many copies of that book that's number one?

Do you think we're sold? And then how many of those books that were sold do you think were actually read? It's a shockingly low number. It's shockingly low. We just don't like to. It can be like a few thousand. Yeah, yeah. It can be, you know, like a lot of those book deals,

if you agree to a book deal, you often have to buy the first couple thousand copies yourself just to get yourself on that list. But then if you look at video, like if you look at something like the defiant ones, If that had been a book versus that series on HBO and look at how many people watch that, if you look at how many people watch movies, TV, how many hours a day people watch TV, video is a medium that appeals to us as sort of like a visual sensory feast in a way.

And so I've always thought that that was a place where I could arbitrage in that, like, I don't think a lot of people actually understand how to make video in tech and why would they? They're never taught this. and I still think video has a lot of room to penetrate a lot of markets that we currently still rely heavily on text for. Especially now that smartphones all have really nice video cameras in them. And you have this generation of young people who are super visually literate about video grammar, you know, the people who were making vines and all these things growing up. As for Hulu, you know, my time there was really interested in, you know, I had gone to film school before going to Hulu.

I've also had sympathy also as an English majors and undergrad for artists and creatives. What a tough life that is. I saw there was just huge adversarial relationship between customers and filmmakers a lot because studios were sort of sitting in the middle of that relationship. So people would be like, you know, screw it. I'm going to pirate this movie because screw, you know, whatever, Columbia or Warner Brothers or whoever, I don't care. But if you ask the most fans of any artists, they actually really are fans of the

creators themselves. And so I thought with Hulu, trying to reform that industry from within to create a more customer-friendly approach from the studios in terms of how to distribute that work to the end customer was valuable. You had seen with Napster and things, sort of the adversarial approach, which is just like, hey, let's just reform the industry from outside, just blow it up. And that also didn't work out that well. And I do think artists should be compensated more fairly for their work because I enjoy seeing the work and I want to see it continue to be made. So that's a big part of the reason for me going to Hulu and trying to reform that industry from the inside.

And we're starting to see what I now see as the first phase of Silicon Valley disrupting Hollywood. And if you look at the history of Hollywood, you'll see how this happened. Way back in the day, movie studios were vertically integrated. They owned the talent. Like, if you were Tom Cruise, you would actually work for, like, an MGM. Like, you were an employee. They owned the movie theaters.

They owned everything. They made the scripts. They shot the films, and they put them into movie theaters. And so these companies had a lot of know-how and unique process knowledge inside their four walls. Well, there was a Supreme Court case where they were like, you know what? You can't own your movie theaters anymore because that's anti-competitive because you can just shove your movies down on the viewer's throat. And then the talent was like, hey, you know what? We don't want to work for you anymore.

We're going independent. So now you have the actor's guild or all these unions, right? They're all free agents. And studios then became public companies. They got bought by large companies. And what you had was a formerly vertically integrated institution become now just a thin horizontal slice. And what is that slice?

It's largely financing and marketing. That's what they do for films. And you had tech companies who came along and initially they thought was, Hollywood doesn't know what they're doing and let's try to shake up the business and they started trying to do all these things to innovate on how films were made and everything. But over time, as they were like basically getting robbed by licensing, you know, these old TV shows for huge amounts of money. They immediately got data back, right?

They're like, how many people are watching this stuff? And once you get data, you know, you know the ground truth. And what studio, what all the tech companies realized was that, oh, look at all these Hollywood studios. Look at how much cash they have. They are barely profitable. Meanwhile, we are these massive companies that are just churning out cash. Why don't we just cut these studios out of the process and just, you know, for Netflix,

just like, why don't I just write a check to David Fincher? Why would I wait for him to make something for a new line and then license it years later for too much money when no one's watching it anymore? Why just go to David Fincher and say, I'll give you $100 million if you make House of Cards for me? And so this is essentially wave one of Silicon Valley disrupting Hollywood is to say, we have more money than you, and we can actually just go straight to the talent. I always say that Hollywood is such a well-tuned structure that essentially you could treat it like an API. And this is the API.

Put money in, get a TV show or movie out of it. It's very abstracted like that. And that's a lot of what the tech companies do now, right? Apple, Amazon, Netflix. They're like, oh, this is great. I write a check for $100 million. Next week, I get back like 10 episodes of premium video and like no questions asked. It's perfect.

And I plug it into my awesome business model where I can make a whole bunch of money from it. And by the way, my business has other revenue sources that Hollywood studios don't. So I actually make more profit off this per unit. Well, that is why now we're essentially down to two studios left in Hollywood. it. There's Warner, which is trying to launch its own streaming service to stay relevant in the world. And you have Disney, which will probably do fine because they have a bunch of incredible IP. And all the other studios are being absorbed or will just die off. So that's wave one. When I think of what I want to do next, it's really, I think, to think about wave two of that

level of disruption, which isn't just like replacing the studios, but doing kind of exactly the same thing as the studios is to think about how does that business change when we incorporate tech in a deeper way into the artistic process. And what does that look like? And I don't know what that is yet. I'm still thinking about it. But I certainly don't think we're at the end of how Silicon Valley will change that entire world. You said earlier that there's still probably a number of categories where video could replace text effectively. Any examples that you could share with us? Yeah, well, just from a simple arbitrage perspective, I certainly think there's a lot of great ideas locked away in books today that are very forbidding and, you know, not appealing to the masses, which could be turned into educational content using video. And that would reach many more people. I think what it takes is, you know, we have these MOOCs now, which essentially every new medium kind of recreates the old way. The first TV shows were just kind of like radio, right? You know, like you see that. pattern repeated. We kind of saw that with the first wave of MOOCs, which wasn't that exciting to me,

where, well, let's just film the lecturer, but the lecture is doing exactly the same thing. They're reading off some slides or they're just talking to the camera. It's like super boring. When you look at what video is strong at communicating visually, it's not that. And so I think we will see the next generation of educational content be much more appealing visually. It'll have cinematic language and production values. And we'll open up education to the masses in a way that we've never seen before from texts. I just think if your best ideas in the history of the world are locked away in some dense textbook, by its very nature, it's not going to reach a lot of the audience that wants it. You're just the fact that you and I are

doing this podcast, right? Like the advent of audiobooks was nothing more than arbitraging one medium into another. It was like, hey, why are audiobooks so appealing to some people? Well, you can drive and listen to these books. You can be jogging outside. You can listen to these books. By the way, the human voice is super expressive. So the book may be more interesting when read by an actor who can give different voices of the different characters. And most importantly to these mediums like film and podcasts and audiobooks, if you don't do anything, they keep going. A book won't read itself. If you're just like, I don't want to read this book right now, the book is not going to enter your brain, right?

But if you're jogging like five miles and you're like, yeah, this audiobook, it sort of has my attention. The thing is it keeps going, right? And this is always the crazy thing. When you read an audiobook, you're like, whoa, because when you look at a book, you know, it can be like hundreds of pages. It looks like this forbidding thing.

And then you listen to the audio book. You're like, oh, nine hours. That's like one commute over a week. And then I'm done with a book. It's like amazing. And then yet a book will sit on your nightstand for like months. You're like, I can't get through it. And so there are all sorts of.

of these weird arbitrage opportunities between mediums, which I just think haven't been explored. There's such an interesting trend. Like I see it even in the financial world where it's become table stakes to have some sort of content aspect of your business. There's just with very few exceptions. And this is like the ultimate scarce examples where it's like really small investment partnerships or really niche type stuff. Maybe doesn't need this sort of exposure. And it's marketing is the fact that it's mysterious and scarce and quiet. But for any business that's like reasonably open and the products are reasonably accessible. It seems as though in the financial community and in others, you need some sort of content strategy. And then what becomes interesting is

the like the relative cost of these different things. And so, you know, we can write the best white paper ever. And we've written a few this year. And the really fantastic ones might get 50,000 people reading them. And that's like esoteric weird quant stuff, right? Like that's a big number for for a very specific topic. That is like the absolute floor for any conversation I have like this very casually with someone interesting. So there's this multiplier effect. And by the way, that white paper is arduous and costly in terms of, you know, mental capacity and time and editing. It's a nightmare. It's a multiples as hard as this podcast. And the podcast is multiples as effective at at reaching an interesting audience. And so I'm fascinated by like where the sweet spot is and all of this because I think

video ultimately, like take the defiant ones again, that was one of the most effective pieces of four hours stitched together that I've ever seen to learn about something, to be entertained, to really take lessons away. It was kind of a masterpiece in content creation, but arduous. Like, I couldn't do something like that. So I'm just interested by like there's these companies popping up that do support and like basically our tool kits for content creators. And I'm just, that's why, you know, your interest in media overlaps with my own. I just think it's such an interesting need for almost every company to have this arm of itself and finding the sweet spot for each, and some do it better than others, to grow their own businesses.

Yeah, well, I'd be curious to hear your opinions on this, but Neil Postman wrote Amusing Ourselves to Death, which is this amazing book. And one of the most... The opening pages of that book are some of the most memorable of any book. Yeah, yeah. I so wish you were alive to write about this current internet age. But essentially, one of the core ideas from his book, which is so important, And even more relevant than ever today is that everything has become entertainment because of the mediums through which it's transmitted.

And the idea I'd add on top of that, which is really important now, is that we now live in what I like to call the big bang of content. This is the age where content went to infinity. Effectively. It's not infinite, but effectively. That is such a difference from the age of scarcity that we used to live through. And what it means is that formally you could sort of stay in your lanes. Like you could be a research facility and just write white papers and just like, look, I mean, what else are people in my space going to do?

They have to read my white paper because that's essential. That's like the only type of content in my business. But what changes in our age today with a smartphone is that at any point in time, you are competing with what's on a person's smartphone. And that means that formerly different lines of business and different industries now compete head to head. You may not feel it entirely, but Fortnite is just as important a competitor to the film industry as the next studio over. And because of the way the mediums are structured, everything is becoming entertainment. Politics became entertainment long ago. You don't have to look at

our current president to say, oh, okay, like politics is a form of entertainment, like this former reality star. If you look at, for example, what Ocasio-Cortez is doing right now, amazing, right? Because she sort of understands, whoa, in this different age with different distribution channels, the game has changed. And she just happens to be young. And she understands these mediums natively, whereas most senators and congressmen are these really old white men who probably don't understand how to use Instagram or what it's all about in all of that. And so the fact that you now are doing podcasts is just a reflection of the fact that part of your business has to be entertaining. It didn't used to be.

now it has to be. And so I think everyone now has to figure out with their content how to compete with every other form of entertainment. That's a sort of invisible asymptote or an invisible competitor that many businesses just can't see. If you were a video company, you're not looking at what's going on probably in e-games or what's going on on Instagram or something like that. But every person now has a choice at any moment in time for how to entertain themselves. And they are going to go to the best option because it's one tap away on their phone. And that means the bar has been lifted. The game has been lifted. There's a sort of entertainment hurdle, which is ever rising, which is sort of like some analog to BOML's cost disease. I just think there's some entertainment

hurdle now, which everyone has to surpass. And it's amusing, right? Like our young kids, my niece, I look at her. And I'm guilty of this. I take a lot of of photos of her on the phone. And she's always like, let me see. As soon as I take it, right, I'm training her to be an entertainer from a very early age, right? When she grows up, she's going to be way ahead of me in understanding that. The reason I don't send snaps or things like that to message my friends is I didn't grow up with that behavior. But yeah, the world has changed. It's amazing. And it affects all of us because our businesses are relying on these things. I wonder what your thoughts are on the personal side of the

visible asymptotes. So in exactly the same way as you describe for companies that you're sort of doing one thing. And if you don't evolve, you hit, everyone hits the top of that S curve. How do you think about that from a personal standpoint? In any way you want to describe it, it could be, you know, your business skills. It could be, you know, how you treat people, whatever. How do you think about that? Well, look, it's human nature to not be good at taking feedback. Some of the most interesting arbitrage opportunities in the world, you always hear this. It's such simple advice. And yet it's shocking that it's not standard behavior. But if you're a CEO or an executive, almost everyone tells you to get a coach, get an executive coach. Atul Gawande wrote this great

piece years ago in The New Yorker about he's a world-class surgeon. And yet he asks a peer of his to observe one of his surgeries and give him feedback. And he was like, oh my gosh, I got all these notes on things that I missed. And the thing is we're just terrible at looking at ourselves. We will always be the most biased observer of ourselves. And we'll always be the most biased observer of ourselves. And so it's human nature if you become successful over time to just feel like

you don't need, like you know it all right? Like you don't need any coaching. You don't need any feedback. And, you know, I have this core thought that almost everything in the world could be fixed

by tightening feedback loops in general. You know, why is it so hard to exercise and eat well? Well, the problem is the feedback loop is too slow. Like, if I could go out for a jog for three miles

and lose five pounds, you bet I would be jogging every day. But the thing is, you have to jog over and over for like, you know, weeks on end before you start to feel your pants loosen up. And you know that'll happen. It's just, and it's the same thing with eating, right? I eat these 10 French fries today. I don't pay an immediate penalty. And they taste really great because the feedback loop on taste is much faster than the feedback loop on your nutritional loops. And so that's the thing with invisible asymptotes. There's a lot of them are just caused by very slow feedback loops. And so a

simple thing that most people can do is just increase the number of feedback loops. Like for me, myself, it's having those friends or peers or things that will give me honest feedback on where I need to develop. One of the problems is, you know, the average tenure of employees at companies in tech now is short. It's like two years or something at startups. And there's a whole bunch of reasons why that happened. The economic models of stock options, the way that companies are like, for all a number of reasons. That is the case. One of the problems is that if you, as a company look at an employee that's only in this day for two years, how much are you going to invest in training? It's just not worth it. They're going to take that training and go to some

other company, maybe one of your competitors. And so the problem is that if you look at the business world, you have all these employees enter companies. Just like, hey, when you just start doing this job, and then they're responsible for their own learning. It's not really great education or anything like that. Companies don't optimize for educating. Like I think it would have been different in the age where people worked at one job for life, then it really behooves you economically to train that person to be the best employee possible. But we're not in that age anymore. You know, I just go back from Japan where the Japanese are famous for you, you'd have these, like, crafts people who become the best that...

Yeah, seven years making rice and sushi or whatever. Yeah. Giro dreams of sushi, right? It's the canonical one that people are familiar with here. And a lot of that was based on an apprenticeship model where you would go server master and study them and learn your craft. And in a way in our modern world where everything is like short tenure, everything that doesn't happen. And so besides tightening your feedback loops, I think we have to get used to this idea that everybody has to take responsibility for their own learning in a way. We've actually never had more resources available to everybody for learning, YouTube and

all these free resources online. but the discipline to take advantage of that is still super rare. So I think I still have much to learn on many, many dimensions. And I've tried to sort of adopt those things. Tighten my feedback loops and then taking responsibility for my own continued development. The feedback loop implies like there's something you're trying to achieve. And so if the five pounds or the inch off your waist is the goal at some point in the future. And if it's a slow feedback mechanism, the odds just suck.

Whereas if you reframe it as no, like all success is just habitual, it's just, it's just habit formation where you actually fall in love with the habits themselves and not the goal that's distant, that you just sort of like short circuit the system. You then live for the process versus the product. Now, that's hard. It's really hard. And I think it requires a philosophical buy-in. In my case, it took me years.

It took me years to convince myself that this idea was true. And whether or not it is true or not, I could be fooling myself. It doesn't really matter because the outcome is that I focus on habit creation and very small, bite-sized habit creation, high-frequency habit, you know, daily stuff, weekly stuff. You know, this podcast is a good example where you don't know maybe what the content of it's going to be. I don't know who my guest is going to be who the next person I'm going to talk to is, but I'm going to talk to somebody for an hour and put it out there in the world.

It's an interesting problem and it gets a lot of attention, but not a lot of action. Yeah, in writing school famously, they teach you that the idea of the muse is inverted. You know, it's this idea I write when the muse visits me. And it's like, how does the muse visit you? The views visits you when you write. And so this idea of just showing up continually. I'm fascinated. Like if you look at interviews as successful people, you're all like, hey, you know, what's the

secret to someone's success? And you hope that there's some magical thing that you can adopt. What exercise in survivorship bias? Right, exactly. But one thing that I find is very common. among all successful people is they have lots of goals. They set goals. To me, goals are just a hack. And it works, actually. The time that I set a goal to run a marathon, I ran a lot that summer. And a goal is just gamifying your own life. It's like you said, it's making the habit drive towards

something. So like, for example, this month, I have a goal of doing 2,000 push-ups. And I just randomly set that and started it. But as soon as I started that little Google spreadsheet, every day before I go to bed, I remember, oh, my, my God, I got to do my, you know, whatever, like 100 or 50 or however many it is. And I keep up with it. And so that's such a simple hack that I always tell people to just set even, just set even arbitrary goals all the time. Just have a whole bunch of goals. And you will just automatically align. Because a goal really is just a way to structure your time and align your incentives into a very rigid sort of path. And, you know, the same way with you with habits, right? Like, we're bad.

the absence of weird artificial constraints like that in knowing what to do. A goal just aligns all your loops and everything. Yeah, maybe we would sum up the whole conversation with just, these are all kind of versions of scarcity, like controlling scarcity, controlling your own patterns is an incredibly powerful way. And then you could obviously scale it up to the business level to do really interesting things. Absolutely. I think the number one scarcity we all have is that, you know, we're all going to die someday. So that's maybe the master scarcity that should govern everything about how we spend our time and everything. Because of your, I think your thirst for experience, I would just love to get a few recommendations from you in a few categories before you wrap up.

So the first would be on travel, which is where we began. What are just a couple really special places? And this, you know, you wrote about alleys in Taipei, and I love that post. And this could be as specific or abstract as you want it to be. But when it comes to travel, what pops to mind? So the mode of travel that I find, this is general. This is not applying to any specific place now. You know, when I was younger, I think, and I was visiting so many places for the first time, I would go off of guidebooks and things, which usually have a list of sites, iconic sites that you have to go see. And in the age of Instagram and everything, you know, it becomes sort of like this checklist scavenger hunt. You're running around. You're like, I, you know, I have to go see

the Sagrada Familia in Barcelona. I have to go see the bridge in Prague or whatever. And it's a little bit exhausting. And this idea of understanding of the path dependence of culture and everything means that now what I mostly like to do is it's fine if you want to hit some of those big sites on your first day there. But mostly I want to embed myself with some people who've grown up in that place and spend enough time with them, you know, eat a couple meals, take them out, like have them walk around and ask them questions about their everyday lives that help you to understand actually their worldview. Ask them. them what they find bewildering about American culture and what they find appealing about it. Ask them

in their daily lives, you know, like what media they consume. And all these things I find have made travel just much more interesting for me. There's so much hidden knowledge that's not in guidebooks that's in the minds of the people who live there. You know, the whole Taipei alley investigation really just came from me asking a local there. I'm like, what's the deal with all of that? And when I was just in Japan, I also noticed the same thing that triggered my, my conversation in Taipei, which was like, hey, there are no public trash cans. I was walking around with this, this empty plastic cup. I was like, I have nowhere to throw this out. So I carried it with me for the whole day. I was like, why are there no public trash cans in Japan? And, you know, someone had told me that

it came from the sarin gas attacks in Japan many years ago where they were like, hey, we don't want these trash cans in public where someone could hide something like that. Whereas, it's In Taipei, it was a totally different situation that explained that. So that's my meta travel recommendation. I love it. By the way, that's a recommendation in not just physical places, but intellectual curiosities, too. If you want to learn about whatever it is, venture capital investing, go talk to six or seven venture capitalists and have them be your guides versus reading 100 books.

You're going to leave it way better informed and with a much better understanding of nuance. I think that's the beauty. The beauty of travel and exploration of any kind is the nuance of it all. all. That's kind of what makes it beautiful. So I love that advice. How about movies? I like all types of movies. So I'm generally not prescriptive on like I think you should find the types of movies that you enjoy. But I think that one way to heighten your appreciation of anything like film is to just better understand how it works on you. Like why does a good film work in a certain way and why does a bad film work in another way. And just like with sports, if you played a sport growing up, you will have a

much deeper appreciation when you watch it of what's happening moment to moment. I don't have as deep an appreciation for soccer because I didn't play it as a youth. But recently, you know, and watching soccer with some people who did play it growing up, they were able to give me a lot of pointers on, hey, what's happening here and there? Why is this little exchange very extraordinary? So with film, and one thing you can do with a lot of DVDs is to listen with the commentary on. So find a movie that you love that has a director's commentary. Turn it on and rewatch the movie with commentary and listen to a little bit about that. Or there are a bunch of books that are all about film, visual grammar, and some of them are pretty light.

Having one book like that and just flipping through it and understanding a little bit about why a shot works a certain way on you is great. For example, there's a famous shot in Jaws. It's called a Zali shot. And it was first used in Vertigo. But what it is, it's called a zali because it's a combination zoom and dolly shot. You zoom one way in the shot, like you zoom in, but you dolly the camera away. So it changes the perspective, right? In Jaws, it's when he first spots the shark and they do the very famous Zolli shot in his face.

And what a Zali indicates is that someone's worldview has changed significantly. in that moment, right? When he sees the shark, he realizes what his adversary is, that it's real and that it's a big problem. In vertical, they do a Zolley shot of the falling down in the tower, which famously just creates, that was creating a sense of disorientation that he felt because he had Vertical and he was scared of heights. In Goodfellas, one of my favorite films, there's a very famous Zolley shot where Ray Liotta goes to meet with Robert De Niro in a diner in a diner near the end. And he's trying to decide, Ray Liotta is trying to decide if he's a very famous. It's going to flip and become an informant in exchange for a lighter sentence from the government.

And he goes to meet De Niro, and De Niro's like, hey, I've got this job for you. I need you to go to this place and take care of this one thing. And in that moment, there's a subtle Zolley shot on that because that's the moment that Ray Liotta realizes, and he says this in the voiceover, I knew I would never come back from this job. That's the moment he realizes De Niro wants to get him killed. and that's the moment he decides to turn states informant. And so just a subtle thing like that. These are the types of things you may hear in a commentary.

There's another famous move in film. There's a rule in film. It's called the 180 rule. It's if I were to film this conversation between you and I, I draw a line between the two of us, and that splits the world in half. And all the camera shots should be on the same side of that line in order to not disorient the viewer.

And you'll see this. In every movie you go to, you'll just see if there's a two-way conversation. They'll shoot over my right shoulder and they'll shoot over your left shoulder. They'll never do my right shoulder and your right shoulder because then the world flips and it's confusing to the viewer. But if you know a rule like that, then you know when it's violated by a filmmaker that something is happening. So there's a shot in the insider by Michael Mann where in the beginning, El Pacino has been kidnapped and they have a bag over his head because they don't want him to see where he's going. he's going to interview somebody. And when the bag is taken off over his head,

he's having this conversation with the person. The camera subtly goes from behind his right shoulder to his left shoulder. It's because there's a pivotal point in the movie where something changed, and the filmmaker wants you to know this. And Michael Mann does this quite a bit. There's also a famous move like that where he crosses the 180 line when Robert De Niro is talking to Amy Brennaman for the first time in heat, and it's when he warms up to her for a moment.

At that point, when the camera crosses that 180, line and it's like such a powerful visible move. You're like, why does the camera move like that? It is foreshadowing the fact that Robert De Niro has now violated. The rule that he tells everybody in that film is never get attached to anything that you can't drop in 30 seconds flat if you feel the heat coming around the corner. And you see that later in the film. He violates his rules and that leads to his downfall at the end of the film. So there are all sorts of things like this, which I think once you learn them, every time you're watching a film, you will, start to understand how it works on you.

And I think understanding how something works doesn't have to remove the magic of it. You can amplify it, right? Yeah, absolutely. Two more categories and then a closing question. The first is I'll call it just products. I know you get asked often to evaluate a product given your experience. And I'm always intrigued because, as I thought about it, actually in preparation for our conversation today, I was on my iPhone and I was trying to type the things, products, I guess is loosely

the right term. it could even be companies like Apple might be one option where a reverse order of their indispensable nature to me like what would I want to lose last if I if I had to slowly prune products for my life like which would I want to lose last and like for example one that was on the list was like my local butcher right like I just like really really like the experience of that and I would be super bummed out like I'd rather lose Instagram than my local butcher and cheese shop and so I'm always just really fascinated by what makes a product experience great magical delightful. And because you see a lot, I'd be curious to know of either at the meta level,

what you think drives those magical experiences or at the more tangible level, some examples of products that you've seen or used more recently that you think are wonderful. Well, I think at a meta level, over the years, I guess my product thinking is always evolving a little bit. I've worked on lots of products. Some have succeeded the way I wanted them to. some haven't. You're always learning a little bit. And the way I've come to think of it, especially when building software products, is that it is a form of sort of like indirect communication. The software interface is a form of language, just like film is a form of language. Film, you're making the film on set, doing all these things with the actors and your cameras

and your lighting and the script and all of that. But you know at some later date, you are not going to be there to guide the viewer through that experience. The work has to speak for itself. Products that have software interfaces are like that. Once I've built the product and someone's using it somewhere in the world on their phone, on a browser, I'm not going to be there to explain it. And so there's just always a level of communication and legibility in the product that has to be built in. And so a lot of, I think product development is trying to decide how much legibility has to be built into the product while retaining some sort of elegance. And I like the idea of elegance, which is, I've heard this definition once.

I think it's in Steve Grant's creation where elegance is the maximum amount of information communicated in the minimum way. And so I think that's my sort of general guiding product philosophy is a language where you're trying to achieve that balance of elegance. If you are too minimalist or anything and no one has to use your product, there's information being lost, which is terrible because ultimately you're trying to serve a need for the customer. If you're overly legible, you probably are too noisy. You've communicated a lot of information to the user, but you've created all this noise that's distracting and it's unpleasant to use. And so there is something into it. Maybe it's

because I just got back from Japan, you know, this idea of the Zen simplicity. Clean. But I think people confuse sometimes minimalism for elegance. Eligance is, minimalism is a one approach to achieve that elegance. But remember, it's maximum information communicating. The ratio, not the, it's the ratio that really matters. You know, in terms of products, it's always hard for me to, like, I should just come up with the list of things that, you know, so I can think of them off the top of my head. But I will say that during my travels, I thought a lot about Google Maps because I used. it a lot. I just think, and I had written about this briefly, that I think Google Maps is the most interesting Google products because there is so much underlying information that forms a

sort of structure that could be reoriented for many different uses. So when Google looks at its portfolio, I'm sure it's very concerned about making headway in some areas where it's not as strong, commerce, social, you name it. And I actually think Google Maps, is potentially the most useful approach for them to take to attacking a lot of these markets. But again, you're trying to balance information and how much is in the interface. And the interface of Google Maps today on a phone is optimized for helping you go somewhere and get directions. But if you took that underlying data and all that and said, all right, many people want

to do a search to buy something or they're trying to find their friends to interact with them around different things, location can be an important component. in all of that, and Google has a ton of amazing data in there, what interface into Google Maps would optimize for that type of thing? And I think as VR gets big, you know, the ability to 3D map the world in a way will become this hugely important base of information off of which virtual worlds are built in the way we, you know, navigate the world. So I'm sort of intrigued right now by Google Maps. Like, I think it has a lot of hidden potential and value. The last category that I'd love you, any thoughts on is conversation itself. So like the art of conversation itself as a medium.

It's kind of the one we haven't talked about. You talked a lot about video and text and voice and sometimes video is a way of capturing conversation. But maybe the art of engaged conversation. Any thoughts there? Yeah. I have over the past year spent a lot of time just pinging random people from Twitter that I found interesting and saying, hey, let's meet up in real life. And one of the advantages of conversation over, let's say, a linear medium like text or reading someone's text is just the ability to adjust mid-course, the give and take of it. Obviously, body language and voice are very expressive in their own ways. But I think the biggest thing for me is the ability to just sort of double-click on anything quickly and jump into this or that, which you get with

conversation with someone interesting, which you won't get if you're just trying to read a body of their work. Not everybody's a great conversationalist. I'm not sure even that I am and I'm not sure what necessarily goes into being a great conversationalist. So that's something that I'm continuing to sort of just like study and examine. You know, you can go talk with some people who are great conversationalists, but probably a simple place to start is just by listening well and reading. In a conversation, the other person is kind of your audience in a way. So the ability to sort of read that other person and draw on something that you think is interesting about them. I went so far as to actually, there's this great book called The Most Human Human,

which was about a person who entered the Turing contest. So the Turing contest is computers trying to impersonate people in a typed exchange, conversational exchange. The Most Human Human is an award given. So there's five computers, and then there are five human judges that you interact with. and at the end, the contestants rate all the people that they chatted with from most computer-like to most human. And the human that is ranked the most human, wins this most-human human award. And so what that book got me thinking about is, well, what is it that makes a human in conversation and interesting?

This is exacerbated by the Google autocomplete sentences in the new Gmail where you're like, oh, my gosh, this robot can tell exactly what I'm to write. Do you find yourself intentionally writing something new? I do. I do. So there's a mathematical measure. It's called conversational entropy, which is how predictable is the next word that you're going to type or the next letter? If it's highly predictable, your conversational entropy is low. And if it's very unpredictable, then it's high. And so with Google, exposing to all of us is that most of us have low email, conversational entropy. And what I find is the high conversational entropy is correlated with interestingness as a human being. And so this book is all about this person's goal to win the most human human war. And he studies

all these people. You know, there's this set of cards. I think they're called hypotheticals or something like that. They're like cue cards of questions that you should ask people in the next conversation. And it's sort of a gimmick. They're like sold its box. But I bought this because I was like, hey, am I like a boring conversationalist? And I realized, you know, going back to all these like exchanges I would have with people at parties, you know, you go up to people and you're like, oh, what do you do? How's the weather? It's like, you're like, oh my gosh, like a computer could do all of this. I'm on autopilot all of time. I'm like super boring. And so these hypotheticals were crazy questions that were like, I don't know that they aren't necessarily the answer to this problem,

but they would be like a wizard walks up to you in the street. The wizard says, I have the power to increase your beauty in some correlation based on the amount of money you're going to give me right now. How much money would you give this wizard? You know, like, there are questions like that. There's another one. I remember just like, your friend is going to die. unless you just walk up to your friend and it's like either like kick him while he's sleeping or just punch him in the face but you can never tell your friend why you did it like would you do it like it's also like weird questions like that and like I think they're sort of like fun party conversation starters but it's more the idea that get out of the rut yeah yeah like genuinely ask something

that isn't something that a computer would just auto complete for you in a conversation I'm sensitive to share this year because it's so nice to have it. People not expect that it's coming because I do this a lot now. My friend Boyd Vardy taught me this when I was in Africa and we had to introduce a group of six guys to each other that other other other than one. We had never met each other. And the method is extremely simple, which is give a short introduction of yourself. Here are the things you're not allowed to mention where you're from, whether or not you have a spouse, what you do for work, whether or not you have kids, where you were born. Basically, there's like seven or eight of It's the equivalent of like, oh, how about this weather? You know, like stripping away, it seems like the art of conversation in many times is stripping away the norms and getting the other person to say things that they haven't said before or thought about before, but not just having it be one-sided. If that goes both ways, you've got kind of a magical conversation. Yeah, absolutely.

So my closing question for everybody is for the kindest thing that anyone's ever done for you. I'll mention one thing, which actually I always think of as sort of having changed my life. And this was when I wanted to go work in the internet space. I was out of undergrad. I had deferred law school because I just was like, I don't know if I really want to go to law school. I was working a consulting job just to pay off my loans. And I was like, this is like, wow, this internet thing, I just love the internet. I just want to be in that space.

But I had like very little work experience, very little qualifications. And I really wanted to go work in. Amazon because I loved books and I was buying all these books from Amazon. I was just perfect. I looked at their website and all the job listings were like requires 10 years of computer science or 10 years of experience or a master's. I ultimately applied for VP of business development, which is laughable. I mean, undergrad of college is like 10 years of experience required. I obviously didn't qualify. But I wrote a three page cover letter outlining my passion for the company why I wanted to work there. And a random recruiter at Amazon got my cover letter. And she read it.

And she was like, well, this guy's clearly not qualified for this position. However, I really like his cover letter. I'm going to pin it over my desk. And at some point, if something comes along, I'm going to call this person. So I got one of those like, thanks. We'll put you on file postcards. I didn't hear for six months. And I was like, okay, like move on. And she actually then found a position that she thought I qualified. She called me six months later. I was like in London on a case. And she was like, hey, I'd like to have you come in. I was like, oh, okay. And when I went, you know, like, it's just one of those weird things where she didn't have to really do that. She was getting tons of letters. And she really just showed me that she had it pinned over her desk.

And, you know, if I hadn't gone to Amazon, I really don't know. I mean, think of how different my life would be. That was my business school. That was my education. And that was my entree into. tech and all of that. So that's something that comes to mind. Fantastic. Well, this has been so much fun. Let's keep it going at dinner. Thanks for doing this. Awesome. Thank you. Hey, everyone. Patrick here again. To find more episodes of InvestorFieldguide.com forward slash podcast. If you're a book lover, you can also sign up for my book club at investorfieldguide.com forward slash book club. After you sign up, you'll receive a full investor curriculum right away,

and then three to four suggestions of new books every month. You can also follow me on Twitter at Patrick underscore Oshag, OSHAG. If you enjoy the show, please leave a quick review for us on iTunes, which will help more people discover Invest Like the Best. Thanks so much for listening.