How Stablecoins Are Reconfiguring the Financial System | ft. Eddy Lazzarin and Sonal Chokshi

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As AI becomes more powerful, it becomes better able to circumvent constraints. So, how do we truly constrain it? Well, cryptography. Cryptography for identity. Cryptography for authentication. Cryptography for money. Technology accelerates the production of mediocre things as a side effect of producing the incredible things. People are spending like 5,000 bucks a day on tokens but only paying 200 bucks a month because the companies are raising rapid capital. Like, we're in the attract phase, not the extract phase. Okay. Well, what happens during the extract phase? >> Yeah, that's exactly where crypto is going to come.

>> And I think it's just an complete no-brainer. >> Stable coins are being adopted everywhere and in all the corners of the economy. What we are talking about is crypto's first killer app. >> They are not a full end to end fix of the whole chain. They're not. They solve one specific part of that chain. And they do that one little piece so fast, so cheaply, and so securely that Hi everyone, welcome to the A6 andZ crypto show and I am so excited today first of all to be back on the show after a while. Excited to have our co-host Robert on, but most importantly our special guest is Eddie Lazerin who I

have known for a number of years but recently he was announced as our newest GP general partner in the crypto fund. Actually, what does it mean to be a general partner? >> I think technically in our case, it means having the direct ability to write checks, so to speak. >> Yes. And there's fiduciary responsibilities with that. >> Well, I do know one of the fun one of the fun ways that the fund operates is that it's all by somebody saying yes. There's not a veto rule where somebody says, "No, we're not going to do this." It's all somebody has conviction, then they go in.

>> That's right. >> Well, is it more precise to say it's not consensus based also? Because when you say that it sounds like like basically you don't need like group agreement. >> Yeah. No, our our investment is what some people call single trigger. A specific GP, a single GP can unilaterally make an investment decision. >> Can someone kill a decision? What would a non-conensus bet be in crypto today? >> In in a way, what's funny is how do you identify what non-conensus is? Right? If it's clear enough to be something that you can point at, then that's probably because some people have formed consensus around that and made it visible, made it something you can interpret. So I think in retrospect, things that are non-conensus bets become

evidently and observably non-conensus, but at the time they're probably defying some kind of pattern. >> This is where Peter Teal's famous thing came from, which Chris Dixon actually talked about a lot when he came to the A6 andZ over a decade ago. And it's basically the idea that good ideas start out looking like bad ideas. That you kind of have to find an idea that's really a good idea, but it looks like a bad idea. And that was his definition of finding non-conensus. >> Yeah. And you know, looking like a bad idea has many dimensions to it. One can be that it's not consensus, so that makes it look bad, right? Another could be that along some critical dimension of the consensus idea, it's completely at

the opposite end, right, of some specific part of it, right? It's more obvious in retrospect and it's not a thing that we have a strong sense of now. You know, what's what's non- consensus in crypto? I think just because something's non-conensus doesn't mean that it's good either, right? Obviously, like there's a lot of things that are non- consensus in the sense that there is consensus that they're bad. And you know, I hate to admit like some of those categories are probably on the weaker side today. It's probably pretty obvious. >> Well, your point is there's a Mackenzie quadrant, right? You've got the bad stuff that everybody knows is bad. You've got the good stuff everybody knows is good, but you want to go for the stuff that people think is bad, but actually is very good. And that's a distinct skill to be able to figure that

out. Is it also possible that given that we're on the cusp, we don't know, but you know, the indicators are that clarity could pass that the seemingly bad things can become good things because for the first time we might see people that only did quote shitcoins, memecoins, whatever they're called, I don't want to be derogatory cuz there may be some community value, but they can actually evolve into something with the business model now. >> Yeah. I mean, maybe evolve is one way. Maybe we just need a new crop of projects, right, that design themselves from the ground up to take advantage of what clarity lays as a foundation. If clarity passes, then I think a lot of people are going to go to the drawing board and think about what this enables.

>> Yeah. >> And design completely new projects to be refreshed. Part of this market structure legislation for crypto is distinguishing between tokens that are related to networks and tokens that are related to companies. What is the difference between those two things and why does it need to be written down in law? I mean the the clarity act's over 300 pages I think right so forgive me for glossing it a little bit and oversimplifying what a network here to me means is that there is a wide array of people or institutions that are all interconnecting with each other in some way that the sum total of their interactions is more valuable in this thing than individually right and a

network token is something that is the natural ownership asset for a decentralized marketplace. That's the idea. So there's a decentralized marketplace and if you can own part of that, we call that a network token. So a blockchain is an example of a decentralized network marketplace. It's a marketplace for compute or for storage or for ver verified compute and storage, right? That's what a blockchain is. UniS swap or uh what used to be called Maker is now called Sky. Like these are projects that are also marketplaces. Marketplace for liquidity, marketplaces for for leverage or for borrowing. And because so much of those

things can be fully automated, they can capture value in an automated way. Because they can capture value in an automated way and they can distribute that value even in an automated way. there ought to be an instrument that reflects that reflects the ownership in the captured value and the ownership in the upside of that thing. That's what a network token is. Now, that's you can see how that's similar to an equity asset for a company except there's a key difference. I keep using the word automated. >> A company may have components automated, but it's still under the direct control of its management. whereas a network token might be a part of a decentralized network that doesn't actually have direct controllers, direct management.

So it's just trying to get at this exact distinction about things that can be fully automated and these things that cannot be fully automated. So tying it back to clarity, the big picture is that previously a lot of legitimate players like founders, crypto founders who wanted to build real businesses didn't have the incentives to do that because they were afraid that trying to have a business model for their token would mean they were suddenly classified as a security and then all these other implications. You could have people come after you for the wrong reasons, etc. And so like what does what what's the next step if this quote design space is unlocked?

>> If it's unlocked, people can look and say here are the milestones or the these these are the conditions I need to meet in order to be a network token. >> Mhm. >> And that means that they'll be able to issue new tokens to represent new types of networks and they won't have to worry about the SEC, you know, deciding to classify them as a security. I think we'll see a lot of experimentation by people who find clever ways to fully automate things that could not previously be fully automated. It's framed around automation. That's like really or autonomous autonomous behavior >> behavior without a without a controller.

The way to really think about it is just that computers can do more and more. What's the limit of that? What's the limit of that? >> Mhm. >> Do you want to be able to own a thing that a bunch of computers can do on their own? I think you do. I mean, I feel like abstractions run our lives today. So, I think it's not a bad >> That's why I work here. >> This is probably a really fraught analogy, but I always think back to the Leviathan cover from Thomas Hobbes where it has all these people sort of assembling into one giant like king ruling over the land. That's kind of my visual depiction of a of a network.

>> That's funny. I mean I think the key here to is if you think about crypto blockchains and beyond just from setting a definition perspective automation in your definition is sort of like a way of saying this thing can run without a controller i.e e a manager of the network. But there is another nuance here which is ideally post some good legislation like clarity or something like that passing people can actually still be involved in their projects cuz in the past people abandon their projects thinking they had to show that they're decentralizing.

>> Yeah. I mean one of the key dimensions to define that something's a network token and not uh not a security is whether or not there is a single controller. Mhm. >> It's not hinging around whether people are contributing or not, right? It's not around continuing efforts. >> Yes. >> So, you can keep supporting a thing that's still mostly or fully automated. >> Just because a thing is >> automatic doesn't mean that it uh can't be upgraded or can't be supported or can't be improved or can't have things layered on top of it. And I think every type of developing network constantly needs maintenance from its from its users and from its participants.

>> I mean, you could theoretically have a road map. >> Yeah. Which you couldn't for a very long time, right? And you couldn't you also couldn't have value capture. And I've I've some I mean, something I've really appreciated about the last year in crypto has been a resurgence of interest in revenue, >> right? Is in projects taking revenue. I'm a big fan of revenue. I've said for a while that uh that all the people who said, you know, revenue is like a minus or it's it's it's actually a it's actually baggage, right? It's bad. You don't want revenue. They're confusing many things. Like it's like a combination of cope because if you don't have revenue, well, you know, yeah, the revenue sucks. I don't have revenue, but revenue sucks. Who cares about revenue, right?

>> But it's also it's also >> like the famous line in the show Silicon Valley where they're like, you know, you don't want to make money. You don't want to show that you can make money. Yeah. Yeah. >> Again, I I I get, you know, detractors will make arguments like, well, if you have revenue, then people can value you and or or if you're taking too much revenue, then you're taking capital out of the system that could be used to growth. These are totally reasonable complaints. But the problem is, of course, is if you just defer revenue forever, then that that may be because you have to defer revenue forever because you don't have any pricing power. So that's why I've been a big fan of decoupling pricing from growth spending. Right? So in a network token, I've been a big fan of

do your pricing up front, test your ability to price in the market, collect fees in the market, and validate your ability to price the thing. But then on the other hand, there's this idea of the buy and burn in crypto, right? The buy and burn a pop wellized, well understood idea. revenue. >> I let another one of our GPS was a little bit down on this, >> which is great. Which is great. We argue about these things, but the idea of the buy and burn is that you take revenue in one side, you charge whatever you can get away with in terms of your price. You take that revenue and use it to burn the token, burn a network token and reducing its supply, which helps it appreciate, right? If you have a constant buyer that's constantly buying and retiring, that may lead to price

appreciation for the asset. >> Anti-delationary. >> Yeah. Yeah. It's Yeah. It's it's uh deflationary, you could say. >> Uh and then on the other side, the sort of mirror of the buy and burn is the is the mint the mint and spend >> so to speak. And this is where you are minting tokens out of nowhere to pay for whatever you need for growth or for network activities, right? >> Often when people are critical of buy and burn, what they say is why are you taking in revenue? First of all, you're slowing your growth by charging. And then second, you're taking capital that came in and you're just burning it to appreciate the token instead of spending it on growth. That's a totally reasonable complaint. But one of the magic of tokens that's not really viable

for stocks is that you could keep minting on the other side in a way that is totally decoupled from the fees coming in. >> That's fascinating. So in other words, you can keep pulling in fees and test your test your ability to charge from the market while completely separately scaling your spending in order to facilitate the most growth. And you may end up at a point later where you're, you know, burning much more than you're spending. Yeah. >> Great. Okay. So like you've reached a point of maturity where the defensibility and network effects are strong enough that you can finally take a little bit of value from the market.

But maybe in the early stages you are burning a little bit while you test your pricing, learning about what the market's willing to endure. And then on the other side, you may be inflating actually spending to continue a cycle of growth, right? So you can decouple these things. >> Wow. >> Because in stocks can't be issued continuously to pay like you can't pay an onboarding bonus to Uber drivers or whatever with your stock. Stocks lack this capability to decouple these things to pay for growth. A conventional company has to do it in a very indirect way. They have to sell the equity >> to an investor in a private round to get cash to spend on growth. But this allows

you to circumvent that completely >> because as long as people can actually invest in the token uh then it has a market value which is the thing that you're observing over time as you mint out of one side and burn out of the other side. Just to put a finer point on this, Eddie, um does the token matter here? Like are you collecting fees in stable coins and another sort of in a network token and like what kind of it doesn't matter? Yeah. In your own native currency could be whatever you want, right? Revenue is revenue most control over.

>> Revenue is revenue. You know, does it matter that an American company gets paid in uh you know Brazilian hal or whatever on the other side? Like it doesn't matter, right? I mean there may be an extra swap step you know some sort of fee management capital management foreign exchange style thing up in front but in in the end like revenues revenue is revenue. So, so the receipt of revenue is less important in what form you're receiving it in, but the minting is really that's going to be your own native network token, right? >> Yeah. So, going back to the Clarity Act is experimentation around these types of things. How do we capture value? How do we price the thing? How do we think about from a market's perspective, valuing a token? How do we think about valuation? All these things have all been bouncing around in crypto for some

years now, years. But because we lack the clarity act, we haven't really been in a position for the market to do its experimentation and to learn about what actually works and what doesn't work. I'd love it if a few years from now we found out, you know, which parts of what I just said don't make any sense and which parts are great if if there are any, right? Like I would love to know that, but we have not really experimented in that for reasons that make sense. entrepreneurs don't want to take extreme risk with their project based on a murky interpretation of some old laws before the new law passes. So, I can't wait to see what the market tells us cuz I think of the market as a information producing

>> truthf finding >> machine. It is constantly doing this and it's so interesting sometimes to step back and look at what the things are that the market is willing to spend resources to learn about >> and which which things it finds too scary. >> Yeah. I have two questions here. So, what's really interesting about what you just outlined, I've actually never heard it all together that way, is you're talking about what's super unique about tokens and network tokens, this property they have that's kind of not ever been seen in >> history before. It's a new mechanism, a new mechanic.

>> Similarly though, there is something very traditional about it which is very refreshing to hear which is you're actually asking people, hey, charge, have a business model, >> figure out how to make money, charge fees, like don't just grow with like fake incentives cuz tokens have this quality. Like you actually have to find product market fit this way like instead of just fuss fussing around. >> Absolutely. Yeah. I'm not fully bucking the sort of Silicon Valley stereotypical view that, you know, growth is all that matters. I'm actually agreeing with that. Right. Right. But but but I'm saying that uh you can experiment with where to do pricing and where to create incentives. Basically, if you have your

own token and it's part of a decentralized thing and you can rally your community around this type of thinking, you can engage in essentially like monetary policy style behaviors. >> Yeah. >> Which is not really possible for companies today. Companies don't think of their equity as something that they can experiment with too creatively. Of course, they do through fundraising and things like that, but beyond that, >> it's not this sort of fluid experimental thing. And I just I like something I've learned about markets is that they love liquidity and capital loves like slloshing around to where it's safest and where it can grow. Crypto offers that. It offers a very high freedom to the capital to move around and reallocate itself. Yes.

>> I refuse to believe that the market won't value this eventually. Maybe not right now, but the market will value this. >> Well, then this goes to my question. What would you say to the people whether you agree with this or don't that would argue that crypto's only use case is speculative? Because I think a lot of people think well liquidity is enough for liquidity's sake and the ability to trade on it build derivatives on it do whatever you need perpetually or otherwise is a unique thing that crypto offers and that's where it ends. >> Yeah. I mean, I'd admit to some degree that that has worked for crypto, right?

Crypto has been very much about speculation, but take a step back like what is what is speculation? Speculation is where you're kind of allocating some money around and you're kind of seeing what happens. And I I guess the difference between mere speculation, right, in the sort of casino or gambling sense versus speculation in the capital markets, infrastructure, you know, you know, things that are actually growing and creating value sense. It has a lot to do with the types of things that the capital can flow to. >> Because if the capital can only slosh around inside its little kiddie pool, well then it's going to be speculation because there's nothing concrete that the capital can be anchored to because think of the capital as like liquid

human effort or something liquid like think of it like that a little bit. Then if it's just slloshing around a little pool, then there's no way for it to be absorbed into a project to create more productive efficiency, which is how capital grows. It grows by >> concentrating into like a little machine that like unfolds and then makes something more efficient or more useful or, you know, better priced or faster, more secure, whatever, right? Is like this improvement. >> It needs to be able to connect to the rest of the economy to do that. So, as long as crypto has been walled off, sort of firewalled from the rest of the economy, it's actually kind of obvious why it has failed to take root in things

that are at the full level of productivity improvement that we imagine they could be. Like we used to say years ago, it's still true, is that, you know, like meme coins are legal. It is legal to experiment. Why is it legal? It's legal because it should be very obvious that they're inconsequential and that their price action has little bearing to do with reality and the efforts of an entrepreneur or company, you know, like it's kind of obvious that it's unmed from reality. >> The minute you start talking about getting mored to reality, >> you re-enter a massive, you know, regulatory thorn bush that you need to respect profoundly. The Clarity Act basically creates the conditions that this capital can connect with reality.

And the Genius Act already did part of that. It's gone from like a a thing we were noticing to like a thing we are fully swamped under is all the opportunity that the Genius Act unlocked. >> Yes. With stable coins. >> With stable coins. And that's because it created the very specific and concrete conditions and excitement for how those conditions will develop between financial institutions and real capital related and money related use cases because there's that link now everybody's flooding around it because the real world can connect with the crypto world. So if we get the same thing with clarity then we get maybe hopefully the same outcome where people can say wait a sec now market structure now capital formation around cryptonative assets is possible that's

what I'm hoping the next year will be like >> I think sometimes we put a footnote on stable coins like it's just a passing thing and I really feel we're underelling the opportunity quite frankly like and what the actual phenomenon is like what we are talking about is crypto's first killer app which we talked about in our state of crypto report. Robert, you know this better than anybody, >> but we're this is actually exactly where degree is taking over and can very quickly tip into kind is stable coins are being adopted everywhere and in all the corners of the economy. It's not like crypto insiders, it's tradfi, traditional companies, international players. It's like massive the kind of growth and adoption and primitives we're seeing on what people are doing with it.

And so I just think it's important to highlight that that might be another one of these examples where the the sheer degree of it can manifest something bigger than what we think. >> Stable coins I think are even though they have become a consensus topic in crypto, they've even become >> arguably a consensus topic in fintech. I hear from a lot of yes >> conventional fintech, you know, non-crypto fintexs whatever are talking a lot about stable coins. I mean, the the way I like to give this story, maybe I'll just give like why it's so why they're so impactful is like >> basically when you when you want to move money in one part of the economy to another, whether it's in a developing country or in the United States, >> it has to go through a series of intermediaries. It has to go through a

chain of intermediaries. >> And each of those intermediaries is not optimized for speed and cost. They are optimized for compliance, for adherence to rules as they exist and they are also just kind of barely doing uh as much as is needed to continue to function in that role. Right? That is that is my impression. Whereas what stable coins achieve is not they are not a full endtoend fix of the whole chain. They're not. Instead they solve one specific part of that chain. a very specific part which is literally the moving of yes >> a balance on one side from one address

to a balance on another side. >> And they do that one little piece so fast, >> so cheaply and so securely >> that it is like >> the entire rest of the system is right now trying to >> reconfigure itself around this one little Lego brick. It's like imagine a circuit, you know, there's like this tangled web of stuff and then there's like this one little piece can do like a gadillion per second at like no cost basically.

>> And connecting to what you said earlier about essentially arguing that capital flows is innovation. >> What you're basically describing and you describe the you described those earlier capital flows as waterlike. Yeah. You're describing a system where water flows anywhere and everywhere in a way it can permeate through various boundaries. It can seep through pores. It can break down things through attrition of the rocks. Whatever. It's literally doing that in the financial system and beyond. >> Absolutely. Capital wants to be free. >> Yes. >> And it will do whatever >> information used to want to be.

>> It will it will do whatever it want. It will do whatever it takes to get there. >> And so right now it's reconfiguring itself along these lines. And that can't just be done in one shot. There's many, many, many, many little pieces that need to reconfigure on this specifically to exploit this speed and this savings. >> Yes. >> And what will happen as they shift over and as new companies form and can do the end to end, they will have >> many secondorder consequence improvements because of this. So >> you know add to a bank very simply that it can send and receive stable coins. So you have a balance in the bank >> and you can withdraw it in stable coins and you can deposit with stable coins.

Okay, that's all you do. You just take a regular bank and you add that. Well, then a bunch of things become possible because now that they can send and receive stable coins. Well, now instead of your your balance getting withdrawn from the bank, they could take your balance and make it in its own address or its own wallet. >> Okay. Well, then that means someone else can see your collateral without having to access the bank. >> Mhm. >> Now, that means that someone can lend you something because you could make it possible for for people to see things going in and out of your account. Maybe a simpler example is you can take two different banks and you can connect those two different banks because they both speak stable coin.

>> Yes. >> So now these two different banks can talk in a way that would have taken a bespoke integration. Now they're all connectable with each other. >> Yeah. You can take all kinds of products and you can weave them together and connect them all together as long they can all sort of speak the same language instead of today which is they have to do one by one by one integrations >> and that is >> again not a change in kind it's a change in degree >> yes but a very profound >> but it ends up in a it's all whole new kind qualitative difference >> exactly it becomes that >> in short I think crypto is entering a different phase this is basically exactly related to what we were talking about earlier which is that >> we've alleviated many of the technical constraints right and what like what are

examples of those technical constraints >> one is blockchain throughput as a result of improving consensus algorithms some of the throughput was constrained by consensus algorithms needing to improve >> that whole space has has advanced profoundly right profoundly we have so much more I don't know the latest benchmarks but I suspect hundreds of megabytes per second in consensus or that's just ordering capacity which can represent gigabytes per second of data depending how you depending how you quantify but blockchain consensus has improved radically uh snark design and the the applications of zero knowledge have improved radically or again orders of magnitude over the last years that

we've been working on this things will continue to advance and it's important that they do but like four or five years ago when we thought that the constraints were purely technical and research church that became a big focus for us and it remains a big focus. I think it will be a constraint over time just because of where the space is today. I think we think of the constraints as product design >> as regulatory. >> Yeah. >> And I think of as adapting to the market where it is like that's maybe part of product design but it's like >> all the crypto enthusiasts who just wanted to own crypto assets. They're already technical do stuff. They have everything they need.

>> Yeah. >> And they have had everything they've need needed for a couple years now. If you do the extra work and you write a little bit of software, you can run your whole life basically out of out of crypto. You can't I do because that's kind of my job is to suffer through these things. So I definitely do basically everything. >> But that's not what we're in crypto for. or in crypto to reach the mainstream to completely modernize how the entire world, normal people, the most sophisticated institutions, the cipher punks, revolutionize how everybody handles finance.

>> Yep. >> And handles money and handles capital, which isn't going away. >> Yeah. >> And so, uh, we are short of that goal. And so I think the entire industry is trying to adapt and figure out what the constraints are because there's just no way that it will remain as it has. I mean it already is adapting. So >> it's exciting times. >> Yeah. I mean so that's like deep in the weeds on how network token business models work and legislation and all that. I would really love to use this opportunity to understand you better Eddie like why this excites you in particular. why any of this excites you, you know, where you come from as a

person. When I think about A16Z crypto, the culture of it is very much set by its founder, Chris Dixon, who everybody regards as a philosopher given his degree in philosophy and his continued uh interests in that. And one thing that excites me about your elevation to the post of GP is that I see you very much in that same vein that you are steeped in philosophy always have been have a degree in it and uh that's why at every offsite I make my beline to you to get more reading recommendations and understand what is the latest thing on your mind. Um, and I'd love to share that sort of uh, intellectual enthusiasm that you have with the rest of our audience here so they can understand,

you know, the kind of person that you are and where you come from. >> By the way, I would call him more of a philosophy engineer, too. That's like his >> Yeah, I I I accept this. I accept this. I accept this label, Robert. I I'll accept it with a caveat, though, is that I do find it can be a little bit cringe to me a little bit because it's often unclear what people mean when they say this, right? Cuz sometimes they just mean uh philosophyish person as like a vague noner. >> A vague. Yeah. Yeah. Yeah. Maybe something like that. A non like a hamlet type just like thinking about thinking about thinking.

>> Yes. Which which is cringe. >> The excessive ponderousness is like the worst. >> Thank you for being self-aware. This is what I love about you though. You're actually self about that cringe factor. >> You're defeating your own point. Clearly you've thought through this too much. >> Exactly. Well, but in a good way. >> He's selfaware. >> What I think people mean by that with the the philosopher angle is just like really trying to understand what it means in the most basic terms like trying to root it as deeply as we can in all of reality a little bit. Okay. Like this conversation we we just had a little bit about like the network tokens and like value capture and all that.

This type of thinking becomes a lot clearer when you try to think about what the market is and what's happening in the market. So, let me let me just say like a couple things about how I think about the market as a means of introducing myself, Robert, because you actually asked about me, but I hate talking about myself because I see myself as a conduit for the market, right? I want to be a conduit for the market because it's so >> Oh, muse of capitalism. Speak for me. >> Yeah, I want to understand it because it's so it's teaching us so much. When we talked about network tokens, we talked about value capture. Value capture is a thing that the market is obsessed with. Now, here's a here's a very unconventional opinion. Okay. Okay.

Okay. Very few people very few people agree with this, but this is like a fact to me. >> The reason why capitalists and venture capitalists and so many and like business people and entrepreneurs are so obsessed with value capture is not because it's like serving their greed at every turn. Not because it's like, you know, how I get rich, whatever. It's actually because value capture is incredibly difficult >> and the market is leaking its value at an unbelievable pace at all times. >> Almost all the value that's created in capitalism is leaking at full speed.

There's this idea something called shimperian profits. >> Okay, shiterian profits. There's this great 2004 paper by William Nordhouse that's very readable, really nice, and there's a there's a whole literature around this that whenever a business improves its productivity, makes products better, makes products cheaper, you know, whatever it does better, what percentage of the improvement, so to speak, its fundamental improvement in productivity is captured by it in profits? >> Mhm. Well, according to Nord House, what percentage would you guess of the surplus, this sort of improvement in value is captured by the company versus captured by everyone else, everyone

else? >> I would guess very small only because you talked about this capitalist. I led us to the answer. I led us to the answer. But >> the leaky capitalism, >> according to Nord, and I'm sure this has changed a little bit over time and varies from sector to sector, but according to Nordouse, 97.8% 8% of the value is externalized. >> Wow, that's significantly wow. >> Very little of the value is captured by the company. Now, >> also a big narrative violation, by the way. >> A huge narrative violation, right? Well, certainly in areas where where technology has the ability to like crash prices, right? I mean, that would make a lot of sense.

>> Of course, and and and replace things that are more expensive and make things last longer and forego the need to even purchase this thing. Capitalism does this all the time. So take the fact that the value is leaking all the time and which means it's very hard to keep the value in. Okay. Okay. The reason why the value is leaking is one competition right is like if the obvious one is that if my company's making things better and faster and cheaper I want to take all that from you your company so I lower the price and no one's going to buy from you and now you lower the and we kind of go back and forth and I raise money to invest in even better system and >> yeah only the consumers benefit.

>> The consumers benefit. So that's anal a very obvious place where the value is leaking. >> And by the way, every price that's posted is a an advertisement for other competitors to jump in. If you're charging a high price and a competitor sees that, that's just like a blinking blaring red signal sign for them to jump in. >> The entire market is sharing this information at all times to encourage everyone to compete with everyone else to take all the value out. >> It is the beauty of market capitalism. Yeah, >> it's constantly leaking. So So why is there such an obsession on value capture? cuz first it's rare and isn't the norm. That's usually not what happens. In the end, all the benefits diffuse. Whether it's new knowledge, whether it's the actual surplus from the investment, they're it's constantly leaking. Like think of capitalism as

this like ship and it's just like sinking all the time, but we're building it like faster than it's sinking. Like it's actually in a runaway feedback loop where it's growing and leaking at an accelerating pace. It's leaking faster and faster and it's growing faster and faster. It's a perma boom, perma crisis at all times. And the second reason why people are so preoccupied with value capture is because value capture is very visible, very legible. Yes. Because you can see it in the company, right? You see profits, you see the costs, it's on the accounting sheet. Like it's the easiest thing to track ever. Whereas the surplus you created for your consumers, it's almost impossible to even measure.

>> Yes. the extra extra work you'd have to do to measure that I gave you a new good that's way better three other things that you used to have to buy you don't even have to buy anymore and this thing lasts longer and whatever whatever like all the like that's very hard to quantify that really hard to quantify I mean how do you quantify that like you bought a new thing and you love it okay you love it cost 15 bucks but you love it how who is taking the accounting like literally who is measuring that you got like you would have paid paid 200. >> Yeah.

>> But you only had to pay 20. No one's accounting for that. So in my view, the vast majority of the benefit is constantly exploding out of it. And the struggle of the entrepreneur is to struggle to keep enough of the benefit inside that they can keep feeding the machine. >> Yes. Capture enough value >> because if it bleeds out too much, it just dies. Right. So it needs to be able to keep its blood inside of it. >> Right. And that is an incredible struggle because it's not just that you're people think of it wrongly like you're fighting with the consumer. No, it's you versus like every other company and every other company's, you know, fighting and trying to like grapple with you and stab you and take your blood out

and uh and and you're trying to keep it in in your body. That's what it is to be a company in in in capitalism. So going back to to me, Robert >> philosopher, >> it's just it's just like the market is not a thing that seeks equilibrium. It's a thing that is constantly in an accelerating feedback loop where there are like accelerating and decelerating factors impinging on its constant sort of barely controlled explosion. Looking at the world like that, that's not very technical and specific from an explanatory angle. But if you bury that in the back of your mind and you return to that, then when you do get into the technical details of how things work, you can sort of reorient yourself

against the sort of frame and allow other things to kind of click into place. Like many people have said things like this, like you know, inverting the frame all the time, like you know, the Jacobe thing like invert, always invert, whatever, >> always invert. Yeah. >> Like the these sets of tools to use the Chris Dixon phrase like mental models, right? He's always about these mental models. Having a great toolkit of mental models is what a generalist does. It's also what a philosopher does. >> Yes. >> Right. And that's how you can encounter totally new domains, >> many many new domains and very quickly get to a just a couple clicks deeper than an average >> Yes.

>> person vantage point because that is I think the ideal >> role and the ideal specification I think of a venture capitalist is not to go deep and be the deepest expert on every single thing. You can't possibly That's the role of the founder. But to be a competent intellectual partner and sparring partner for founders so they can discover you and you can discover them and you can make them a little wider and they can make you a little deeper. Right. >> It's the perfect distillation. >> So you've listed, you know, one person here, Nord House, as uh his ideas being influential to you, but who who do you count among your greatest influences beyond him? Like if you were to Yeah.

Think through your intellectual upbringing, who would you cite among the pantheon? >> And it could be people you also used to disagree with and further form your view. >> Absolutely. That's a really good point. That's especially good >> who I disagree with. >> You can't dislodge them from your brain. >> Oh, that's a great that's a great one. I mean, so top of mind for me is like some of Lan's ideas, Nick Lan's ideas. Big fan of. Y >> the thinking about feedback loops and cybernetics and artificial intelligence and capitalism being the same thing.

>> Very big fan. I particularly like Vincent Lei's new book >> about Nick Land. I quite like Sub Vincent. I just saw him on a podcast recently. Very very very good. Very interesting. Love his stuff. In a similar vein is uh Markx, right? I mean that's kind of answering your question. Some people remark that Karl Marx was like the earliest and best cybernetician specifically because he was obsessed with these feedback loops as part of like his you know >> capital circuit very famous material dialectics is kind of the proc like this kind of thing you ask like kind of love hate like yes >> Markx is like ridicul like labor theory of value humiliatingly dumb like so many things that he that he missed but uh

still some core ideas like almost for comedic value like Xjek's sort traditionalist or you know I forget what he has sometimes called himself like a conservative Marxist or something hilarious ridiculous. There's some hilarious clip I love of Xjek saying how much he loves alienation >> like cuz he wants to be left alone at his house. >> Yeah. you know, and just like not deal with human beings, whatever, which is like obviously alienation is this like traumatic thing in the Marxist frame, but like I think in a contemporary frame, it's actually almost welcome. Like we kind of welcome our ability to sort of not have to engage with other people as a result of the markets intermediating us from different people all the time. I distinctly remember the first time I read through like summaries

and, you know, compilations of like Adam Smith and David Ricardo. >> Yeah. Yeah. >> And like talking about comparative advantage, blowing my mind, right? And not something I thought of before, right? Like just like so counterintuitive, so interesting to lodge in the back of your mind. Always thinking about comparative advantage. specifically with regard to how what it implies about the optimal allocation of resources in complex economies. For example, like this is where I go into I've told you this phrase before like I've told Robert this phrase before is like >> getting a little schizoidal about things. Okay?

>> Right? Remember this Robert? I'm going to say I'm going to say okay >> say it. >> Hit me. >> This is obviously highly reductionistic. Okay? But you think about schizotypal thinking versus autistic thinking. This is totally not scientific what I'm saying. They're metaphorical labels, >> but schizotypoal thinking as like everything is connected, >> and autistic type thinking as everything is distinct and separated, >> right? These two extremes, >> right? What's the stereotypical asberian or autistic person? No, these two things are like totally different. They're totally different, you know, whatever, right? like you know like that type of like you know being able to understand like the pitches of different notes and exact machines and this version of this thing whatever

>> everything is separate and then schizotypal thinking >> everything's connected like this is this and this is and they're the same thing and like you know this kind of like it's all it's all part of one plan whatever that kind of thinking >> to the same vein you know the debate today about AI is very much about the replacement of the human >> right that's like a thing That's a thing of great anxiety. >> But take comparative advantage thinking >> like we're just I was just saying like comparative advantage. >> If you've really lodged comparative advantage into the back of your mind, >> it should be obvious that even if artificial intelligence exceeds human capabilities in specific domains, there will remain work for human beings

to do that even if human beings are >> less efficient than the most efficient AI. Y >> it makes a lot of sense to allocate that to them as opposed to machines because of you know some differences in their capability >> or the comparative advantage of human beings. >> Yeah. So so that can only occur to you if you lodge these types of ideas into the back of your mind >> and you're always thinking about them like they're just kind of >> Yeah. >> erupting from things schizotypally. So I think of my reasoning style as very schizotypal.

>> I love that. I was relating. Do you relate to that one too, Robert? Or are you on the other other camp? Because I was relating to this gets so typical. >> I'm a connectionist through and through. I'm always Yeah, I'm just making weird analogies. I think that's more typists tend to be a little bit more >> schizoypal. You kind of have to be. It's also how you find meaning because if you're not going to be a specialist very deep, this would be like the autistic end of the two models you outlined. You almost have to find meaning by connecting things and and seeing that you know at park at Xerox Park we used to call this not just T-shaped people who are both broad and deep but it's like a comb. You have one whole comb and each of these folks are all the areas of

interest you go in. So you're in the comb and that was a unique kind of profile actually. It's a funny thing but it's actually they did like kind of an informal study of who are the people cuz you know it had a reputation of being repeat innovation like they invented a lot of things. That was the type of person that was there. It was like a comb shaped person. Yeah. Like very skitso typo. >> I'll also say like Hayek is like and his whole lineage of ideas. I hope like my articulation of the market like it should sound that way like to anybody. >> I actually we do want to hear a little bit about your evolution to who you became who you are from the career side.

>> Yeah. I I loved music. I always thought I'd be a musician. I used to play a lot of guitar and a lot of drums. Actually, >> you know, I was originally when I went to college, I was originally accepted as a music major. >> What? I know. Did you know this? >> I did not know this. >> I also came in having taken um like, you know, AP economics and loved it. Loved it. So, I took some economics courses and it was very soon after that I switched over to philosophy and economics. >> Oh, so those are your majors. Actually, that actually now makes perfect sense. Like you're one of the few people whose majors match your personality.

It's like you came out of the system molded the way you meant or you molded it the way you >> I think I was like one or two classes short of like actually an economics major but like I definitely had a had a minor whatever. I love music but I have to admit like I was actually last week like lamenting >> that I don't I really don't have the time or don't think that much about music anymore. Yeah. I think the way music is produced and consumed now has just changed a lot. And I guess I kind of deliberately kind of gave it up because at least the way I used to like to listen. There was nothing as painful as like being out of the loop. Like being half in the loop if that mean like I know what you mean.

>> What I mean by that is like >> I love to have a comprehensive view of everything. Like I wanted to know all the new releases, all the new like if I wanted I loved the feeling of just the wave of new stuff and just whenever I there was like a new thing I was anxious like I can't wait to hear I just want to hear it. I always put it on and just be like absorbing the new thing and thinking about it and sort of logging it in my mind and searching my mind for my reaction to it. How is this making me feel? What does this mean? What does this mean for the history of music? You know what I mean? All those types of things. And doing a half-ass job of that is brutal because you're constantly reminded of >> that your view is incomplete. Basically,

it's incomplete or you missed a reference to something. I don't know, it's too painful. So, I very much almost intentionally kind of like gave >> By the way, this would be ideal for agents cuz I've been actually trying to make some agents that can do this with literature for me in a different vein. Like, you could set up a bunch of agents that literally do this thinking for you. >> Possibly. But I guess I think the joy of music is in consuming it synchronously. >> Yeah. >> So to speak to use computer language, right? Whenever I watch like YouTube videos or audio listen to audio books, which I do all the time.

>> Yeah. Me too. >> I always listen at one and a half to 2x speed. >> Mhm. >> Music is the only thing you can't do that to. You got to listen to music 1 second per second. >> Yeah. One to one in the moment. So how did you go from being a music person in college philosophy and economics and then I actually don't know where you went next because all I know is that before you came to A6NC crypto you were doing data science at Netflix. So what kind of took you on this journey? >> Well I guess I guess just in brief the more economics I was doing the more I was veering into what was very trendy at the time which was behavioral economics.

Yeah very trendy >> common and terskies stuff. >> Yeah. Very very trendy. And so I I joined a behavioral economics lab which was excellent. Such an enlightening experience. But needless to say, one of the bottlenecks for a behavioral economics lab is the analyzing of experimental data. We're running experiments all the time and you need to be doing statist statistical analysis. So the PI at the lab I worked at needed more. So he told me, go take a computer science class so you can actually like >> do better on the analysis. And so I took I took one and it was like a mind-blowing experience which I I want to say kind of a brief funny remark I guess is that >> even when I was in college the financial crisis happening sort of toward the tail end and then the dotcom bubble sort of

in the beginning end and also my upbringing in Miami meant that the image people had imbued in me of computer science was that it was kind of a glorified IT job. When I say IT job I mean like >> that it was like making sure people's computers were working. Not to denigrate it cuz it's incredibly valuable, but just that's how people talked about it. And I had worked at like a retail computer shop summers and stuff, like basically the equivalent of a Best Buy sort of. So I kind of avoided computer science cuz I incorrectly thought that this is like what it was, right? Which is ridiculous in retrospect.

>> And then I took this computer science course and it just kind of melted my brain completely. I was just I could not believe how cool it was. Oh my god, I so many stories of like seeing the professor teaching sorting algorithms by like instructing students to move according to like the rules of different sorting algorithms like students in a line. >> Yeah. >> And they had to like sort out, you know, B like here's a merge sword, here's a quick sort like at the end, right? Here's insertion sort. Here's a bubble sword. Right. >> The fact that you could use abstract rules and that that that the work of computer science was in abstractions. It wasn't in in the weeds of computers. Of course, it can be, but it's has to do with thinking systematically.

>> Yes, >> it was incredible. I remember that summer the Department of Defense did a demo. This is in 2009, a demo regarding computer vision. >> Mhm. >> That was uh taking security camera footage at an airport and then trying to classify people in the airport based on the suspiciousness of what they were doing. >> Yeah. So we would draw like a box around them and like this person's not suspicious and then like someone stops and starts like rifling around their bags and it was like suspicion increasing, right? It was like literally like the color of the bounding box would like become blue to more red when they're more suspicious.

>> I remember thinking it was a totally mind-blowing idea that a computer could develop a belief about what suspicious meant. >> Yes. Now we that we kind of take that for granted right now a little bit that they can have subjective views but at that time I was like I cannot understand how a computer can have an opinion about what suspicious means. I was like unable to grasp like wrestle with this idea and it meant I was utterly compelled to switch basically to computer science spend the entire last year and a half of my undergrad on only computer science and then stay and do a master's degree in computer science. And there's like I could only I could only think about

this. My goal was to understand enough >> that I could at least have a glimmer of a sense of what it would mean for a computer to have an opinion. >> Yes. that like this image is a suspicious person or this is an anomalous event or whatever and yeah so that's that's how I got into computer science. >> Did you ever deliver that helpful statistical analysis to no I stayed working at that lab yeah I stayed and I did a bunch of stuff with them the whole time I was at my master doing my masters. It was awesome. There was a really interesting point because it was philosophy and economics. It was so crazy. I was taking a advanced class in statistics.

>> Mhm. And at the same time, I was taking a philosophy class. >> I believe it was dual listed with the math department called basian statistics and causal inference. >> Of course, because that makes perfect. It's a mathematical problem. >> Yeah. And it was as much it was taught by a philosophy professor who happened to have a great math background. >> And then I was intersecting this of course with like computers having beliefs. For a computer, of course, especially at that time, you couch beliefs in statistical claims. basically like >> yes >> it's trying to reason about the likelihood of things based on its prior probabilities of other things and it's very much a statistical claim for a machine to have a belief right and so I remember taking both these classes at the same time and just thinking like

>> everything's coming together all these things are interconnected being part ultra skitsoidal like I was just like this is insane yeah so that's how that's how I got to computer science >> they do connect though and I think it's actually I think a big reason why people are in crypto A lot of people ask me like how can you go to covering just crypto after you covered like everything else bio fintech you know natural language like physics whatever and it's like because crypto is everything it connects all these things economics philosophy psychology like you know all these mechanics super interesting >> yeah it does yeah and you know around that time was when the Bitcoin paper came out I was actually yeah I was in the middle of my master's degree when

people really started talking about it >> so it was actually an object of interest like to professors and like we would talk about it. I got very much into it around that time period. I mean there wasn't a lot to get into. It was like Bitcoin, you know, you buy it or sell it, you know? I mean, whatever, right? But but still what we now know of as Nakamoto consensus and this idea of networks that can be Byzantine fall tolerant, right? Tolerant to internal disagreements about the state of the network from different participants in the network. >> Yeah. >> It was a very very interesting family of ideas. So I got into it around then.

When I moved to the bay, I wanted to be a software engineer. I wanted to write statistical Python, you know, that was like what I really wanted to do. >> And uh all those jobs are in the bay. So I moved to the bay, worked at a startup, learned a ton, just doing a lot of social network analysis at the time >> on uh what is now X, right? And and and stuff like that. >> But all my friends at the time were all crypto people or Bitcoin people. And of course, crypto has evolved so much. It's kind of hard to believe it's been so long. It's been like 15 years >> uh since then. You've talked about how you had your entree into crypto and into computer science, but how did you go from there and then you made some stops

in between at Facebook and Netflix before you arrived here? So just >> bring us up. >> Yeah, I mean in in brief like at the time in early the early tens, the growth of social networks in particular, but the growth of the web and all the businesses built on the web meant that now many many many companies had a lot more data to store. So there was this huge anxiety at the time about big data. >> Oh yeah, I remember big data. Oh god, I haven't even heard that phrase in over 10 years. >> I know. I know. All these cool technologies were built around the time around this time to deal with big data Hadoop and Spark and yeah uh Presto and all this stuff. So I was very much in that world I would say in the

combination of like what became data science, >> data engineering, distributed systems engineering trying to figure out how to help these companies >> absorb as much data as they could and do interesting things with it and do very interesting analyses. It's funny I say with only a little bit of lamentation in my voice is that that that has basically been solved like that whole data data engineer like you know you can do incredible stuff today with >> just a subscription that would have taken like a whole team 10 10 years ago to figure out.

>> So it's kind of done and so of course all the people I know from that era uh myself included don't think about that at all anymore. I around that time though 20 2018 I was so interested in crypto and I really felt like crypto was the place to go in particular because I was hearing about smart contracts. Yeah. >> Right. And that was like a whole other level of thing >> and I looked around. I was talking with a lot of people and I met the A16Z team and I spent a bunch of time with with Ali and with with some of the team members at that time and then Chris and you know decided to join and the thought was it would be helpful to have somebody with kind of a data and statistical you know data science background

>> who is also from a software engineering background >> to support investing. Now it's a little bit of a bigger team. It has been uh quite a ride the last seven years. So one thing is when I think of those early days when you joined it feels like a lot of the conversations on the crypto team. Yes there were interesting ideas around the future of media and different things that could evolve later but it feels like a lot of the early conversations were all constraint based you know like here's what you can and can't do >> and then suddenly it seems like I feel like the first year I joined the crypto team full-time it was all data availability and only this and only that and throughput and transaction limits and da da da and I feel like we don't even talk about those things anymore.

>> Yeah. I think I speak for many people in crypto when I say we believed for a long time that the space was limited by technical constraints. >> Yes. >> And it was without solving those technical constraints, many things that we've wanted to happen or have happened couldn't have happened. But I think something and I think this is part of why in certain areas of crypto people are pretty bummed is that >> the technical constraints lifting has not unleashed a lot of the innovation that we wanted to to to >> to unleash. Some of it I genuinely believe is constrained by regulatory issues which like like the clarity act which I believe >> others I think have been constrained by

you know honestly a little bit of a lack of imagination where people have been trying to concentrate on what seems to be working. There is so much interesting stuff happening now in particular as a result of AI that the threshold the bar that something needs to exceed to be worth taking a risk on is high. I mean, think of it like this is like it's really obvious there's going to be some great stuff in AI. >> Oh, yeah. >> Incredibly obvious. And there there there already is and there will be more. >> That just raises the bar for the whatever idea in crypto.

>> What do you mean by raises? >> Well, just you're a founder. You can choose. Should I go to AI and do some amazing thing or should I choose crypto and do this other thing that raises the standard for what you might even be willing to endeavor to risk doing in crypto. And so having evidence that some things have worked or some patterns you can match against makes it more attractive. So I think in crypto the releasing of the technical constraints has not quite led to the explosion that we thought could happen. >> But it often it's a matter of timing and certain things just take a while to unfold. For example, in AI, like the AI takeover that we've seen has been since when the very end

>> chat GPT3 chat GPT. >> Yeah. Like maybe a year after that, >> which was late 2022. >> Yeah. >> Right. Kind of mind-blowing to think that we're already three and a half years in, >> right? But many of the things that people are talking about today are ideas that resurfaced or surfaced late 2022, early 2023, and they've been given enough time to kind of unfold. Maybe, let me put it in this funny way. Is anything that we've seen today in AI, which is amazing, mind-blowing, and obsession, is anything that we've seen totally unforeseeable given what you knew in 2023, early 2023? I don't I don't think so.

>> No, I don't think so either. If anything, it's not any differences of kind and it's only a matter of a difference of degree where the extent to which the speed and the extent is the surprise, but not the difference of kind. >> And I think and I think everything is basically a difference of degree. >> Yeah, that's true. Actually, I'm I'm in that category. >> It's all just degrees cranking up and cranking and cranking until it just kind of looks a little bit different. Like >> I'm I'm with you. That's like an abundant maximalist mindset. >> The birds are just dinosaurs with feathers, you know, whatever, right? like it's all the same thing. Like it's just crank crank it more. >> It's on a continuum.

>> There's no one specific discrete point. >> And so uh I think there are too many ideas in the graveyard of crypto >> uh that have been stymied by too many very intense blockers. >> Yeah. >> To conclude that the space is done. >> Mhm. >> In fact, some of the cranks have been really kept cranking. >> Yes. Yes, the infrastructural constraints, stable coin popularity, regulatory adaptation, maybe a second new law. We've already had one. All those things, every time a new thing kind of unfolds, it affords an opportunity for a prior line of thinking

to be resurrected. >> That's absolutely right. And that is kind of how I'm looking at it is like everything is either cranking forward or something's revitalized or whatever. Whatever. >> It should be self-evident that with the improvements in automation that come from AI >> accelerating every aspect of maybe most tasks, right? There's going to be more commerce. There's going to be more management of capital. Yeah. There's going to be more intense demands on the allocation of capital and resources.

>> I could say a hundred things that are obvious entailments, but they're all going to touch finance. If they touch finance, if they touch money, if they touch capital, then they're probably going to have to touch crypto. And you could, of course, of course, of course, you could build this on a conventional system. >> Mhm. And I think a lot of people have a lot of anxieties about being reintermediated by agents, right? Basically, in one frame, you can disintermediate yourself from other sources like whether it's like news or social networks or vendors, commerce, you can say, "I don't care about them. I'm going to trust my agent

who works for me to decide what to what to get from me or to be my intermediary." Right? So you are in some sense disintermediating yourself because now your representative works directly for you. >> Yeah. >> Instead of having to rely on the third party, but you're also reintermediating yourself because you used to have a direct relationship with the adversarial third party, maybe semi-adversial third party, and now you have this trusted agent that's in between you and the third thing. >> So in some sense it's intermediating, in some sense it's disintermediating.

And the right way to deal with this problem is to think like okay what what are the ways I can constrain or I can observe or I can verify the behavior of the agent working on my behalf and that's financial constraintsformational constraints and as AI becomes more powerful it becomes better able to circumvent constraints. >> Yeah. So how do we truly constrain it? >> Well cryptography is the answer. I I really think cryptography for identity, cryptography for authentication, cryptography for money visav blockchains, uh for verification of compute, for verification of programs.

There's so many layers that you're going to need to bring in to adequately constrain the AI. So, I really struggle to see a future where >> uh if you are preoccupied at all by the prospect of reintermediating yourself by trusting an agent, >> Mhm. trusting an in AI where you wouldn't want to bring along a toolkit of things to alleviate some of the trust that you give to it. >> That's fantastic >> in many dimensions. So I I see them as complimentary. Well, of course, we're at the exuberant adoption phase of AI where like >> everything's good. the AI companies are competing to give us more subsidized credits and like people are spending like 5,000 bucks a day on tokens but only paying 200 bucks a month because

like the the companies are raising rapid capital like to use the Chris Dixonism, right? We're at the attract >> versus the extract phase >> versus the extract. We're in the attract phase, not the extract phase. >> Okay. Well, what happens during the extract phase? >> Yeah, that's exactly where crypto is going to come in. >> And and I think it's just a complete no-brainer. I think it's a complete no-brainer. If anybody has a story for how that plays out without crypto, would love to hear it, but I'm I don't see it. >> Yeah, I completely agree. You've actually written a lot about this too already in some dimensions um like proof of personhood and various things, but I it plays out every >> We'll see which one things work and which don't. I don't know. Right. But there will need to be constraints placed at different parts of the just to ensure

that it performs what the user desires. >> Yes. >> Uh and what serves the market best. That's fantastic. >> What's your favorite idea that was relegated to the dust bin that you think is ripe for resurrection? >> I'm cheating a little bit in my answer, but the the idea of the network token is is is the one. >> It's the one for me. The idea of an asset that is not a company, but can capture value and can be communityowned and controlled without a single intermediary in the middle, a single human intermediary in the middle. That's the most interesting one. There's tons of other interesting ones, but that is like that is the one. And then, you know, other nearby ideas that I've just I've always loved but are being

developed, right, is the idea of a self-custodial bank. It's pretty easy to custody your own stable coins. It's a little harder, but still possible to add privacy to it to the mix through the use of certain protocols. there's not that much more needed to go fully end to end and to really have >> a bank so to speak that is under your direct control. I think that's really really interesting and I think it's pretty obvious when you're self-custodial over your assets and you have an AI agent that works for you then the AI agent can control your assets and that becomes really interesting. I mean, is it not self-evident that people will just trust the diligence and research of

their uh gigab brain AI agent >> in the managing of their finances? I think you got to be insane to conclude that they won't. >> I mean, apparently you don't believe that when it comes to music, but you're not just kidding. Like, >> yeah. No, I agree with you. >> Yeah. No, it's true. No, it's true. I mean, it's true. It's true. A weird interpretation of what Son is saying is like you could almost have like an AI agent that like listens to your music for you. >> Yes. >> And just tells you, >> by the way, I loved this album. Don't worry about it. You're busy working, but I liked it.

>> Does that Does that relieve you at all? >> That actually that actually is kind of what I think. I mean, isn't that what we do with our editorial when we just like distill people's voice into like a single markdown file and then say this is what you're using to then generate this copy? I mean, it's not that different than that. Except in your case, it's giving you that satisfaction, the psychological pill of I don't need to go for completion. My agent can provide the gathering and the completion and then I can tune what to listen to, which could actually solve that. >> Yeah. There's this Xjek anecdote about the Tibetan prayer wheel. Heard this >> Yeah. So, you put a prayer on the prayer wheel and you crank it >> and it's praying for you basically like because it's it's turning the scroll.

It's turning the scroll as if it was being read. Well, if you just hook that thing up, you know, you can say a second. >> Yeah. >> Yeah. You'll get so many prayers per second. You know, imagine how many albums I can enjoy as long as I just let the AI do it for me. >> I mean, speaking of that, you mentioned having comparative advantages. Is there a comparative advantage that you see humans having or what what is one area where humans can remain uh ahead? Well, there's this uh great little tweet I saw by this guy who makes it has this really cool AI generated game like in the browser about killing zombies. He does a lot of AI gamedev and he just tries to do as much as he can with AI basically

uh and test its limits and he highlights like all these different areas. He says like you know 2D 2D art AI is like basically at par with like human artist 3D human specialist way better game engine development AI agent is the better story authoring human far better game feel and like you know the sort of visceral experience of the game human a thousand miles ahead right so like it's in other words it's a spiky surface Mhm.

>> What what human beings are better at versus what machines are better at. That's not something that we talk enough about at a wide level, like a wide cultural level, >> and it's changing too quickly to have a grasp of like this one thing is what the humans are better at. This one thing is what the machines are better at. That takes a while to develop the language around. >> Yeah. So the way to answer your question, Robert, is it seems like there's a lot of things like right now >> machines are arguably their best when it comes to coding a system that is according to spec and even brainstorming about the right spec. They're very good at that actually. They're they're very good. What they're maybe not as good at

is like the feel of a thing, the coherence of a large interconnected world narratively or even like physically coherence at like a very large scale. You know, some people like to say taste which I'm like a little contorting some people say which like I'm a little going there and I was like that word is bad. >> Well, I say that with a caveat because I think I obviously I get what people are saying when they say that but I I I wouldn't draw the line here. here. I don't think the human human being should die on that hill, right? Is like is like the taste hill.

>> I don't know. I've seen some pretty good stuff. So, it's >> And I've also seen bad stuff with very terrible taste from plenty of humans. I >> think the median human has horrible taste, by the way. So, I don't know. >> They're not allow where we hang our hat on that. I don't think that's a solid thing to hang your hat on. So to answer your question, Robert, like it's it's um I think that we don't really have a deep enough understanding or enough direct exposure and experience to have a crisp view of what the humans are better at and worse at. But I think it will remain true that humans are going to be a little bit more adaptable, a little bit better at certain classes of things, maybe complex bundles of things. And uh we'll find out what that is.

>> So just to wrap up, we've we've heard your story, your evolution. You've been very humble but very self-aware which is really nice and not being annoyingly ponderous but in the most interesting way. >> What do you do for fun Eddie? What are your hobbies and interests that you just kind of do on the side? >> Well, my number one interest right now is definitely my little son who's so sweet. Oh my god, he's so cute. >> He's amazing. I love him so much. >> He's ridiculously cute. >> Yes, he is. I do happen to find a little bit of time now and then to play video games with friends like my old friends. We've had like a like a group of ours Discord server for 10 years now, believe it or not. Literally a 10 year 10-y old Discord.

>> Video game world today is very interesting because we are really in the midst of a indie developer renaissance. >> Yeah. >> Cuz the cost of making very creative, weird games that would never have existed before has gone to zero and has been this way for a couple years now. So, I love trying like random, you know, little indie game. Love that. Play those with my friends. We like what some people now call friend slop. >> What's that? I've never heard of that. >> It's like co-op games that where you and your friends play together. Like >> Peak is a great one. There's a bunch of other great ones. I'm really into shooting sporting clays.

>> Mhm. >> Really into that lately. My brother and my dad are coming up soon. We're going to go shoot sporting clays >> again. I used to have a lot of side projects at once, but honestly, like so much of my energy is now living out my fantasy of being able to build every software idea I've ever had. >> Yeah. >> Right. I mean, it's kind of it's honestly insane. >> Is that really happening for you? >> Yeah. No, honestly. Yeah. I mean, I'm not going to we're not going to turn this into an episode of me talking about like AI stuff, but you know, just like about like personal AI stuff, but >> it's true. It all works. How much of your time is spent on like, you know, traditional corpo apps versus like Eddie custom tailor made bespoke homebrew apps?

>> It's honestly like 50/50. >> Wow. >> I spend a lot of time on goofy fun stuff. I have a thing right now that like I can give it a voice memo and it will make an app that deploys on my internal network and is just connected with all my other apps and my my personal. It's like so it's so so good. Everybody has that. It's like that's like wow right now. in like two months that'll be like the least interesting thing ever. So >> yeah, but I I I love spending time on things like that. >> Is there a holy grail or something you want to build that you're like, man, I just want to build this one thing? >> What's just out of reach for you? >> The truth is I don't know if anything is. I think >> Oh, that's a good time.

>> I think it's just about I think it's just having time. >> No more excuses then. >> It's just having time. There are no excuses. It's just just it's it's all just prioritization. >> Yeah, >> I have like a server rack in my closet that has like I think 200 terabytes of capacity. >> Oh my god, that's not scary. It is, it does create a lot of heat, but like I do a lot of data hoarding like books and you know music and stuff that I like like to keep copies of cuz no one's going to take away all this beautiful stuff from me, right? >> Uh and that is so highly automated and so beautiful now. Oh wow. It's so crazy.

It's crazy what you can do. You can have a whole thing where >> every time you watch a video, you can have it downloaded automatically and stored forever. I mean, you could have a thing where every time you listen to a song, a single song, it will go find the whole discoraphy >> Yeah. >> of that artist and store it forever. >> Yeah. I I don't know about you guys, but I feel um that is where I feel overwhelmed and I miss having like scrapbooks and photo albums. I feel like this digital abundance on this front is exhausting to me because I don't have the same curated photo albums I used to growing up. And this includes all my other artifacts. I do own physical copies of all my favorite movies and DVDs, but that's because I'm a bit of a a prepper and I do think of like

dystopian times when you might not have connection. >> Yeah, it's the same idea because the the thought I've had and it's kind of happening now is like I've for years and years and years I've store all this like I have, for example, I have every picture I've ever taken since 2003. >> Since you had your phone? Yes. >> Yes. Every picture I've ever taken. How often do I go look at them? Never. >> Never. >> Basically never. But very soon, arguably today, >> yeah, an agent, >> you can ask an agent like, "Make me an album of like all the most interesting pictures from that place I went summer 2005."

>> Yeah. >> And it will it will do a really good job of that. It'll already do a pretty good job now, but probably just one more generation of the image recognition, image recognizing models, >> and they'll be able to kind of like remember, oh, that's these two pictures are the same person. and like I can intersect >> kind of like it feels like it's all at the fingertips. Another thing I'll throw out is like I think everybody should lean into and enjoy the sensation of AI psychosis, right? I think that's like a it's like a good thing. Okay, now no I'm not saying psychosis is a good thing. Okay, people who have serious mental issues, that's not good. You know, I hope they get help, right? Like but often when people refer to AI psychosis, what they're actually talking about is a

kind of gatekeeping. Oh, interesting. What it is is it's like what what is AI psychosis like in its in its like median s not in the extreme someone's actually having a problem which by the way happens all the time people have >> it happens in in IRL even >> without without AI but when you see kind of people throwing out in a flippant way what are they talking about what they're saying is that the production of mediocre stuff at full speed without self-awareness is cringe >> oh >> that's what they're saying they're saying it's cringey to not be aware you've be become irrationally exuberant >> about your new found powers.

>> That's what it is. So when I say people should lean into the feeling, I don't mean do bad stuff. Like what what I'm saying is >> the people who are exhibiting some of the most intense public displays. It's that they just realize they can do stuff and they've lost their mind because because like we were just saying like it's just kind of a matter of time. The biggest constraint on me, no question. No question. No question. It's time. On the weekends during break, I produce the most stuff because I just finally have a little time.

>> Time too just to do things. >> So, what do you call it when someone is exuberant producing maybe things that aren't to your personal standards, but they're incredibly happy and they feel that they now have >> tremendous unlocked creative potential. I think that's what people are actually talking about when they talk about AI psychosis a lot of the time. Of course, I am not saying that everything produced is good, but I think we can all agree, anybody being reasonable should agree that AI is going to get better. People's ability to control these things is going to improve.

>> And so what you're seeing is the beginning of a new a revelation >> of a new kind of creative potential. So I'm very pro AAI psychosis. I'll say that. >> Awesome. It kind of reminds me of, you know, things that have happened throughout history with communications technologies dating back to like well forever. But, you know, to think about something like the Gutenberg printing press and him producing Bibles and wanting to get uh financial sponsorship from like the the local bush bishops um you know, thinking it was going to be this great thing for the church. And then all of a sudden people got their hands on the technology and were making pamphlets and stuff in vernacular language and this and that. everything was just exploding.

>> And then bring that all the way up to like when people when the internet went commercial and like all the forums opened up to everybody and it was eternal September. Anyway, it's just like this thing happens all the time like everybody gets access to the new thing and then >> they start doing all sorts of wild things. >> Yeah. This is Yeah. Which I forgot to say earlier but like a thing. So here's like a mediumsiz hill I'm willing to die on. You do get the then I'll give a small the smallest hill. The mediumiz hill I'll die on is that most things most people do most of the time is not worth much. I mean in the productive sense. I don't mean people's personal lives obviously. I mean like like the median website is >> pretty crappy.

>> Crappy. Okay. Sorry. Like the median book is probably crappy. The median article is crappy. Like the median album is crappy. Like and I don't mean that to denigrate the creators of those things. Everyone should endeavor and like that's how you find the amazing stuff, right? But like there's a certain amount that has to be produced to make those gems, right? Technology accelerates the production of mediocre things as a side effect of producing the incredible things. >> Yes, >> you can't throw the baby out with the bath water. So, whenever you see something that increases that froth, that's good because that means there's gems coming. And the only thing that's going to help you wade through the lowquality medium thing is more technology.

>> Exactly. Technology is a very solution to the technology it creates. Exactly. >> The sensation of something being bad is that nothing's happening. The good sensation is tons of stuff is exploding >> exploding out just like it's >> ejecting tons of interesting material. That's like the that's the good thing. >> So, so that's my medium hill is like your taste isn't that good. Don't be judging stuff. Let the market sort it out. And then smallest hill is that ice cream and soft server should be maximum fat. Oh, I completely agree with this. Hill fro yo should not exist.

>> Yeah, low fat frozen like it should not exist. >> Low fat. Throw it in the trash. I don't care. I hate it. Maximum fat. 9% 11% 13%. Give it all. >> Better for your health, too. >> Of course it is. >> On the protein and on the other side, too. >> Of course it is. And I don't care. >> Yeah. There we go. That is a fantastic note to end on. Eddie, you have been such a joy to chat with. >> We love working with you. I know we've all worked together now for a number of years and we're so excited about you in this new role and kind of seeing what new philosophical degrees get unlocked.

But thank you for joining us on this episode of the A6NZ crypto show.