Please enjoy this transcript of my interview with Balaji S. Srinivasan (@balajis), an angel investor and entrepreneur. Formerly the CTO of Coinbase and general partner at Andreessen Horowitz, he was also the co-founder of Earn.com (acquired by Coinbase), Counsyl (acquired by Myriad), Teleport (acquired by Topia), and Coin Center.
He was named to the MIT Technology Review’s “Innovators Under 35,” won a Wall Street Journal Innovation Award, and holds a BS/MS/PhD in Electrical Engineering and an MS in Chemical Engineering, all from Stanford University. Balaji also teaches the occasional class at Stanford, including an online MOOC in 2013, which reached 250,000+ students worldwide.
To learn more about Balaji’s most recent project, sign up at 1729.com, a newsletter that pays you. They’re giving out $1,000 in BTC each day for completing tasks and tutorials. Subscribers also receive chapters from Balaji’s new (free) book, The Network State.
Transcripts may contain a few typos. With some episodes lasting 2+ hours, it can be difficult to catch minor errors. Enjoy!
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Tim Ferriss: Hello, boys and girls, ladies and germs. This is Tim Ferriss. Welcome to another episode of the Tim Ferriss Show. I’m going to keep my preamble short because we are going to run out of time well before we run out of subject matter with today’s guest, Balaji Srinivasan, and I’m sure that that pronunciation could be improved. @balajis, that’s B-A-L-A-J-I-S, is an angel investor and entrepreneur, formerly the CTO of Coinbase and general partner at Andreessen Horowitz. He was also the co-founder of Earn.com, acquired by Coinbase, Counsyl, that’s with a S-Y-L, acquired by Myriad, Teleport, acquired by Topia, Topia perhaps, and Coin Center.
He has been named to the MIT Technology Review’s Innovators Under 35, that was in 2013, is the recipient of a Wall Street Journal Innovation Award, many others, and holds a BS/MS/PhD in electrical engineering and an MS in chemical engineering, all from Stanford University. Balaji also teaches the occasional class at Stanford, including an online MOOC, M-O-O-C, that’s Massive Open Online Course, in 2013, which reached, as I understand it, more than 250,000 students worldwide. You can find him on Twitter at @balajis. I’ll get it right this time, with a J, B-A-L-A-J-I-S. And you can find much more about him on his website, balajis.com. Balaji, thanks for coming on the show.
Balaji Srinivasan: Great to be here, Tim.
Tim Ferriss: And I thought we would start with a number, and that number is 1729. And as I understand it, that’s not in reference to a date, but you use that number quite a bit. Could you please provide a bit of context for how you’ve used that number and why you’ve used that number?
Balaji Srinivasan: Sure. So I’m actually going to be launching something at that domain, probably by the time this podcast is published, hopefully. And so it’s a domain 1729.com. And what does it refer to? It’s not a year, it’s the first number that’s the sum of two cubes in two different ways. And what that refers to, it’s basically the Ramanujan number. So Srinivasa Ramanujan was India’s greatest mathematician, and kind of like India’s Einstein, but has kind of a romantic story in the sense that he was extremely poor and wrote these letters to mathematicians around the world. He had just self-taught math from a textbook. He wrote these letters to mathematicians around the world, and most of them ignored him, just thought he was a crank. And one guy brought him out to England, this guy G.H. Hardy, who thought this guy has to be a genius because no one would make up these equations.
And so then Ramanujan began a rampage through mathematics and has people still to this day going through a page of his notebooks for an entire mathematical journal issue, because he just wrote down all these results that were true, but he didn’t provide the proof. You just intuit the result. So where does 1729 come from, 1729?
Well, unfortunately, Ramanujan died very young, very, very young from — people think it’s because he was away from his food and the warm weather of India and so on. But basically on his deathbed, Hardy came in to try to cheer him up. He said, “Ramanujan, I came in on a taxi and the license plate, it’s very boring. It’s 1729.” And on his deathbed, Ramanujan still had the wit and faculty to say, “Oh, that’s not boring. It’s the sum of two cubes in two different ways,” because he’s on a first name basis with every number, you know? And that’s kind of the legend of Ramanujan. And so, have you ever seen Good Will Hunting?
Tim Ferriss: I have.
Balaji Srinivasan: Yeah. So Good Will Hunting was kind of based on that. There’s actually a recent, there’s a book that was turned into a movie called The Man Who Knew Infinity. And —
Tim Ferriss: It’s a very fun movie to watch. I mean, it’s engaging. I don’t know how factually accurate it is but —
Balaji Srinivasan: There’s pieces, actually the numbers in there and so on. But to me, for many years actually, before joining Andreessen Horowitz, what I was going to do is turn the MOOC course that I had done in 2013 into a global talent search. Because just like you have the Hubble Telescope looking for dark matter around the universe, I thought of the mobile telescope, the telescope provided to us by mobile, could help us find the dark talent in the Global South, the undiscovered talent. And basically that’s not just the Global South, that’s Eastern Europe, that’s Russia, that’s all the former Soviet countries, that’s basically the world of all these people who didn’t have a chance. And I think of that as something that I’ve wanted to do for a very long time. That’s what I was going to do prior to joining a16z, for a bunch of reasons.
I joined a16z instead in 2013, and I’m kind of coming back to the path not traveled, and doing this global talent search. And the idea is that basically we who have been fortunate enough to have some resources or winnings, we can offer a hand up to all these people, bring them into the global economy, level them up, give them what we know in terms of education, or teaching, or what have you. And all of the stuff can be delivered, I know it sounds like a cliche, but at scale over the internet, you produce it once and you can replicate across millions of people. So this is what I’m doing next. And hopefully by the time the podcast comes out, this’ll be live. Knock on wood. Okay.
Tim Ferriss: Amazing. So there are these seeming pillars of influence, pillar may be too strong a word, and I think we’ll want to explore a few of those, including Lee Kuan Yew, perhaps.
Balaji Srinivasan: Sure.
Tim Ferriss: And we’ll get to that. And for people who don’t know who that is, we’ll explain because good God, I mean, what a figure and what an influence. Now, before we move further ahead, what was the subject matter and the intent behind the MOOC that you taught?
Balaji Srinivasan: Great question. So the subject matter, the title was Startup Engineering. And the concept was that it was basically the class that I wish I had had before doing my first startup. And so it was kind of like a time capsule back to somebody who was into math or into just technology in general, but was just completely naive about how to actually run a business or anything like that. When doing my first startup actually, this is a first approximation, but I thought that the primary difficulty would be calculating difficult integrals. And I was like, “Okay. That’s the hard part, and everything else is kind of basic, whatever. We can knock that out before breakfast.” And of course that’s not the case.
Tim Ferriss: As often turns out!
Balaji Srinivasan: As often turns out, that’s right. Because the thing is, I was a career academic for many years, and in academia, there is a high premium placed on novelty of results, technical difficulty. And there’s some good aspects of this. In math, you learn how to think rigorously and go premise, premise, premise, conclusion, really interrogate your results. There’s seemingly obvious things that aren’t actually true mathematically when you actually go and work them all the way through. Famously like the parallel postulate of Euclid is not something you can just take for granted, you get different geometries if you assume different conditions there. And so you think rigorously in academia and then you think, “Okay. Well, that’s the entirety of the world. It’s just technical difficulty,” and it’s not.
And the second piece was the philosophy of startups, meaning what is the difference between a startup versus small business, or why is this happening now? There’s a piece of recent history, for example, do you know what the NSF-AUP is?
Tim Ferriss: I do not, I’m not even going to try to pretend.
Balaji Srinivasan: Sure. So National Science Foundation had this thing called the Acceptable Use Policy in place for many years, and it prevented commercial traffic on the internet. How about that? Right? So the dotcoms —
Tim Ferriss: I did not know that.
Balaji Srinivasan: Yeah, the dotcoms that we know and love were actually not feasible until I think about 1991, plus or minus one or two years, but I think it was 1991, they repealed the AUP. And the reason people fought it, they said there was going to be spam, and porn, and malware on this commercial internet, and it was all going to be broken, because before that, it was an academic and military internet. Everybody was sort of a quasi-trusted user on it. You had to have a .mil or .edu domain. And then they were like, “Oh, my God, all these crazy people are going to get on. It’s going to be…” And you know what? They were right. All that stuff did happen. But the benefit was worth it. The downside was mitigated by I think the upside, and that was the birth of the commercial internet.
And that’s something which most people don’t even know how that came about. It really was something where one rule was holding back all this innovation. That’s something that’s made a deep impression on me. So stuff like that was the kind of stuff that I tried to convey in the course, alongside the nitty-gritty. And I think most of the time, that kind of stuff is not taught in the same place from the same person with one coloring the other. I think that’s part of why the course was popular.
Tim Ferriss: Thank you. That was a very comprehensive answer. I love comprehensive answers. Been looking forward to this conversation, you’re very good at teasing out the details. And we may end up teasing out the details on all sorts of things in this conversation, including some of what one of our mutual friends described as one of several Balajisms, including the line immutable currency, infinite frontier, or maybe frontiers, and immortal life. I’m giving teasers to people. It’s a bit of a cheap trick, if you’ll excuse it. Another one, this is from, we’ll just say anonymous, although I think this sentiment has been echoed by a few people I chatted with, which you may enjoy, which is something along the lines of, “Balaji will end up on one side of a firing squad, but I’m not sure which side.”
Balaji Srinivasan: Okay. That’s funny. I’m very peaceful. I’m extremely peaceful. I just want to put that out there for the record. Go ahead.
Tim Ferriss: He’s very peaceful. And I think that part of what fascinates people about you is how often they would consider you prescient. And often that comes with a degree of fear, not of you, but of the consequences of you being right. And I’m thinking of, for instance, a quote, I think it was on January 8th, by the co-founder of Roam Research, you probably remember this one. I think it’s @Conaw, if I’m getting that right, which was something along the lines of, “The most terrifying words in the English language are Balaji was right.” Okay. So I’m planting those seeds just because we’re going to come back to why some of the things you’ve predicted accurately have in fact been terrifying. Before we do that, we can, if you want to say something first, we could dive into it.
Balaji Srinivasan: I will offer just a little bit of color there, which is, so what he is referring to is specifically my predictions on COVID and the pandemic and so on, but then also more generally kind of a bunch of unheeded predictions or things that I’ve said, and that people would be like, “That’ll never happen,” and then it kind of happens. So it’s not so much that it’s always bad predictions, it’s not always just Cassandra. I like to think that I look for large deviations, so that you can actually get large upside as well as large downside. And so folks who’ve, I think, who’ve followed me on investments have done reasonably well, but there’s both, we’ll see.
Tim Ferriss: There are both, and Cassandra, for those wondering, that is a mythological reference, correct?
Balaji Srinivasan: Yes, that’s right.
Tim Ferriss: It’s given the gift of prophecy, but with the condition that no one would believe her.
Balaji Srinivasan: Correct.
Tim Ferriss: So we will come back to some of these predictions. And is it, I want to say I just heard you say COVID, most people would say COVID, does it matter? Is one correct and one not?
Balaji Srinivasan: I mean, it’s an acronym. I have heard it pronounced both ways, COVID, or COVID-19, or COVID. So I don’t —
Tim Ferriss: I like COVID.
Balaji Srinivasan: Yeah.
Tim Ferriss: I’m going to roll with it, and we’ll come back to that. Now, before we started recording, and you and I have chatted before, we were chatting, but I thought it would be kind of fun to kick the ball around in the conversation about podcasts, because you have opinions about the state of media, or mainstream media, and perhaps even the future of media, which I’d love to dig into at some point. But you had some perspectives on the podcasting world, relative to perhaps other ecosystems. Could you just provide your first, I don’t want to say postulate, that’s me trying to get fancy.
Balaji Srinivasan: No, no, no. Yeah.
Tim Ferriss: Yeah. Please go ahead.
Balaji Srinivasan: Yeah. So basically, let me give some definitions first. So here’s a one-liner that took me a very long time to understand. So product is merit and distribution is connections. And so for example, a great blog post that nobody sees is a great product with terrible distribution. Conversely, a really dumb article, or whatever, that is a piece of content that is in a feed that is seen by millions is a terrible product with great distribution, right? And these are actually essentially disjoint things. Sometimes you can build products that have distribution built in, like social networks, or payment apps, where they’re inherently viral, that’s why people like them. But most of the time these are disjoint things and you have to put as much thought into the distribution of the product. If you’re selling chairs or something like that, it’s not enough to make a good chair, you need to think about, “Okay. How do you get to Walmart? How do you get to this distributor? How do you get on Amazon?” All of those tens of things are critical parts of making it work.
And Peter Thiel has this good line, which is that distribution is the thing that just engineers don’t get. Part of the reason I think they don’t get it is that it’s based on “connections,” right? So it can’t be just produced to math, or at least parts of it can be, like your contribution margin and so on. But it is something where a lot of it is “networking” or knowing somebody, and people don’t usually put thought into this, but when you walk into a convenience store, why are some energy drinks pulled up all the way to the front? Like 5-Hour Energy, why is it in the checkout aisle, and why are others at the back? That is not an accident. That’s a bunch of distribution relationships and deals because people are hyper-conscious, the store owner is hyper-conscious of the fact that being up front near the checkout is a great spot to move inventory, and that’s actually more valuable to be there than at the back. It’s a negotiation with a — okay. What’s my point?
The point is that I think an enormous amount of our media ecosystem today is actually something where the product is terrible, but they’ve got a lot of great legacy distribution. Okay. So again, a software analogy. Think about Microsoft or Oracle. Oracle, which makes a database, any engineer who’s listening to this, the database is okay, but most people, if you’re starting from scratch, you’ll use PostgreSQL, or an open source database, or a combination of some kind. So Oracle has kind of a bad product or a declining product in many ways, at least relatively, versus the open source competition, but has great legacy distribution because it’s got its hooks in all of these enterprises, the salespeople know them. It’s also hard to extract it, to pull it out. And how does that relate to the podcasting thing?
Well, if you think about distribution, not just for sales or for companies, but for ideas, media creators can have great content, which is a great product, or they can have lots of followers or lots of influential followers to show good quantity and quality, respectively, of their distribution. And podcasters, when two people tend to do a podcast together, they tend to have comparable distribution. Because they have comparable distribution, X hundred thousand, Y hundred thousand, or X million, Y million followers across platforms, not any one platform, that actually is, it’s almost like the Wild West where both people come to a saloon armed, right? An armed society, polite society. Okay?
Tim Ferriss: It sounds like something that should be put on the license plates here in Texas. Go ahead.
Balaji Srinivasan: Yeah. And what I think it’s done is it’s changed the culture of podcasting. The thing is, when everybody’s kind of comparable in distribution, the culture is changed to one of politeness back and forth, give and take, as well as the long form nature of it. Right? But the contrast to this is like a journalist versus a subject. Podcasting is peer-to-peer. Journalist subject is hierarchical. There’s a journalist, a corporate journalist, an employee of a media corporation, and then there’s the subject, right? As in the subject under the microscope, or the subject, and there’s a King and their subject, or subject to. That word subject is such a revealing word. It gives away so much. The journalist and the subject under the microscope.
And the thing is that journalist-subject relationship, when the journalist interviews the subject, the journalists can edit, they can pull whatever quote they want, and they have the distribution that the subject doesn’t. They have millions of folks who will read their thing, the subject can just squeak and can’t get a word out edgewise. They can yell all they want, but it doesn’t do anything. No one will listen to them. It’s just boom. That’s why people used to say, “Never argue with the man who buys ink by the barrel.” You’re writing a little letter to the editor and they’re rolling off the printing press, right? It says if you’ve got millions of drones that you can just hit enter and boom, just push software updates to, and this person can just talk to the people around them. Because that’s what media is, media scripts human beings, right?
If code scripts machines, media scripts human beings, even in ways that we don’t fully appreciate. That’s why people spend so much in advertising. You might think advertising doesn’t convince you of something, but it just sort of reminds you that Coca-Cola exists. And then you’re at the store and you know, “Maybe I’ll get a Coke.” That’s how words are picked up. That’s how vocabulary is picked up. A small example, if I said postulate like eight minutes ago, or nine minutes ago, you might say postulate two minutes ago. That’s a small example. So that’s not bad. It’s just how we should think about it. Point being that once we are equal on distribution, then we can actually speak to each other as peers. And it’s futile to try to argue with someone who has way more distribution and is hostile, you just need to build your own distribution, which is much more possible in the internet age.
Tim Ferriss: I agree with that. I agree with the, if we were to put it in delicate terms, the sort of mutually assured destruction element of civility, I think there are also a few other contributing factors. One is that many journalists working under a masthead have the air cover, they have the air cover of not only the reputation, whatever that might be. It doesn’t need to be the most prestigious publication, but they have the reputational cover. They also have the insurance cover, the errors and omission policies in actual insurance, those clauses within actual insurance policies, and some degree of legal protection by their employer would be one. Another is that very often podcasters have experienced having their quotes cherry-picked, or have been on the receiving end of a hit piece. And therefore, I think are just more sensitive to inflicting that on other people, not to say it’s —
Balaji Srinivasan: Exactly, empathetic, right?
Tim Ferriss: Yeah. They’re more empathetic. And I would say that you see that very clearly, you see a shift, sometimes, not always, in journalists, and there are many spectacular, wonderful, diligent, ethical journalists out there. Some of them are very close friends of mine. And those who are say tending towards the kind of cynical cherry-picking side. Once they launch, this is how it usually or often happens, their own book, and now suddenly they are at the whim of other media, and other reviewers, and other critics, they really, for the first time, sometimes get a large dose of their own medicine, and often that can stem the tide a little bit.
I would say last, not to give podcasters too much ethical credit, although certainly some of them and many of them are ethical, I think that it’s very difficult to cherry-pick when you’re interviewing in long form. Not only that, but both sides can very easily record. So there are a lot of factors that make it a friendlier format. Although, I will say I have had podcasts that are highly produced try to pull a fast one on me before, and not that that’s terribly relevant, but that was how I learned to listen and pay attention to my dog very closely, because it was one of the few times that this woman walked in, this was pre-COVID, this is many years ago, to interview me with a producer and so on. And my dog growled.
Balaji Srinivasan: And the dog barked? Wow.
Tim Ferriss: The dog growled, Molly growled, and that almost never happens. And I apologized for her growling and continued with the interview, and very quickly realized that I was being led into a trap, and I just stopped the interview. I said, “Yeah, I think that if this is how you’re going to approach it, we’re done.” And it turns out, if they’re on a deadline, and they have a highly produced piece, and they have a lot of employees and mouths to feed, that that is actually a reasonably strong move, assuming you can afford to do it, is just not play ball, just to walk off the field. And so a lot to be said about media.
Balaji Srinivasan: Absolutely. The thing is actually, the non-answer, the ignore, the block, is actually quite effective as an individual and even more effective if practiced by a large group of people. There’s this site, blocknyt.com, that if you saw, actually did quite well on Twitter, and is a minor hit. And I think you’re going to see much more of that, where essentially the issue is that a journalist versus subject, it’s almost like a traveling salesman who goes town to town and runs a con on this person, and the next person, and the next person. There’s this great book called The Journalist and the Murderer that actually documents — have you heard of this?
Tim Ferriss: No, I haven’t. But that’s a hell of a title.
Balaji Srinivasan: Hell of a title. It’s actually in the Modern Library’s I think top 100 books of the 20th century. It’s called The Journalist and the Murderer.
Tim Ferriss: Wow. No kidding.
Balaji Srinivasan: It’s by a former journalist. And essentially it talks about how there was this really brutal killer, and a journalist who interviewed that killer, and then published a story that was a huge misrepresentation. And the killer was so mad they sued the journalist and the jury actually ended up sympathizing with the murderer over the journalist once they understood what the journalist had done. So it’s a phenomenal book. You should read it. Actually, I’m just going to read you the opening of it, because it’s so good. It’s by Janet Malcolm of The New Yorker. Okay. Ready? Famous opening.
“Every journalist who is,” this is her quote, okay? It’s not mine, but it’s — all right. “Every journalist who is not too stupid or too full of himself to notice what is going on knows that what he does is morally indefensible. He is a kind of confidence man, preying on people’s vanity, ignorance or loneliness, gaining their trust and betraying them without remorse. Like the credulous widow who wakes up one day to find the charming young man and all her savings gone, so the consenting subject of a piece of nonfiction learns — when the article or book appears — his hard lesson. Journalists justify their treachery in various ways according to their temperaments. The more pompous talk about freedom of speech and “the public’s right to know”; the least talented talk about Art; the seemliest murmur about earning a living.”
Tim Ferriss: Okay. So I want to offer — go ahead.
Balaji Srinivasan: By Janet Malcolm of The New Yorker. Okay. So I want to just say that’s a journalist on, corporate journalist basically. Now, go ahead, you were going to say something.
Tim Ferriss: Well, I was just going to say that there’s, for those who want to, there are two sides to this coin, and I want to say for those who want to further educate themselves on the dark arts and those gambits they might fall prey to, there’s also a book called Trust Me, I’m Lying by Ryan Holiday, which covers a lot of this, including the tactic of getting an email 20 minutes before a piece is going to be published asking for a comment, which of course is intended to —
Balaji Srinivasan: Panic you.
Tim Ferriss: — not elicit any comment, or panic you, or other tricks. “I’m going to be commenting on you whether you provide a quote or not. Therefore you should do A, B, or C.” But that’s a good book on some of the dark arts, and don’t lose your place. I don’t think you will because you seldom do, but this also lends all the more testament to those journalists who can withstand and methodically counteract these powerful incentives and motivations to actually do good work where they don’t get sucked into this vortex of perverse incentives. So I do want to say that the people who are actually able to stand in the eye of the hurricane and do that, I give a tremendous amount of respect, because it’s hard.
Balaji Srinivasan: I understand what you’re saying. I do think that the structural incentives in the profession now are such that you’ve got someone who’s literally just swimming against the stream. And I think actually part of the issue is that it’s a profession in the first place. And what I mean by that is the founding fathers talked about how a standing military was a bad thing, because you’d have this Praetorian class that was armed to the teeth, and there would be, again, subjects. And that Praetorian class was in drills, it had its own esprit de corps, its own sense of self, and would increasingly go contemptuous of these civilians who they watched over, and that was a recipe for bad things. So that’s what they preached against a standing military.
Now the US basically didn’t have a standing military for a long time until essentially the permanent wartime mobilization of the 20th century, especially post-World War II. And before, the ideal was to have citizen soldiers. If you’ve seen the movie 300, well, the Athenians come out and it’s like I’m a potter, and I’m a baker, or whatever, and they grab an ax and go to war, but they’re not permanent military. Now, whether we can get back to a standing military, or rather away from a standing military to a citizen military, I think that’s going to have to wait until midcentury when it’s all drones. At which point, then it’s all computer programming. And actually, I know that’s just a cast off from our — go ahead.
Tim Ferriss: So within the next 30 to 40 years, once we get to the sort of asymmetrical warfare where the cost of offense is much lower than the cost of defense with armies of drones, is that what you mean?
Balaji Srinivasan: Yeah. I think basically some time midcentury, maybe more, I don’t know if you’ve followed the, just as a footnote on a footnote, the Armenia-Azerbaijan conflict, which was heavy on drones. That’s a glimpse of the future of warfare. “The future is already here, but it’s not evenly distributed” kind of thing. So I do think that eventually, once you get full automation of everything, it’ll actually be just drone on drone. And then people will surrender rather than have civilians killed. It actually might be more ethical in some way. There’ll be obviously a transitional phase. The transitional phase of human versus drone will sort of be like early in World War I, there are cavalry charges versus machine gun nests, and the calvary were just kind of this outdated way of war that quickly went away. Human versus drone, human versus robot will be like that I think. And then people will quickly be like, “Okay. We just need robot versus robot.”
Anyway, so leaving the standing military bit aside, because I don’t think that can be solved in the short term, by analogy, there’s a concept of standing media. A standing media is, again, like a Praetorian class or a select class, a code elite, that among themselves practices certain behaviors that the average person can’t. And what’s interesting is NYMag had this thing a few years ago, like the media on the media. And it was — let’s see if I can find it. I think it was in 2016. It was the case against the media by the media or something like that. And it was something where there was a poll of people who all work in the media, and essentially it said that they all agreed that basically it was kind of an internal — here’s the survey. Okay. Let’s find you the exact thing.
The Media on the Media, July 24, 2016, 9:00 p.m. One of the biggest things that they all agreed on is journalism’s biggest blind spot in its coverage is groupthink. We draw from a limited pool of people who generally have a similar background and class. They’re simply unable to see the perspective of people who are not like them, and tend to drive out those who don’t fit in. Now, I actually understand this coming from academia. I could see how that epistemic bubble happens. It’s ironic that the people who complain often most about filter bubbles are actually complaining about the plural, because there was just one filter bubble that they controlled, and now they’re annoyed that there’s more than one.
Tim Ferriss: They have competing filter bubbles.
Balaji Srinivasan: There’s competing filter bubbles, exactly, right? So the way I kind of think about this is, the answer is not reform. The answer is not to tell these professionals, “Hey, go in journalism better,” or, “Hey, you’re doing a good job. This guy’s doing a bad job.” I think that’s been tried for a very long time. I think the answer is radical decentralization in several ways. One critical way is everyone is a journalist. So citizen journalism, as opposed to corporate journalism. And so this way you don’t have a media corporation that’s literally running billboards declaring itself to be truth incarnate. Lest I exaggerate, that’s literally the slogan of one large media company that shall go unnamed. It runs a billboard saying it’s the truth, right?
And yet these media companies are basically, the big ones are nepotistic endeavors. They’re passed down from father to son. They are everything that they castigate technology for being, which it isn’t, they’re these kind of inbred sort of things. And no one ever points this out, right? No one points out that the owners of these papers are actually just literally father to son kind of endeavors, which is not happening in tech. You don’t get father — people found their companies in tech, right?
So the alternative to sort of this hereditary dictatorship running these media corporations is everybody writes, and you have local expertise, you have chemical engineers writing on chemical engineering, and you have biologists writing about biology, and you have computer scientists writing about computer science, and they do it as a duty, not for profit. Meaning that it’s actually the fact that there is this corporate business model there, basically currently incentivizes them to go for popularity and the number of clicks, as opposed to truth. Now you might say, “Are you against profit, et cetera?” No, I’m saying that the citizen journalism part is one important component. Let me give two or three more.
A second important component is decentralized cryptographic truth. And this is a big concept. I’m not sure I’m going to be able to do it justice in a few sentences, but I’m going to try, which is to say, it is now possible with cryptocurrency for an Israeli and a Palestinian, a Chinese person, a Japanese person, a Democrat and a Republican, to all agree on the state of the Bitcoin blockchain, right? Regardless of your political views, your geography, people agree on how much Bitcoin someone has globally. This is an incredible triumph because a trillion dollars, forget it. I mean, a million dollars is the kind of thing that people will fight over and disagree on, and so on. There’s essentially no dispute on who owns what BTC. And that’s the kind of thing that people tend to have large disputes over. A trillion dollars, people tend to fight over. They tend to try to fake history, they forge things, all that type of stuff.
The point is that once you can develop consensus algorithms that can get people to agree on what Bitcoin someone had at what time, you can extend them as we’re doing to get people to agree on what properties somebody had at what time. So what stocks, what bonds, what real estate with this, with that, right? Which is again, another huge component of the kinds of things people fight about. And then less obviously you can extend that to a variety of what events happened at what time. So what device recorded this temperature in Kansas on this date? Or what hospital uploaded this medical record to the blockchain at this time? Or what was the price of this house that was sold in this area? Or what crime was reported by this victim or this police officer in this area?
All of these feeds of data right now that are happening in these kind of disparate silos, you put them together into something I call the ledger of record, which is a global feed of cryptographically timestamped history, undeletable history. It’s kind of like Twitter in the sense of when people are referencing whether something happened, they’re like, “Was that tweet real?” And you go to the permalink, right? And you want to see whether someone actually did it. That’s imperfect for many reasons, one of which is that Twitter can man-in-the-middle it, another is that the person’s account can get hacked and they can post to someone else’s, happened last summer.
With cryptography, with digital signatures, not going into all the details, that offers not a perfect set of checks, but a much greater set of checks on this comes much harder to falsify history. You can’t delete the tweets as Twitter can do. There’s a lot of things that come into it where that feed becomes incorruptible. It becomes an indelible ledger, and it becomes cryptographically validated. And so what I think, in crypto this is called crypto oracles, the point being that you’re no longer relying on just pure humans, fallible humans, to tell you what is true. You rely on decentralized cryptographic truth rather than corporate truth. And this is already the kind of thing, which is the input to smart contracts handling millions of dollars. I think we’re going to scale this out over the next 10 years, and this is actually the alternative to a few folks in Brooklyn trying to determine what is true for the entire world, which simply doesn’t scale. Not that it ever did, but it’s very obvious that it doesn’t. All right. Let me pause there. A lot to digest. There’s more I could say.
Tim Ferriss: That is a lot to digest. So it’ll be very interesting to see what happens to long-form journalism. That is pieces that would take possibly weeks or months of dedicated time to produce, but putting a bookmark in that, we can always come back to it.
There are a few things that I would love to get your opinion on, or perspective on, and I’ll give kind of a preview of the two. One will be current forms of self-defense, whether preemptive or reactive, while we’re waiting for the future to be evenly distributed. What can we do in the meantime to protect ourselves or counterpunch if we’re being potentially mistreated by members of the media, that’s one. And then after that, I’m going to ask you about, for yourself, keeping a ledger of predictions, much like you’ve recommended people to write out the bull, bear, and base case of joining a company and then checking themselves a few years later. But let’s first talk to any particular strategies or tactics for —
Balaji Srinivasan: Self-defense.
Tim Ferriss: — defending oneself. Exactly. For self-defense. Do you have any thoughts there?
Balaji Srinivasan: Sure. So I have several. The first is maybe the least obvious, which is you should radically reduce your expenses if possible, because financial independence is upstream of individual independence, and ideological independence. If you’re in lots of debt, if you’re not in debt, but you’re just spending every dollar you have because you live in an expensive area, then you are extremely conformist because, oh, my God, you lose your job and you have no savings, and you’ve got this high consumption. And so you just have to stay in line for everything. Now, if you want to live like that, go ahead. But if you don’t, the first thing to understand I think is that it’s much easier to reduce your costs by 5X than to increase your top line by 5X. It’s possible to do both, but it’s almost deterministic to reduce costs if you’re willing to do it, and how do you do it?
You go to nomadlist.com or teleport.org, and you do a spreadsheet and you optimize your personal runway. And your personal runway is what it sounds like. This is a concept I developed. It’s very obvious, but just extends the concept of corporate runway to individuals. It’s your savings divided by your burn rate. And here’s the thing. The moment that you move to let’s say Bali or some very inexpensive locale, and start living like a grad student, and of course this is most applicable for people earlier in their life. It’s harder for folks with families and what have you. So I recognize that, but even then it can be done. There’s a Reddit group called I think LeanFIRE, Financial Independence Retire Early, there’s Mr. Money Mustache, folks who do this kind of thing, like household budgeting, right?
But as an individual, it’s actually relatively easy. What you do now, and this is actually even easier in 2021 than when I first started recommending this, you get a remote work job at a good tech company. It could be any company of course, but let’s just say tech, because it pays well or whatever, if you can get it, but a remote work capable job. You move to the cheapest place that you can tolerate, that’s good. And actually, there’s actually some really great places that are cheap and warm, especially now that remote is feasible. I mean, basically all of Latin and South America, if you have to be in an American time zone, for example, and big chunks of Canada, if you like the cold. And of course the Midwest and what have you. These huge areas of the map that have opened up thanks to remote.
And if you do that and if you cut your expenses 5X, now you go from, just as a thought, let’s say you’re making, I don’t know, 100,000 a year as an engineer. And before you’re in San Francisco and you’re burning 90,000 of that a year, or something, that’s actually not insane. A lot of people do exactly that, because the rent is so high. Now you go to some rural locale or even overseas, and now you’re actually only burning let’s say 50k a year. 40k in tax or what have you, and then 10k or 20k, let’s say it’s 60k, 20k in expenses, because you just cut it all the way down. Well, now every year that you work, you have basically built up because if your income goes away, your tax goes away as well. Every year that you work up, if you’re spending 20k a year, you have 40k in savings, if you just do out the math. Earn 100, spend 60, bank 40, if your spending is 20.
Then you have two years of personal runway added for every year that you work there, in this simple toy example. And that means that you don’t need to accept angel financing, you can self-finance. You can just, for every year you work, you can take two years off. It’s basically a way of getting personal financial independence, like a deterministic path to doing — now, of course, you’re no stranger to this. You’ve been talking about this stuff forever, The 4-Hour Workweek, and this is not unusual for your audience. But I think that the, perhaps, somewhat novel is connecting this to ideological independence, because it means you can’t be canceled. You can just ride it out. Like the square-jawed Chad, yes. You know the memes I’m talking about? No?
Tim Ferriss: No, I don’t. What is square-jawed Chad?
Balaji Srinivasan: Okay. This is very online. If you Google the Chad Yes, it’s like someone would be like, “Oh, my God, I can’t believe you believe this,” or whatever, and the guy’s like, “Yes.” He’s just not backing down at all. Just totally firm, square-jawed Chad. You’ve never seen this?
Tim Ferriss: No. Nope. That’s all right. I didn’t know who Taylor Swift was until like four years ago. So I’m a little sheltered, it would appear.
Balaji Srinivasan: Yeah. It comes from Yes Chad, Know Your Meme. Here, I’ll send you the thing. Anyway —
Tim Ferriss: I’ll put this in the show notes for people right next to drone warfare.
Balaji Srinivasan: I bet 99 percent of your audience has — maybe it’s obscure, or maybe it’s not, I don’t know, but we’ll have to see. Anyway, point is, how do you do the square-jawed Chad yes? It means you have to be able to accept — you’re not backing down. You accept what consequences may come because you have planned for the future. You know conflict may come and you have essentially banked up. So that’s what’s called a one-piece, financial independence.
Tim Ferriss: Right. And it requires, not to state the obvious, but it requires, or may not even require, courage, the less fear you have. If courage is acting in the face of fear, if you have minimized the risk or the damage of being canceled, or any type of media retribution, you have less fear to overcome. It just makes it easier, like you said, to have that ideological freedom to hold a position.
Balaji Srinivasan: That’s right. The second thing is, if you read books like Beautiful Trouble, do you know what that is?
Tim Ferriss: I do not.
Balaji Srinivasan: Okay. So that’s like a —
Tim Ferriss: I feel like I’ll be saying “I don’t” and “I do not” a lot in this conversation.
Balaji Srinivasan: No, no, no. So Beautiful Trouble is an awesome window into another world, which is — It’s a handbook for activists. So you sort of learn, when you read it, you’ll be like, “Whoa, I recognize that from this event and I recognize that from this event,” and you start to realize actually how much stuff you read in the paper. Some part of it is sort of from corporate PR, but another big chunk of it is from activist PR. For example, taking a laser pointer-ish thing and shining a logo onto the side of a building. There’s various kinds of stunts like this, right? But the one that’s relevant here is there’s this concept called spectrum of allies. Where you’ve got people who are at —
Let’s say there’s five categories: strongly supportive, weakly supportive, neutral, mildly opposed, and strongly opposed. And your goal as an activist is to recognize you can’t just move people from +2 to -2 right away. What you do is you try to find some incident or thing that is bad. And then you go and you put a microphone to everybody and you force them to comment on this person or this incident, and be like, “Can you excuse this horrible thing?” And you try to force them from a +1 to a zero or what have you. Now, that is actually a very premeditated thing. When we are visualizing it, it’s an attack on your social network. This is a premeditated thing. It’s not like an organic thing. And it’s a spectrum of allies. And when we are thinking about this is you have a social network supply chain.
So visualize yourself, you’re a node at the center. And you have your employer. And let’s say you’re a CEO, you have your investors, you have your employees, you have your customers. There’s all of these nodes around you. I’m talking about from a tech startup context, but you can of course generalize this to something else. And those nodes can be colored. Let’s say they’re gray, or blue, or red. They can be colored according to their ideology. And the most important thing about your social network supply chain, and this is not obvious, it is what periodicals they read and respect, because those periodicals have root access to their brains.
If a periodical suddenly says, let’s say The Wall Street Journal, and you’ve got a bunch of Republicans surrounding you, for example, right? The Wall Street Journal suddenly says, “You are bad.” All of those people who read and respect The Wall Street Journal will suddenly zombie turn, their eyes glowing red, and start excommunicating you. Or they’ll move in the spectrum of allies. So the guy who is on the fence may quit. The person who’s really strong and strong supporter might move to what the minimum contractual obligation is. And so the attack, it’s like a mortar that lands in somebody’s social network neighborhood. That’s what negative press is. Negative press is an attack on your social network.
Now how do you mitigate this? Well, first, you, as I mentioned, you’re like a sovereign individual, you’re financially independent. So if people pull away, it doesn’t matter. But second and more important, you need to actually identify where likely attacks are going to come from, and make sure you actually choose your friends, your employees, everything, such that that’s actually robust to foreseeable kinds of attacks. You robustify your social networks supply chain. In the same way that a judicious person who runs a manufacturing plant is thinking, “Okay. China has some supply chain risk,” you are thinking, “Okay. That person has social network supply chain risk. I think they would go south in this event.” And then you might want to get them off the board, or you might want to not hire them as an employee, or hire them as a contractor. And that’s actually better for them as well, because they may or may not know it, but they’re basically the Manchurian candidate. They’ve got a remote chip in their brain, and they’re just like this when you’re denounced.
And now, we have it actually relatively good in the West. The term cancel, by the way, it’s actually very juvenile. It kind of comes from TV shows being canceled, like cancel culture’s like teenagers complaining about it, and this sort of elliptical way of complaining about it has made its way up to 30, and 40, and 50-somethings discussing this topic. But the original term for being canceled was being purged. That’s what they called it in the Soviet Union, and the People’s Republic of China, and so on. And it could well be said that in the Soviet Union or the PRC, an editorial was a prelude to an extrajudicial execution. You wouldn’t just get canceled and lose your friends. You would lose life, liberty, and/or property. You’d be shot, or jailed, or certainly expropriated, or all of the above.
Tim Ferriss: Sent to a labor camp in the Cultural Revolution.
Balaji Srinivasan: Correct. And the other nodes in your social network might be as well. Like if you were a member of a family that had a known capitalist rotor in China, not really very good. And it was possible, just like people come back from being canceled, Deng Xiaoping was actually purged three times. His son was thrown through a window during the Cultural Revolution and was in a wheelchair for the rest of his life. I mean, this is the kind of stuff that happened in other countries. It got even more violent than it has so far in the US. But we’ll see what happens with that.
Anyway, point is that, so that’s the second mode of defense, versus personal financial independence. And second is collective independence. You want to really think through who the nodes are that are associated with you. By the way, one interesting consequence of this if you flip it around, is if you have a monochromatic supply chain. There’s basically nobody, for example, at The New York Times Company who reads and respects Breitbart. So Breitbart has zero effect on The New York Times Company. No node there can be Manchurian candidate by them. But The New York Times Company absolutely on, if you go to Breitbart‘s extended social network supply chain, there’s absolutely folks, whether it’s ads or other kinds of things, that read and respect NYT. So A can publish an article that has no effect on B, but B can publish it and it has an effect on A.
Another example is, if Xinhua Daily — and by the way, I’m not saying anything pro or con about Breitbart and NYT, I’m just making an observation of fact there. Another example is Xinhuanet in China, the Chinese people’s daily, if you’re a Chinese and they denounce you, your whole social network supply chain is like, “Whoa, the government just denounced this guy. You’re in trouble.” If you’re in the US, nobody even reads Chinese or even cares, “Hey, these guys are Tartarians, who cares?” Or at least that’s what folks — you’d be able to brush it off. So it’s more than just “red or blue” or whatever. There’s other colors to it. Whatever you assign the color to the CCP or what have you. And so another one might be if Al Jazeera denounces you, or Russian state media denounces you. You’ve got vulnerabilities to different kinds of things. If you were a Russian expatriate, you might be much more concerned if RT suddenly started going after you than if you were just some random American or even a Chinese person. Go ahead. Let me pause there.
Tim Ferriss: Well, I was thinking we could — I’d be curious to hear what else you have thought about for yourself in terms of self-defense, if there are any tactical recommendations. And just also to come back to one of the examples you gave with reducing your expenses by 5X, would you not — so it’s a combination of questions. You can take them in either order. But if you were employed by a tech company, whether that’s a Google, or Facebook, or otherwise, is that not a significant vulnerability in the system? While financially if you maintain your job, you can withstand say public denouncement or media denouncement, but the company may not have the same willingness to support you.
Balaji Srinivasan: Absolutely. So let me get to point number three. So point number three is, I gave a whole series of talks on this, and I’ve been thinking about the technology for it as well, something that I call the pseudonymous economy. So the thing is that real names weren’t built for the internet. Real names are actually a technology. In fact, real names are a stolen base in many ways, even the term real name is a stolen base. It’s better called a state name or a social security name, because it’s a global identifier. It’s an identifier that anybody can type into a database and pull up all kinds of information on you. And this is something where historically past cultures understood that giving out someone’s real name was actually very bad, or knowing you had power over that person. The reason is that — if you read this book, Seeing Like a State, very good —
Tim Ferriss: Seeing Like a State?
Balaji Srinivasan: Yeah, Seeing Like a State. So this is a great book by Yale University Press that essentially talks about how names were developed to among other things simplify the process of conscription. So rather than, “Oh, that guy over there with brown hair,” which is an analog identifier that could refer to a bunch of folks, though it’s imprecise. Instead you’d say “John Davidson.” And that first name, last name was a, it’s not perfect, it’s not quite as good as a number, but it’s a reasonably good digital identifier where you could go down a list and cross it off. And the thing is, is that would not just be conscription, you couldn’t have even executed Leninist registration of property very easily without those lists. It was all about the list. Literacy is what actually enabled a big chunk of that. You had lists of names. “That guy’s rich, that guy’s not rich. Take his property,” et cetera.
So the point being that the alternative to real names, or a single global identifier and everything, is pseudonyms, search-resistant identities, which people are already using at large-scale. There’s 400 million pseudonyms or pseudonymous users on Reddit. And by the way, there’s a distinction between anonymous, pseudonymous, and real name. Anonymous is totally disposable identifier, that’s like the culture of 4chan, that actually is kind of a pit, right? Pseudonymous, like Reddit, is a persistent pseudonym that accumulates reputation, but that is at a distance from your global identifier. In general, what I think is the Peace of Westphalia at the end of our 30 Years’ Internet War, is going to be —
Tim Ferriss: Hold on, pause for definition. If I could click on, did you say Westphalia?
Balaji Srinivasan: Yeah. So, from 1618 to 1648, Protestants and Catholics slugged it out over religion, but also over power, you know, who’s going to rule, the Catholic Church or Martin Luther guys, disciples of Protestants, very bloody war, lots of killing. And it was basically centralization versus decentralization, among other things. And eventually the truce that came out was the so-called Peace of Westphalia, which established the modern nation state, basically — go ahead.
Tim Ferriss: I was just thinking how happy it makes me that you thought I might even know that. I am so honored. So thank you. But please continue. I don’t want to take us off track but it made my day. That just made my day.
Balaji Srinivasan: I don’t mean to drop an obscure reference, and there’s lots of areas of history that I don’t know about, but this is one that I think about a lot, because it’s highly relevant, I think, to the present day in many different ways. Arguably, the 30 Years’ War arose out of the introduction of the printing press, because you could go and mimeograph all of Martin Luther’s stuff and spread to people, and that’s how you did the software install, boom, into people’s brains. And that’s Protestant Reformation, distribution took off.
And so this technology gave rise to this huge fight that essentially redrew the map, and the concept of the nation state was born out of that, which is, okay, you don’t have these transnational entities that just can have influence everywhere. Instead, we’re going to have these sort of geographically defined areas that are the sovereign government with a monopoly of violence, and a religion can’t just walk in there and just start bossing people around. There’s a lawful government. That was the truce that people came to. You stay in your own lane, I stay in mine, just out of all the bloodshed and to stop the bloodshed. Okay.
So I think we’ve just begun, hopefully there’s not bloodshed, or not much of it, I think we’ve just begun. People think we’re ending it, but I think we’ve just begun the global internet Cold War, where all of the social networks, currency networks compete for ideological and economic dominance around the world, because it can just spread virally back and forth like this. And everyone will be trying to cancel each other and whatnot, it’s going to be this crazy, crazy thing. For example, one thing I anticipate will happen sometime in the 2020s is I think in some country, probably the US, for lots of reasons, I think the cloud will burst. And what I mean by that is some — the treasury was just recently hacked with the SolarWinds things. People don’t know what they got. They could have gotten every tax return. They could have gotten all kinds of very sensitive stuff. And in the —
Tim Ferriss: It was hacked with what? I’m sorry.
Balaji Srinivasan: SolarWinds is sort of the name of the hack.
Tim Ferriss: I see. Got it.
Balaji Srinivasan: And the scope of it is not fully understood. It’s this total ownage of all kinds of government systems. And this is not the first time this has happened. It’s also happened to the government of Texas, and so on and so forth. I’m not pointing at any particular entity. The main thing is when there’s a recent hack of Ledger, the crypto company, their database was just blast on the internet. And you could actually, I wasn’t a customer, but people could see their name and their home address on the internet, and they’re like a crypto fanatic who has a hardware wallet on there.
Tim Ferriss: What a nightmare. What a nightmare. Oh, my God.
Balaji Srinivasan: And so it is like this thing where you can’t easily change your home. Some people can, but —
Tim Ferriss: Yeah. Suddenly you have guys in tracksuits showing up at your house.
Balaji Srinivasan: Potentially. Exactly. It’s like a rank order list of who holds crypto, really, really, really sucks, right? May lead to home invasions, other kinds of things, very bad piece of information to have out there. It’s an enriched list. Right? So it’s hard for — the thing is even discussing it, I hate bringing more attention to it on their hand, it’s also something which has important consequences. And one of the consequences is that it shows it’s not a theoretical risk to think about what these hacks could be. So far, people have talked about hacks kind of in the abstract, but once a government database is hacked and all of this surveillance on us is just blasted out on the internet, the cloud bursts, whether it’s Facebook —
Tim Ferriss: What does that mean, about the cloud bursting?
Balaji Srinivasan: Like all Facebook DMs rain down, all Slacks rain down, something like that happens.
Tim Ferriss: Rain down, meaning are suddenly searchable and available for consumption.
Balaji Srinivasan: Suddenly searchable and available. Wikileaks style. Exactly. Now, when that happens, the defense that people are — now, it’ll cause all kinds of crazy stuff. Basically, it’s not so much that you’ll see fires and electrical outages and so on. But all kinds of social damage will be caused, low trust, relationships broken, all that type of stuff. Like the tearing of the social fabric. Go ahead.
Tim Ferriss: Well, I was just going to say, not to mention that even if you feel like you have nothing to hide, and this is an issue with a lot of surveillance act bills and things like that. If suddenly every lawmaker, every member of Congress has dirt on them, I mean, the destabilizing effect is non-trivial.
Balaji Srinivasan: It’s non-trivial. Now, there’s an argument that when everybody’s naked, no one is. Some people may make that argument, right?
Tim Ferriss: Right. Sure.
Balaji Srinivasan: What I think happens —
Tim Ferriss: But it doesn’t all happen at once. That’s the thing, right? It’s not all discovered simultaneously nor distributed simultaneously.
Balaji Srinivasan: Exactly. That’s right. And if you look at what happened during the Sony hack and so on, this is like a preview of that. And so the answer I think is we’re going to need to build a pseudonymous economy, where over the medium to long term, you separate out your real name, your earning name, and your speaking name. And in fact, you have multiple earning names and multiple speaking games, just like you have multiple usernames at different sites. Crypto is a crucial component of this because it allows you to earn pseudonymously, and with a recent innovation that, I haven’t coded it up, but I’ve got the white paper level description of it, would let you transfer reputation from one pseudonym to another. So one issue right now, just to frame the problem, is you may have a bunch of reputation followers or karma, for example, under a username, even a pseudonym. If you boot up another pseudonym, it starts at absolute zero, which is one of the big things that stops people from doing it.
Let’s say, for example, you have a large Twitter following, and you boot up a new pseudonym, that pseudonym starts with nothing. And so it takes you time to boot up a new following, that’s a whole effort, that deters a lot of people from doing it, they’re starting all the way from scratch. And I thought about this problem, because the thing is that with cryptocurrency, we’ve actually solved this where you can set up a username and another username and you can use ZCash to transfer money from one name to another pseudonymously. So money can be transferred, reputation though didn’t seem to be, until I realized that actually you might not be able to do it for followers, which are non fungible, that to say, one person is not, like, the same as the other, but you could do it on a site like Reddit, where you had Karma that was accumulated.
And so someone who had 10,000 Karma under one pseudonym just like you use ZCash to transfer digital currency, ZCash was basically like the truly anonymous version of Bitcoin, the truly private version of Bitcoin. Just like you use ZCash to transfer cash from one name to another, you could use ZKarma to transfer Karma from one username to another and thereby a reboot under a new username. And that username would have no comment history, but people would be like, “Okay, that’s a 50,000 Karma person or whatever the number is, clearly that’s somebody who our community esteems to some extent has been offered a lot. Perhaps we should listen to what they have to say because they felt they had to go into a pseudonym for this.” And of course you could do this with not just a global Karma, but subreddit specific Karma.
You accumulate all this Karma in, I don’t know, the historian subreddit, or the mathematician subreddit or something like that, something controversial to get off your chest, you can say it this way. So that’s one dimension of the pseudonymous economy. I think another dimension is basically that, just like you don’t give out your password, I think it’s going to become less and less and less common for people to give out the mapping between their physical body and their usernames online. Like you may not even tell your wife.
Tim Ferriss: Well, you mean physical mapping, that just means you’re not going to correlate those two things for someone.
Balaji Srinivasan: That’s right, exactly. So essentially able to be considered a full pot. And we’re already moving towards this, there’s this YouTuber whose name I forget, shake his head, he’s like a faceless guy, like faceless horror or something like that, what’s his name, do you know what I’m talking about?
Tim Ferriss: I don’t know, but we’ll find it and put it in the show notes.
Balaji Srinivasan: What is this guy’s name? Corpse Husband. Ever heard of him?
Tim Ferriss: C-O-R-P-S-E.
Balaji Srinivasan: Yeah, Corpse Husband. So it’s this guy with this super deep voice, it sounds like this, I can’t even mimic it. This guy had the super deep voice who’s never shown his face. And so Corpse Husband basically he’s quasi anonymous. He’s given away his audio, but not as video. And I think that stuff like that, I think what’s going to happen soon, sooner than we think probably by 2025, 2030 latest, is you’ll have filters on your Zoom that are not simply like, Oh, my background is San Francisco or whatever, but audio and video filters so that you sound and look like a different person. And that will be the equivalent of clothes.
Tim Ferriss: The FBI informant filter, something like that.
Balaji Srinivasan: Just something where people don’t need to know who you are. And here’s why I call this a Peace of Westphalia, I think at the end of this — rainbow is not the right metaphor, but this journey pseudonymity stops both discrimination and cancellation. So it’s not ideal, but it is accepted and widely used by people of all political persuasions. And so it’s sort of like a mutual disarmament where you can’t cancel somebody. The only thing you can do is judge them by what they’re saying, you can’t discriminate against somebody. You don’t even know what their immutable characteristics are.
And so that’s actually, I think an acceptable truce to many parties, not a great one, but it’s the total opposite of bring your full self to work, Google stuff or whatever. It’s actually the total opposite trade off, which is minimum necessary self. And I think this goes hand in hand with a future world where there’s more tasking, more microwork, less full-time jobs, and so on. Some of the stuff, obviously, you’ve touched on many times.
Tim Ferriss: All right. So there are lots of questions I could ask, including — we’ve talked about what it stops, but not what it produces or what side effects or perverse incentives could come into play with a synonymous economy. I think we might get into that, but I just want to ensure that I don’t miss asking a question. And this is really a meta question of sorts, and if it’s a shitty question, you can tell me and we’ll do something else. Sure. I had for context, as you mentioned, or maybe as I mentioned. I think it was on January 30th of 2020, this is a week after the lockdown in the city of Wuhan, you posted a tweet, “What if this is the coronavirus?” Or “What if this coronavirus is the pandemic that public health people have been warning about for years?”
And you ended up predicting accurately, many things related to COVID. You have certainly been a participant, and in some respects, by participating, a predictor of many developments in blockchain and cryptocurrency. And for that reason, I had a laundry list of questions related to different types of possible predictions that you might have. I thought a broad strokes way of checking all of those boxes might be, and tell me if this makes any sense, or if you’re game to try this is to actually talk about investing. And just to say, if someone handed you $100,000, or $100 million today, and you had to invest it, how would you even think about that? Because I think by answering that, it might actually begin to speak to some of your predictions in the upcoming years. Should we think about that framing?
Balaji Srinivasan: Sure. So basically, I never give financial advice —
Tim Ferriss: I was just going to say as a disclaimer, what would you do? This is not financial advice. We’re not registered investment advisors, caveat emptor, this is for informational purposes only, no minors or minotaurs allowed, et cetera, et cetera. Please continue.
Balaji Srinivasan: Sure. So the question is, if I was given $100,000 or a $100 million, what do I do with that? How do I maximize returns? So the dumbest thing, but that I think is the most obvious thing to do, is put half into Bitcoin, half into Ether.
Tim Ferriss: The dumbest, meaning the simplest or the most ill-advised?
Balaji Srinivasan: No, the simplest. The simplest thing that I think is guaranteed to produce really exceptional returns. I think you could probably do, in retrospect from I don’t know 2030, looking back, there’d probably be something you could do that would be, not probably, there will be almost certainly something you’d do that’d be better than that, but that’s going to do extremely well and I think it’s a global strategy also.
Tim Ferriss: Is that what you would do now? Understanding you’ve sold multiple companies, you’ve had multiple exits, you are post-economic, I assume, in that respect but you said to maximize returns and I’m not sure if that is how you would think of the objective at this point.
Balaji Srinivasan: Right. So is the objective to make the maximum difference to humanity, or is it to maximize returns? What was your —
Tim Ferriss: It’s whatever you would do with it.
Balaji Srinivasan: Oh, okay. Well, what I would do is something very different, so I thought you meant invest on behalf of somebody else.
Tim Ferriss: Well, in a sense, you answered that. So I’d love to hear your personal take.
Balaji Srinivasan: Sure, okay. So I’ll tell you what, at least I’m planning on doing, which is pouring money — some of my own, and maybe some from investors, if I had such crazy money — into bootstrapping talent around the world through 1729. So just to return to that, because we were talking about that at the beginning. This is going to be the first newsletter that pays you.
And so that’s the say daily at least a thousand dollars in Bitcoin prizes for doing tasks. So for example, here’s an essay, the best 10 responses to it get a hundred bucks in Bitcoin. Here is a scientific article, the best 140-second video on this gets a thousand dollars that explains it to the masses. Here is a textbook or a chapter of a textbook please generate 10 exercises for this chapter that are fully open source that anybody can do and I’ll give you a hundred dollars in Bitcoin each. So that’s cumulative, like an open source Coursera, open source Wikipedia in a sense.
And the goal here in doing this is several fold. First is, I want to actually build up those citizen journalists that we talked about, those content creators. Second, I want to invest in a cumulative form of education, open source education where these folks are doing tutorials. So for example, those 10 questions I just mentioned, it could be on science, but they could be on video editing or other kinds of things. And it’s all just open source so that people get paid for creating the educational tasks that others can do.
How are those two things related? By the way, I know that seems a little vague, but let me explain. So you have these tasks that people are completing, and you have this educational content that people are creating. The reason they’re related is, there’s global tasks that anybody can do, but you might be able to get paid more if Figma, or if Python, or if chemistry. And so the educational tasks that I also pay people to do are like a curriculum that if you solve these tasks, you can level up and get higher value from remunerative tasks. So the basic idea is — go ahead.
Tim Ferriss: May I pause you for a second? So if you have a task like create 10 exercises based on this textbook or this material, can multiple people perform that or complete that task? If so, do you pay all of them? How do you decide who to pay?
Balaji Srinivasan: That’s a great question. So the review process, actually, we allocate as much of a budget or a good chunk of the budget just to review because review is its own thing. And there’s various ways of doing review. And we’re going to experiment with a crowdsourced aspect, like a Reddit-style leaderboard of up and down voting, and then a manual review on top of that, and then there’s like 50 different things that you can do to kind of make this more sophisticated.
In a sense, this is like earn.com 3.0 there is earn.com. There’s Coinbase Earn, which earn.com was actually doing extremely well before we sold to Coinbase, is essentially pay people to reply to emails and complete tasks. And then Coinbase Earn was asset issuers, creators of new cryptocurrencies and digital assets would pay users to do tutorials on their asset to learn about how it worked, like Filecoin or Orchid, how to use decentralized storage or decentralized VPN.
And this is like a third iteration, which also combines a bunch of ideas that I’ve had for online education. So just to summarize it again, A, a newsletter that pays you with at least a thousand dollars a day in Bitcoin prizes for completing tasks and tutorials. And then B, what this does is hopefully, it bootstraps talent all over the world. Anywhere there’s a phone, there’s a job.
We can give this skyhook to people and you can just start with nothing, absolutely nothing other than this phone, which people have made really cheap. And you can do the tutorials, you learn some skills, you level up, you get more tasks, you start leveling up more, you get digital currency. So anywhere there’s a phone, there’s a job and there’s an education and this is what I plan to do with what I’ve been fortunate enough to make, and that’s my contribution to humanity, I think, or hope it to be.
And hopefully, this helps find also like the next Ramanujan out there. Who is this kid in Brazil or the Middle East, somebody’s in some war torn area, like Syria, it’s all bombed out, but hopefully, that kid has a smartphone and we can kind of airlift them out, give them a shot if they’re willing to put in the work and be all free. So let me pause there. That’s at least where I’m thinking about doing, and I know it’s an idiosyncratic use of capital but I’m not the type to spend on Ferraris or whatever.
Tim Ferriss: Yeah. I would expect no less. So let’s just say that there is a bright kid in Syria who, I am struggling so much because I’m accustomed to saying Ramanujan, but I’m getting that corrected, so Ramanujan, and he’s performing, or she is performing various tasks at a high level. What do you then do with that talent? So presumably, they develop some type of reputational score or they accrue some type of reputation. How do you airlift that kid out or encourage them to airlift themselves out? Is it the capital? Is it that they now have the resources and greater optionality to perhaps improve their situation? Or is there another approach because they could be brilliant and continue to complete these microtasks?
Balaji Srinivasan: Right. So three thoughts there. So first is, of course, Syria’s an unusual case because it’s actually a war zone but —
Tim Ferriss: We could use another example if it’s easier.
Balaji Srinivasan: Right. So let’s say it’s Nigeria, or it’s India, or it’s a place where maybe the kid doesn’t necessarily want to leave. If they don’t want to leave, now they have their cake and eat it too. They can have home-cooked food, they can have their local culture and local language, but they can also get into the internet fast lane. And they can contribute pseudonymously, ideally, to a community that will neither discriminate against them nor cancel them because the accent doesn’t matter, their age doesn’t matter, skin color doesn’t matter. Gender doesn’t matter, none of those things matter, can’t matter, that’s at least my ideal, the true global meritocracy. And that’s international of course.
And so the concept here is, yes, they would start earning. And the thing is a thousand bucks, even once in a year, is actually a lot of money for people in a lot of places. So that’s like quite a lot of people that we can airlift out that way. When I say airlift, as I said, I don’t necessarily mean like remove them from that location unless they want to leave; they might be just able to stay there. I mean, more like airlift them from whatever situation they’re in, at least give them the opportunity. And what does that mean in practice? Again, if this works, it’s ambitious and it’s crazy and so on, but let me try and explain it anyway.
This is actually the digital native solution to education. Here’s what I mean to that. So you can think of a piece of paper, and then you can think of a scanner and then you can think of a text file. Right. So you go from physical to this hybrid, like physical to digital scanner and then digital native. Another example would be you’ve got a face-to-face meeting, you’ve got Zoom, and then you’ve got virtual reality. Zoom is also like a scanner. It’s taking the offline and putting it online. But then VR is like digital native. With me?
Tim Ferriss: I am.
Balaji Srinivasan: Third example, physical cash, then something like PayPal or fintech, which is just basically the scanner, taking that and putting it online. And then you have crypto, which swaps out the backend is just now natively digital, it doesn’t have a physical form.
And with education, at least higher education, offline, you’ve got the physical college, then you’ve got the scanner, which is like Udacity, and Coursera and so on, which are fine companies, good companies, billion dollar companies, but they’re basically taking the college experience and putting it online. And then there’s this really interesting Terra Incognita of what does digital native education look like?
So let me kind of motivate how that works and then you can see how maybe that links in with the tasking piece. And I say this as someone who’s taught a lot of courses, whatever, it may be a mistake, but it comes from my experience of mistakes. So let’s say you take a Stanford degree in computer science, there are on the order of 25 courses you need to complete the degree, give or take. And that’s in addition to so-called graduate education requirements.
Each course, roughly 10 weeks, and say on there you have 10 problems per week, sometimes more, sometimes less. So that means about 2,500 problems, 25, times 10, times 10, you need to solve 2,500 problems before you get your one degree. So it’s like you have zero degrees at problem 2,300. And then you have one degree after problem 2,500, a caricature but not by much. Right? And after you have your one degree, you go and now you can actually get paid and you can work and so on and so forth. That’s a historical thing, get your degree and then work. Now, of course, this is only an idealization, people will do paid internships and so on during college. So after 500 problems, they have enough qualification to go and get some job or internship. That’s true.
But to first order, this is how the system is still meant to work, get your diploma before you get a job. Now, one of the things people used to say, a sort of a caricature or attack or whatever of Udacity, Udacity had these nanodegrees. They say, “Oh, you’re getting a nanodegree. Well, you better expect a nanosalary.” Right. “Oh, it’s crap.” So the thing about that is what if you take that seriously, what if you say, all right, rather than this step function, this discontinue segue, you have to solve 2,500 problems before you get a job that’s paying 100k, what if you solve five problems and I give you a job that pays you 10 bucks, a microtask, and we see how you do on that?
So the question then becomes, how do you actually do proof of skill? And I think the answer is something, and I’ve got a post coming on this, which I call the crypto credential. And the idea is every time you solve one of these problems, we don’t give you karma, like on Hacker News, we give you a little badge that says you solved that problem, and that’s held in your digital wallet, just like your cryptocurrency. Think of it as an NFT, if you know what NFTs are. So this is an NFT basically, except it’s non-transferrable.
Tim Ferriss: And just a side note, for people who were interested in learning more about NFTs or non-fungible tokens, if I’m remembering correctly, Katie Haun and I discussed this at length in that podcast episode, which you can find elsewhere. So just Google her name, H-A-U-N and my name and it’ll pop right up, so please continue.
Balaji Srinivasan: Awesome. No, Katie’s awesome. So the idea is, this is not something you can resell, so it’s not like a piece of art in that sense. It’s a third application or Nth application of crypto. It’s not cryptocurrency, it’s not art, it is a crypto credential, right. It’s awarded to you. And the first version of those are just you solve problems on a website and you earn these crypto credentials, just like you earn badges at stack overflow, just like you earn badges in a video game, you earn these crypto credentials, the difference being there on chain, and because they’re on chain, you can log into any site with them. And now you can qualify for instant jobs, microtasks. Now, here’s, what’s cool about this, there’s a lot of details in how we implement this, which I can get into, but what’s cool about this, is it levels it all out.
Yes, absolutely, there’s smart people at Harvard, or MIT or Stanford, but there’s smart people in the middle of Brazil, and in Hungary, and India, and Nigeria and the Philippines. And I know there are smart people there because I could see them in my class. And I could see that many of them were the equal or the better of some of the more pampered kids at these expensive schools, especially nowadays where there’s less stress on just getting the right answer and more on canceling people or whatever, undergrad is much more screwed, especially in the US than it was even 20 years ago, 10 years ago.
So plus because of the pandemic, lots of colleges are shut down and they’re having economic problems, there’s a huge desire to do something better. And the concept is, if we do this right, it’s like Wikipedia for education because every course is open source, the problems are out there, it’s like an open source curriculum.
And that’s something where you’re just incrementing numbers on somebody else’s server. I’m not seeing it as zero value, there is some value to it, but it’s not value that you can easily quantify or extract from the system, you built up your followers here, you can’t import them or export them. It’s not really building up yourself.
So the deal behind 1729.com would be, you would constantly be pursuing, improving your knowledge and your bank account. You’d constantly be learning and earning. You’d be learning and getting these crypto credentials and then that would allow you to earn cryptocurrency. Now, the third thing, actually, and this is something I’ve been also thinking about, I’m flirting with the idea of and maybe we’ll do this is you may think this is crazy, but you’re also The 4-Hour Body guy.
Tim Ferriss: Already crazy. I think I’ve crossed that rubicon a long time ago.
Balaji Srinivasan: All right. So, so the third thing I was also thinking about is actually putting up a third kind of daily post, which is burning. That is to say just post something of you working out, and we give the 100 best each day, like $10 in BTC.
It’s a varied health task, not just working out, maybe it’s show your fitness tracker or what vitamins are you using, or something like that with the goal being that people who are at 1729 are focused on truth, health, wealth. Learning true things in leveling themselves up that way by gaining knowledge, health, like improving their body, their physique. But also like staving off aging, thinking about transhumanism, measuring themselves, and then wealth as important, a third. Truth, health, and wealth in that order, because determine what’s true, make sure to maximize your health and then accumulate wealth, but don’t do it at the expense of what is true or what is good for your health. Go ahead, you’re smiling.
Tim Ferriss: I love that. I love it because I mean, not to bring this to The 4-Hour Body, it seems like a downgrade, I mean, I’m very proud of that book and happy with it —
Balaji Srinivasan: Great book, yeah.
Tim Ferriss: A lot of what was in there that seemed highly speculative at the time has only gained more traction, and support and literature and so on, so I’m very pleased with that. A large component of that, and especially The 4-Hour Chef, which very confusingly is about accelerated learning and behavioral change, the disproportionate impact of small incentives and stakes is, I just think so underdiscussed and one of the stories that I tell in The 4-Hour Body, I believe was of a Google engineer who hoped to get in shape and he created a pact with a fellow engineer, which was, we’re going to work out together, whatever it was, three days a week. And if either of us misses a workout, we’re going to pay the other person a dollar. Now these are Google engineers, they make more than a few dollars a year, and it was incredibly effective.
And the fact that it’s a microincentive, leading to a microbehavior should not be minimized, because ultimately our life is largely comprised of longitudinal accrual of these microbehaviors, it’s a big deal. I love that idea. Let me backstep if I could. I mean, I knew this was going to happen, so no surprise here, but I realized that I did not deliver on the promise of one of my questions and that question was related to, so we’re going to focus on the earning component here for a moment, just because I want to ensure that I provide what I promised to listeners. I asked what would you personally do, in this case to maximize return with 100k or 100 million, and then we didn’t dig into the predictions or assumptions underlying your answer.
The answer was half in BTC, Bitcoin, half in Ethereum. And I’d love to hear you comment on, number one, the assumptions of what’s going to happen or not happen that makes that a rational investment. And number two, and maybe you can answer this first, if you could paint a picture of what you consider the risk profile to be in doing something like that. And again, this isn’t investment advice, but is part of the calculus and assumption that this is a 10 or a 100x extra to zero or something else, if you could just speak to that.
Balaji Srinivasan: Sure. So, I mean, look, it’s crypto, crypto is crazy and it’s very difficult to predict exactly what’s going to happen with anything. But the two things I said that I’d do with the money are, there’s return on investment, then it’s like return to society. And what’s interesting is actually when you talk about the return on investment is 50 percent BTC, 50 percent ETH, return to society is the sort of open source education, tasking, truth, health, wealth thing. And by “The truth, health, and wealth,” I think of as the next “Liberté, égalité, fraternité,” it’s the slogan of the next state, which I’ll come to, or one of the next states.
But coming back up the stacks, so both of those things actually have common premises underneath them, which is that I am simultaneously very bearish on the US specifically in the West generally, but very bullish on the internet, technology, crypto, Asia, and future progress. Often somebody is very positive on one, and positive in the other, or vice versa. Now, they’re actually separated out. They’re separated out of things because for a long time, people associate technological progress to the USA. And now technological progress is something that doesn’t benefit the US establishment. They don’t win a game, the East Coast establishment does not win a game of free speech and free markets. And so that’s why they’re clamping down on free speech and free markets, because if everybody has a voice, especially around the world — go ahead.
Tim Ferriss: Why do they not? Could you just say a few more lines on why that’s the case? Why they don’t win the game? Why those things are bad for the East Coast establishment?
Balaji Srinivasan: Well, so a small example of not winning a game of free markets, whether it’s the bailouts, whether it is all the regulations that protect them or the whole GameStop thing, where it definitely looked like some strings were pulled somewhere. I’m not saying the Robinhood thing because I think Vlad gave a pretty good explanation on that, for people who follow that whole scenario. But certainly Discord going and just shutting down GameStop discussion out of nowhere, based on, I think a pretext, seemed like someone pulled some strings somewhere to make that happen. And that’s something where truly free markets, maybe Wall Street doesn’t win. There’s a rigging that’s going on.
Tim Ferriss: It’s obvious. It goes East Coast establishment, just to be clear, you mean specifically in the financial sector?
Balaji Srinivasan: No —
Tim Ferriss: Do you also mean DC?
Balaji Srinivasan: Media, DC, Harvard, like basically the legacy kind of entities in the US, the pre-internet establishment. And then like free speech, that’s even more obvious. Right. Every single day you have some new editorial saying something like, “Free speech is killing us,” or “critical thinking is bad,” Or whatever, and “Oh, I can’t believe people are having unfettered conversations.” That was like the latest thing.
And for many people, this is like this weird thing where, how is it that the US that they grew up in has suddenly just done a 180 on this? And the answer is that those folks have legacy distribution, but they have a terrible product. They can’t win the argument. And because they can’t win the argument, they’re trying to use their distribution to shut off other people’s distribution, because they know they’d lose the argument if distribution is open to all. So they’re against free speech against free markets. And crypto is actually truly free speech and free markets. So that’s actually the true inheritor of the Western tradition.
It’s sort of like the internet is to the USA, what the Americas were to the UK. It’s like this new world that it will eventually give birth to the successor. And crypto is like a huge, huge part of all of that, because it captures the part of the West that’s actually globally admirable, like unambiguous rule of law except in smart contracts, protection from search and seizure through encryption, all that type of stuff.
Okay. Coming back up, you asked though why, why to win this game? Because first is empirical observation, what’s the underlying pinning thing? Well they basically become these inbred folks. They are not selecting on talent anymore. They are selecting on connections. They’re selecting on whether you were the son of the son of the son, or the daughter of the daughter of the daughter. It is not something where they’re actually taking the best folks, they are taking the folks who can just repeat the party line. I think that’s one huge component of it.
Tim Ferriss: Just for sake of clarity, do you mean within corporate entities, therefore contrasting sort of —
Balaji Srinivasan: East Coast media, for example, take a look at how many of those folks went to private school. How many of those folks have a trust fund? How many of those folks inherited a fortune? And one of the things that’s happened, by contrast like — go ahead.
Tim Ferriss: How does that tie to the BTC, ETH?
Balaji Srinivasan: How does that tie? Those folks, they lack the skills to win in a fair competition. So there’s various rigging that was done most obviously with the bailouts of 2008, there’s so many other items, that’s just a very high profile one. And in response to that, technologists developed Bitcoin and Ethereum and these free systems. I mean, if you look at the genesis block, it references the bailouts in the genesis block of Bitcoin where it’s essentially the counter to this sort of nepotistic East Coast establishment.
And to me, that’s like super obvious, but you’re right that it’s actually useful to kind of lay out the full logic of it. Because I think one of the consequences here, or one of the medium term things is you can only use force to kind of clamp down on global free speech and free markets for so long. It’s like a Jack in the box that will just pop out somehow.
One way I think about that is, after the financial crisis, basically, the way that they decided to like stop the next crisis is they made it almost impossible to get a banking charter. All right. So you punish the banks by eliminating all of their competition. Now, somehow fintech and crypto found a way, different threads coming to the same thing where basically like working above, doing partnerships, working below.
Despite the front door being closed, technology came in through the windows, in the chimney or what have you. And it’s actually sort of reforming the system against their will. Dodd-Frank did not reform the banks, he just sort of enshrined them. It was a coronation in the name of a regulation. It did reduce some of their profit levels in some ways, but it made them look more invulnerable — go ahead. You were going to say —
Tim Ferriss: No, I’m smiling. I’m enjoying. For those who can’t see us, because we’re probably not going to be publishing video. We are currently on video, so we can watch each other’s facial expressions. Please continue. I liked the coronation disguised as regulation.
Balaji Srinivasan: Right, exactly. It is literally picking winners because you’re writing the regulation that assumes a certain structure and capital requirements, I mean like the concept of a smart contract was not contemplated in Dodd-Frank, like a contract that could be executed independently of a judge or a person.
Okay, what’s my point? The point is I don’t think many institutions that predated the internet will survive the internet. It is this universal acid. And the reason is because it connects people peer to peer. One of my laws of internet physics is the internet increases variance. Why? First let me give the observation. The observation is you go from 30 minute sitcoms to 30 episode Netflix binges or 32 second YouTube clips.
You go from a stable nine-to-five job, to a 20-something billionaire or a 40-year-old failed son who’s made nothing of themselves. You go from a taxi ride, standard taxi ride, to Uber, which actually has very long trips and also very short ones. The whole thing is spread out relative to the ride time of the normal taxi. And the reason for this, this is a very common thing, in every area, I’ve seen hundreds, probably thousands of companies at this point, I’ve seen all of these graphs. So you’ll have to believe me that this is a synthesis of a lot of different graphs that I’ve seen, when the internet disruptor comes in, variance increases, there’s more downside and more upside, more amazing outcomes and more really bad outcomes in all kinds of ways.
Why does that happen? The internet, because it connects people peer to peer entities, peer to peer, it removes the middleman, it removes the mediator, it removes the moderator, it removes the mediocrity. Now each of those words has a different connotation. Getting rid of the middleman, everyone cheers, “Yay.” Getting rid of the moderator, people are like, “Oh, I’m not so sure.” Getting rid of the mediocrity, again, everybody cheers.
So those are all kind of similar words, but they mean somewhat different implications, but they’re all true at the same time. So what happens is you have these communities that then arise with nodes that can never connect to each other, boom, they form some bizarre subreddit, right. Or some amazing thing like ETH research or Y Combinator. I don’t know if you’ve ever centrifuged anything, have you ever centrifuged anything?
Tim Ferriss: I can finally say yes to something. Yes.
Balaji Srinivasan: All right, great. So you centrifuge and you get these different layers out.
Tim Ferriss: Samples of tissue or a fluid from my own body.
Balaji Srinivasan: There you go. There you go. So if you centrifuge something, you see all the layers, you can often see them just in the test tube itself. Like, “Whoa, that was like a slurry before, but now it’s like very defined.” There’s a supernatant in those layers. And I’m in the same way, that’s what the internet is doing. It’s just basically taking all of these previously mediating, mediocre, moderating, middleman institutions, and just nuking them. And they’re trying to fight back, but they won’t make it. It’s like if the centrifugal force is too much, I think.
The one exception might be the Chinese Communist Party. That might be the exception that proves the rule, just because they were like super early on a lot of this, they built the firewall, they may be the exception that proves the rule and the future may be a centralized East versus decentralized West. Where, what would I think happens in the West, did you see this Greater Idaho thing, for example?
Tim Ferriss: Have I seen what?
Balaji Srinivasan: Greater Idaho? So a bunch of counties in Oregon want to break away from Oregon and merge with Idaho. Catalonia wants to break away from Spain. There’s all of these breakaway movement type things or whatever happening. It’s like a rumbling that’s happening. Go ahead.
Tim Ferriss: Quebec. There are quite a few examples. I mean, I have a Texas t-shirt that says “Most likely to secede” with a picture of the state. Not that that is, but actually, you could look into some of the formation documents, so to speak of Texas, it’s kind of fun. But yes, I’m not familiar with Greater Idaho, but I’m familiar with the breakaway movement.
Balaji Srinivasan: Right, and the thing about that is I think some of those bad, some of that is good, but the centrifugal force, the whole thing is juddering, the system is juddering because folks are unhappy with it. And I think one of the reasons for that is, going back to Westphalia, one of the Westphalian assumptions is that people who are geographically proximal are ideologically proximal. That, say, you live next door to this guy, therefore you share his language, you share his culture, you share the norms for the most part, you know them, you say hi to them, all the types of stuff, right. In the modern era, people live in these apartment buildings where they couldn’t recognize somebody who lives 10 feet away from them but they’re sharing the most intimate moments with people 3,000 miles away via Snapchat or Twitter or whatever, right?
Tim Ferriss: So this variance, just again, to try to tie some of these threads together, the variants increased by the internet and what you’re describing, these are to the benefit of, in this case, Bitcoin and Ethereum.
Balaji Srinivasan: Yes. And now the reason is they’re examples of the extreme upside, they’re examples of several things at the same time. First, those middlemen are going away, whether it’s the old nation states, they’ll fight to keep control; it’s not going to be a trivial thing. Some of them will reform. I’ll come to that point. I don’t think every state just goes away. I’m not like a total tech utopianist in that sense.
But first, there’s a loss of faith in the past. And that makes people open to turning the constant to a variable. A dollar sign, this fixed dollar that everybody knew into, well, like in a fiat or crypto. Something that was a constant is now a variable fiat or crypto. Before, it was just fiat. Was fiat even a word 10 years ago? People knew it.
Tim Ferriss: I had never heard it.
Balaji Srinivasan: You had never heard it, right?
Tim Ferriss: I think it was a car when I was a kid, and now it’s crypto.
Balaji Srinivasan: Exactly, that’s right. Or rather, it’s opposite of crypto.
Tim Ferriss: I’m sorry, you’re right. It was a car. Jesus. Well, I’m tying myself up in knots here. Yeah. It was a shitty car and now it’s a shitty debased currency.
Balaji Srinivasan: Exactly. That’s right. So essentially, many things we have taken to be constants have been turned into variables because there were constants due to that mediating influence. And once people could connect peer to peer on the internet, you could see there actually more permutations and more levels, and those people started to gain more of a voice. And that’s true in so many different areas, I just point out this one, right. For example, just the digital versus physical versions of everything, you had to specify, whether it’s a snail mail or an email 20 years ago, now it’s almost all email, or the meeting, is it an in-person meeting or an online meeting.
The reason that BTC and ETH are important is, first they represent the sort of unbundling from the old system where it’s no longer able to corral all the nodes, the nodes aren’t all trusted, it isn’t performing the functions that they all wanted. And the top ones can now escape to build something better, which they did on the internet. And that I think becomes the new center that people align around, like the digital native kind of thing. Because I don’t believe that you just have all these particles flying around forever. I think we’re in the age of unbundling and then eventually rebundling.
I mean like there’s that thing by Jim Barksdale, the only way he knew how to make money on the internet was unbundling and bundling, that was a very funny kind of thing, it’s also true, you think about you unbundle all the songs from all the albums then you’ve rebundled them in Spotify playlists. You unbundle every single article, and website, and URL in the world and you rebundle them into a Twitter feed.
You unbundle all of these different — actually, there’s a lot of things I could talk about with unbundling here, but you unbundle all these different products and you have them on Amazon and you rebundle them into like shopping lists or whatever they are, so you can click and just buy like 50 things at once, it’s as if you have your own store shelf, this is your prepper shopping list. And there’s 1000 things like this if you think about the unbundling and rebundling.
But I think the next step is because states of mind and nation states no longer map to each other, because people are friends with millions of people around the world who share their values, but they’re not physically concentrated. The physical areas have less volition by their subjects. So they have to enact more coercion. And more coercion internally, leads to less solution and leads less legitimacy. And that’s a negative feedback loop where at the same time, people are building bonds with other folks of like mind that are geographically disparate.
And that is something that’s exerting like a strain on the whole system, which I think eventually results in mass migrations and people assembling into communities of like-mind to sort of rebuild civil society with folks who they agree with ideologically, and that’s already kind of happening with hacker houses. And so I wrote an article on this by the way, eight years ago in 2013. And I think it’s really starting to happen. Go ahead.
Tim Ferriss: Well, I think it’s, it’s certainly happening on a small scale. I’m aware of a number of concrete examples in places like Utah, upstate New York, and so on where this has been, I think, dramatically accelerated by COVID. And a mass exodus, at least for the time being, I don’t think this is permanent, but out of city centers. Not to belabor this point, but I think it’s a useful tool to use in the conversation in the case of BTC and ETH, how would you think about downside risk and what would need to happen or what might happen or not happen that would make them bad investments?
Balaji Srinivasan: Great question. So I think that for BTC, because like a 10-year-old protocol, the attack on BTC that I think would be the most likely is that the Chinese put up the great firewall against it. So it’s a network level attack as opposed to a mining attack, because the thing is that Bitcoin assumes that every node can reach every other node or every mining node can reach every other mining node. And so it assumes a global intranet.
If you put up the firewall, you can work out the kind of predator/prey on this, but they block port A333 and the Bitcoin devs do port randomization. And then they do deep packet inspection, and these guys do tunneling to try to put it over a stage, through GPS, there’s a back and forth that can happen there.
I think at the end of the day, the firewall is pretty sophisticated. That plus domestic penalties may make it challenging for people to maintain a blockchain indefinitely in China, or what happens is they mine, the China chain and the rest of the world chain is also being mined. And there’s like a peekaboo problem where they sync up every once in a while. And because the China chain would have more mining, the rest of the world chain would have less mining. All the blocks mine, the rest of the world would get thrown away with a chain reorganization, the China chain would basically periodically throw away every transaction that’s happening in the rest of the world. That would be like the worst case scenario where, remember, two things would have to happen there. First, they’d have to put up the firewall. And second, they would have to allow Chinese mining to continue.
Tim Ferriss: Sorry. At some point, as you’re describing this, I’d love to hear you assign a probability, if you had to, like zero to a 100 percent over a timeframe. In the next five —
Balaji Srinivasan: I’d say 30 percent chance of a firewall attack. It’s not a hundred percent, the reason is because Bitcoin is like a guy who’s like extremely strong and muscular on many dimensions, but can be hit from a direction over here, it’s just an assumption of the protocol is that every node can reach every other node and depending on the location of where mining is happening. To be clear, I don’t think this is a fatal blow. I think what would happen is in the event that China allowed mining to continue, but put up the firewall, which is like the most Machiavellian thing they could do. They’re pretty smart.
Tim Ferriss: Right. And the 30 percent that you assigned was only for the first part of that, correct? Not the allowing mining to continue.
Balaji Srinivasan: Well, if they do both. I think it’s very likely they’re going to do a firewall attack at some point. If they do that and shut down mining, no problem. Okay, and the reason is because there’s enough rest of the world or whatever mining to continue to just being Chinese can only transact in the rest of world. They have to either go overseas or pick up the phone and speak the words to somebody to execute a transaction. China will never be able to actually eliminate Bitcoin because of the way it’s constructed. If they really went after it super aggressively, they’re the only state in the world that I think has the combination of total disregard for individual privacy or human rights, totally organized like top-down surveillance regime which gets a workout every single day with a firewall, that combination.
The US government can’t mail checks to people on time. The US government isn’t capable of a technical attack, the US government can’t set up a website. It is not the entity that we know from the movies, which maybe never existed. But the US government from 1933-1968, could do like Hoover Dam and a Manhattan Project and Apollo, that was like a generation that has long since gone. You can’t think of the last impressive thing that happened — go ahead.
Tim Ferriss: Well, no, I’m just smiling. I’m just enjoying this conversation tremendously. It’s not because I have something to say, although, now that you’ve given me the mic, I’ll ask a question that perhaps is just on the mind of people listening, and that is that 30 percent that you gave, does that mean that Balaji is saying there’s a 30 percent chance of Bitcoin being a bad investment?
Balaji Srinivasan: No. I’m saying something different, which is, in the event of such an attack, like a firewall attack, what would happen probably is a few things. First, depending on how it manifests, people might actually move over to a quasi trusted chain for a time. That’s to say you put some form of signature or hash into miners when they put it out there to prove that they were a non-China miner. And you’d actually temporarily move away from the Satoshi algorithm of heaviest proof of work chain to heaviest trusted proof of work chain. You actually have to introduce some trust potentially to get around, that’s one option. It’s just that, like a fork of the chains, and this event that they do the firewall, but they also allow mining to continue, which is like the most Machiavellian thing that’s possible.
However, if there’s some other issue with the Bitcoin protocol, the thing that I’m pretty sure will never disappear is the Bitcoin ledger that is replicated in so many places and it’s so valuable that in the event of some issue with the Bitcoin protocol, the ledger could be imported into 100 other chains and would be, it’s already done with all these forks or whatever. But for example, ZCash could just double their supply from 21 million to 42 million and just give refuge to all Bitcoiners. It just kind of snapshots at a particular timestamp. Everybody who has private keys before then you’ve got a spot on the ZCash ledger. The same thing could happen with Ethereum, the same thing could happen and all these other chains. So it’s as if your stock would get split into a hundred different or 1,000 different instances, your private keys would still find refuge.
The sum total of all those values, that might be a price hit. There’s no question that there might be a price hit there, maybe it’s even more. Who the heck knows. Crypto is so unpredictable, I can’t even say what would happen because some of the forks have done extremely well, way better than I would have expected.
But that would be a Tower of Babel moment where he’d still want to hold on to your private keys, but it’d be all these other chains that would back you up. So it would be messy, but I don’t think the idea of cryptocurrency can be defeated at this point. I think any individual chain, it remains to be seen how robust they are. But I don’t think that cryptocurrency as a concept goes away.
It’s similar by the way to file sharing where Napster got sued and Kazaa got sued, but BitTorrent and magnet links to the Pirate Bay are still around and actually quite good. BitTorrent streaming is quite good. What was that? Popcorn Time? Popcorn Time is actually quite a good app, that’s like basically streaming with the quality of like an iTunes or whatever BitTorrent streaming. So that doesn’t mean I’m not saying it would be a bad investment. I think that’s the most likely attack I can see from the Chinese side.
Tim Ferriss: That’s specific to BTC?
Balaji Srinivasan: For BTC. Yeah. So on the US side, so now other algorithms, other consensus algorithms have a greater degree of partition tolerance built in, for example. The fundamental thing you’d have to work out is extended tolerance for extended partitions where a big chunk of the network can’t see another big chunk of network. And so then you’d have to detect that. You’d have to like maintain a log of which nodes you were able to reach there. There’s ways of doing this, it’s non-trivial. It’s especially non trivial and production, but it’s possible. And a lot of smart computer scientists working on it. So you have to have partition-tolerant chains, which could exist, number one, number two with respect to what the US would do, the US will probably do a regulatory attack because that’s the one part of the state that’s still functional, they can pass regulations and yell at people and job limit them and so on.
Now what happened in New York with BitLicense, I think, is a harbinger of what is to come. New York sort of overestimated their clout. They’re like, “We’re New York, so of course we’re going to regulate all crypto stuff. What are you going to do? You’re going to go somewhere else? It’s New York, it’s the best, blah, blah, blah.” And that’s not what happened, Instead what happened was every crypto company was like, “Actually, the world is very big now, New York is the last place that we’re going to operate. Literally last, like we’ll operate in 49 other states and do New York last.” And that just meant that actually New Yorkers got financial innovation last rather than first. So that one regulation, the BitLicense, was something where these folks who were, at some point, the Big Apple was number one, and they just overplayed their hand in an arrogant way because they didn’t understand.
The guy that didn’t — the guys who got them there weren’t arrogant like that. They were always hungry coming up, there were folks who understood, okay, New York has to do this, has to do that. These folks had been born with it, they’ve inherited the system, they just thought they always had that leverage. And I think that’s a microcosm of what the US might do right. Where it becomes super unfriendly for crypto, it’s possible. But I think it’s also possible the resistance comes from within the US. This is something we have very low probability on. I think it can go many different ways. The future is uncertain.
Tim Ferriss: So the Federal level regulatory attack in the US, you view as a low probability event? Or just a low consequence event because those companies domiciled in the US who are focused on crypto just redomiciled?
Balaji Srinivasan: It’s not that easy to just do that for lots of reasons. It’s not that easy to just do that, exactly. So I think US incorporation, in the sense of like being incorporated in the US, is going to be considered a major vulnerability in the future, I think, after the 2020s. And people ideally will want to incorporate on chain and then have jurisdictions that respect that because that’s global rule of law. You can put your shareholder vote in there, you can put your board of directors’ vote in there, everything can be done on chain in a better way, just like you can print out a document locally or exchange Bitcoin locally, or have email work everywhere or Twitter works everywhere, you know what I mean? Local governments would actually adapt to the on-chain realities rather than vice versa. That’s starting to happen. Now to the federal point, go ahead —
Tim Ferriss: Yeah. I was just going to say that sounds like a company or organizational response to federal regulatory attack. I’m wondering what, if anything, individual sort of retail investors who hold —
Balaji Srinivasan: Sure. So I’d say, go to Miami, go to Wyoming, go to places like that. Maybe Colorado, which will be sanctuary cities and states for crypto.
Tim Ferriss: Why is that? Is it just because you have, the first two at least, or are no state income tax, or is that —
Balaji Srinivasan: I mean, these places that are low taxes, that’s not actually the thing, the mayor of Miami, Francis Suarez, is an awesome guy, you should follow his Twitter, basically may single-handedly changed governance in the US because he just got out there and he innovated in a way, he’s got the personality of a startup CEO, have you followed this at all? The whole Miami thing?
Tim Ferriss: I haven’t, but I’m listening.
Balaji Srinivasan: His name is Francis Suarez, he’s mayor of Miami, and last fall somebody, one of my friends actually, after just observing the latest catastrophe in San Francisco’s like, why don’t we just all move Silicon Valley to Miami, and Francis Suarez retweeted them with, “How can I help?” Which is kind of like the VC kind of catchphrase or whatever. And by the way, I’m not cynical about that phrase at all. There’s people who try to make it into like somebody to be mocked or attacked and making everybody cynical. It’s actually a good phrase, even if it’s not lived up to 100 percent, it’s way better with that said than not said.
Anyway, so he put out “How can I help?” And then the contrast with California, basically a legislator there told Elon Musk “FU” literally on Twitter. And Elon replied, “Message received,” versus “How can I help?” enormous gap between the two. So Miami suddenly basically began to — go ahead, I hear you laughing.
Tim Ferriss: No. I’m shaking my head because I’m just like, how is that a good move? It boggles the mind to me how that type of response is productive.
Balaji Srinivasan: And they are getting local positive feedback for that, there are people who are cheering them on Twitter, “FU Elon,” et cetera, et cetera, stupid peanut gallery type stuff.
Tim Ferriss: And then Elon moves to Austin and there you go.
Balaji Srinivasan: Exactly, he said “Message received,” got the F out. And this is the thing, so Suarez essentially has recruited all of these tech and finance people to Miami by literally just being friendly on Twitter and doing coffees with them, welcoming them to the city, billions of dollars in capital. All of these companies have now moved to Miami because why would you — go ahead?
Tim Ferriss: I was saying “Smart.”
Balaji Srinivasan: Yeah, that’s right. The ROI of every tweet has to be a million dollars. If you did a thousand tweets to recruit a $1 billion company to the city, you can score it however you want, maybe it’s not a billion dollars for the city, but the market cap is going to get distributed somehow, it’s going to be spent some fraction of that. His ROI is phenomenal. And the thing about it is you don’t actually need 10 percent of the world’s governors or mayors to be like Francis Suarez, you just need 10. Because those folks will be these technologically progressive leaders that will recruit tech and finance to their cities. And Dubai is doing this, Estonia’s doing this, Switzerland’s doing it, right? Chile for a while had a startup Chile program. All of these places now see the opportunity if they’re smart. And many of the legacy mayors don’t understand what’s just happened. Basically COVID has put us into the remote world, and now you’re more like CEO of the city than a typical mayor.
Tim Ferriss: That’s so true. Totally true.
Balaji Srinivasan: CEO of the city, you’re always selling, you are selling your city. And crucially, there’s a new path to power. You don’t need to go mayor, to governor, to president. You don’t need to get on national TV. You don’t need to politic and angle for a spot at the national convention, or go to national media, instead by just doing sales every day, by essentially getting on whether it’s Twitter or some social media platform and just getting out there and talking to folks, recruiting folks and pitching your city and improving the product of your city. He got a bill through, which was like, well, Miami is now like a pro-Bitcoin city. Actually, it’s the first city to buy Bitcoin. He also put the Bitcoin white paper on miami.gov.
Here’s the thing like there are a bunch of governments that did this, Estonia, Colombia, Miami, et cetera, all in a little boom a few weeks ago, put the Bitcoin white paper on their site. Now the thing is, on the one hand, of course, it’s just a symbol. On the other hand, it’s actually a great signal that that’s actually a crypto-friendly place.
It doesn’t cost them anything. It doesn’t commit them to anything. What it does do is it puts up a flag. And if you can’t get the white paper on a government website, maybe that place isn’t actually that friendly to crypto. And if you can, there’s at least somebody there who’s pretty friendly to crypto. It’s actually a really great filtering mechanism in that sense.
Tim Ferriss: It’s much more than symbolic because of the bureaucracy involved. It has to actually get the nod from quite a few stakeholders in order for that to happen. So it may seem entirely or could be entirely symbolic if it were just an individual blogger but for it to be put on a website like that, it signifies much more. Quick question for you. I mean, it’s as much for me as for people listening, what are the implications of federal regulatory attack for those who are not able, or not willing to move to Miami, or Wyoming or —
Balaji Srinivasan: Yeah. So Wyoming also, by the way, has amazing crypto laws and basically my thesis on this, just to hover on that for a second, is those places will probably litigate and fight some federal kind of thing if it happens just because they have a strong incentive to all their citizens are there and so on and so forth. So that’s actually good because it drags it out for a long time, we see what happens.
To be honest, I don’t know. I don’t know what the answer is. I think that things are going to get really crazy because, here’s the other side of it, that crypto ban, if it’s contemplated, will happen at the time that crypto has created thousands of millionaires and billionaires, not thousands of billionaires, but like a lot of very wealthy people who are ideological. These are the kinds of folks, the more crypto you have, typically, it’s more correlated with buying into crypto in 2011 or 2012 or 2013 when it was an out of the money thing to do. Basically, ideologically, you made a bet against the monetary policy of the US.
You said, “Bailouts are bad.” And you said, “Despite what everybody’s saying on TV, I don’t believe that. I actually want to make a contrarian — and, as it turns out, right — bet.” Not like “Q Anon” or something, but contrarian and correct, you know what I mean? And that’s actually like the whole Thiel thing, you’re actually making something that is in that quadrant. And so those folks are not folks who are likely to just go down without a fight, the whole thing, I mean, these are activists.
Tim Ferriss: And also highly anti-authoritarian, generally speaking.
Balaji Srinivasan: Yes. But capable of organizing. So it’s an important combination. I mean, this is the best parts of the community. There’s all kinds of crazy actors in particular who I wouldn’t endorse. Maybe it’s an idealization, maybe this is the community I want to build. But I think it is fair to say that the best tech folks and the best crypto folks are win and help win, which is actually not neither progressive —
Tim Ferriss: I agree.
Balaji Srinivasan: Yeah. So here’s the thing about that. Win and help win is neither progressive, nor conservative, nor libertarian, and let me explain why. Okay, so first, conservative, your typical conservative, and maybe it’s a caricature, maybe some of your listeners won’t like this or that, but they just kind of want to stay at home, they want to do their nine to five. They’re not as ambitious, they don’t want to leave the small town. They don’t want to go bright lights, big city, that’s not dispositionally small C conservative.
Your progressive often has a very zero-sum mentality. They may be ambitious, but they often believe at a very fundamental level that the rich are rich because the poor are poor, that one person’s gain is another person’s loss necessarily and they feel it’s a zero-sum conflict and the state, it’s there as a weapon, and so on. And the libertarian will say live and let live, which is a vision of Little House on the Prairie, all being by themselves, et cetera. And win and help win is none of those three, it’s ambitious in a way that the small seed conservative is not, it is positive sum in a way that progressive is not, and it is collective in a way that libertarianism is not. And I think that’s actually like the most powerful kind of philosophy where you are — and notice also the ordering the sequencing win and help win, that is to say, absolutely take care of number one, that’s important because if you don’t do that, you can’t help others win. But do that as well.
Tim Ferriss: So two questions for you, and I’m sure many more, but it strikes me that what Francis Suarez is doing, what Wyoming is doing, it’s very valuable as an experiment and also possibly as different prototypes and that there are governors and mayors who would be very interested in learning more about this, but they don’t know how to approach it. Is there a list of what these different places are doing? Estonia, Dubai, et cetera, Miami or anything, a resource that one could point mayors and governors to who want to possibly look at testing different aspects of embracing Bitcoin or cryptocurrency?
Balaji Srinivasan: So actually this is one of the first 1729 tasks that I wanted to commission because I’ve got a bunch of these. I want to see whether folks can crowdsource the rest. And then we just put that into the website. So let’s do this experiment. I’ve got like 10 or 15 of them, but I’m sure I don’t have the global list. And maybe we can just get that in a day.
Tim Ferriss: Second, because I asked about the probability you’d assign to the Chinese side of things. When we were discussing that earlier, what probability would you assign to the federal regulatory attack or shut down in the United States?
Balaji Srinivasan: A regulatory attack of some kind, I mean, it’s basically a hundred percent, Mnuchin already tried something. The question is what level the attack will be —
Tim Ferriss: How should that factor into how somebody thinks about, or I’ll make it personal again, how would the regulatory tech potential factor into how you think about investing or not investing or bet sizing with BTC and Ethereum?
Balaji Srinivasan: So the thing about this is an attack is not necessarily successful, that’s why I say a regulatory attack. And the reason is that there are lots and lots of people across the political spectrum who are very pro-crypto, pro-crypto people tend to be more pro-crypto than anti-crypto people are anti-crypto, with some notable exceptions, I think that’s true. So you just feel more passionately about it for all kinds of reasons, ideological, financial, technical, whatever, and they’re extremely online. And many of them are crypto-rich say of all the time in the world to be extremely online. And they’re truly anti-establishment and so on. So they punch massively above their weight.
This is a non-answer, but let me give you something that I think is interesting. Back in 2011, all the early Bitcoin people thought, not at all a good chunk, let’s say on Bitcoin talk or whatever, I shouldn’t say all. But a good chunk of people thought that once more people knew about Bitcoin, and crypto itself wasn’t a thing, It was just Bitcoin then.
Once people, more people knew about Bitcoin, well then China and Russia and every country that wasn’t the US would adopt it, and the US would fight it really hard. And actually that’s not what happened. What happened was once there was money to be made a whole bunch of people who weren’t just interested in a purely ideological project, but were maybe ideologically sympathetic and could invest came off the sidelines. That’s what happened in 2013. And that was this enormous strengthening of the ranks that was able to make the argument that this was financial innovation. Because there was technical and monetary upside, not just an ideological project. That actually meant that the greatest support in some ways came from within the US, and in fact, places like China and Russia were actually more bearish on crypto and still are than the US is in many ways.
So it was like the regime and the opposition are both the strongest within. It’s this hard thing for me to fully articulate. But if that makes any sense, it’s sort of like both the problem of the bailouts and this giant monetary system that’s failing the world and the solution are both coming from within the US or the West. Which is this kind of crazy thing but it’s actually similar in some ways to the three-body problem where the Chinese invite the aliens to the world, and then they have to solve it. It’s Homer Simpson like, “Beer, the cause of, and solution to all man’s problems,” right?
Tim Ferriss: I was just going to say it also strikes me that your vulnerability to regulatory shutdown also probably depends on the form in which you hold Bitcoin.
Balaji Srinivasan: Oh, yeah. You definitely want to hold your keys locally. I’m an investor in a company called Casa HODL, which is actually like a relic. It’s keys.casa is the URL. It sounds oxymoronic, but it’s cold storage as a service. So they go through, with you, how to set up your cold storage in such a way that the whole signing ceremony and so on, it’s basically home storage of your crypto in such a way that it’s hard to mess it up, and it’s more error proof, and whatnot.
One of the most heartening things I’ve seen since January of last year is all this crypto leaving exchanges, all around the world. Get your keys off exchanges, do it now, do it yesterday, get your coins off exchanges. And don’t worry, they’ll be fine. Not your keys, not your coins, absolutely 100 percent true. And I think it’s with DeFi, you can’t even mess around with DeFi really, unless you have your keys locally. So there’s an incentive as well as a disincentive. So definitely keep your keys locally because that at least means that you can’t just have your account frozen with a tap.
Tim Ferriss: So we’ve spoken, or I should say you’ve spoken, at length about a number of risk factors, a number of potentials related to Bitcoin. Just to make sure that we touch this base, is the risk profile of Ethereum different? Is it more resilient and less susceptible to certain risks? Is it more susceptible? How would you think about Ethereum as compared to Bitcoin from that perspective?
Balaji Srinivasan: Yeah, so it has a different pattern of risks. Some of them are shared like regulatory attacks on crypto. Others are distinct. For example, if Ethereum completes the migration to a proof of stake system successfully, then it doesn’t have stationary Ethereum miners that can be rounded up in the same way that Bitcoin mining farms can be. So that’s one major difference where you’ve got a bunch of mobile individuals. It’s got downsides in other ways. I won’t get into extreme technical detail, but proof of stake, because it’s not doing computation in the same way the proof of work is, doesn’t have some of the same guarantees that proof of work does in terms of being totally, totally trustless. You start to need someone to point you to which chain is real if there’s a bunch of chains like Medusa, like that are all competing. So it has a different, orthogonal set of risk factors.
I think Ethereum is certainly more complicated than Bitcoin in many ways. The most important of which being that there’s tons of programs running on top of Ethereum itself. All the smart contracts. And it does have actually a negative network effect right now where the more things that run on it, the higher the fees are, which crowd out other things. So there’s both positive network effects from composability and negative network effects that come from just incredibly high fees for all kinds of stuff.
Now everybody’s working on scalability of blockchains. It’s a good problem to have. It’s kind of like scaling the early internet. There’s going to be paradigmatically new things. I’m an investor in something called StarkWare, which has something called Cairo that is very promising in general, so-called zero-knowledge roll-ups are very promising. It may turn out, for example, with Ethereum, that only the prices to applications stay in Ethereum and many other applications go to other L1 chains that then all just specialize by application.
I think that’s probably the most likely outcome. Or rather, I think Ethereum will scale, but I think that, for example, derivatives might go to a chain that’s specialized for that. NFTs might go to a chain that’s specialized for that. And so on and so forth. And chain interoperability, a so-called interchain, will be a big thing. Where assets can be indexed and referenced, even if they’re remote, to particular chain. So Bitcoin had no knowledge of other chains, but nowadays chains do have knowledge of other chains through things like crypto oracles, things outside of themselves. Right? So risk factors of Ethereum are distinct, different from those of Bitcoin. Some overlapping, some not.
Tim Ferriss: Let’s segue to Lee Kuan Yew, and we’ll get into who this is. Before we get there, maybe this’ll be a shorter question and a shorter answer, but they’re in some ways tied together. In my mind, at least. There are those out there who are terrified of your predictions because they feel, rightly or wrongly, and I want to hear your perspective on this, that there is a high likelihood baked into those predictions of apocalyptic outcomes and that one needs to become a tech-enabled Jason Bourne to survive, let alone thrive in the future.
Balaji Srinivasan: Which is you, Tim! But go ahead.
Tim Ferriss: So how would you respond to that assessment? Do you view yourself as leaning towards viewing the future through the lens of entropy and dystopian possibilities or is that just a misread of what you’re saying? And is that just a misread of you in general?
Balaji Srinivasan: I think the future will be more different from the present than is commonly understood. So more different than ours, was the year 2000 that different from 1970? Not really. Certainly there were political changes and obviously China had reformed and the SSR had fallen and so forth. But the rhythms of daily life are actually quite similar. You know? People got up, they went to work, there’s a relative constancy there. Yeah. There were phones, but they weren’t smartphones. They were still basically landlines. Handsets, right? Cordless, perhaps.
Over the last 20 years, there’s been an enormous change in terms of rhythms of daily life. One way of thinking about that is, what was your daily life when you woke up in 1980? So there’d be an alarm clock, beep, beep, beep. You’d wake up, you’d go downstairs, maybe flip on the TV to look at the morning news, make some eggs, drink some orange juice, maybe read the morning newspaper, go and drive to work where your job involved, if you’re white collar, some papers, and if you’re blue collar, you’re going and hammering something or whatever. You’d come back, maybe go to the bar on the way back. Or you’d just come straight home and play with your kids or something like that. Right?
And almost every aspect of that is now changed. How do you wake up? You wake up to your phone, right? What’s the first thing you do? You look at all of your email because you’re getting just all of these are messages, right? Messages are coming into you, right? You have this personal communication device. The first thing you do is different. This is for people who are addicted to their phone, but a lot of people are. You come downstairs or you get up and maybe you’ve got some fitness thing that has read off your sleep. So you look at that, right? Because your sleep was also instrumented. You go to the kitchen and there’s food there, but maybe you just go straight to work and you Uber Eats food to work. Or maybe you don’t go to work at all. And you just work remote from your pajamas in the living room, which is totally feasible today. Right? Your job isn’t evolving, papers or hammering things, but it’s hitting keys. Everything is with 50 people who you might’ve never met in person that they’re remote all around the world. Through the day, you’re reading newspapers, you’re reading code. Your job is just much more variable than the hammering job. Rather than pushing the same button for 20 years, you’re pushing a different key every second.
Basically every single second of life, from your sleep to your sleep tracker, to your food, through your ordering apps, or what have you, to obviously your work to your finances, to your communications, to where you decide to go after you finish working. Like, “Okay, let’s do Google Maps.” Now the whole map is opened up. Right? One thing we take for granted is in the ’80s and ’90s, you really had to get an atlas or get a map out to go somewhere new and you had to study it because you could get lost. Getting lost was a thing. Right? We never get lost anymore, not in the same way.
And so for the most part, thoroughfares were really important. People didn’t really go off the beaten path that much, unless you had a house over there. It was like the fewest number of turns. You really didn’t drive around randomly. You didn’t go to this random coffee shop over here. The map was mostly corridored. It wasn’t opened up. And so that’s all opened up now. Your recreational life, you can meet with a different person 50 days out of the week rather than the same group of friends.
So in so many ways, the rhythms of life we’ve turned into these sort of nomadic creatures from 20 years ago. And our political structures and our homes and a lot of those other things haven’t flexed to accommodate that. And one way to think about that is there’s two major ways that humans operate. There’s the hunter/gatherer where we roam around the world. Many religions, many cultures have something similar to a Garden of Eden-type thing, which is whether it’s in our genes from some like primitive hominid ancestor that we’ve got all the way down, because vision is baked into the genes of course. Like the reason you can recognize something’s human. That’s genetic. So maybe there’s something coded into us from many, many millennia ago that recognizes a Garden of Eden-like thing when we were hunter/gatherers. Who knows how it’s represented?
And then of course, there’s the farmer or the warrior. Where you have a piece of land rather than roaming all around, you’re settled in one spot and your food is worse. It’s grains. It messes up your teeth and so on. It has you grow less, but it’s more reliable. It’s more consistent. Rather than the variable ups and downs with hunter/gatherer. And in many ways what I think, and this is not original to me by any means, this is a fusion. So this is a lot of different ideas, but perhaps at least this take on it is, we’re going back to the hunter/gatherer way of doing things, but with technology. The best quality of life will actually be available to the digital nomad who has a minimum number of possessions, has the ability to pick up and move stakes at any point, because mobility is leveraged against a state. A state is a sessile actor. Mobility is something that you can do as an individual, the state cannot do. Not as easily. It can’t just stretch a tendril somewhere else.
And so new kinds of polities will form. New ways of self-governing humans that are fundamentally network-based, rather than state-based. Fundamentally optimized for mobile social networks, as opposed to stationary houses. Because the assumptions are fundamentally different. And, basically, for example, I define a network state as a social network with an integrated cryptocurrency in a sense of national consciousness that eventually crowdfunds territory. Okay? And I think that’s a new kind of thing. That’s one definition of a network state. And that territory doesn’t have to be all in one place. It can be a cul-de-sac here, a ranch here, an apartment building here. And so you have a group of a hundred thousand people that owns pieces of territory all around the world and that is constantly in communication with each other through a social network and considers themselves to be a people. It’s like national formation, distillation, that centrification that we talked about out of the internet. Boom. This is a network state. And it is like a cloud formation taking physical shape. The clouds are actually distilling down.
And so, when I think about the future, I think about this type of stuff. I’m thinking about 50 different graphs, right? This is going down, this is going up, this is going down, this is going up. Actually Jordan Peterson had a good remark on this similar kind of train of thought where he’s like the number of different revolutions that’s happening at the same time is too hard to track. Tinder alone is a complete change in our mating habits. Swipe right, swipe left, swipe right, swipe left. That itself is this huge thing that would dominate the textbooks of another age because it’s a massive change in how the daily rhythms of life operate. Have you seen the graph of how people meet their partners?
Tim Ferriss: I have not.
Balaji Srinivasan: Okay. This is an amazing graph of how people meet their significant other, the 2020 update. Basically, each little curve here tells a story, but it was like, did you meet at church? Did you meet through your parents? You meet at college? Did you meet at work? And you can see meet at work is this boomlet that kind of drops off. It’s peaked in the ’80s and it drops off in the ’90s with various kinds of pathologization of something like that. And so what dominates everything today is internet. Internet, internet. And in particular, basically, where norms have shifted now is that it’s actually more legitimate. I mean, I’ve aged out of this, fortunately. But for my younger friends, what have you, it is impolite to hit on, depending on the situation, it’s often considered impolite to hit on somebody in real life. But it’s totally okay to do so on Tinder.
So of course humans are contextual and of course the same behavior that’s okay in a bar is not okay in a workplace or what have you. But now that’s actually extended to digital venues as well. So Tinder alone is just this massive evolution. And then you have 20 of them happening at the same time. And so all of those are these things where the institutions that we have are simply not built for this at all. And that’s where they’re straining and stressing against it and they’re going to give, and we have to have a vision for what’s on the other side.
Tim Ferriss: So you’re more a student of destabilization, or stabilization, but it just so happens that right now, these multiple revolutions combine to present these stabilizing forces. Not so much that you view humans, or the future of humans, through a dystopian or pessimistic lens. Is that fair to say?
Balaji Srinivasan: Yeah. That’s fair to say. I think there’s actually a lot of good stuff that’s going to come out of this. So, what is a positive vision? What do I think about? I do think that we can shape the future. Individuals can shape the future. You can shape the future. A founder can shape the future. I’ve seen it happen with my own eyes. And what I think a lot about is a positive international vision. And I think that’s going to be based around essentially transhumanism. And why do I say that? So I’ve got various one-liners on this, but I’ve got this book coming up by the way, that’ll actually also be serialized at 1729. So there’s daily tasks and book chapters. The book’s title is The Network Safe. So you’ve got about 10 chapters that they should be dropping and then more to come.
But one of the concepts in it is infinite frontier, immutable money, eternal life. As something to strive for. Because you need these slogans or things, a bumper sticker, that expands into a PhD thesis. So what does that say? That says space is good. That says Bitcoin is good. Crypto is good. That says life extension is good. And yet it pulls so much with it. Life extension basically says, look, universal health care is not enough. We need eternal life. Our ambitions have actually been lower than they need to be. Universal healthcare is just moving gravy around on the plate. It’s a fundamentally zero-sum mentality that really presumes — go ahead.
Tim Ferriss: No, I just. That’s a great turn of phrase. Moving gravy around on the plate. Yeah.
Balaji Srinivasan: The goal is for you to not need healthcare in any normal sense. The goal is for you to be this self repairing, rejuvenating. There’s technologies out there, which would sound crazy, but I’ve got a post called the purpose of technology. We can, scientists can, engineers can restore sight, cure deafness. There’s good research on limb regeneration. There’s good research on genetic modifications that’ll make you completely ripped without ever having to do anything. Like the follistatin stuff and myostatin stuff. And —
Tim Ferriss: Can I pause for one second?
Balaji Srinivasan: Go ahead.
Tim Ferriss: Just for people who don’t have this bit of context, because I don’t want folks to think these are the ravings of a madman. You are very cross-disciplinary. You’ve spent a lot of time in the biological sciences, genomics, computational biology, of course. And, tell me if this is a fair statement, you almost became the head of the FDA under the last administration as well. Is that a fair statement?
Balaji Srinivasan: I was considered for a very senior role there. Yes.
Tim Ferriss: Okay. Just wanted to add that for people who may not have any of that context. So please continue. Yes. Universal healthcare or basic healthcare, moving gravy around on a plate unnecessarily, unhelpfully low expectation.
Balaji Srinivasan: Right. Exactly. I’m really not somebody to stand on qualifications or credentials or whatever, but in this area, some people want to check them. Yes. I taught computational genomics, have founded a clinical genomics company, all that stuff. And, of course, no one can be an expert in every area of biology. It’s too big. There’s guys who are experts in radiology, which I don’t know as much about. But I do think that one of the few good things that’ll come out of this pandemic is a Y-shaped recovery. Where we’re taking a different fork. We’ve deprecated the 20th century leisure economy. The 20th century leisure economy of bars and restaurants and clubs and all that type of stuff is something which just had this enormous economic hit to it. The levels of bankruptcies are just off the charts. It’s a terrible thing.
I think if we’re lucky, we get not in its place, because it’s not zero-sum, but there’s a greater focus on health, on life extension. And the reason we say life extension, by the way, we’re really reversing aging, which is even better, is it just captures everything. It’s like a universal ruler where if we can reverse aging, we can fix so many other things. We can probably, should I say cure cancer? There’s many kinds of issues, musculoskeletal things, osteoporosis, macular degeneration, all those kinds of things that happen often that are correlated with increasing age. And people have this mental model that, “Oh, we’re just breaking down.” Like a car. It just accumulates hits and it breaks down. That actually cannot be the model of how aging happens. Do you know why?
Tim Ferriss: Why is that?
Balaji Srinivasan: Because if that was the case, if we were breaking down like a mechanical thing, then there’s a known statistical distribution. It’s like a hazard rate, right? So you’d have an exponential distribution of lifetimes and some fraction of cars, for example, just manage to make it through without any hits whatsoever. And so you’d have some people, if that was the case, would live like 1,000 years because they’d just be lucky and not take any hits at all. That’s not what we see. What we see is actually a sharp cutoff at like 120 —
Tim Ferriss: Right. If you keep the human in the garage in perfect condition, they don’t last forever.
Balaji Srinivasan: Yeah, exactly, exactly. That’s right. So there’s something interesting about it. It’s very predictable. There’s an aging and then there’s menopause, for example, in women. And graying. It’s not like one car rolls along and it busts a tire and the other one smashes a windshield. There’s a greater degree of variability when it’s just random things happening. If you see 500 older men, they’re all are some version of grayer or more wrinkled or what have you, there’s a predictability to it of how actually everything’s happening. And so because of this, people have found that aging is actually a coordinated thing. And people understand that going from a child to an adolescent is a coordinated process. People get that that’s programmed into your genes. But it just hasn’t really sunk in for many people, is that the aging part is as well. And we might be able to unprogram that or reverse that. In fact, there’s actually a lot of results in this area. Way more than people think.
There are studies I can show you that are, if we technically call the holy shit phenotype, where there’s a guy whose graying hair has just been reversed. Repigmentation of hair just by taking a cancer drug as a side effect. There are studies of rats where you can see the follistatin injections, you get this Hulk-like rat. I posted one of these. And so there’s actually amazing things that are happening in biomedicine that have simply not achieved distribution. In part because of regulation, in part because that’s simply not the stories that people are interested in telling, in part because of, not exactly lack of funding, but it is lack of funding and energy sufficient to overcome the regulatory and negative press obstacles.
And this is something I think is related to doing decentralized media, getting folks around transhumanism. Either people are going to vector on the sort of anarcho-primitivism axis. Do you know what that is? It’s a phrase I think is going to become much more well-known. Anarcho-primitivism. It’s basically the Unabomber ideology, right? It is essentially ideology that humans are bad, we’re all destroying the planet, therefore we need to kill as many humans as possible. Do you know VHEMT? Voluntary Human Extinction Movement?
Tim Ferriss: I don’t.
Balaji Srinivasan: This is like a quasi-joke. But there’s actually a lot of folks who do, on some level, believe that humanity is bad, humans are bad, humans’ impact on the world is bad, you shouldn’t have children because everyone’s causing climate change and we’re ruining the earth, and we need to have a smaller footprint and we need to shrink onto ourselves and we can’t expand. And what we’re doing is terrible. And we should just go back to nature somehow. And technology is bad. The future sucks, right? This is a real attitude. And it’s partly connected to folks, I think, idealizing nature. And these are folks who love nature. But often, I don’t think they realize they love tamed nature. They like nature without wild lions and they like nature while they still have eyeglasses. And they like nature while they can decide to lose the nature and go back to a warm bed. They’re not really going to live like — the Unabomber at least had skin in the game. He’s out there actually living in the wilderness like a true caveman. But many of these folks, they’re just inconsistent.
But nevertheless, they call themselves anarcho-primitivists. And that’s a real ideology. And it’s a burn it all down ideology. Unfortunately, it’s very popular, much more so than you might think, because it’s easy to burn it all down. It’s exciting to do. The aftermath sucks, but it is like you get the sense of transgression, you get the sense of maybe doing it all collectively together, you get the sense of, “We’re making history and destroying it, [inaudible],” et cetera.
And against that, I think, is transhumanism, where you’re going to the stars. You’re transcending this human body, we are doing brain-machine interface. We’re doing limb regeneration. We’re doing CRISPR, we’re doing all the things and we’re taking away all the limits, thus infinite frontier, immutable money, eternal life.
Tim Ferriss: Let me hop in for just a second. Are there any particular thinkers, scientists, or resources you would recommend, just a handful, for people who want to explore this further? I don’t know if it would be a David Sinclair, an Aubrey de Grey.
Balaji Srinivasan: Those are good.
Tim Ferriss: I don’t know who would make your shortlist or what resources?
Balaji Srinivasan: It’s funny because the serious book on — so Zoltan Istvan is pretty good, I think and —
Tim Ferriss: Say that one more time, please.
Balaji Srinivasan: Zoltan Istvan. He’s prof —
Tim Ferriss: Great name.
Balaji Srinivasan: Yeah, exactly. There’s a debate that he did with an anarcho-primitivist a while back called, his name is Zerzan, and they billed it as Zoltan versus Zerzan, which I thought was hilarious.
Tim Ferriss: It’s like something from one of those early Superman movies.
Balaji Srinivasan: Yeah, that’s right.
Tim Ferriss: Superman II.
Balaji Srinivasan: Zoltan versus Zerzan in 2014, right? This is one of those things, which I don’t think people realize, is this obscure thing happening in academia that is going to dominate our future, because there are going to be essentially these, for lack of a better term, Luddite forces, who don’t like tech, don’t like the disruption springing, think we need to go back to when it was a simpler time. And I understand that. I actually really do. The easiest way to give them that path is actually VR goggles, so we give them these. I half kid, but I don’t fully kid.
Tim Ferriss: Ready Player One, here you go.
Balaji Srinivasan: Ready Player 1980. Exactly.
Tim Ferriss: Right.
Balaji Srinivasan: Because that’s actually —
Tim Ferriss: Yeah, yeah.
Balaji Srinivasan: That’s the best way to give them the idealized version that they think they want.
Tim Ferriss: Well, I was just going to say, this is a rabbit hole that could go very, very deep. So I want to respect the value in that while also recognizing that we may want to leave people hungry for more of that and continue exploring. So when we think of these, I think I’m getting this right, sort of Malthusian dilemmas and growth of population and inextricable devastation and ecological collapse and so on, I mean, I do think there are some arguments to be made that uncontrolled population growth is a terrible thing for an invasive species so successful like human beings, but on the same —
Balaji Srinivasan: But that’s why. That’s the thing. That’s why we need stars.
Tim Ferriss: Right. So we have the extra planetary, and then we also have a few corrective forces. If anyone has read Lessons of History by Will and Ariel Durant, war, famine, and pestilence, example given COVID-19, also do a pretty good job of correcting for a lot of that.
So we were discussing nation building. We’ve talked about nation states, the weaknesses thereof, of certain types of nation states and different types of leadership. And that is a segue to Lee Kuan Yew. Could you please explain for people who Lee Kuan Yew was and why he is interesting?
Balaji Srinivasan: Lee Kuan Yew was probably the greatest leader of the 20th century. He wrote a book called From Third World to First, and he took Singapore from this third world swamp, which had all of these historical battles with drug addiction, this post-colonial kind of dump, into this shining metropolis. He had no natural resources to work with. It was a tiny place that was surrounded by hostile actors. He was in a region where there was a ton of basically communist revolutionaries that were trying to operate because he’s in Indochina where you had obviously Vietnam and you had Cambodia, you had China pushing everybody into communism.
Despite all of that, he managed to pilot it through not simply to survive as a polity, but to build a country that was so impressive that when Deng Xiaoping took over China, he actually went to talk to Lee Kuan Yew as one of the people to help him reform China because he could see what an ethnically Chinese population had done there. He could also see it in Taiwan and Hong Kong, but for various reasons, those were certainly influential in Deng Xiaoping, but they were also counterrevolutionary. And so he had to give him a little bit more of a distance, whereas Singapore and LKY were kind of the Switzerland of Southeast Asia.
What Lee Kuan Yew did, really, the reason I think he’s so important, is I think he’s a piece of the 21st century that fell into the 20th, to paraphrase. Basically, I think he was the first startup CEO of a country, of a city state. And I think we’ll see a thousand more like him.
So he’s a very important person to study, his life and history, because here’s the thing: he did what he did with minimal coercion. He’s not famous for winning some giant violent conflict. He’s not famous for some activist movement. He stands for delivering results. That’s actually really, really interesting. He’s famous for boosting prosperity and zero-to-one-ing a society. He was really a lion, really a great guy.
Now, of course, I should say a lot of people don’t like — there’s a lot of people who will try to knock down Singapore in various ways. There’s a famous article from Wired, “Disneyland with the Death Penalty.” Here’s the thing: part of the reason it is Disneyland is it does have the death penalty for drug smugglers. The thing is, Singapore and China had a huge problem with the Opium Wars during that period. The British basically had addicted huge percentages of the population to opium.
And that part is often not talked about in that Disneyland with the Death Penalty thing. There’s a whole colonial overlay on what Western powers have done in that region. You — basically, LKY just cleaned up that whole thing. Now, I can understand that people don’t want to live there. I think also the Netherlands is a totally different solution, for example, on drugs, which is total legalization. Fine, okay. Different structure, different folk, I think. There’s multiple solutions there. But as just a ridiculously impressive country in many, many different ways, from a financial center, it’s become a tech capital, you’ve got unicorns there. It’s just a very, very awesome country. It’s warm. I love it. Great place.
Tim Ferriss: Hugely impressive, LKY. And Lee Kuan Yew is spelled L-E-E K-U-A-N Y-E-W, for people who want to learn more about him. It is true. The systematic approach with which that country has been transformed into what it is today is mind-boggling. It makes me also all the more appreciate when I went to Princeton as an undergrad, and there were many Singaporean students, all of which were going to go back to Singapore at the end because their educations were being paid for by the government to work for the government. So their inclusion and retention of talent inside the government is also remarkable. And the way that they prioritize financially incentivizing also top talent to participate in government, I think, is really worth studying. Are there any other countries that are on your shortlist to watch if there were places that maybe the 22nd century —
Balaji Srinivasan: Sure.
Tim Ferriss: Dropping into the 21st. I’m pushing the comparison a bit.
Balaji Srinivasan: Yes. So, Estonia —
Tim Ferriss: What countries? Estonia.
Balaji Srinivasan: Yeah. So, Estonia. Basically, the countries I’m going to name are those that have leaders with some of the skills of software CEOs. So it’s a different approach to the network shape where a state takes on qualities of a tech company. Masters technology to drive things forward. So Estonia basically had this guy that, around the time of independence where Estonia got its independence from the Soviet Union, this guy Toomas Ilves, who is a Princeton-trained computer scientist. And he was the one who said, “Look, we need to use this internet thing,” which at the time was like a country gaining its independence and me being there and saying, “We need to do this crypto thing.” It was definitely, some people were talking to that. That’s roughly analogous. It was a thing certainly people were talking about, but you’re talking like mid-’90s, but it was a relatively early thing to do.
And it was not uncontroversial, but essentially Estonia became a software country. And so they punched way above their weight with Skype and TransferWise and other kinds of companies that have come out of that really, really impressive place.
Dubai actually has done quite well. They’ve got a large fund where they’re investing in things, very livable place and very tech savvy.
I think Switzerland is the — The commonality of the places that I’m naming is that they are relatively small countries, which have had to do more convincing than coercive. When you’re a gigantic country, your go-to is courts, right? Oh, I can pass a law, compel all these people, et cetera. When you’re a small country, you have to work for your supper every day. And it’s actually a better habit in the time of the internet. When crucially all these people are now mobile. In the remote economy, what COVID has done, what most people don’t understand, is doing this. And then the remote economy just jacked it up.
Just like Google News in 2002, put every single newspaper in competition with every other one. And then all of these local newspapers shuttered, and only the really big national distributors became international centers, ones that could respond to it. And then the smart ones actually saw that. And then you had new things come up, like pure digital outlets.
In the same way, the remote economies put every city in competition with every other city. Miami is in competition with San Francisco, is in competition with this, is in competition with that. And the smart cities recognize that. Actually, Miami is on my watch list now. It depends on how much strength Francis Suarez has, but because his so-called weak mayor and his weak mayor versus strong mayor, his formal powers may not be that much, but his political capital is much higher now. But I don’t know how that actually nets out.
But Estonia, there’s Switzerland, there is Dubai. There’s Singapore. Actually, Israel, also they’ve got Unity 600. They’re very up on cyber war. They reinvent themselves constantly. Taiwan with Audrey Tang there who has done a phenomenal job in terms of leading their COVID response. I think, let me see what else? Those are some big ones.
Monaco, the Prince of Monaco is actually very smart about crypto.
I think in terms of larger countries, let’s do China, India, US. Push out the big 30. So China.
Tim Ferriss: Yeah. India is in the news right now quite a bit. You’ve commented on this.
Balaji Srinivasan: Yes, that’s right.
Tim Ferriss: Not to skip to India.
Balaji Srinivasan: I’ll do India last. It’s one which I think is going to be the dark horse of this decade. It’s one that’s not priced in. People just don’t understand how big a deal it’s going to be, but I’ll come back to that.
So China is kind of priced in. Everybody knows it’s a big deal. It’s going to continue to be a big deal. Go ahead.
Tim Ferriss: No, you keep asking me. I’m just smiling. I’m just smiling. Yes. China, everybody knows China’s a big deal.
Balaji Srinivasan: What is not priced in about China? I think that most people don’t realize that a lot of, I mean, it is definitely becoming more totalitarian. The Xi Jinping Thought app, and so sort of thought control is actually — Jack Ma having what happened to him. The Jack Ma thing made the headlines because he’s so big that he’s known in the US. You have to be enormously —
Tim Ferriss: Yeah. And for people who don’t know Jack Ma, founder, or maybe co-founder of Alibaba. Like Jeff Bezos of China, I think it would be fair to say.
Balaji Srinivasan: That’s right. So the super rich, super successful tech entrepreneur gave a speech that was critical of regulation in a fairly measured way. And they just went after him, they stopped the IPO of Alibaba IPO. He’s under quasi-house arrest, all the regulars are so mad, and they showed them who is boss. And that is a real change! To be a Chinese entrepreneur in China, the state is really asserting itself and saying “There shall be no gods before me. As an entrepreneur, you better bow and kiss the ring.” And they’re also pushing much harder on this Xi Jinping Thought app where you have to repeat Xi Jinping thought all the time.
Now is that far from where America is nowadays? Not that far anymore, actually. Like that’s the thing I don’t think people get.
I think the world is splitting into three groups, which I think of as woke capital, communist capital, and crypto capital. And America’s woke capital and America and its subsidiaries, tributaries, allies, whatever you want to call them. Communist capital is China. And crypto capital is the free world. And the distinction is the first two are very good at pointing out each other’s flaws and faults, but not in, you know.
The internet censorship, all that stuff is going to ramp up aggressively in the US. I think that by 2024, you’re going to have to use VPN. So there’s going to be all kinds of filtering at the ISP level. It’s going to get very, very aggressive. All that stuff already exists. There’s safe search, there’s block sites and so on, but it’s going to get to a level way beyond where people think. Because East Coast institutions can no longer win a game of free speech and free markets, so they’re going to restrict and constrict.
And obviously the same thing is happening in China. The difference is China’s just more explicit about it, which is both good and bad. It’s good because it allows them to, I shouldn’t say good. It is good in the sense that everyone can identify it’s happening. It’s obviously bad because when it’s explicit, they’re just in your face about it. The site is up and then it’s down and there’s no apology that is given. It’s just the government says so.
In the US it’s this weird moonwalk where it’s more like the Soviet Union, or the Soviet Union would say that you have this great constitution, and hey, everyone can have an election and so on and so forth. But then actually, I don’t know if you know how elections worked in the Soviet Union. You just put in a blank ballot to vote for the communist, but if you wanted to vote for someone else, you could do it. You’d write something down and they’d know who you were. And so, Soviet Union have all these rights guaranteed on paper, but the actuality of it was a completely different thing. The gap between the actual thing and what was written down, and that’s where the US is becoming.
Where it is — there’s this joke in the 1980s, that’ll kind of illustrate it. This guy Yakov Smirnoff. I don’t know if you remember him. He said something like — he’s the joker who came over from Russia. He’s like, “People say that in Russia, we don’t have freedom of speech. Of course we have freedom of speech. But in America you also have freedom after speech.”
That’s good, right?
Tim Ferriss: Yeah.
Balaji Srinivasan: Is that true anymore? Not really. Or at least not outside of pseudonym.
I think China is actually underestimated in some ways. It’s not fully priced in. I think a lot of Americans underestimate China for a few reasons. First is, they think everybody within the country is this oppressed, that they don’t like the regime. That they’re against the regime. I think if you’re a Uyghur, or you’re Jack Ma, or you’re an entrepreneur who’s on the wrong side of the Communist Party, yeah, you’re probably not a fan. But I think that on net, the Chinese government has delivered the goods with, for many people from their perception, but the COVID response and with 40 years of growth, they’re the relative winners of COVID. The West just totally wrecked themselves.
And technologically they’re way beyond. People don’t understand how far beyond they are. They did drones for taking people’s temperatures. I tweeted about this in the early days of COVID. They really did five years in a few months of technological improvements to deal with COVID. From robots delivering stuff, they had hospitals that are fully telemedical hospitals where the doctors didn’t have to go in and they could remotely operate them. All kinds of crazy things that they managed to pull off. So you’ve heard the term cope?
Tim Ferriss: Cope as in C-O-P-E?
Balaji Srinivasan: Well, it’s used —
Tim Ferriss: I know the word —
Balaji Srinivasan: You know the word, right? But online it’s used as “Yo man, that’s cope.” You’re saying that to try to handle this difficult situation. And there’s a lot of folks who are over the course of COVID, I saw something very new and interesting, I mean, bad, but interesting happen. which was as the US sort of flailed and its response, as the federal government failed and state governments failed, and local governments failed, as public health failed, and public schools failed, and police failed ,and fire failed. As a power went out, as the health went out. As like riots had, all this stuff happened. People would basically say things like, “Oh, yeah. I know you’re saying Taiwan’s got it under control, but they’re an island. And New Zealand. And China did that but they’re totalitarian.” And everyone would give like this litany of excuses, which was why that course — you’re so stupid that that wouldn’t possibly apply to the US.
And fundamentally, it was basically a bunch of excuses where America isn’t the worst in the world. What are you saying? We’re just as bad as Europe. They make these kinds of comparisons. And you have to cock your head and be like, “We’re number one, USA, USA, USA.” It’s just extremely different from, “Yeah, we’re not the worst.” Just completely different. And while there’s this cope within the US on this. Outside, it’s very perceptible that the US was basically, it was just handed a military defeat by COVID. People don’t actually fully perceive this. I mentioned this a few times at Twitter, which hasn’t sunk in or whatever. Maybe people will get mad at me, but 2018, there was a DOD thing. There was something like a national bio defense policy. Nine defense strategy protects against manmade and natural threats.
And all of these four star this and that, full FRAs, “Oh, we’re so protected.” And they’ve got like this plan and they’ve had billions of dollars that was allocated for bio defense since anthrax attacks in 2001, 2002. I think it was 2001. I forget, it was late 2001 or early 2002, but I think it was late 2001, right after 9/11.
Since anthrax, all this money that went to bio defense. I know, because when I was in grad school, a lot of that money was floating around for like microbial research and what have you, that was like 15 years ago. And there was SARS and there was the Ebola scare. There’s plenty of warnings for all of this. And it was a military priority. There was like DARPA stuff that was supposed to crank out fast vaccines. And none of it actually seemed to work. To the best of my knowledge, and correct me if I’m wrong, I might be wrong, but the military’s most public thing was setting up the folding chairs in the Javits Center.
And that sounds really harsh. You know what I’m talking about, right? The palliative care? Early in the pandemic, right?
Tim Ferriss: I do.
Balaji Srinivasan: And they put a flower there so people could die next to a flower. That sucks. And the reason I kind of make that harsh comparison is — you know the Maginot Line in World War I?
Tim Ferriss: I do not.
Balaji Srinivasan: Okay.
Tim Ferriss: I do not. And also, I know we have the lens on the US right now within the context of China, but I would love to make sure we don’t forget to have you comment on the other things that are not fully appreciated about China.
Balaji Srinivasan: Sure.
Tim Ferriss: Please continue. And I don’t know the line. I don’t know the line that you’re referring to.
Balaji Srinivasan: Okay, so after World War I, the French built something called the Maginot Line, which was like, “Oh, yeah, Germany, you’re going to try and trench warfare on us? We’re building the system of fortifications where we’ll just gun you the F down, and you’ll never win trench warfare against us again.” Of course, Germans invented Blitzkrieg and just went around it. So this huge system of fortifications, it’s a great metaphor for fighting the last war.
And so there’s a guy who I don’t personally believe that I’ve ever met him or anything. This guy who a lot of folks quote, like Zayan, and I should probably go and write a blog post on all the things I disagree with. It’s about 20 percent I agree with like, it’s true that shale oil is an important resource for the US, but he thinks for example, American or demographics are a big win for the US over China, but robotics over demographics, you need a small number of people programming the robots. That’s the future. You know, you can already see that in warehouses.
Another thing is, he’s really bullish on like the US military. And the US military, at 35, was a failure, right? The US military just failed on the pandemic. US military in many ways I would argue, is actually a Maginot Line where it’s set up to fight the last war. And one way of thinking about that, it’s hard to test this. Because it’s just a prediction, it’s a forecast, but China was able to build a hospital in like 10 days. And their infrastructure in general, they can snap together a subway in nine hours. People keep posting these videos on Twitter. It’s like crazy. But they do. They prefab everything. They snap together on site.
And that’s something which is a whole of society thing. It has to be legal to do that. The engineers have to be willing to work 24 hours. They have to have the early American 1900s work ethic, not the late-American current work ethic. They have to be interested in building things as a society where it’s not everybody fighting each other where you build something and it’ll make my property less expensive, there’ll be shadows or something, which is the San Francisco style. All of these things have to come together. It’s not just one thing. But they snapped together a subway station at nine hours. So you can snap together a skyscraper in 30 days and people will say, “Oh, yeah? Well, their building quality is terrible. It’s only going to fall over or whatever.”
Have you seen the Millennium Tower in San Francisco? It’s actually creaking to one side. The whole Salesforce complex that they built near Salesforce, this new train station? That was also creaking. It was built like a billion dollars or something like that. It was creaking after the first few weeks and they had to not allow anybody in there.
So it’s all like the American building quality. You have to do a Cisco analysis to actually put them side by side. But in general, if you go to China, most of the buildings are standing up and most of them are new and they’re built over the last 20, 30 years. What’s my point? The point is the Chinese have shown the ability under duress to be able to execute in the physical world. When, as a subroutine, you can think, “Okay, we’re going to build a hospital,” that’s just not something we can contemplate in the US. That seems like a 30-year process, not a 10-day process. What do you have to do in a war? You have to build like a field hospital. You might actually build a bridge. You might have to take down a bridge. There’s all those kinds of things that have to happen. And if in, perhaps, the most desperate crisis the US has faced in a long time, people have this idea that it’s like cramming for a test. Like, “Oh, we’ll pull it out. The US will do the right thing after exhausting everything else.” They’ll quote these like Churchill-isms from like 70 years ago. And the thing is that cramming for the test only works if you’ve studied somewhat, not if you haven’t done anything for years.
And that’s actually, I think, it’s flipped over a card where in an actual, serious military conflict between the US and China, a non-nuclear conflict, I think China would probably win. There’s a Taiwan conflict, because we’ve got all the observables. The observables are even under duress, the US military can’t execute in the physical world. It’s got these plans for a pandemic that didn’t work. The Chinese can actually execute in the physical world and build these things. And that’s not just a one-off, it’s like across their whole society. And it’s also not a one-off for the Americans across our whole society, where the power is going out, and other kinds of infrastructure things are happening. And it’s not like just one localized place. It’s like the water in Flint. It’s the power in California. It’s the power in Texas. It seems to be spreading.
Tim Ferriss: I was just going to ask, so if, if there were a military conflict or a nation state versus nation state conflict between the US and China, it seems unlikely that it would be like Red Dawn on US soil. It seems unlikely, not impossible. I mean, there might be a cyber attack that has impact on any number of things in the United States, in the domestic US, continental US. But, if we take as an example, Taiwan, if there were a conflict over Taiwan and the US lost, what are the consequences of that, in your mind?
Balaji Srinivasan: I think it’s huge, because I think it, basically — it’d be comparable to like the Russo-Japanese War — in 1905, the Russo-Japanese War actually led to all of these former colonized people being like, “Wait a second, the non-whites can win against the whites? Holy cow.” And it was this huge mental unblock where that led to anti-colonial sentiment and so, and just kind of ended one century and began another.
And I think it would — that would be the true end of the American empire, I think, because it’d be a true — it wouldn’t be something that someone could write off, oh, Vietnam, we didn’t really try. Or oh, Afghanistan or Iraq, well, no one else visibly won. It would feel different, I think.
Tim Ferriss: It would be like the Mike Tyson getting knocked out by Buster Douglas moment for the United States, where people were like —
Balaji Srinivasan: That’s right.
Tim Ferriss: — “Oh, this is actually a defeatable — This is a defeatable enemy.”
Balaji Srinivasan: That’s right. Now the thing about it is we should hope it doesn’t come to that. What I fear is that often there’s a delayed reaction or a fuse on this stuff, like Occupy Wall Street only happened about like three years after the financial crisis. So the fear is that, if vaccines are eventually rolled out and if enough Americans take them, then by 2023 or 2024, people will be spoiling for a fight to go and beat up China as the one legitimated enemy. In sort of the same way as in the mid-2000s, it was okay to hate people in the Middle East. That was like a loosened kind of valve or whatever. You could be more angry towards them. It was more socially legitimate.
I don’t think it was good. I think that, that was — it was just true that that was more legitimate, or at least people greenlit it more. In the same way I think anti-Chinese sentiment will be more greenlit. It won’t be — people won’t jump on you for saying things that are negative about China, and it’ll filter into, unfortunately, many Chinese Americans, because anybody who’s like working at a university lab or something like that, they’ll come up with some rationale for why it’s not racist or whatever, Because it’s nationalist and, “Oh, my God, I can’t believe you’re saying that the agents of a totalitarian dictatorship are blah, blah, blah. That you have to be concerned about it.” But point is that they will — I don’t think it’d be great to be a Chinese American in like four years or five years, as a new Cold War really heats up.
Now, we should hope that doesn’t actually come to — I mean, call it — this is one of my bad predictions. It would be an unfortunate thing. Of course, many Chinese Americans have been here for generations. They have no ancestral connection or the ancestral connection to China is very distant. It kind of doesn’t — I shouldn’t say it doesn’t matter. It does matter. I don’t think there’s going to be stripped of citizenship or anything like the Japanese internment. But I do think that it’ll sort of be like being a Muslim American in the 2000s, which, basically, there was actually — it’s one of those things where there was a lot of surveillance of mosques. Folks within the community felt it a lot.
You might say it’s legitimate, you might say it’s not. I’m not trying to get into whether it’s good or bad. I’m just saying that that’s likely to happen. Okay. So what’s my point, point is that the — I think that Cold War between the US and China, we should hope it doesn’t kick off into a hot one. If it does kick off into a hot one, then the wounded American pride might like retaliate with nukes. There’s crazy things that can happen. It gets really bad very quickly, if you think about those scenarios. With that said, I think that most of the world will actually not want to be — they want to try to keep as far away from this fight as possible. I don’t think many Americans realize that. Many Americans think, Oh, yeah, Europe, they’re going to saddle up with us against China. Europeans don’t think that. Europeans think America’s going crazy.
And Europe is actually, in many ways, now, in some ways, actually to the right of the US. You can actually kind of put it on a spectrum where the US is on — it basically the most left-wing large country in the world. Then you’ve got Europe, then you’ve got crypto in the center, then you’ve got like India and Israel like center of right, and then you’ve got like China as the farthest right. That’s like a new kind of political spectrum of, roughly, on one side ethnonationalists, on the other side, ethnomasochists, and in the center, pseudonomists. Okay, if that makes any sense.
Tim Ferriss: It does. Let me jump in for a second here, and then I want to move to the dark horse, because I know it’ll probably not be a short conversation. On the Chinese front, considering China, if there were just a few actions or a few investments or changes that the US military could make, or the US government, what would they be to try to mitigate against some of these risks?
Balaji Srinivasan: The US has within it, the capability — like we were talking about earlier with crypto. They are the cause and the solution to all of man’s problems, and so. The US has within it that capability for a rebirth. Just like, frankly, China had a rebirth under Deng Xiaoping. And India had a rebirth under Manmohan Singh, after decades of just being in the toilet. The US would have to experience a national rebirth. And that’s a serious thing. That’s a big deal. It’d have to be like the level of Deng or Manmohan Singh or Lee Kuan Yew, or something at that level. I don’t think it’s — you’d know it when you saw it. And what kinds of things could lead to that?
Let me give you some out-of-left-field thoughts. I don’t think there’s anything — but to answer your question, do I think there’s a tweak or another tweak? No, I don’t think there’s a tweak, because I think the US is on the civilizational downtrend. For example, Intel failed their chip tape-out, and Lockheed Martin as is mentioned the F-35 and Boeing failed their thing, and all physical businesses have been shut down. The only thing that basically is functional, if you think about it, are the internet businesses that were founded 20 something years ago. Those are only things that are essentially functioning through the pandemic, the political institutions didn’t work. And the reason is those new businesses were new enough that, I guess, they’re like a fundamental distinction I have, which is between founding versus inheriting. If the founders are still around, the founders can edit things and change things. Whereas so many of these East Coast institutions were inherited.
Sometimes in the literal sense of inherited fortunes or inherited newspapers or inherited money, but also in the sense of inherited something that they couldn’t have built in the first place. The 57th mayor or 72nd governor of some state could never have organized the National Guard and the Public Health Department from scratch. They were selected solely for legitimacy and not for competence as well. If you’re elected, you’re selecting only for legitimacy, you’re not actually selected for being able to organize the NYPD from scratch.
By contrast, if you’re a founder, you’re selected for both legitimacy, why is the guy the CEO? Because he founded it. So you’re selected for legitimacy, but you’re also selected for competence, because all the backlinks, the support that’s come into you, you don’t just get them with a snap overnight, like you do when you win an election, they come to you gradually over time with a 1,000 proof points.
Zuckerberg didn’t just get three billion people and this gigantic organization. There were a thousand proof points that he did over 10 years, where that support came in gradually. It wasn’t just, okay, I don’t have the nuclear codes. Boom. I have the nuclear codes. It wasn’t like this overnight thing. It was gradual.
And crucially, one of the things about that is the folks who were selected on the basis of founding rather than inheriting selected for both legitimacy and competence, rather than just legitimacy, those folks actually are folks like Bezos who actually could organize the NYPD or the US military, because he’s an expert in logistics. And you know the saying, right, “Amateurs talk strategy, professionals talk logistics.” I have no question that Bezos would at least be an extremely important contributor to the organization of military from scratch. If Bezos had to do the US military from scratch, like a drone army, he could probably do it. And so the question is, how do you have selection for legitimacy and competence? How do you get more founding DNA versus inheriting DNA?
So let me just throw a few interesting concepts out there. One thing I think about a lot, this is a chapter in my upcoming book, is 100 percent democracy versus 51 percent democracy. So what’s 51 percent of democracy? Do you know what a Fosbury Flop is?
Tim Ferriss: I do. I do. This one I actually do know.
Balaji Srinivasan: Okay.
Tim Ferriss: You want to explain it for us?
Balaji Srinivasan: Sure.
Tim Ferriss: Yeah, Dick Fosbury.
Balaji Srinivasan: Yeah.
Tim Ferriss: Great story.
Balaji Srinivasan: That’s right. So, basically, if you’ve ever seen a pole vault in the Olympics, you know what a Fosbury Flop is. It’s essentially someone — they vault in such a way that they just barely clear the bar. They like manipulate their body in such a way. Go ahead.
Tim Ferriss: And they do it backwards.
Balaji Srinivasan: Yeah, they do it.
Tim Ferriss: Over the — they do it backwards.
Balaji Srinivasan: They do it backwards. So it’s just like barely clearing the bar. And that is the way a 51 percent democracy works. Where if you think about the root of democracy, it’s not actually voting, per se, the root of democracy is the consent of the governed. That’s what makes a democracy legitimate. Is that — go ahead.
Tim Ferriss: Can I add a note on the Fosbury Flop?
Balaji Srinivasan: Sure.
Tim Ferriss: A quick note on the Fosbury Flop and Dick Fosbury is that, for the vast majority of the time that the Olympics have existed, the techniques used for clearing that pole vault bar were almost like, not a scissor kick necessarily, but very similar to the way you might clear the high hurdles in a sprint race. And then Dick Fosbury comes along, and I think, I want to say it was in Mexico City, but I —
Balaji Srinivasan: I think that’s right. I think that’s right.
Tim Ferriss: — might be misremembering that, and the equipment had changed. So it became possible for the first time to land in the way that he landed, which was on his back. And he was ridiculed at the time, ended up winning a gold medal. And now that is the default technique used for —
Balaji Srinivasan: So Fosbury —
Tim Ferriss: Please continue.
Balaji Srinivasan: Fosbury’s method was actually a smart hack of the system. But one of the things about it is, basically, or the part that I’m evoking is the feeling of just barely clearing the bar.
Tim Ferriss: Very little margin of safety.
Balaji Srinivasan: Little margin of safety. And so insofar as the legitimacy of democracy comes from the consent of the governed, we kind of intuit that there’s more legitimacy if there’s a landslide. There’s more of a mandate if it’s a bigger margin, because you have more consent. If there’s more consent, you need to use less coercion. You have more of a mandate with which to govern. 60/40 is way better than 51/49.
Here’s the issue. The issue is when it’s 51/49, which it’s been for a long time now, basically, that’s just the minimum necessary, that’s a Fosbury Flop of consent. It’s a minimum consent to say, “Okay, we’ve got the consent of the governed.” And when you have the minimum necessary consent, you have to use a ton of coercion when you’re in power. And then what that does is it pushes that two percent over to the other side or whatever. And then the next group is in power. And then that guy has to use a lot of coercion when they’re in power.
And so this is a very bad negative feedback cycle, where you’re using, yes, you use coercion if you’re a government, but in general — think about being CEO, if any of your followers here are CEO, a lot of people have this kind of fantasy model of a CEO, where the guy goes and barks, where he’s like, “I’m the CEO just go do it,” like that. And if you ever are CEO, you’ll find that that really doesn’t work. You have to persuade and you have to convince and you need to motivate. And you really can’t just order flunkies around in quite that way, because everybody’s got another possible job they can get.
It’s more like a bunch of subatomic particles you’re holding in your hand to just like not have them all go to escape or whatever. So it’s a very different kind of thing where you have to convince, you can’t really coerce. I’m not saying that you sometimes can’t have to give it an order or something like, “Yes, we’re going to do it this way.” I’m not saying that doesn’t happen. But ultimately, it is much, much more weighted towards convincing than coercion.
Okay. So this is also true for a good leader. A good leader is doing more convincing than coercing. All right. Here’s the point. We see this 51/49 thing. The ideal would be a 100/0. The ideal would be a 100 percent democracy where everybody consents, and you do that in such a way that it’s not like some Stalinist joke where everyone’s voting their great consent for the great leader, and they don’t actually have a say. You need to have their not manufactured consent, but demonstrated consent. To paraphrase Chomsky, you don’t want manufactured consent, you want demonstrated consent.
So where I go with that as I think, okay, there’s actually three kinds of votes. We think of two kinds, voting with ballot and voting with wallet, which are democracy and capitalism, respectively. There’s a third kind, which is voting with feet, namely migration. Actually all three are components of the US political system. So for example, if you put them on an axis, with X axis being the cost of that particular kind of vote and the Y axis being the probability of changing the outcome. Vote with your ballot is a tiny, tiny, it’s a small costs, it’s a few hours. And a tiny probability of changing outcome, like one over N of N people, roughly.
If you vote with your wallet, like a political donation, it’s not considered kosher to really calculate this out, but people do. Washington Post often publishes like the price of a vote or whatever. They calculate, okay here’s the spending on political ads. Here was the actual votes. There’s ways that people try to pull us out of regressions. Main thing is with some money you can effectively get more votes than just your one. Vote with your wallet, it does through ads or what have you campaign stuff, it gets to you — you’re putting your 2300 max, if you’re an individual, it might get you 10 votes or a 100. I don’t know the number, but basically it’ll get you more than one, towards that candidate. All right. So that is a higher cost than a few hours, but it’s a somewhat higher probability, still small, of changing the law under which you live.
And then we get to migration. Now migration is the highest cost of all, usually, because it’s like $10,000 or more to pick up stakes and move city to city or country to country. But it has by far the highest probability of changing the outcome. It’s a 100 percent, you just pick the laws. You just look at the dashboard of all the laws and you pick the one that you want and you moved there. Vote how you want, we move where we like. And that is — go ahead.
Tim Ferriss: No continue, please.
Balaji Srinivasan: So once you start thinking about like this third fundamental force, there’s nothing more American — I mean, every — America is a nation of immigrants. That means tautologically, it’s also a nation of emigrants. And the camera is not as frequently put on what causes people to leave. What causes people to leave was declining economic circumstances or communism or Civil War or socialism or just a bad economic lack of opportunity and they came over to the US.
And so, if our ancestors weren’t evil, then immigration can’t be evil. In fact, immigration is the most American thing ever. And so now when you think about that as a third fundamental force, you start thinking, okay, a 100 percent democracy means that people are resigning a social smart contract every few years, they’re part of a polity, and they are — if they don’t like it, they’ve got 999 other jurisdictions to go to. They can vote with their feet to go over there. And the critical thing this does is this model of lots of jurisdictions run by the CEOs of city-states maximizes consent. You can — I can — I’ve got a mathematical model of this, but maximize consent because like a company, nobody is there if they don’t want to be.
Tim Ferriss: Let’s take this opportunity to transition, unless there are just any closing comments on that chapter that you’d like to make, but I would love to, as our last topic —
Balaji Srinivasan: I have one last closing comment.
Tim Ferriss: Yes. Fire away.
Balaji Srinivasan: Once you start kind of thinking in this way, about like maximizing consent and so on or using the network versus state, something that is possible, for example, in Austin, it’s a city of like 850,000-ish, one point two million, somewhere in that range of people. It’s not inconceivable to just — if you start thinking of, okay, convincing rather than coercing, you just start by declaring yourself shadow, not you, but someone, maybe you, okay, someone with some distribution, or even someone who wants to build it, declares themselves either shadow mayor of Austin or community organizer or something like that. Okay. And they just —
Tim Ferriss: Very different proclamations.
Balaji Srinivasan: Very different proclamations.
Tim Ferriss: Yes.
Balaji Srinivasan: Shadow mayor is like this concept from the UK, like the shadow government. And you just start organizing people, whether it’s Austin or some other city. You just start organizing people. It’s just like, you start a company, you declare yourself CEO, you and who? You’re the CEO, you just named yourself CEO. Okay. So you just — whatever title you decide to give it, maybe you say lead community organizer. I don’t know. And people just start folding into you if you start delivering the goods. What are the goods? I think you would conceive of this thing as like a network union. Let’s say, not like a normal social network, but a social tree. Not everybody connected, higgledy-piggledy, but a graph, where folks are folding up into a union leader, effectively, a network union leader.
Excepted it’d be a network union, so it’s not just focused on labor rights, but it could collectively bargain on behalf of the people as consumers, as producers, as investors, as voters, whatever. It’s just like a group of folks that are organized for a collective action. It could organize, for example, shoveling of snow or empowers out, it’s a genuine community organization and you have this head and these folks folding into them. What’s my point? Just like a startup, you can grow that — and you might go back in time, because this is so new. It’s actually old, what I’m talking about is old, but it’s new to us today because it hasn’t been done in a while. It doesn’t seem like something you would. People know how to start a company and a multi-billion-dollar business, they don’t how to start a community organization, but your ancestors did it, like an Elks club or whatever type thing.
And so you build that up, and you may name it something, and you started accumulating users, 10, a hundred, a thousand, 10,000, because your organization is competent and able to deliver the goods locally. It doesn’t have guns. It can’t coerce. It doesn’t have guys with badges. It can’t tax. It has to do everything with contributions. Maybe it’s selling a product. Maybe it’s organized like a company. There’s many different ways of doing it. But fundamentally it’s delivering the social goods that the current elected, inherited government can’t. Because that inherited government was set up for a different time, under a different set of circumstances.
As you start just delivering more goods, you gain more political capital. And ultimately, that entire social structure is just softer in people’s heads. The mayor, the supervisors, city hall, all of that is just stuff people have agreed to do. And just like fiat to cryptocurrency, call that fiat government, this crypto government or something like that. I might do it all pseudonymously or whatever for some time. It’s lots of different ways and parameters you can fix.
At a certain point when you’ve got 100,000 people in this hierarchical organization, then yeah, when there’s an election called, you’ll probably just instantly win and become mayor. And this is a way that you can affect political change outside of politics, because you start actually focusing on delivering the societal goods, by convincing people, and you set coercion to zero. And frankly, you can get really far with that, because CEOs get really far with that. You might think of this as a tech startup. That’s a fine way of thinking about it and you modify it to make it like a community oriented tech startup.
There might be dues. You could do subscriptions. There’s lots of different ways you could make this work. It’s a community organization where you pay in to get something out, just right there, that might work. It’s got local news. It’s got childcare. It’s like round-robin childcare. You keep track and you give to get. There’s a lot of things you can do here, once you start thinking about this. You can use Facebook groups to organize it. You don’t need to code things at the beginning. A lot of it is just, you might be able to do it with no-code, if you know that. This is, I think, the recipe for how you start rebuilding functional organizations in the US. Not try to jam a square peg into a round hole and be like, “Hey, let me capture the coercive of state and get the guns, and then I’ll be able to finally do something here, bossing around the other 49 percent.” Instead, you build these convinced-oriented organizations as opposed to coerced. Let me pause there. Okay, your thoughts?
Tim Ferriss: Well, I think this — I might just call this — maybe this episode should be titled The Episode That Shall Spawn a Thousand Shadow Mayors. I think this is a valuable discussion. I think this is a very valuable discussion, and I’m glad that you got to explain this and I would love to get to India.
Balaji Srinivasan: Yes. Sure.
Tim Ferriss: So let’s add any sort of concluding statements just to that piece. And then segue, if you’re open to it to maybe starting with India, the dark horse, as you mentioned, and what is currently at stake. And there may be many things at stake, but certainly the one that is pinned at the top of your Twitter profile is of interest to me. So I’ll let you take it from there.
Balaji Srinivasan: Great. Yeah. So, all right. So we talked about China, we talked about the US. And so you have this thing where you have this ascending China, and you have this declining US, and they’re just on a collision course, sparks are already flying. This is the Thucydides Trap of the rising power, and the declining one and big fight. And there is an interesting, possible way out of this. Or at least — I’m not sure there’s a way out for the US and China, but there might be a way for the rest of the world. Especially someplace like India, which is — India is number three, so it’s neither the US nor China. It is actually, in its own way, in the position of a Singapore, for example, where it is not realistic, you might think it’s realistic to coerce the world to use the dollar. You might also think it’s realistic to coerce a big chunk of the world to use the digital Yuan. Both of those are contenders for a global reserve currency, the digital rupee is not for, because it’s number three, you’d have to be at the number one, number two. So you could do something different. You could say actually the other possibility here, if you’re neither Windows nor OSX, you go all in on Linux, right? So you’re neither the dollar or the renminbi, you go all in on BTC and crypto, because that is as a nation, your first thing is you want to be able to control your currency, but internationally you want no one to be able to control your currency. And you’d rather have no one control it than a foreign power control because the currency is not just a currency it’s a technology platform, right?
SWIFT, the international market, that’s a technology platform, the US can hit a button and just de-platform you from SWIFT, just like Twitter can de-platform you from Twitter, right? The dollar is not just currency, it’s a technology platform. And it’s a declining technology platform because it’s basically based on this 20th century technology. If you look at the, I retweeted this other day, but new China’s been gradually, over the last 10 years, replacing the dollar in cross-border trade. It was basically 80-something percent in 2011. And now it’s I think it’s now less than, or close to less than 50 percent. So it’s about to flip — the flipping thing is happening, right? And then they’ll just replace it completely and it’ll be dollar independent. And that means just like the BitLicensing that we mentioned earlier, there’ll come a day, just like New York tried to throw its weight around with that license and actually found that it just sanctioned itself.
And rather than forcing a bunch of companies to jump through its hoops, those companies just put it last on the list, right? America will try to wheel the dollar as a weapon one more time and just find that it’s actually showing itself. It’s just walled itself off from enough of the world economies outside the dollar economy.
Tim Ferriss: Is India at risk of doing that right now?
Balaji Srinivasan: So India had postulated a crypto ban. Okay. I think that if you look at the very latest reports, that is now being retaught. And the reason for that is a lot of tech people, a lot of financiers, a lot of people in the government have communicated that actually the two biggest stories in India over the last 30 years are A, economic liberalization and B, the internet, and crypto combines both, right?
It is the financial internet. It’s literally at that level. Cause what did the internet do? It digitized books, movies, songs, all forms of media, right? Crypto goes and digitizes everything scarce. Stocks, bonds, commodities, and of course, gold and other things. Basically, because what a blockchain is potential, it was a way to copy things from point A to point B, a blockchain is a way to transfer things, scarce things in a proven way.
So every financial asset becomes natively digital, just like every media thing became natively digital. So economic globalization and internet massively benefited India and crypto is a combination of them. And so banning it would be this huge [inaudible 03:18:41]. So I wrote a couple of long articles on this, A, Why India Should Buy Bitcoin, and B, How India Legalizes Crypto, and those have gotten a fair amount of traction, I think within the Indian discussion. And there’s some really good follow-up articles and videos that I’ve been retweeting. And it’s definitely something now where I think folks are realizing that a ban would be precipitant. You know, it’d be too hasty. We’ll see what happens. But I think that it’s going to be more likely that it’s legalized with some form of regulation than it is to be banned, knock on wood, that’s how it looks as of right now. Right. But 10 scale.
Tim Ferriss: Okay. What would be the global consequences of India banning cryptocurrency?
Balaji Srinivasan: So global consequences wouldn’t actually, it’s like [inaudible] seen and unseen, right? The thing is that if India banned crypto people don’t understand how big a deal it is that India banned crypto because crypto hasn’t had time to compound within India. It got banned in 2018 and then unbanned. Right. And so because of that the crypto industry is in a much more nascent state than it is in other places, and so on. Meaning only like 10 million people have it or something like that, which is small for a relatively large country. Right.
But let me describe what would happen in the alternative and then it will be more obvious as to why it’s a big deal. Basically over the last four years, while everybody in the West was obsessed with American politics, India’s brought about 400 million people online. There’s something called Reliance JIO, which basically at 4G LTE there, it is about a hundred X cheaper than in the US. So it has the cheapest mobile LTE service in the world, which is insane, right? Cause that’s a huge physical infrastructure project in India, that’s hard to do, but you need reliable power. All kinds of things have to work for something like that to work, and at the same time, two other things happened. COVID happened, so all the world’s jobs went remote and crypto happened, which meant that you have this peer to peer international payment rail.
So India has the opportunity to have 400 million people suddenly start doing all these remote work jobs that they’re newly qualified for with their phones. Because every remote work job cannot be done there, which is at least, I don’t know, 10 million, 20 million, 30 million new sources of remittances and remote work. Maybe it’s like 10 X that who knows. Right. So that would completely change the world. It would basically mean that every Indian who could do white collar work could do it for one 10th the price on an Android phone being paid in crypto or something like that. And when I saying crypto I don’t necessarily mean Bitcoin or Ethereum, but that’s also possible. But if you look at stablecoinstats.com one of the stable coins, which you can now transmit to anywhere that has an internet connection, all they need is an Ethereum address, you can send it to them. So the magnitude of that disruption is hard to actually, when you have like a few hundred million people coming online, that’s a very big deal if they’re part of the global labor market.
It’s not like they wouldn’t be connected if they didn’t have crypto, but they’d be a lot less connected because crypto means anyone on the internet can pay anyone for shorter, it’s like email. So if you have to go through the rupee it’s fine for some purposes, but it’s certainly not fine for just paying somebody 20 bucks to do something right now. That’s a multi-day wait for an international wire transfer, you spend more than that on the wire fees, it just won’t work. So banning crypto would be one of those things where it’s more obvious as to what would be lost when we unbanned crypto. So by 2030, you’ll be like, yeah, okay, that whole thing wouldn’t have happened without it. But it’s hard for me to show you that yet, because the compounding hasn’t happened yet.
Tim Ferriss: Right. But with distribution, with wider distribution and use of say micropayments via cryptocurrency, much of the friction for this type of gigantic possible workforce to engage globally is removed. Right? A lot of the friction, put another way.
Balaji Srinivasan: Yes, exactly.
Tim Ferriss: If the Indian government wants to facilitate the global participation and effective competition of its citizens, we’re going to come online en masse with profound implications, then cryptocurrency facilitates that substantially.
Balaji Srinivasan: That’s right, India basically is internationally competitive in computer science. And it’s also pretty good at all of these, I mean like the Indian diaspora has been pretty good at things like finance, media, journalism, as mentioned engineering, but also medicine and so-and-so right. It’s notable in those areas. These are all white collar jobs that you could do over an internet connection for crypto. And then you wouldn’t even have to leave India. And remittances, remote work are a huge source of revenue. So basically India could be this, the other thing about it, by the way, by supporting crypto right now, America’s blowing up the Middle East and China is building colonies in Africa. And you know actually on net, yes we built those colonies for everybody. You can call them colonies, you can call them cities.
Like the Africans actually are benefiting from the Chinese presence. In that sense, they’re actually getting infrastructure and so on out of it. If you actually talk to Africans there, they’re not that negative on them. It’s definitely not like, “Oh, we hate the Chinese” or something. It’s not like that. But people can say, “Oh, the Chinese are actually hooking them today, and then they’re going to put them in debt.” Like they’re trying to do with the belt and road projects. Are your listeners familiar with that? No?
Tim Ferriss: It depends. I’m sure some of them are! I’m not.
Balaji Srinivasan: China has this thing called the belt and road, which was a bigger deal before the pandemic, but they may be rebooting it. Essentially it’s this idea of building global trade routes with over land and over sea where China builds across Eurasia, these huge railway lines that can ship their finished goods everywhere to hit all these markets.
And one of the concepts behind the belt and road is China builds infrastructure in all of these countries, ports and railway stations and fueling stations and all this stuff, schools, whatever, and in return that government just takes out a loan in renminbi, but maybe it can’t pay back in which case China kind of repos everything and it has a military base there or whatever. So that’s kind of this heads I win tails I don’t lose deal, that China is doing. It’s actually quite smart. It’s kind of like the Marshall plan in a different way. You know, where the US got all of these military bases. That’s a cynical way of looking at it, of course. But you know, that’s certainly part of the games for the USF military presence in Western Europe. What’s the point? Point is while America is blowing things up and while China’s building these colonies, what India could do is build software for the world because getting behind crypto, and this is a good case, right?
If India gets behind crypto, crypto is a globally neutral platform because everybody can trust it since they don’t need to trust, they can audit it. They can look at it themselves. I already see this today, Chinese people no longer trust, the retrains investors don’t trust the US legal system and certainly not vice versa, but both of them will definitely invest in a smart contract on Ethereum. That’s actually where international capitalism still lives and will continue to thrive even in this age of tariffs and trade war and so on and so forth. People can actually work across borders regardless of facility fights. This is actually my spirit and this is something which I think India can be kind of a peacemaker. Similar to actually in some ways, they tried to stay out of the cold war with the so-called non-alignment. There was NATO and the Warsaw Pact and non-alignment. And the non-alignment movement was sympathetic to the Soviet Union, but it wasn’t sending troops around the world to wage communist revolution.
And that’s actually the origin of the term third world. First world was the West, second world was the communist countries, and the third world where all these countries are behind the non-alignment movement. Now, of course the non-alignment movement came in third, it was poor. It didn’t have part of the reasons it didn’t join any militaries, it didn’t have the money to even pay for the guns or anything like that. But now back to the future, I think if the US and the West is, there’s a declining West and it’s woke capital and you have, on the other side, the Chinese are communist capital. I think India could be crypto capital, and it could be the center of the decentralized movement which is maybe the most powerful of the three, because there are sympathizers of crypto in both the US and China, millions of people.
And it sounds weird to put it that way today in 2020, but it won’t sound that weird in 2025 or 2030, because crypto is an ideological movement and it’s a transnational movement. It’s international capitalist, and it’s not nationalist capitalist like Reagan, it’s not nationalist socialist or international socialist, like Hitler or Stalin’s national socialist or Lenin was international socialist, it’s internationalist and capitalist. Or rather, Trotsky was internationalist and socialist. So international and capitalist is like tech, that’s crypto. That is, do a deal across borders, that is, “I don’t care what you look like, we’re equal partners in the deal,” and of course there’s bad aspects of it too, I’m sure people can rattle them off, but ultimately there’s an ideology embedded in there. It’s not simply a currency. And that is, I think, over time going to be what blue jeans were in the Soviet Union.
That is to say the orange coin is like the global symbol of freedom and prosperity. Like the blue jeans were in the Soviet union. It’s really a deep point. You know, blue jeans in the Soviet union were a symbol of what was there beyond the Iron Curtain. The orange coin is both freedom, being able to transact with whoever you want, to say what you want, freedom from surveillance, speaking your mind, not being de-platformed, not being censored, and of course prosperity because they’re going up and to the right. Go ahead.
Tim Ferriss: I was just thinking to myself, we’re going to have to call this episode The 4-Hour Podcast.
Balaji Srinivasan: That’s funny! No, that’s true. We’ve gone on a lot. So I think that there’s an outside chance that India could become a backer of crypto for national security reasons because it’s not going to be the US or China. So it could play a different game. If it embraces crypto, then India gets all this remittance volume. It gets all this remote work volume and all of its financiers are actually quite good, and all of its engineers are also quite good. The other aspect of crypto is it would allow Indian media — so this is actually, if you want a dark horse, you want a dark horse prediction for the 2020s? I actually think India has the potential to become a media superpower. Why do I say that?
So China in the late ’90s, early 2000s, it was making plastic stuff for Walmart. A lot of people were very skeptical of China’s ability to ascend the value chain. All of a sudden we’re going to make fancy machine tools like the Germans, and of course it did. It went all the way up from iPhones and stuff, now it makes drones with DJI, and it makes basically everything other than the very top end semiconductors and they’re working on it. China’s workshop in the world, people no longer say that it makes only crap. It makes a lot of quality stuff there now. I’m just giving them their due. They do big quality stuff and they ascended that value chain very intentionally, very methodically, with espionage, with all of that stuff, with beg, borrow, and steal, they did everything they could. You have a company there, they forced to the acquisition of it, all that stuff. They play fair and foul.
So China became a tech and manufacturing superpower because they’ve got WeChat, they’ve got the software, and they’ve also got the physical stuff, but I think India can take a different path and become a tech and media superpower. And the reason I say that is, so first one we talked about the raw material. So of course he has Bollywood. You know, it has, less well-known, it has the backend for a lot of animation for Hollywood. Like if you go and you look at the end of Tenet, you see all these Indians there. They did a lot of the special effects, a lot of computer graphics because of a lot of Indian engineers. And India has SAJA or at least the diaspora in the US South Asian journalist Association with thousands of journalists. And it has this multi-thousand year culture of arts and letters and it’s exporting Buddhism and Hinduism.
You’ve got all that. So finally, it’s got engineers that are competitive worldwide. Because now actually number three in tech unicorns after the US and China, most people don’t know that. So how does India potentially become a media superpower? Well, the difference is it’s not Bollywood going global. That’s often the mistake people make. Why? Because when you go and you have a chair from China, can you tell it’s a Chinese chair? No, not really. It’s a global chair. You have to look on the bottom to see “Made in China.” Everything’s made in China. So there’s a company, for example, called ArcelorMittal, an Indian company, it makes steel, but it makes a global bar steel. You don’t look at it and be like, “Oh, that’s Indian steel.”
That’s just like a globally competitive product. That’s like the best product you may say, I’m not a steel expert, but it’s one of the best products for its price. It’s totally competitive. Whereas Bollywood has a specifically Indian flavor to it. And this is the mind shift that I think India is going to make in the 2020s, it’s going to take a lot of people by surprise. It’s going to start building products for the world, not just software product, because it can do that, but media products. And I think the direction is a bright sun to the West Black Mirror. And what that makes them, what I mean by this, as I was saying earlier, because East Coast of the US has experienced a decline in relative status as the internet has risen, they have this sort of Black Mirror worldview. This future sucks. We need to crack down on our free speech and free markets.
I hate these tech bros. Oh, you invented a bus with Uber. Like they basically are doubling and tripling down on the old stuff. It’s sort of similar to a country where technology passed them by, they double-down on religious fundamentalism. They might be richer than us or whatever, but we’re better, we’re holier, we’ve got a better democracy or whatever. It’s cope. It’s more cope, right? So the West is in this sort of Black Mirror thing where the only thing they can see of the future, not all of the West, but certainly a lot of the intelligentsia, a lot of media folks, and so on. The only thing they can see in the future is this Black Mirror, where their future is declining. And the future is dystopian.
To give a completely different worldview, have you ever seen the movie or even the trailer to Super 30?
Tim Ferriss: I have not.
Balaji Srinivasan: You should definitely watch this. All your viewers should watch this. You couldn’t have a more different spirit and attitude towards technology than this. Imagine sort of like Rocky, but for engineers, kind of like that. Okay. It’s not exactly right, but it’s got the same spirit. And it is essentially something that just glorifies computer science, engineering, leveling up in the future, because for the global South, for India, for all these countries that have just gotten smart phones, they’ve risen with technology. This is something which is correlated with the greatest improvement in living standards they’ve ever experienced. And that is just a completely different, you can’t teach that. You can’t inculcate, that’s just a different cultural base.
The future is looking bright. We’re all the way up. We’re regaining, we’re coming back to our rightful place in the world, that’s kind of the mentality there. And that is the basis for a completely different kind of culture, a completely different kind of culture expert. And so I think that you can start the export of films, movies, culture, that’s based on technology, global technology. So all of the stuff that I talked about and how would you do it? You were like, how do you make it not boring cause movies all require conflict. There’s going to be some Pollyanna thing. And so there’s actually an interesting flip that you can do with a dystopian movie. The key trick is, it’s like at the beginning of Terminator, the present is all idyllic, everyone’s gambling through the fields and so on.
And then this crazy scientist invents some horrible new Terminator and it messes it all up and now the future is worse. And so the premise is that the president was fine and this tech guy, tech bro made the future worse. Miles Dyson in Terminator. But it’s easy to actually invert that. And the inversion is a present that is dystopian. It’s a present where we’re all wearing masks it’s the present where the power’s going out, it’s a present where random fires rage, and cold snaps hit in the middle of nowhere and politics is dysfunctional, Oh, this is a really fictional story of telling, right? So it’s the present that’s dystopian, and there’s a small group that might be able to carve out a better future. But I think just invented for example, a better form of nuclear power, but they’re getting hemmed in by these power hungry regulators and these NGOs that just hate nuclear power and the press, it’s just trying to impress them for clicks.
And these guys need to figure it out and actually build something better. And so you just invert a lot of the tropes, you’re still fighting the power, but you’re actually fighting the power that is technologically conservative and you have a group of technological procrastinators. Now what I just described actually has a lot of move to it because that’s actually a reality. That is every single startup founder has to go through what I just described. Now, once in a while you see a Hollywood depiction of this. House of Cards on Netflix in its first season actually depicted an evil NGO. Like a water thing. It was like some water charity that was just a scam for — it was a future president’s wife running this thing. It depicted an evil journalist.
The original Ghostbusters depicted an evil regulator. So did Dallas Buyers Club, depicted evil regulators. So there are snatches where evil journalists, evil regulators, evil NGOs are depicted, but it’s like a one to 10,000 or a 100,000 where normally it’s the evil corporation with evil military that’s depicted, but those are the mental models that people slot things into. If you have media that inverts that; if you have media that allows people to pattern recognize that, and it doesn’t have to be in feature films, it can be short video games, it can be clips, and so on.
That’s actually upstream of driving technological progress. Because A, it shows the technology is good. B, it still has a conflict, as much conflict as a dystopian. And C, you can just take all those plots, adapt them straight from the history of a thousand different tech companies, startups, and then going backwards further in time, you know, Robert Goddard had to fight NYT Co. on rockets. Do you know that story? Basically they said that it was a total joke, that what he was doing was joke. They were basically being technologically conservative forever. And so every innovator had to fight this and those stories are on the shelf that we can just take off and make into things. Let me pause there.
Tim Ferriss: Well, I’m just going to say dark horses and cryptocurrencies and biology, oh, my. This episode is going to take my team a hundred years, maybe I’ll need a thousand Indians to help us with this, to do the show notes. I’m just imagining, linking to everything that we, that — I’m using the royal we — that you have discussed so far. So I think this makes a lot of sense in part because my headset is running out of battery and my bloodstream is running out of glucose. I think this is probably a good chapter one for folks. Is there anything that you would like to say if you’re open to closing now or close to it, are there any closing comments or questions or requests of my audience that you would like to make?
Balaji Srinivasan: Sure. Go sign up at 1729.com. It’s free and you’ll get chapters of my book and you also will be able to get some crypto tasks. And if you like this, there’s a lot more of it. And it’s all better organized in writing. Tim has been a very gracious host, it’s been a lot of fun. And I think all of these ideas are laid out at greater length in the book and on the tasks on WhatsApp, it’s all free.
Tim Ferriss: Wonderful, and people can find you on Twitter @balajis, website balajis.com. For everybody listening, my team will make a best effort to link to everything that we have discussed. It is going to be an incredibly voluminous version of show notes, and Balaji, thank you so much for taking the time. This is going to have to be the episode of everything. There are many titles that are vying for the final version of what we will call this episode. It will be very, very challenging, but I’m looking forward to it as a challenge. But thank you for making the time. This has been great. We’ve covered a lot of ground.
Balaji Srinivasan: Awesome. Thank you.
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7 Replies to “The Tim Ferriss Show Transcripts — Balaji Srinivasan on The Future of Bitcoin and Ethereum, How to Become Noncancelable, the Path to Personal Freedom and Wealth in a New World, the Changing Landscape of Warfare, and More (#506)”
It’s interesting that someone who is as smart and well-informed as he is and was up for a public health role in the Trump Administration (US FDA) seems unaware that the US Department of Health and Human Services ran a simulation in 2019 (completed just before Covid-19 appeared) called “Crimson Contagion” that was eerily similar to what actually happened with Covid-19. Balaji placed blame on the military for poor execution but the primary responsibility for a pandemic response is with HHS; instead of taking action based on what they learned in the study, the Administration actually proposed cuts to critical agencies like the CDC.
This episode I read instead of listening to. Lucky me!
Started on a Saturday night then spent Sunday morning. Mind blowing..
I feel privileged to be able to eavesdrop on a brainiac talking about stuff I didn’t know existed. It was heartwarming when Tim finally got to giggle, “Yes! Yes I HAVE heard of this!” Oh the sweet relief! Good humour slicing through the dense, information heavy chat and yet, ”I cannot stop reading this it’s so mind opening!”
I appreciate the diversity of guests you have too.
Does Balaji have any published writing, or favorite pieces, explaining why he believes the world is fundamentally not zero sum?
I think it’s pretty clear that with new technologies the magnitude of inefficiencies that can be streamlined resulting in net positives is so large as to make that point inarguable.
This episode shook my entire worldview and perspective on the future… thank you.
Excellent episode but I hope Balaji’s book is less long winded. Every answer was soo long. Good learning about all of this. My question is couldn’t the US create a digital dollar currency, backed by the US dollar. Just using blockchain technology?
This podcast scrambled and challenged my world view in the best possible ways!
Fourteen months into living through Covid in San Francisco, this massive information download was “just what the doctor ordered” in order to negotiate the multiple and tricky transformations ahead in these turbulent times.