On with Kara Swisher - SVB, IG & AI with Instagram Co-founder Kevin Systrom

Episode Date: March 16, 2023

After a quick rundown of Kara’s Twitter feud with SVB-enthusiast David Sacks, we turn to an interview with a former Silicon Valley Bank customer: Kevin Systrom. When you found one of the most successful social media apps at 27, it’s tough to figure out where to go with Act Two. But after leaving Facebook (now Meta) in 2018, Systrom is back with an AI-powered news-reader called Artifact which has been dubbed a “Tiktok for Text.” Onstage at SXSW this weekend, as the SVB crisis was playing out, Kara and Kevin discuss his regrets about Instagram, his plans to crack the news business and what’s wrong with tech bros.   Questions? Comments? Email us at [e-mail] or find us on Twitter @karaswisher and @nayeema    Learn more about your ad choices. Visit podcastchoices.com/adchoices

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set, grow. Go to ConstantContact.ca and start your free trial today. Go to ConstantContact.ca for your free trial. ConstantContact.ca Hi, everyone. From New York Magazine and the Vox Media Podcast Network, this is the Screaming Mimi VCs with 100% fewer all-cap tweets. Just kidding. This is On with Kara Swisher, and I'm Kara Swisher. And I'm Naima Ratha. I thought you were the vitriolic media lady. Is that your new Twitter bio after David Sachs called you that?

He didn't use a nice term like lady, just that I was literally, one of the more vitriolic people called me vitriolic, which is essentially bitch in another language. And it was interesting because literally his boss is vitriolic. He is vitriolic. They're all vitriolic. And then the minute someone pushes back,

they get all sensitive. I have to say many people sent me messages like Kara versus David Sachs is the Twitter I'm here for. It's kind of awful because they're not listening. Explain who Sachs is and your Twitter feud with him. He's someone I've written about for years. He was a decent entrepreneur. He was part of the PayPal group. And he's always been sort of the number two, but he's now sort of stepping out himself. He's doing a lot of political stuff. He's about to do a fundraiser for Ro Khanna, for example. That's an unlikely marriage.

I know, but there they are. He's been trying to distinguish himself more than from behind the scenes. He's been working at Twitter with Elon. And so he holds forth on Ukraine and now the banking crisis. And during this, it was Jason Calacanis. They're all on a podcast called All In. You're welcome for the promo, guys. You know, by the way, I would point out that Pivot won the best technology podcast today with iHeartRadio. But I won't, you know, they're really big, though. They always go, we're really bigger. And they are very big. Whatever. Good. Fine. Good for them. And so anyway, so he's gotten very opinionated about things. And so during the banking thing, he and Jason, Jason was using all caps. It's like 100,000 Americans will

be lined up at the bank. I was just making a joke about that. And there was a story in the Wall Street Journal that the screaming on social media caused a lot of fear mongering. Even if we tended to agree on what the government should do, people like Ron Conway and Reid Hoffman were in the background actually doing things and not screaming and actually reaching out to people. And they may have been too, but they spent a lot of time on Twitter, I think, scaring people and making people nervous.

And so I call them screaming memes, that's all. So let's just get the basics out. In case you've been living under a rock, there's been a massive bank failure. It's still like Convalley Bank starting last Friday. And since then, Signature Bank, stocks are down this Wednesday morning as we're taping this. What happened is interest rates went up, they were holding treasury bills, very safe, but they were stuck fire sailing these things. And

then there was a bank run. That's it. There's a bank run. Yeah. And the difference between this bank run and say the 2008 financial crisis is that we have outsized, powerful people with great influence who had a vested interest and they were screaming on social media, which meant that they could fear monger. And that created a lot of pressure on the government, more pressure than they already faced. Yes, but I don't think the government

was paying attention to Twitter. I think it just creates a situation of contagion. And if you keep saying contagion, contagion, contagion, panic is never a good thing in a banking crisis. And the government was working very hard over the weekend and working with people from Silicon Valley saying contagion, contagion, contagion. Panic is never a good thing in a banking crisis. And the government was working very hard over the weekend and working with people from Silicon Valley who kept their mouth shut. The real powers in Silicon Valley, honestly. So let's talk about that, because why is David Sachs bad, but someone like Mark Cuban, who's tweeting up a storm about government failing and not being there, why is-

He hears some ideas. It was- But it was also, where has government been? It was not. Why is... Here's some ideas. It was... But it was also, where has government been? It was not. It was not. Mark Cuban? No, he did not say that. He's like, where is the government in all this? Yes, he did.

He meant on a longer term. He obviously knew that the government was very reasonable. Here's my ideas. Here's what we should do versus hair on fire. The government sucks. And posting memes of Mad Max, not good. Not good, I'm sorry. Is any of this new? Because here's my experience of the Valley when I landed there in 2012, and I was a student of government and worked with foreign governments in particular

during development. And I felt that California and Silicon Valley had this kind of, we are the vanguard and the world is converging toward us. And they had this kind of, we're post-government. They wanted to disembowel government. Right. It started with Bill Gates. They like to scapegoat it. Yes, exactly. They like to disembowel it and then they like to scapegoat it. And even Mark Cuban was like, where is government? Well, government is often, you know, unable to act because it's so indebted to these same people who are saying that government sucks. And yet they think it's

a worthwhile investment for their lobbying and donation dollars. I think what more irritates me is, is this is not a time to cosplay at all. And I think that's, have some responsibility. And government can't say things, by the way, because anything they say sets off a tizzy in this, in this online, over-caffeinated environment. So I just feel like just grow the fuck up is my whole thing. It's the panic and influence that's your complaint. It's the panic plus influence. It's not influence alone.

It's both. And panic was part of the mood where we were last weekend. We were at South by Southwest when all of this is happening. A lot of founders there, a lot of employees of tech companies there wondering if they were going to be paid the next week because over the weekend, we didn't know what was going to happen. You did the Kevin Systrom interview that we'll hear today.

I moderate a panel with the Midyard Network about how companies use data workers generate against them. So it was my first South by Southwest, but not yours, Carrie. You have some special badge, I think. Yeah, I'm in the Hall of Fame. I got it in 2017. And on the badge, it's, I get to go there anytime for free

for the interactive part. And it reads, this badge proves that Kara Swisher is indeed a badass of the highest order and should be led into all South by Southwest interactive events from now until Ragnarok, subject to venue capacity. So they have the subject to venue capacity is my favorite part.

And Ragnarok is my favorite part. which Kevin Systrom really liked too, because you flash badge at him in your, I like how you like to intimidate them right before the interview by showing them your fancy South by Southwest badge. He's a great guy. Yeah. He's one of those founders you like. And we should say Kevin Systrom is the co-founder of Instagram with Mike Krieger. And now they have a new venture out together that they've co-founded called Artifact. We'll get to that. But how did you two meet, you and Kevin? And why do you like him? I met when he had like, I don't know, 15 people, but right before they sold to Facebook. I really was intrigued by what he was doing. There'd been a lot of efforts in photo and I thought it was,

and then the iPhone had spurred a lot of new companies. And this was the one I thought was one of the most interesting. There was lots. And he was thoughtful. The product was great. The product was great. It was a beautiful product. Even way back in the day, it was creative and clever and well done. And he thought very careful about what he was making. And I just enjoyed it. And he constantly is questioning what they're doing and thinking hard. And it's what you want. The founders of Stripe are like that. A lot of the ones I like the best are thoughtful and they don't lose their minds when you criticize them. They're okay with a critical thing. There's nothing better than that to me.

Kevin and Mike's newest product is Artifact. And It's really a newsreader from what I can see. Yeah, I like it. It's interesting. It's definitely starting to learn what I like. You know, Twitter's become such a, like I say, it's like a library with all the books on the floor covered by toxic waste. And so it's very hard to find the news anymore on it. And I've always thought that's what Twitter should be. We'll see if it's enough. You know, if you can't have the angry fighting that goes on on it, is that attractive? And so we'll see. But I think it's beautifully done. Let's take a quick break and we'll get back with the interview. Fox Creative. This is advertiser content from Zelle.

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Artifact, the AI-powered newsreader you recently launched with your co-founder of Instagram, Mike Krieger. But we've got to start out with Silicon Valley Bank. Talk about your exposure. Exposure. What's 1% higher than 99%? 100. Yeah. So yeah, 100% of what we have at Artifact is now locked up in this process, but that's okay because we are seven people. The good news is the co-founders of this company happen to have enough personal liquidity that we can figure out how to loan the company money for the time being. We can be an ATM, hopefully, because we're not burning a lot. But there are other companies with exactly the same percentage locked up who need not only to

meet payroll, but they have all these bills, and people don't just have this money lying around. You can't just dish it out. Yes, you put it in a bank. Yeah, right. Yeah, which one, it turns out. I myself have gold in my mattress, but go ahead. Yeah, it's not comfortable to sleep on gold, though. So we're trying to figure it out, but I think we're in a much better place than most companies, but it's still, you question, you know, all the bullshit that's going to get thrown at you starting a company. This is last on the list of your expectations. Right. So why did you use Silicon Valley Bank?

Why did you say, oh, we're going to use this one? I don't think it was a conscious decision so much as, I mean, this is one of the problems with banks. It shouldn't be a conscious decision. You should just be able to look around and go, oh, I guess that's where we'll put stuff. But as you find out in Silicon Valley, whether it's wealth managers or accountants or lawyers, there's this herd mentality and no one actually asks each other why they use whatever service they use. If you're an entrepreneur, one of my lessons is like, ask why, do some due diligence. And I think that's important because you never really know what

you're getting into, but there's a lot of like, oh, so-and-so company uses X, Y, or Z, we should use them. And that creates problems in the long run. Right. And that's the there's a lot of like, oh, so-and-so company uses X, Y, or Z. We should use them. And that creates problems in the long run. Right. And that's the concentration's a big issue. A hundred percent. 50% of startups. So as a founder and investor, you think the demise reveals structural issues in Silicon Valley besides herd mentality, which you and I have talked about, but VC power and the concentration. I mean, you said before not to go around talking about things and waxing poetic. I'm not asking you what Janet Yellen should do. Again, that's up to Jason Calacanis to decide what Janet Yellen should do, because he's the world's expert on that. I have no idea what should happen.

All I know is that there's real potential for contagion. And it does make sense that the government and other regulating bodies should step in and figure out how to make this not a contagious event. Because First Republic apparently is fine, but they're fine until they're not fine. By the way, every bank, the one way you know it's not going well is when you get an email from them saying everything's fine. At that point, you sell. And the number of emails I've been getting inbound in the last few days, but maybe it is fine. So we'll find out.

So when you think about this, this has been a tough year for tech, and you're starting a company. I want to get into Artifact in a second, but what is the long-term fallout? Because it's not just this. It's the layoffs, obviously, the whole FTX thing, which is separate. Possible fraud, alleged fraud. I think it's fraud. They kept the money in a drawer, et cetera, those kind of things. Is this something that

was brushed over in the collective memory? Or do you think it has any long-term effects in the brand of tech? Because now everyone's like, oh, maybe they're not so smart. I thought that the whole time, but go ahead. Not you. Who's they? Not you. Can we be specific? Not you, but honestly, Kevin, it's a low time, but go ahead. Not you. Who's they? Not you. Can we be specific? Not you, but honestly, Kevin, it's a low bar, but go ahead. My sense is that whenever there are good times,

you should be really concerned in Silicon Valley. Whenever companies that you know are dumb ideas are raising many tens of millions of dollars, when people are throwing excessive parties, when I guess I'm just old enough. Like I basically, I was in, let's see, so 2008, I would have just been coming out of college, but 2000, I would have been coming out of high school. So I saw both crises from afar and the patterns just repeat over and over and over again. But what you realize is no one gives a shit. Because as long as you're making money on the way up, it's like musical

chairs. If you can just like find a seat before everything comes crashing down, you make a lot of money and you go away and you're happy. But it turns out there are a lot of people without seats at the end of that. And I think that's crushing to the Bay Area generally that is already dealing with enormous wealth disparity. And my point is, it was very clear that the Reading was on the wall, that bad things were going to happen. I don't know. Like, I think the SVB thing is like

five or 4% of the bad stuff to come. So we'll see. To come. What's to come from your perspective? That's the part that no one knows. But so I've talked about this fairly publicly. I have a lot of respect for Ray Dalio and Bridgewater. They study economic crises from the past. And when I left Instagram, I was interested in finance, so I bought his book

on debt crisis, and I read through it. It's a very thick book. Very thick book. He writes big books so that you can throw them on a small dog and kill them. Go ahead. But if you read the one on debt crises before you throw it on the dog, every single crisis is precipitated by rising rates, specifically very quick rising rates. And this is no different. It's the exact same pattern over and over and over again. And typically, you don't see a recovery in a year. You see multi-year issues, and there are these cascading effects. Just like I said, you have a liquidity in a bank, and it leads to this, and that company can't pay that company, and things fall out from that. Lots of jobs, livelihoods. So none of this, I think, is surprising as a pattern, but the specifics, obviously, of how they come out are surprising.

as a pattern, but the specifics, obviously, of how they come out are surprising. Did I ever imagine you could put money into a bank as a startup in a savings account and lose it? And by the way, I don't know enough about the SVB internals to know this, but it doesn't seem like they were betting on highly speculative bets. No, no, it's not. It wasn't that. It was treasuries. And then a lot of people would say, you should have seen it coming. This was the free money era, and then it was over. So interest rates are going to go up. I am both jealous of younger entrepreneurs because they can work harder, longer hours. They don't have kids. But you talk to entrepreneurs, and they haven't seen the patterns.

So what I at least lack in some of the benefits of being 27 when I founded Instagram, I do believe that the second time around, some of the experience at least helps you spot the craziness before it comes. Before it comes. Well, talk about that. Oddly enough, I was interviewing Jamie Lee Curtis the other day. She's entrepreneurial. She made a diaper that has a what, you know this, that has a wipe and a bag in it. It's nice. Nice. We're parents. We understand this. And then she said, you know, I invented Instagram. And I said, oh, really? She's the Al Gore of Instagram. Yes, exactly.

But indeed, she showed me a blog spot where she had gotten 30 photographers together. And it was an Instagram-like experience. She didn't have the filters. And it was a year and a half before yours. Okay. And so I said, you... Is she coming for equity? No, no, no.

She deserves it, honestly. But she called it iPhone-y. It was right when the iPhone came out, as you recognize. I think Instagram rings a little bit better. No, I understand. Okay. All right. Nonetheless, but think about the image of tech shifted from 2010. And I want to, how do you think it shifted? Because it was a much headier era in a positive, optimistic note. Obviously, being a second-time entrepreneur, you feel like the bar is much higher, not in terms of like, will your company work, but you can't make the dumb mistakes you made before. You can't just ignore things. You have to think about moderation.

You have to think about the impact on the audience. And it's not to say that we shouldn't have when we were starting Instagram, but we were four kids in a tiny, you know, room with no air conditioning, and we didn't know if this thing was going to work or not. So why would we think about maybe if we scale to a billion people, what will the effects be? This time around, it feels like every single company that gets started, the expectation is, have you thought through the implications of your company? Exactly. And I think that's a good thing. I think the era of tech just being able to kind of do whatever it wants is long gone, hopefully, because it's important that people think through the implications of what their company will do before it gets there.

Though, I don't know. The good times have led to an enormous amount of excess, whether it's in Web3 or crypto. I actually believe in a lot of the underpinnings of Web3 and crypto, but there's just like a lot of hype and hot air that led to a lot of people losing money and a lot of people buying into the promise that everything was going to go well. And I saw a lot of people getting into these companies, taking advantage of that hot air and explicitly manipulating the consumer to buy into their vision of whatever animated thing that they were selling. And I don't know, I think that's why tech gets a bad rap. You

were talking about tech people before, and I was thinking how deeply I care about not being associated with the tech bro image. And I realized that being literally a tech bro. But like, how annoying is it to live, you know, and work in an industry where like tech bro is a pejorative term? Like that kind of sucks. Yeah. Which one is instead? Asshole? What? No, no. It's... It is really comes down to that. But Kara, we all deserve it because we walk into these industries and we act like we're

going to reinvent them and sort of, there's this amazing joke uh on silicon valley which i couldn't watch because it felt too real um seriously no i was an advisor to them but go ahead i'm sure like that's why it was real no it hurt too much i couldn't watch it it was like therapy played back at you um you know the the company comes out and they're like, because if we can make files smaller, we can make cancer smaller. It's like, it's one of the best jokes of all time. You know, you can just pontificate on subjects

you don't have an expertise in. Like that is what is wrong with tech bro culture. And I don't know, I probably fall prey to this. I mean, we did RT Live during COVID and I deeply wanted to take artificial intelligence and math and try to provide a good service. And at the same time, I can see where all these epidemiologists in the world are like, wait, I've been paid and I studied for 30 years to do that. And just because you can tweet, you can get attention for your website. Meanwhile, my thing's over here and no one's paying attention. There are real implications of that. You see, you were approaching it a different way.

I tried to. You did not annoy me. The others did. Thank you. And it was because you were trying to get information out there in a way that was helpful to a lot more people and shine a light on those things. Trying to. Of other people's like, let's talk about that. Before we get to that, 11 years since you sold, how do you feel about that today? You and I have gone over the situation at Facebook and that experience. You did not stay like Brian Acton and Jan Koum, who were a little louder on their way out about what happened. Do you feel good about selling and good about leaving? It's hard to say you feel. There's this terrible Mark Cuban quote where he was like, was it okay to sell your company? He said something about flying here on a G5. And he's like,

it's hard to feel bad if you have access to these things. He said it in a more tech bro way. Yeah. No one fucking feels bad. He had a much shittier company, but go ahead. No, like no one feels bad for me.

I think we did. Okay. We did great. Yeah. And the thing, so maybe this is rationalization. By the way, the other Silicon Valley joke, did you see the one where he walks into the doctor and he's like, hey, I'm really stressed and I don't know if I should sell my company. And the doctor was like,

oh yeah, we had a guy like you walk in last week, like shot himself because he didn't know whether he was going to sell his company or not. And the doctor was like, I can't remember if he sold his company or not. And this is why I can't watch this stuff. It's actually kind of dark now that I say it out loud. I'm fine. I was going to say it's an intervention. No, I'm fine. I thought I might have to hug you. It's actually just not funny to make fun of mental health issues now that I think about it. But the reason why I mention this is I think the worst part of the sale was just trying to both accomplish something great with the company and also merge it into a company that didn't quite know how to look at you.

Were you a competitor? Were we excited to own you? you? Were you a competitor? Were we excited to own you? Like, it's like a roommate who moves in and you're like, oh, like this person's really cool, but also there's stuffs everywhere. Right. That's kind of what it felt like. Bad roommate. Yeah. It's like, are there any good roommates? I don't know. Maybe that's the reason why like people shouldn't have roommates, but like it was challenging, but we did great things. So I don't know. Can I look back on the Instagram experience with anything but awe? No, come on.

It's amazing. There are over 2 billion people that use it. You have done that yourself. You know, I was of the feeling that you sold too soon because I felt that you really had something special and that you had the capabilities of doing it without their help. Yeah.

Although they don't think that, but that's whatever, they're wrong. And you're creative and they're not for the most part. Well, they're not, it's just they're shoplifters, but okay. So, but actually really plagiarists. When you think back of their time machine, you go back. And you had a little of the knowledge of what was going to happen. What would you have done with it had you not sold? I just don't like playing the counterfactual because I don't know.

Let's talk about others like Foursquare or Path where they probably had term sheets. And they said no. And then where are these companies now? Yeah. So I don't know. Facebook didn't sell. Lots of companies didn't sell. Sure, but there are plenty of companies that none of you remember because they didn't sell or they didn't become part of a rocket ship.

I think there were a lot of benefits to being part of Facebook, and we attached ourselves to an already very large company, and we're able to grow. And as much as we had conflict, we would probably have had more conflict if we were independent. I don't know. But honestly, as an entrepreneur, let me answer personally for a second. It's awesome to press the reset button and get to start something new. Yeah. Now, to be fair, how much did Elon and companies sell PayPal for? I don't remember. It was very little. It was basically a billion dollars, right? It's worth a lot now. Yeah. The chapters, I'm i'm 39 i'm still i talk sometimes like i'm older but like i've got lots of room to

go i'm still excited about building things and it's why we're back in it you can do it much older too i'm much older than you yeah totally and so my point is i get it the book's not over i literally have left every job possible in order to reset. And in one, one of them, I went and someone said, this is great. Everything's working. Why are you doing it? And I said, I just don't want to talk to you anymore. And, and I meant it. I was like, I'm tired of talking to you. I'm going to go do something else. And I'm tired of you telling me things. And I don't want to speak to you anymore. And that was it. That's my version of reset is get away from me. But, but when you think about, I'm going

to finish this because I want to know how, what you did then and how you got to Artifact because you've done, it was a long time. It was quite a bit of time. When you, when you think about it, this teen time spent, the, and everything else, what, what would you might have done differently? Would you have anticipated the impact of Instagram on especially young people in terms of all these problems you didn't think about? And I get why you wouldn't imagine this would happen. Like nobody knew what the internet was going to be. Well, I'd say for the last four years of being at Instagram, I spent an enormous amount of time on mental health kindness. Like we did all these programs. We built everything into the app so that if you were searching on a specific topic,

we could detect and then intervene. And whether it was pop-up information about mental health or mental health resources like the suicide hotline. In fact, we were sending so many people to these services that we were getting inbounds saying, hey, like, can you help fund us? Because we're actually being overwhelmed with inbounds of people accessing help.

That is both exciting because we're connecting people and both terrifying as an entrepreneur because you're like, well, it's on our product there. In fact, finding these people, so many people have issues, how do you help them? I'm not saying we did enough or acted quickly enough, but we certainly tried. In terms of a legacy when I look at Instagram, having a daughter myself now, she's five years old, I think a lot about, like, if she were to grow up

in an era of social media, how would I let her engage with it? What would I have done differently? She's about to go to school? Are you sending? She's about to go to school. So I think a lot about these things, but they're almost intractable

problems at the scale of 2 billion people. Like, what do you do? My biggest regret, I think, at Instagram is how commercial it got. And when I say that, what I mean is most of the power on Instagram, and I mean this to full respect to all the creators in the room or influencers, it's just, it focused the energy on people living apparently amazing lives with no bounds, doing the fanciest things, looking the best, wearing the fanciest clothes. Yeah. And I mean, you know, I was with someone last evening and they were like, yeah, I moved out to the Bay Area and I see all my friends on New York living their best lives. And I'm so jealous. And I'm like, come on, you know, they're not living their best lives,

but of course they're putting the best images on Instagram. That dynamic is terrifying as an entrepreneur who created the thing, because you want people to know that life is really hard and whatever people post on Instagram is not necessarily, it's the tip of the iceberg. Yeah. But how do you fight that as an entrepreneur?

And what's good though- And that's not particularly good products, your shitty life. No. Kind of. I don't know. Isn shitty life no kind of i i would i don't know isn't be real kind of that not that shitty oh but it's like stop performing yes like just show us what you're actually doing yeah that's brilliant i mean snapchat snapchat came out

of the pressure of everyone feeling like they had to have a perfect grid right and now you could just send things to your friends and they would go away and there was less pressure. So I... Yeah. Well, that's why we have Twitter and it's run by the person it is. We have that service now. That's a different kind of ephemerality.

I'm teasing you. But I mean, I think that it's a difficult thing. One of the things I was, when people were being very performative, which you noticed right away, I got fixated on straight couples when they get married when they when they after they get married and they turn around they always put their hands up together like this like put your hand up with me like this yay we did it that kind of thing so when i see that i'm always you know someone's like a friend of mine was like oh they're really happy another happy couple i was like they're totally getting divorced. Like in seven years, it's over.

So it was kind of like this performativeness had a mental effect on a lot of my friends. But I think, is there any way to fix it? I'm hoping that discussions like this, more open discussions about mental wellness, that life isn't always so easy, even for people at the top of their game, whether it's like the best marriage you think, or the best company, uh, life is this giant struggle and like, that's okay.

And I don't think people talk enough about that. And, you know, I'm not involved in, in what Instagram is doing now, but I hope that there's still a large team. Cause we had one at the time that spends all of their effort communicating that and building products to be more real. That's a pun, I guess. But being more clear about what your life is rather than this refined version of it. But I don't know. I study game theory a lot. It's this race to the bottom of who can be, right. And it's not a game that I like playing anymore. It's entertainment. Professionally or personally. Right, but it's entertainment in a lot of ways.

TikTok went the entertainment route, which is more like dancing and singing. It's got dark sides, no question. And there is that Chinese ownership issue that people seem concerned about, including myself. Is there a way to do it at all? You think just talking about it to me it's like a casino it's never not going to be that i'm not going to found this company but i believe

there should be companies focused on the smaller networks that we have i think we've lost the soul of what made instagram instagram and your friends and your family i used to be able to go on and see what my friends were doing and see what my family was doing. I think the problem is the incentives are always to go to more commercial, more creators, more deals, more ad dollars. There was this moment, gosh, maybe four years before I left Instagram where we had this emergency meeting talking about creators doing their own ads and like, how did we wanna be part of that ecosystem or not?

And I think basically the feeling was it was going to happen anyway, so push into it. But the problem is that that takes all the content and it makes a commercial. I had friends on very early, some of these people who are famous, and they used to post photos of their daily lives and it was quickly becoming hashtag ad, hashtag ad.

And that to me feels like not the Instagram that we started. And I'm not someone who tries to hold on to the past. I understand that things evolve, but like, God, like Instagram used to be this place where you could consume what everyone was doing. And can we get back to that? I believe so. But I also believe that there's this natural selection of companies that get too big and, and, and too and too happy with the commercial success that eventually they move slowly enough that someone comes up beneath them and starts doing that job again better. I think that's actually very healthy. Your path was that, was trying. Exactly. It didn't work. But I mean, we talked, you mentioned other ideas like the Instagram before

Instagram. Ideas are a dime a dozen. Timing is 100% of what made Instagram, Instagram. We happened to launch right when the iPhone 4 came out. It was just when people started to take a ton of photos on their phone. And yes, there was a lot of execution that involved in making it great, but in general, ideas are a dime a dozen. So the question is just, okay, given the context of where everything lies in social now, is there an opening for people to go after this friends and family content? I've got to imagine there is. Yeah, but let's talk about you. I'm not going to revisit it. We'll be back in a minute. Thumbtack presents the ins and outs of caring for your home.

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so don't miss out. Terms and conditions apply. So let's get to what you're doing now, because you've left in 2018. You became a dad. You have two kids. What did you want to do? Did you have pressure on you to make something else? Because 2018 was a while ago, I have to tell you.

Tell me how you really feel. Chop, chop. Yeah, I mean, I don't know if you remember this, but we had breakfast after I left. Yes, we did, I remember. And I remember you saying, like, please don't retire.

Like, do something again. Yeah. Something, because, and I appreciate that. The reason why I did that is because I'm like, these fucking assholes are running wild. Can you come back, please, as soon as possible that's why took a while yeah it's true it's

100% in the transcript that will be mild applause right okay um so what happened let the record show so I had these kids I get so I have these kids and uh I don't know I've never met like a musician who had a first hit um and I've never talked to them about this but I've got to imagine that second album is is terrifying um it's like that it's it's okay how could we ever possibly top Instagram you can't and the second you let go of that I once saw um Vince Gilligan talk uh Breaking Bad Vince Gilligan talk, Breaking Bad, Vince Gilligan, and he said, I took zero time before the ending of Breaking Bad and moving on to Better Call Saul because I didn't want that voice to creep in that said, hey, don't do this. It won't be as good as the next thing. And I thought to

myself, I'm going to take two years. And the funny thing is every month that went by, it got harder and harder. But there was a moment where I said, you know what? Screw it. I believe in a few things. One, I met with the smartest people I knew, Mike, my co-founder, Adam D'Angelo from Quora, who was the first CTO at Facebook. And he was great for us at Instagram. And both were focused on machine learning.

They both said, that's the next wave. And this was 2019. Okay. And I said, all right, I love math. I'm a dork. So I'm going to go into it. I'm going to study everything I possibly can. COVID hits. So I say, okay, how can I learn about machine learning during COVID? We did RT.live. And it was a dashboard and uses all sorts of fancy math to predict where COVID is spreading, etc. It was okay, but it was a dashboard and uses all sorts of fancy math to predict where COVID is spreading, et cetera. It was okay, but it was enough that it made me think, you know what, this is super fun and machine learning is going the right direction. So what can we do?

So I studied it and I said, ah, I believe the right thing to do is machine learning artificial intelligence. This was before it was trendy, to be clear. And I was like, okay, I think I know a fair amount about social. So I drew those two circles in my mind. And then I said, okay, what in the world feels like it is either kryptonite to touch or has a lot going on it that everyone talks about the problems and no one talks about the solutions. I was like news, because I worked at one of these companies, Facebook. And I mean, internally it was like, do we do something about news? Yes, we're going to do something about news,

but what do we do? And the publishers don't like us, and we don't like them. And then you see what Twitter's doing about it, and you're like, it doesn't feel like anyone's actually attacking this problem in the right way. And if you study the problem, I mean, Toutiao in China is phenomenally successful,

started by ByteDance. Not many people know this narrative, by the way. Like, TikTok didn't just come out of nowhere. It was Musical.ly and ByteDance layered their AI on top of Musical.ly. Where did they get their AI? They got it from building Tochiao, which was a news recommender in China

that more or less looks like Artifact today. But we, basically I looked at it, I was like, you know what? It feels like someone has to do something about how we consume information because it's dominated by the loudest voices in Silicon Valley or on Twitter. And that feels wrong. Like why should the person with the most followers be the person who delivers COVID news to you?

It should not be. Exactly. Yeah. So why is it? But this is the other thing that pains me, okay? For the longest, we just take this for granted that the recommender system of the world should be the people we follow on social media.

No, that was a hack because we couldn't figure any other way out to figure out what content you wanted. So we said, you know what? It's your friends, your friends and your family and the people you went to college with. Those are the people who are gonna decide what you see and consume every day.

That worked okay for a while. And then we decided, you know what, maybe we shouldn't have to be friends with them. You should just be able to follow them. And then that worked for a little while. And then these things got really big. And all of a sudden, all of the information you consume comes from a handful of people who just happen to be best at building an audience. But that has nothing to do with the quality of the information or how good it is for you so i i looked around i said i think machine learning can do this let's the worst thing about social media is that it's social get rid of all the follow graph i'm serious get rid of the follow graph and and like i don't know i feel like picking on someone in the audience and being like what makes you you are you Are you into authentic Mexican cooking? Do

you really love wakeboarding? I'm talking about tech pros now. But my point is, what makes you you? What type of music are you into? And it turns out your friends and the people you follow are not necessarily the best people to serve that for you. But imagine there's a service that in real time can crawl the web and find all those things for you and know they're great for you and deliver it to you. That was the great premise of the web in the first place. Exactly. So the idea we are working on today is one of the least original ideas in tech. It's like, ah, news recommender. Okay, great. So what's different? One, we can get a lot of attention, a lot of people in, so that the data can then come back in spades. It allows it system to work because machine learning requires a lot of data. And machine learning changed fundamentally in the

last five years, but really in the last year to the point where you can be talking to a chatbot, which by the way, is also one of the least original ideas in technology. But then something clicks and you go, oh my God, this thing is, is it sentient? Now I don't have a job at Google. Yeah, yeah. But like, you know, sometimes the best ideas, even like an image-based social network, not necessarily the most rocket science of the world, but with the right team and the right timing

and the right execution, you could do big things. And I think it is enormously important for us to get ahead of information consumption because it is part of why we are all getting pulled apart. So will we solve this? I have no idea. I'm not going to be that tech bro that typesurfs and announces we're going to solve it. So you're building Artifact with knowledge of how social media has fucked up, right?

That's part of it. Part of it is machine learning. That's right. And the idea that there is good, there could be good coming out of it, that it starts to define you in good ways and not in the, which I always talk about is engagement equals enragement. Right. Or enragement equals engagement. Can I tell you about one of the most exciting ideas I've learned about as studying this? Sure. This thing called bridging algorithms. And I don't know how many of you guys have seen this, but the idea is that at scale, you can basically cluster your users into viewpoints.

You kind of know, is someone far right? Is someone far left? Are they moderate? And what you do is you look for content that basically, it resonates with all groups, not just one group. It looks for non-polarizing. Pluminalities. That's right. And I have other issues around a service just showing things that bring people together, because I think that's boring and down the fairway. But in general, within a topic, you can find sources and articles that bring people together rather than push them apart quantitatively. And I think that's really exciting. Now, has it been proving it out at scale?

I don't think so. There are a lot of nice papers on it. But you've got academics. You've got these thinkers thinking about the problems that social media has today. And there are ways of trying to solve this. And I'm just excited to be in the middle of that and have a platform that might be able to use these things. So Casey Newton called Artifact a TikTok for text. How do you describe it? It's got a nice alliteration to it.

Yeah, but I don't like TikTok for anything, or Facebook of, that kind of thing. It's an easy way to describe it so that people can grok it. Usually the experience, I think, on Artifact is you open it up and you use it for, I don't know, a few hours the first couple days, and you say, I don't really get it. What's different? But then people will call me a week into it and go,

oh, I see, it's clicking. You go through kind of this J curve. And our job is just to shorten that J curve to the point where you can use it. And within a day you're getting exactly what you'd like. But what's fascinating to me is how many people feel that traditional sources, whether it's Twitter or otherwise, don't serve their interests. Tons of people love F1, but it's hard to get all of F1 in one place. It's hard to follow just your specific driver or whatever. And that, to me, feels like such an easy opportunity to take advantage of, and

Artifact does that. Well, in many ways, the way I was describing to someone last night was Twitter is like a library with all the books on the floor, and then it's covered with toxic waste. So there's some good stuff in there. Last night, I was like, okay. No, the burns are very bad when you touch it.

I'm on stage with Kara, and I've got to make this spicy, but you just did. Okay. Library with books on it. Well, it is. I hope you don't become that. But people have called you a Twitter competitor. How much does that drive you?

How much does the chaos there benefit you? Zero percent planned. And it's unclear if the chaos will be positive chaos for Twitter or negative chaos in the long run. Meaning what? Meaning sometimes chaos breeds creativity and new products and new ways of thinking. And I think you would agree for the longest time that Twitter stayed very much the same as a product. They did, yes. I don't agree with all the changes happening. Would I do it the same way? No, but maybe that's part of why tech is so exciting right now

because it's not exciting if you're on the receiving end of a layoff notice from Twitter, obviously, as an employee. But as someone watching... I don't even think they tell them. They just... No, there's no notice. But on the outside, you've got to imagine

maybe great stuff can come from all of this chaos. In terms of being a competitor, sure, in terms of news. But, like, I kind of find that uninteresting because we're just doing what we're doing. It's not even close to the same. I don't think so. What do you think it is? Because is it a social media network for news or is it a newsreader that has social media on it? I think it's the latter.

But I have this thesis that all great social networks start as utilities. You have a great utility, whether it's a filter app or a directory at a college. The only counterexample, and you have to help me with this, is Twitter. I can't quite get my head around what the utility of Twitter was before it was a social network, but generally speaking, you found a utility first. And then once it grows, you can figure out the ways of adding social. And we launched with a very specific view that if we were going to be massive someday, we'd have to be extremely useful for a specific job that people have in their lives, which is to consume information that matters to them.

And only then do we get like a coupon that allows us to start doing social stuff. Will you leave out as important as who you leave in? You have Fox News, but not Newsmax, The Daily Wire, but not Daily Caller. How did you make these decisions? And what is your relationship with these media companies? Because they've been burned a zillion times. Yeah. It won't surprise you to know that when we were making this decision, I said to myself, we're going to be asked. So I think of it more as, like, what are we going out of our way to put into the recommendation system proactively? So what I said internally, I was like, all right, we've got to have our principles. And what we decided was our goal is to have a balanced ideology subject to integrity and quality. Quality being not just a ton of ads and spam and pop-up videos.

Integrity being you generally adhere to well-accepted principles of journalism. And balanced ideology in that we're not just carrying one side or the other. We're trying to find as many sources across the spectrum. You use third-party sites. There's allsides.com is one of them. There are a bunch of these services which literally rate different sources. Right, and you can make choices.

This is the thing that tech people don't get. You can actually make editorial choices in its own way. So we did. Who didn't make the cut? Who else didn't make the cut? I mean, we'd have to look. A lot of people.

What was one that you were like, uh-uh? Currently, we don't carry Team Z, not because we're against them, but because there have been a bunch of issues around how they have acquired information for their stories in the past, and it feels like not the appropriate thing to do at this time.

Wow, ethics, that's fantastic. Content moderation. You've said you're going to remove posts that contain falsehoods. Whoa, hard. How do you do that cost-effective at scale as you are well aware of these problems? And how have you handled, how are you going to handle some of, say,

a VC is calling for a run on the bank, for example, recently that just happened. How do you deal with that? Because it's a massive issue and Facebook spent a lot of money on this. There seems to be no solution. The flood is so big. How do you deal with the content moderation? Is it going to be through machine learning? Is it going to be, how do you do that? So the problem, I think one of the problems with content moderation on something like Facebook or Twitter is when you're taking it down, you're taking down your post. And although there's no guarantee of free speech outside of government, you can't just like... I think these platforms think of people posting as the lifeblood of the system. When you are simply distributing content, it feels a lot easier to say, you know what,

that article violates these principles, and therefore we're not going to let it be distributed. That feels like an easy decision because it's between two responsible parties. It's a publisher and it's a company. Would you call yourself a publisher? I don't think so because we don't create any original content. Right, so you're a platager. I like, sorry, what's that?

Platform publisher. Oh, okay. It's my word. Talk about then using AI for Artifact because Instagram rode the iPhone wave. This is what major, and many companies like yours, Uber, others, many others, and now Artifact wants to ride the AI or machine learning wave. Why will that make Artifact better than, say, Apple News?

You've previously said machine learning is like a dark art and doesn't work until it works. Why will that make the difference here? That's the key part of this, correct? dark art and doesn't work until it works. Why will that make the difference here? And that's the key part of this, correct? So when you start this stuff, you have to figure out where you figure out in the ecosystem. And Apple News is actually a very good product for the head. If you want headlines and if you want kind of the major publishers, so why would I need another place to consume my headlines? I don't. I have the New York Times. I have Apple News. I have literally, you can go out and find any number of services to do that.

But if you're super interested in specific topics, Artifact can be that place where it knows you. Like the gaming industry is super interesting. We collect all these amazing blogs on gaming and we have the headlines every single day in the gaming industry. And that might just not be interesting enough for some of these larger projects so right so the bet is the long tail super interesting so you've also talked about artifact generating individually ai articles in

the future i think we there's a lot so we could be a publisher yes you could be um there's already a lot of news aggregators not enough enough news reporters. What happens in news gathering when AI is cribbing the few remaining reporters? Well, if you want to describe it as cribbing, then I think the articles that will get written by AI are more synthesis articles that point you to deeper articles. So if you want to understand the totality of the SVB crisis, no one generally writes the meta piece on what articles to go read to get the full picture. We can show you a list, the full article. All I'm saying when we say we might write articles someday, I can imagine showing up and saying, hey, you want to learn about the SVB crisis? Here's the background of how it started. Here's a great piece by so-and-so

on the fallout. Here's government intervention, and it breaks it up into these clusters so that you can see all sides of it. That's the kind of article that I think... Plainer at Vox Media did that. That was by hand, though. Yeah, but I think things that will be automated will be automated, and investigative journalism will never be written by chat GPT generally, although OpenAI tends to surprise us. Yes, it does. So news is not an easy business.

You know, media is hard. When Andreessen Hards is someone there called me after they put a future and they're like, we're going to kick your ass. I'm like, it's a shitty business and you suck. So congratulations. Is that what you're saying to me? No, no, no, no, no, no. You're not making stuff. Instagram sells ads.

Twitter is trying to make a subscription service but it keeps breaking the the system uh post which i'm advising sometimes is uh focus on revenue share how are you going to make money at this i get asked by every publisher esther and the answer is i have no idea okay it's all on the table. I do think we are having a phenomenal metamorphosis from just ad driven to, yeah, I'm willing to pay for something quality. And at the same time, you've got people who used to pay for Netflix and now the ad supported model is coming. So it's really unclear what direction we're headed and for what content. Also, I'm not a fortune teller, so I don't

know what will resonate with people the most. So you don't know. So I have to get that money back from SVB. Yes, yeah, yeah, clearly. But you self-funded it. Should you have gotten VC funding? Would you have, or you just want to talk to them? I just don't think we're there yet. I'd rather not have any pressure from an outside firm to move on things that we don't need to be moving on yet. That sounds like kind of a can't answer because it is, but I don't know. Actually, let me tell a good Elon story. I've only met him in person once when we were having lunch and we were talking about other

stuff, but I said, do you do angel investing? I'm kind of dabbling in angel investing, thinking that would impress him. It didn't. And he goes, why the fuck would I? And I was like, choked on some asparagus. And I was like, well, I don't know. You know a lot of people and they really respect you. And he goes, I invest in myself.

And I thought about it as a contrarian view, but I was like, I get it it like if you're going to spend all this time and it's hard and it can be miserable at times and it doesn't work until it works right um you might as well invest in yourself and I I so do I feel and then he vomited on you and shot himself in the foot but go ahead no no I'm. That's an excellent point. I would agree. That's the best of Elon. That's about it, but go ahead right now. My reflection from it was if you are lucky enough to be in a position to be able to invest in yourself, that is the greatest freedom in the world because you can do great things and you can be independent. And I think you look at two structures, one in which Facebook, Mark has been able to control

the board forever and build towards the destiny he believes Facebook should build. Or you could be caught in fights over the boardroom at Twitter, fights over the CEO job, who owns what. I'd rather be in the position where there's this phrase that we use a lot, we may not be right, but we're not confused. where there's this phrase that we use a lot. We may not be right, but we're not confused. And part of why I want to invest in myself and in our team is because I,

I feel like there, the chances of being confused are very high in this world. So we need to have a particular point of view and work very hard on it to, to keep that path. All right. Would you ever sell again if it was successful? What's a 1% below 1%? No. So not to Mark, not to Elon, not to TikTok. I think freedom is the greatest thing in the world and being able to manifest your own destiny and make amazing things. So I think chances are really, really low on that. Really low.

So my last question, in 2020, you were being considered for TikTok CEO. I remember I called you about that. I don't actually remember that. Oh, but I did. So maybe I texted you. Did you touch a bullet there? Should the government ban TikTok? I do believe that TikTok is so powerful

and it is so popular in the United States. And just like if Artifact were that powerful to distribute information, you have to ask yourself, like if it is not run inside of the United States and it's run by a competitor, when I say run by a competitor, run in a competitive state, like what do you do? Like, are you okay with that?

The Chinese have always said, no, it's why you can't have Instagram here. It's why you can't have Facebook here. So I don't think it's crazy to say that we should look at it really closely. Yeah. Which is not an answer. I don't think we should ban it. Yeah. But I think we should figure out how to run it in an independent way inside of the United States. I think that's a really smart plan. Now, whether or not that is tractable, it's why that job is really hard and why I'm glad I'm doing what I'm doing. Yeah, exactly. Kevin Systrom, everybody. Thank you.

Invest solely in yourself. I think that's Elon Musk advice we can all agree on. Diversifying doesn't make sense when you think you have a lot of potential, but on yourself. That's good career advice. It is. Kevin's a very group-oriented person, and he's not very selfish in the way Elon is, and I am in a lot of ways. And I like that. I like that he's learning from that. And I thought, again, he's a very nice guy, as you can see. And he took away something actually really good, which I always appreciate about him. Yeah, he had a positive story to tell us about someone who's mired in negativity, which I thought was good. And he said that the era of tech bros being able to do whatever they want is long gone. It is not. So you think he was being overly optimistic on that? I think

he's like that. I think he's got the best intentions, and that's the way he is. And so I think it's his hope, but I don't think he traffics with those people or spends a lot of time. I thought that was more a statement, him saying that the world has gotten smart to what these guys are up to, not that these guys have gotten any better. I think younger entrepreneurs, I am so thrilled to meet so many of them because they do, they're more thoughtful. They're just not jerks, you know, and over, overweening narcissists. There are some young jerks, Kara, I've met them. Yes, I know. But I'm just saying, on the whole, you're meeting a lot more interesting founders. And that's, that's a good thing. And I think that's what he had hopes for.

I'm hoping there's more Kevin Systroms than there are other people. So we'll see. It was interesting to hear him be envious of Be Real or Snapchat in a way, right? Sure. I mean, they were good ideas. If you're an entrepreneur, you're like, oh, how did I miss that? But just listening to the whole interview, he's like, get rid of the follow function, these bridging algorithms. Like, why don't we have more of a family and friends business idea? By the way, I think that's WhatsApp groups for friends and family. But I know he wasn't going to engage and reflect in the same way on Instagram, but it was kind of imagining a nicer, kinder, less vitriolic, and less competitive social media. And yet he wasn't, as as he said he's not going to be the

one to build it you know he i don't think he liked a lot of the things facebook has done to instagram but he sold it so there that's the way it goes or not just what facebook had done but the unintended consequences of the thing he had made no i think he didn't like the things they did to it really i don't the advertising i don't think he liked the the go-go growth i think he's more thoughtful yeah some of these problems are early. Like he was saying, they were kind of sending people to suicide lines and getting- They got bought right away. So this was always at Facebook. This is where it grew into the size it is. But he was thinking about it and perhaps the company wasn't thinking about it quite as much.

But again, he sold the company and that's the way it goes. Let's see what happens with Artifact. He has this idea he can do something with, quote, balanced ideology subject to integrity and quality in journalism. Let's see. Let's hope. Let's see. It's a tough time for that. Anyways, you want to read us out today, Cara?

Yes. Today's show was produced by Naeem Araza, Blake Nishik, Christian Castro-Rossell, and Rafaela Seward. Special thanks to the team at South by Southwest. Our engineers are Fernando Arruda and Rick Kwan, and our theme music is by Trackademics.

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