The Breakdown - Will Big Tech Enable or Destroy Small Business? Feat. Sahil Bloom

Episode Date: July 24, 2020

Today on the Brief: Disappointing jobless claim numbers with first increase in 4 months US banks now allows to custody crypto Senate hears arguments for a digital dollar in the context of US-China economic competition Our main conversation with Sahil Bloom Sahil Bloom is an investor with Altamont Capital Partners and a prolific author of financial literacy Twitter threads.  In this conversation, he and NLW discuss: Today’s jobless claims Long term economic impacts from COVID in the travel industry “Forced efficiency realization”  How remote work opens white collar professionals to global competition  Whether tech platforms are a destructive or enabling force for small business  Why financial education is essential and sorely lacking Why the Robinhood rally crowd represents a positive opportunity for bringing new voices into the markets Find our guest on Twitter: @sahilbloom

I think we are increasingly going to be moving towards global competition for high paying and for highly technical jobs. I think that technology has been driving that change for a number of years and it's just much more visible now because of all of these accelerating movements. I mean, over the last 10 years, if you had a friend that started a new startup and was trying to bootstrap it, where was he getting the technical and back end work done? It was Ukraine. It was Bangladesh. It was India. And those developer jobs have been international and that competition existed internationally in the freelance market. It's just that now the freelance market is going to be the mainstream market in a lot of ways as we go forward.

So, yes, I do think you're going to see an increasingly globalized world as it relates to that kind of talent as more and more of these jobs go digital and go into the digital ecosystem. Is it a good thing or not? is a much more tricky question for me. I very much believe in the American dream. My family came here to pursue that, and I very much believe in it, and I believe we live in the best country in the world. That being said, I'm also a big believer that historically and throughout history, talent is evenly distributed, but opportunity is not. And that is something that really has troubled me throughout my life and something that I'm determined to, even in the tiniest way, help fix throughout the course of my life. And this is an event that begins to see opportunity

distributed more evenly. Welcome back to the breakdown, an everyday analysis breaking down the most important stories in Bitcoin, Crypto, and Beyond. This episode is sponsored by BitStamp and Crypto.com. The breakdown is produced and distributed by CoinDesk. And now here's your host, NLW. What's going on, guys? It is Thursday, July 23rd, and today my main conversation is with Sahil Bloom. Sahil Bloom, you might recognize from a number of excellent threads that have been exploding all over FinTwit, explaining important concepts in really accessible ways.

One of the things that I believe incredibly strongly is that today's financial media, in general, has the role of excluding rather than including. people. It is an insider baseball type of niche performance art that really only serves to reinforce the fact that people who know all the acronyms and initials are in that in-group and everyone else is in the out-group. And when it comes to something as important as the economy, which impacts every single one of us, I think that our financial media has to be more invitational. It has to start from the premise that no matter who you are and what you do, you have a stake in and can understand important economic concepts. Sahil shares that perspective and has been doing some

amazing work and really simplifying things using the format of the Twitter thread. So that should be a really fun conversation. Up first, however, let's look at the brief. First up on the brief today, it is Thursday, which means we get the new jobless claims data, and today was not good. We saw the first rise in initial jobless claims in four months, up 109,000. and seasonally adjusted claims to about 1.4 million claims total. That was up from the expected 1.3 million. Now, if there was good news it came in the continuing claims data, which was down 1.1 million to a total of 16.2 million continuing claims. Other indicators, unfortunately, also suggest that there is a lack of demand or an easing demand for labor. We're seeing job

openings in July, being down from June, and Google searches for file for unemployment are growing again. What's more the growth in worker hours in small businesses is on the downturn. Why this is significant? Well, I've said this before. Basically, I see these jobless claims as something of a counterpoint to the day-and-day-out statistics of the stock market as one of the major economic indicators we need to be looking at. And a line from the Wall Street Journal kind of gets at what worries me. The level of claims indicates many workers are being laid off perhaps for a second time. I think that what we're seeing and what's hard to refute is that there's a new layer of insecurity and a settling in of the idea that this is not going to be a quick recovery in terms of actual getting back to normal.

The virus is still with us. It's still growing around the country. And so there's a new normal that has to be adjusted to. And unfortunately, in many contexts, in many small businesses, in many large businesses, that's going to mean more economic pain. Next up on the brief, U.S. banks have been cleared to offer crypto custody. The U.S. Office of the Comptroller of the Currency, which is absolutely a mouthful, is set to allow all nationally chartered banks to provide custody services for crypto. Previously, crypto custody had to come from specialist firms with specific license, often state-by-state license, and this really opens the door to a huge new set of actors

to participate in a major way, in an institutional way, in this industry. That's the first part of why I think it's important. it expands access to services for the industry in an industry that has had a really hard time getting top quality banking services and creates a financial incentive for these types of financial institutions and banks to get more involved. Second, I think it also potentially shows the impact of individuals. The acting comptroller right now is Brian Brooks, who is a former Coinbase executive. He's been in power for a couple months and is making a number of pro-crypto pushes, including also a national payments charter, which would basically allow crypto startups to

get past this state-for-state approach in terms of acquiring money transmission licenses and instead have a national approach to that issue. All of this together means it could be an interesting moment over the next few months for institutionalization of crypto and new actors coming into the space. Speaking of crypto themes, our third topic on the brief is a Senate hearing on the digital dollar. On Wednesday, the U.S. Senate Banking Housing and Urban Affairs Subcommittee on Economic Policy conducted a hearing on, quote, winning the economic competition between the U.S. and China. Now, most of this was not about crypto, right? Four of the five speakers had no ties to crypto. And the main issues discussed were things like supply chain dependence

and technology like 5G, which makes sense. If you've listened to my episode on a primer on the key fault lines, these are the top of mind issues for U.S. regulator. as it comes to China. However, there is also this question of the Chinese digital currency and what it means for the role of the U.S. currency as the World's Reserve. In that context, Christopher Giancarlo, the former CFTC chair and now head of the Digital Dollar Project, was one of the representatives. Why is this relevant? Well, there's obviously just a fact that this digital dollar question is being elevated as one of the major economic competition issues with one of the most important geopolitical relationships in the world. But there's something else that.

that's interesting that I really wanted to point out, which has to do with Tom Cotton, who's a ranking member on this committee, and who is, importantly, a pretty big new cold warrior, you could say. In part of his comments to Giancarlo, before asking the next steps in rolling out a digital dollar, he said, for us, maintaining the dollar supremacy is not only an economic matter. It is a critical strategic matter as well. It is what allows us to have such effective sanction regimes around the world as well as other benefits. And again, I point out that this isn't just any senator, this is Tom Cotton, who is a leading voice right now on the Republican side, specifically as it relates to this push to see the U.S. and China in something of a new Cold War.

If he becomes, and people like him, become major advocates of a U.S. digital dollar, I think you're going to see a lot more political momentum behind that than we've seen so far. But with that, let's turn our attention to our main conversation with Sahil Bloom. Sahil has a really interesting background that I'm sure we're going to get into on this show, but as I mentioned, I started to notice him when he had these really excellent threads start to pop up on Twitter. I featured one of them where he tells the story of Mr. Federico in Renaissance Italy in one of my Longreed Sundays, and I've been paying closer and closer attention. He's been kind of exploding on Twitter.

He's been growing a huge number of followers. He's collaborating now with Scott Melker, who's also been on this show, The Wolf of All Streets, on a new financial media play. And I'm really excited to see what they build. Ultimately, the thing that made me want to have Sahil on the show is this sense of trying to make important economic concepts more accessible to everyone based on the belief that everyone has a stake in economic outcomes and so should have a voice that is understood in this space. As with all long interviews, this is edited only very lightly, so let's dive in and I hope you enjoy it.

All right. I am back with Sahel. Saito, thanks so much for joining today. Yeah, absolutely. Thanks for having me on. So by way of kicking this off, I think a lot of people maybe have just started to hear your name if they're hanging out on crypto Twitter or Finn Twit. But like, give us the background. What do you do?

Who are you, you know, and kind of where are you spending your time? Yeah, absolutely. Definitely, pretty new to the whole FinTwit game. I, you know, grew up on the East Coast, moved out to California back in 2009, was fortunate enough to come play baseball at Stanford. So played on the baseball team for four years, stayed on and did a master's at Stanford, and then jumped into the financial world back in 2014, joined a, joined in an investment fund in the Palo Alto area. have been there now six years, focused on investments in the consumer space, but more broadly, you know, have a very, very deep interest in finance and money and economics and in the history of all those things. So I've really enjoyed starting to engage in the financial Twitter world and spreading some of the financial education things that I'm really passionate about

through that medium. Yeah, it's interesting. I mean, I think I want to come back to this because I think something that you and I share is a sense that financial media has a tendency to be exclusionary, and there's a disruption that's happening right now that's much more invitational for people. So let's definitely come back to that. But first, I want to talk, let's just get right into contextual news. So it's Thursday, which means it's jobless claims day. And one of the things that you and I had wanted to talk about was real economic impact of the COVID-19 crisis. And we just found out that there were 109,000 seasonally-adjointed, just did job claims higher than last week, about 100,000 more than economists thought were going to

happen. So it's the first time in about four months that jobless claims, or initial jobless claims rather, have gone up. What do you make of what's going on and what these numbers mean? Yeah, it's a great question. And look, just at the outset, I mean, just to say it, the gross numbers on a weekly basis here are shocking. Sure, they were going down a week on week for a long period of time, but to have over a million new jobless claims every week, every single week over the last, I don't know how long it's been, eight, 12, 16 weeks now, it's really just unbelievable. And it shows how we're anchored on such horrific numbers that the million number is no longer shocking to us.

I mean, imagine that. It's just, it's insane. But to see, you know, to see it tick back up this week, I think is a pretty troubling sign. And it starts to speak to the fact that there's a thing. recovery is slowing and sputtering and potentially reversing as we've seen some of these health issues pop back up with with case numbers in these states. Yeah, I mean, I think this is the, it's been interesting for the last two weeks or so because you had the scenario where the May into June data was getting people optimistic again,

right? Retail traffic was up, something like a retail sales were up like seven and a half percent. And there were a bunch of indicators like that. The problem was that those numbers, are obviously lagging, and they were coming out at the same time as we saw a new case numbers going up in 39 or 40 states. And I think this gets at the central, I think frustration for most people who are kind of thoughtful observers of this, which is that we've continued to have this conversation of health outcomes and economic outcomes as two divorced realities in some ways. And problematically now, it feels like we're starting to see just the natural catch-up of, you know, hold aside any additional government shutdowns or anything like that, just

people making kind of rational decisions for themselves or their businesses about where they're going to spend and how they're going to spend and all that stuff. Yeah, I'm with you. I'm with you here 100%. To me, it's all about anchoring. We were anchored around bad numbers. Anything felt better than where we started in March, April. So you started to see things that looked like a recovery based on that anchoring point,

and people got optimistic. And, you know, even separating the market and we could talk for, hours about all the craziness going on there, people started to get more optimistic about the real economy. People felt like spending was coming back. Retail sales numbers looked okay to your point. But the reality is the real economy is still suffering. And there are a lot of people without jobs who have had that gap plugged by by government subsidies and by the government. And at some point, the music stops on that. And I worry that people won't have a chair to sit in, so to speak. Well, and you have right now, the government is kicking back into full swing because the $600

extended benefit is coming to a close for most states this week. This will be the last week that people can actually draw upon that. And that has contributed, I think, a huge part to the sort of easing of the pain of this thing. And so it seems likely that unless there's something that fills in that gap, the real economic reality is going to hit really fast. Yeah, I think that's absolutely right. I think it allows. people to completely avoid and kind of just neglect the idea that there was real economic suffering happening, both in their own households and more broadly across the entire economy. And the government did what it needed to do in a lot of ways.

There were people that were suffering because of a government mandated shutdown. And so they tried to provide support to those people. Unfortunately, as is the case with the government from time to time, they didn't think through some of the second and third order effects of it. they didn't think through the fact that people might be making more money on unemployment than in their regular job. And so you have cases where people aren't going back to work because it makes more sense to remain unemployed and continue to ride the government, the government free money train, so to speak. So they flubbed it in some ways, but I was encouraged by the fact, to be honest,

that they did support the real economy in some ways, taking the market economy and the Fed actions aside. Yeah, I mean, the question, though, is, you know, the, I think the, we've two, two things happening simultaneously that I think are for observers trying to make sense of the world, you have to kind of keep in mind both contexts. The first is what happens next in the immediate short term? And unfortunately, we have another short term, right? We had a short term a few months ago that was made not a short term because, you know, we kind of continued to dilly-dally from a political perspective as it related to common sense measures to address the health. But then you have this larger structural shift, too. So numbers just came out from Yelp that of the 132,580 closures around the country

of small businesses that had been listed on Yelp, 55% were now considered permanent. So you have this tidal wave of small businesses that have gone out of business. You have, again, this sort of creeping creeping corona, but then, and this is something that you and I were starting to talk about on Twitter the other day, you also have these larger kind of structural shifts that are likely coming to a number of industries. So let's talk, I guess, about some of these second order effects and more long-term effects and where we're likely to see long-term or at least medium-term behavior shifts that have a particular impact for either individual industries or cutting across industries. Absolutely. I think you said it really well. There's there's second, third,

end-order effects to all of this. The coronavirus trigger has really set off a chain of events that I think really function as a accelerating event of sorts for many of these changes. I mean, we've, we've known about the trend towards virtual work, remote work for quite some time, but the forcing function that was COVID has now pushed that forward in my mind 10 plus years. You and I were talking about the travel industry and you play out for airlines how this all works. You had mentioned on Twitter, I believe, that a big chunk of these airlines revenue comes from business travelers. It's the travelers who their office is paying for full fair business class or upper class tickets. That's where they make the majority of their revenue, the majority of their profits.

And if you have those people start to think, well, shoot, I can just do these meetings virtually. I don't have to be away from my family. I can reduce the cost to my employer. There's a lot of reasons to think that the airline business model is fundamentally changed now. Their entire revenue model is disrupted by this. Yeah, it's interesting. So I was reading before this after our conversation, airline business travelers make up only about like 12% or something like that of. total airline passengers in the U.S., but 75% of the profits, which is exactly what you were just

saying, right, that they're the most lucrative segment. And I think to your point, you have this confluence of factors, right? You have, on the one hand, just people getting more comfortable. A lot of the intransigence to work from home, right, a remote work, was, well, we can't possibly make it work. And people have been forced to make it work, so that argument goes out of the way a little bit. And even the people who do want to or have been reaffirming.

in their sense of wanting to kind of build their companies in a mostly in-person way, and now are more precise, I think, in what they really need to be in person for or not. So you have that kind of, that excuse is gone. And I think with it is going to go some of the presumption that every meeting even between companies has to be in person as well. And so you have the reduction of travel there. Plus, you have, I think, the larger structural issue, which is that companies are likely to be, at least thinking about ways to be more resilient going forward, right?

And in the context of cost cutting. And if all of a sudden there's these huge domains, you know, particularly office retail or or, you know, lots of travel that can be cut in a way that seems plausible, it feels like it's going to be one of the first things to go. I think that's all absolutely right. There's so many. You could play out the threads along this in so many ways from the direct travel industry to all of the industries tied to business travel, thinking about cities that have been built in the

U.S. and in other countries around conferences, large gathering, large conferences that have restaurants, they have hotels, they have tourist attractions, everything that is tied to the travel industry goes well beyond the airlines. And it has sweeping effects. And then you play it out to businesses, as you said, and trying to save money on office space, trying to save money on events that they had to host, conference rooms, all of the aspects that add to the operating costs of these businesses, it's just a total rethink across the board on what your cost structure looks like. And it's a huge opportunity for a lot of them to drive and squeeze costs out of businesses, particularly when you're uncertain about what the demand looks like in the coming years.

Yeah, so you have a concept that you're talking about called four. Eust Efficiency Realization. Could you speak a little bit more about that? Yeah, absolutely. So, you know, when I talk about forced efficiency realization, I really try to simplify it and think about a runner, a distance runner training at altitude. It's an example that a lot of people are familiar with.

You go and run in the mountains and train with less oxygen in order to strengthen your lungs and become a better, more efficient runner. Now, play that out with a company. what you've had during COVID is a period where you need to function and operate more efficiently from a cost standpoint. Demand is so uncertain. A lot of these companies had to make furloughs or cuts in order to make sure they could survive from a cash standpoint. So that was the training at altitude for them. They were forced to go do that. But in the environment post-COVID, I think what a lot of companies are going to find is that they are now a more efficient runner per se. They are able to

operate in a more efficient manner with less cost in their business. And whether that's less headcount, whether that's less office space, it's all of the above. They have a more efficient business now that they've been forced to do it. And in an environment where demand starts to come back, they will not have to bring back all of those jobs. They will not have to bring back all of those costs to layer on to their business. And what I worry about is that that means there is a residual high level of unemployment in our economy and a lower level of overall spending as a result because of the lack of discretionary income that has long-lasting structural effects for the broader economy domestically and internationally. BitStamp is the original global cryptocurrency

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that they're looking at massive, massive job cuts in the coming year. And it makes you question, right? We're past the COVID shock. Everyone says, we're on the V-shaped recovery. Things are good. You have politicians on TV. You have the Federal Reserve officials on TV saying we're recovering. Then why are these big companies announcing new job cuts?

And it all goes to that point that this is starting to migrate upstream. This is starting to migrate to, white-collar professionals beyond the service line, you know, front-line workers that you were mentioning. And that has a long-term lasting impact for the overall economy if it does come to fruition. Yeah, one of the scariest versions of this that I saw was LinkedIn announced 6% of its workforce was being cut and the jobs, it was something like 960 jobs. And they were all around professional and recruitment services. And the reason they were being cut is reduced demand for professional and recruitment services.

which is so many layers upon layers of indicators, right? Hail of the whip. So let's talk about, I think one of the things that's really interesting is looking at winners and losers in this environment and actually starting to try to piece out how power shifts happened. Because so as we were talking about before, you now have, you've had a tidal wave of small business closures. And obviously we've seen in markets, certain categories, particularly in tech, have emerged as

huge winners, right? Just naturally, Amazon is capturing more of the behavior shifts. They're incredibly well poised for this. They're obviously businesses that relate to enabling remote work and things like that that have been winners. But I think I'm interested in your take, not just from a kind of category by category analysis, but in a larger sense of how you think capital might rearrange itself in terms of kind of power dynamics, what the implications are for entrepreneurs, for private equity, for public corporations. I guess, you know, how do you see power shifting on the other side of this, which is admittedly a huge question?

Yeah, a big question, although a great one and a very important one, to begin to chip away at. And I don't want to suggest that I have all the answers to this. My big picture perspective is that this is an unfortunate environment where the big get bigger. The winners are the people that you know about. right now, excuse me, in my mind, you have these big tech companies who have steadily increased in size, steadily chipped away, they're going to continue to win, that they have business models that work in this environment, the notion of tech eating the world will continue. And I don't

necessarily think that that in and of itself is a bad thing. I think in many cases, technology makes our lives better. And if these technology companies are inherently deflationary, they have business models that allow us to get more for less money. I mean, you think about your iPhone and how much power is contained in your iPhone now and the cost you're able to get it for now relative to what that same computing power would have cost 10, 20, 30 years ago. It's incredibly deflationary what technology is able to do. So I don't in and of itself find that to be a bad thing. I find it very troubling when small business and small entrepreneurs are going to face an environment where they get bullied out of markets or are not able to succeed at the ground level.

And I worry about what that means for general society. I worry about that what that means for the culture of America, a culture of entrepreneurs of scrappy startups. And you don't want that to die. That is a very important part of our ethos and of our overall environment that we've created as a country. Yeah, I mean, it's interesting because I think one of the reasons that technology is complicated right now is that for many of the reasons that you just suggested, there is a lot of ways in which the kind of scale that these companies can operate on, particularly a company like Amazon, has created massive benefit for us. However, at the same time, we've had a conversation about antitrust in general over the last 20 or 30 years has been

absolutely gutted. We don't have that conversation really. anymore in the political mainstream. And you have a company like Amazon that is basically slowly replacing every single small brand and small seller on their site with an Amazon brand. And it has to bring up this question. I mean, it's a super dramatization of the larger kind of net impact around the world where is everything just becoming winning

based on the kind of tyranny of the algorithm. And if now, what's the answer, right? because it's hard to imagine how even an extraordinarily well-funded startup could encroach upon Amazon in any of these kind of key categories that it's infiltrated at this point. Yeah, I think you make a great point. I would push back in a couple of areas. One, I would say Amazon or whether you're looking to other areas of e-commerce, like a Shopify or Walmart Marketplace, which is a bigger focus for them, I do think they're going to focus more

and more in the coming years, particularly as it becomes a political question on promoting and really championing third party sellers on their sites. Amazon has started to do a better job of that of providing services to third party sellers. And I think part of that is a political play in order to avoid disruption from from antitrust movements, etc. But they have done more of that in recent years. Walmart Marketplace will launch and be slowly, become an alternative to the third-party seller's marketplace on Amazon. Shopify, to their credit, is one of the most incredible businesses in my mind in promoting entrepreneurship and small businesses. I have so many friends that have started these really unique small businesses

selling online. And Shopify has been this incredible tool to allow them to scale and grow as a small business in a digital environment. You know, you play it out across the tech world Apple with the app store and what they've done for developers and enabling independent developers to grow and scale their brands. So these tech companies are enabling small business and entrepreneurship to an extent and there are some good actors out there. I do think it should be a focus of the people and of government to some extent to continue to promote that and make sure that the tech companies are not growing

at the expense of all of these small upstarts. and bullying them out of markets across the board. Well, it's interesting. So I think that using the comparison of Shopify and Amazon to me is a good reminder of why the linguistic brushes we use, we should be careful with, right? Because Shopify and Amazon are kind of designed in structurally different ways. You know, Shopify is based on promoting entrepreneurship where, you know, It's so far outside the realm of this podcast, but I would push back for years on Amazon as it relates to third-party sellers.

I think that they do as little as humanly possible and have been systematically pushing them off the platform for years, which is fine. I mean, like, there is a really meaningful question and discussion to be had around no one is entitled necessarily to digital spaces as their own, right? Amazon created the context for third-party sellers. They're welcome to change that. But this question about what the relationship is between platforms and their users, I think also gets into a larger question around that where it's coming up more than Amazon right now is obviously speech issues as it relates to the major platforms. However, I think a really good point is what Shopify is doing for a lot of different types of businesses. And it's interesting. I sometimes wonder if we are seeing almost right now the first time, like, okay, let me bear with me for a second.

The boomers had them, the boomers watched themselves get disrupted and watch their expectations of what their careers were going to look like change in front of their eyes based on the internet, right? And millennials in a lot of ways, digital natives in particular, came up with the internet. So our expectations for our jobs, how we would work, how often we would shift jobs might have been, like they were a little bit more in line in some ways with the reality, the economic. reality. Now, that holds aside everything around asset prices and our inability to buy into real estate and all that sort of stuff. So I'm not saying that it was a good economic environment for millennials, but we didn't watch ourselves get disrupted in the same way that boomers who thought their jobs and careers were going to look one way had to adapt to this radical shift. I wonder to what extent now millennials are actually experiencing a disruption to their business

model where we now are grappling with an internet that is kind of ruled by these huge platforms and that might have pretty structural changes for how we have to operate and expect our careers to go. It's a fascinating line of thinking. I've never thought about it that way. I'd love to continue to play it out. I haven't until literally 20 seconds ago. What I was thinking about.

When you get on these kind of things, you start thinking about things in a different framework. It's fascinating. And I think it'll be very interesting to see where things are one, two, and five years from now. Because you have platforms that are doing the exact opposite. We mentioned Shopify Upwork is an interesting example that I'm extremely bullish on in this new freelance remote work environment. It has the opportunity to really champion the careers of superstar freelancers who are going to become more and more a part of the working economy. as remote work, as digital work, et cetera, becomes the norm rather than the exception. And so I am excited to see this new crop of businesses that pop up and champion small operators and sole proprietors,

rather than this aggregation of power that, you know, that you reference as it relates to Amazon. I know we have a slightly different viewpoint as it relates to Amazon. And I hope that I'm more right than you are in the future and that they do. too, you know, focus on and not nudge people out of the market. And frankly, I hope that Shopify continues with a noble, with a noble pursuit of continuing to champion small businesses and operators and not start to throw their weight around the room, so to speak, as they get bigger and have more command over the e-commerce and digital ecosystem. Yeah. So it's interesting. I mean, so Upwork is another great example, although Upwork brings up another question I want to ask you about.

So, I mean, the breakdown, the logo and everything was from Upwork. I use Upwork pretty frequently. It's one of my favorite services. And, yeah, I mean, I guess just to play this thought out a little bit more, it's like, I guess it's dramatized for me by watching these 50% of small businesses be permanent closures and realizing, it's seeing that in contrast with where are people looking to build small businesses now. It's individual content creators.

It's in the context of the Shopify's. and all these sort of like agencies of one and models. It's just, it's interesting. Like we don't have, you know, obviously big power shifts happen over time, even when it feels like there are moments where it's really highlighted. And it's just interesting to see a moment where one way of doing small business has been completely wiped off the map. And the question is whether the new way of doing small business can can even accommodate.

And one of the things that Upwork brings up, which is maybe a question that I have no idea actually what you think about because I don't think I've ever seen you write about this. Upwork brings the fact of global competition as an outcome of remote work more clearly, right? Because I, the last five people that I've hired on Upwork, one was in the U.S., one was in Serbia, one was in, I think Malaysia, one was in India, right? And it's completely on the basis of talent. And it's unbelievable. It's incredibly cool. But one of the things that I think worries people, and people even read this into Facebook's quick move to embrace remote work, was, is this just going to be a structural force that means that every white collar professional in America is now competing with every other person of similar skills around the world?

What's your take on that? Is that the case? And if that is the case, is that a good thing or a bad thing, what are countervailing factors? So first off, yes, I think we are increasingly going to be moving towards global competition for high paying and for highly technical jobs. I think that technology has been driving that change for a number of years. And it's just much more visible now because of all of these accelerating movements. I mean, over the last 10 years, if you had a friend that started a new startup and was trying to bootstrap it, where was he getting the technical and back end work done? It was. Ukraine, it was Bangladesh, it was India, those jobs have been, those developer jobs have been international and that competition existed internationally in the freelance market. It's just that now the freelance market is going to be the mainstream market in a lot of ways as we go forward. So, yes, I do think you're going to see an increasingly globalized world as it relates to that kind of talent as more and more of these jobs go digital and go into the digital ecosystem. Is it a good thing or not is a much more tricky question for me.

I am, you know, I'm the son of an immigrant. My mother's from India. My dad's family is from the Ukraine. I very much believe in the American dream. You know, my family came here to pursue that, and I very much believe in it. And I believe we live in the best country in the world. That being said, I'm also. a big believer that historically and throughout history, talent is evenly distributed, but opportunity is not.

And that is something that really has troubled me throughout my life and something that I'm determined to, even in the tiniest way, help fix throughout the course of my life. And this is an event that begins to see opportunity distributed more evenly. You have people in India that have the same access to a high paying or a technical job as a person who grows up in a wealthy family in Menlo Park. And do I think that that's a good thing? Yes, I do from a global society perspective and from a human utility perspective. Absolutely. Are there things to think through from a policy perspective in order to protect American jobs and ensure that people have a standard of living that is up to par?

Absolutely. And I think it's a very tricky one. And candidly, I don't have the answers for it. And I don't think anyone does today. It warrants discussion and it's going to be difficult to figure out and come to a solution on. But I am a big proponent of more evenly distributed opportunity across the world. Yeah. I mean, listen, this is going to be one of the biggest big picture political issues over the coming decade, you know. And it's going to be, I think, highlighted by the context of a power struggle between the U.S. and China, but it's going to have much bigger implications, you know. So I think it's an incredibly salient point. I mean, it's something that I think about all the time. And I mean, it gets to very fundamental questions of what it looks like to promote national interest in a borderless world. And obviously, you know, there, I believe probably that there will be attempts to reinstitute borders in ways that are going to be really difficult to make stick in this world of, you know, both openness, but also going back even to the

point that you made forced efficiency realization, right? All of a sudden, you have forces for globalism from kind of a political or a social or a moral ethical perspective, dovetailing with business interests for these changes. So it's going to be fascinating to watch play out. I totally agree. And we're only playing out the next five to ten years as it relates to human jobs, right? Play it out over the next 10 to 20 years and you start running into a robot globalized world and you're competing against robots for high paying jobs. And that becomes an entirely different discussion that we can have on another day, but a very difficult one as AI, machine learning, et cetera, start to take over some of the higher paying and more technical jobs.

Yeah. I mean, I sometimes think about what it will be like to listen to these conversations. like 10 years from now and will they just be such a chuckle in terms of like totally missing the mark in terms of actual relevance. Absolutely. But we can't know. Well, so I think that's actually a pretty good segue, though, into something that you were discussing before and I know it's really important to you. Part of why you have been kind of blowing up in the Twitter conversation is you've been doing

these great threads that simplify through allegory, analogy, and story key financial concepts. And I'd love to hear more about what your take on financial education, financial media, financial information is, and what inspired you to start doing this sort of these threads? Yeah, absolutely. So first off, education has been something I've always been really passionate about. Again, it goes back to the point about opportunity not being evenly distributed. I think the way to fix that is as a starting point through education. And as you look at the world of financial education in particular, I think,

the financial industry has, to your point earlier, intentionally been exclusionary. It's insulated itself through complexity, as I would put it. And that's through jargon. That's through over-complicating key terms and concepts. It's through all of these things that are intended to keep others out and insulate the jobs of people that are, quote-unquote, the insiders. And that's a really unfortunate reality to me. When you look at a country where a young man or woman getting their first credit card cares more about the perks than the APR they see on the label, that is a scary thing. And a lot of that comes from just a lack of basic financial education and literacy. And part of it is our schools don't teach it. You learn about history.

You learn about mitochondria. You learn about geometry, all of which are important. But you don't learn about taxes. You don't learn about what a brokerage account is. You don't learn about how to build a diversified portfolio, how to invest in index funds that are low cost. And to me, that is a real travesty. And it's something that I feel like I can do a small part to fix. And the way I like doing that is through storytelling.

I like simplifying these concepts into really understandable parables that anyone can relate. to because they come from real life situations. And I've been candidly quite amazed by how it's taken off and how people have enjoyed engaging with the material. But it's been really encouraging to me. And it's exciting to see that people find value in it, both in the U.S. and also internationally. What are the concepts you think are really fundamental that you're finding a surprising number of people just don't really understand? I think it starts all the way. at the basics. I mean, my mom texted me the other day and I'm working on a threat on this now. She texted me asking, what is an ETF? Apparently, some financial advisor had pitched her on

taking her money and investing it into a, quote, diversified pool of ETFs in order to give her, you know, great risk reward profile. And she's not from the finance world. And that sounded really complicated. That sounded really attractive. It sounded like something that would justify paying this person some management fee to do for her. And the reality is if you understood what an ETF was, and if you understood how to invest in them or what platforms allow you to invest in them without paying a management fee, you'd be much better off. You have all these people paying financial advisors, paying these crazy fees, when in reality they could be investing in Vanguard, mutual funds or vanguard ETFs that are at such a low cost and allow you to accrue and build

wealth over time. There are these basic concepts like that. And my mom, just to say it, is a, you know, she's a Princeton master's grad. She's very, very intelligent as has been in the world of, you know, high, high paying jobs in in her realm her whole life. And she doesn't have that basic education on something so simple. So it strikes me that there are, concepts like that that just need to be disseminated more effectively and more efficiently to the masses. So as I look at the world of financial Twitter, if I'm being totally honest, there is a segment of it that is extremely, extremely intelligent and very much focused on interacting with each other. A lot of it goes over my head because the people are so smart and so deep in expertise on

their one area, I'm not focused on that group. I'm very much focused on how do I communicate with the masses? How do I communicate these concepts in a way that's understandable for everyone and make them accessible to everyone? Do you think that this sort of explosion of interest from the Robin Hood crowd and the Davey Day Trader Global crowd actually creates an opportunity to have more people included in, even if they're coming in kind of in a crass way to begin with? Absolutely. I think we're at a seminal moment for financial education globally. I've been talking to people about this recently. I mean, I come from a baseball background. Half of my friends from my life or baseball players, a lot of them are still playing. And the number of texts I've gotten from

those friends saying, hey, I just opened an account. Do you have any tips for day trading or any tips for stocks? And my first answer is no. But my second answer is like, what questions do you have. What is popped up that you don't feel like you understand that I can explain? And I'll explain it to them. And then that ends up being the genesis of a thread I do or of a story I do. And I think it just goes to show that there are a lot of people who want to be educated. They want this information. They want to be financially literate. They want to make more money, support their families, et cetera, and feel like they're really building and accruing wealth. And if I can be a small part of helping people do that through something I enjoy in storytelling.

That's really exciting to me. As you sort of navigate what is inherently a very fast-changing economy and wider world, are there any mental models you use to kind of make sense of things? That's a great question. I'm big on the inversion principle. I don't know if you're familiar with that one. I first learned about it from reading some Charlie Munger. But the idea that to break down a complex problem, figure out what would have to happen

for the exact opposite to occur. I've always liked that one. It just has clicked with me. I've never been a huge mental model person. I'm not going and studying all the Farnham Street mental models and memorizing them and how to use them. But that is definitely one that's resonated with me. The other one that I constantly come back to, and you can probably tell from reading my stories, is Occam's Razor, just the idea that the simplest possible solution is often the correct one.

And I try to leverage that and think about that as I write these stories is just providing the simplest explanation of something. And a simple way to think about it is often the best way for the vast majority of people. What is next for you? what are your plans to the extent that you can talk about them for expanding on these threads, these stories, this kind of mission around financial education and literacy? Yeah, there's a bunch of things in the works that are pretty exciting. You know, I've been approached by a handful of people about ways to expand this platform. And frankly, it's all happened over the course of the last week or so.

I had an awesome conversation with Mark Cuban, who had, who had retweeted some of my material and who is very passionate about financial education. I think he's invested in some businesses in the space. And he was providing some suggestions around places to partner with, et cetera, in order to expand this platform and this mission. So there are people that have, you know, a great deal of excitement around seeing this mission spread and built. And I'm looking forward to seeing it play out over the next four to five days as, you know, as it continues. It's hard for me to plan too far in the future because of how much

it's changed so quickly. But it's very exciting. And I hope to just be able to reach more and more people with it as we continue to go here. Well, I've been enjoying it immensely. I'm really excited to see what you do next. For people who want to follow along, where can they find you? I am at at Sahil Bloom on Twitter. That would be the best place. And I love engaging with people. so please pass along any suggestions. If there are any concepts you don't understand, please shoot them my way. I would love to meet you all and look forward to continuing to engage with you, Nate. Awesome, Sahel.

Well, thanks so much for hanging out on the show today, and I will catch you on Twitter. Thanks so much for having me. There is a lot from that conversation with Sahil that we could spend hours unpacking. This question of whether tech platforms can actually create the context for a new generation of entrepreneurial small business seems like an incredibly important question. The question of whether there is another side to this remote work trend, which is the competing of white-collar professionals with similarly skilled people from around the world and what the implications of that might be. One thing that I think is super clear, though, is that in any of

these contexts, we want people to have more information and more understanding in order to be able to make better decisions. And that's where Sawhill's mission around financial education and financial literacy comes in. I think it's an incredibly important mission. Obviously, you probably understand that about me if you are listening to the breakdown. But I think it's something that I'd love to see more people go actively after. So follow Sawhill on Twitter. The link will be in the show notes. And thanks as always for listening. Until tomorrow, guys, be safe and take care of each other. Peace.