Patrick McKenzie - How a Discord Server Saved Thousands of Lives

Speaker 1 Today, I'm chatting with Patrick McKenzie. He is known for many things.
On the internet, he's known as Patio 11.

Speaker 1 Most recently, he ran Vaccinate CA, which probably saved on the order of high four-figure number of lives during COVID. He also writes an excellent newsletter called Bits About Money.

Speaker 2 Patrick, welcome to the podcast. Thanks very much for having me.

Speaker 1 So, what was Vaccinate CA?

Speaker 2 In early 2021, we were quite concerned that people were making 20, 40, 60 phone calls to try to find a pharmacy that actually had a dose of the COVID vaccine in stock and could successfully deliver it to them.

Speaker 2 I tweeted out randomly: you know, it's insane that every person or every caregiver is attempting to contact every medical provider in the state of California to find doses of the vaccine.

Speaker 2 California clearly has at least one person capable of building a website where we can centralize that information and send everybody to the website.

Speaker 2 If you build that website, I'll pay for the server bill or whatever. And Carl Yang took up the gauntlet and invited 10 of his best friends and said, basically, all right, get in, guys.

Speaker 2 We're going to open source the availability of the vaccine in California by by tomorrow morning. This is at like 10 p.m.
at night, California time.

Speaker 2 And so I lurked on into the Discord where, of course, all medical infrastructure is built and gave a few pointers on, you know, making scaled calling operations.

Speaker 2 And then one thing led to another and I ended up becoming the CEO of this initiative.

Speaker 2 At the start, it was just like this hackathon project of a bunch of random tech people who thought, hey, we can build a website, make some phone calls, maybe help some people find the vaccine at the margin.

Speaker 2 And it grew a little bit from there. We ended up becoming essentially the public-private partnership, which was the clearinghouse for vaccine location information for the United States of America.

Speaker 2 That felt a little weird at the time and continues to.

Speaker 1 Okay, so the obvious question is, why was this something that people randomly picked up on a Discord server?

Speaker 1 Why wasn't this an initiative either by an entity delegated by the government or by, you know, the White House has,

Speaker 1 or the pharmacies have a website where you can just sign up for an appointment?

Speaker 2 Oh, there are so many reasons and a whole lot of finger-pointing going on.

Speaker 2 One of the things was that there were almost no actors anywhere in the system who said, Yes, this is definitely my responsibility.

Speaker 2 Various parts of our nation's institutions, county-level

Speaker 2 public health departments, governor's offices, the presidency, two presidencies over this interval, which will become relevant.

Speaker 2 You know, they all said, Well, I have a narrow part to play in this, but someone else has to do the hard yards of actually like putting shots in people's arms.

Speaker 2 And someone else is clearly like dealing with the logistics problem, right? And the ball was just dropped comprehensively.

Speaker 2 And no one at the time really had a plan for picking it up or didn't feel like it was incentive compatible for them specifically to pick it up right now.

Speaker 2 It would be great if someone could do this, but just not me.

Speaker 1 Okay, so to explain the context and how important it was that people get vaccines at the time and how much these delays mattered, you can account for it obviously in the amount of lives saved.

Speaker 1 You can even look at it in terms of when vaccine news was announced, how much the stock market moved.

Speaker 1 It was clear it was worth trillions of dollars to the economy that the vaccine be delivered on time. And so it should be priority number one that people know where the vaccine is.

Speaker 1 A sort of meta question is, why are, I kind of heard about this problem for the first time when I read your article about this.

Speaker 1 Why is this,

Speaker 1 there's a bunch of controversy after COVID about people pointing fingers about masks

Speaker 1 or different kinds of protocols. Why was this not, people are getting hauled in front of Congress?

Speaker 1 Why were we not able to deliver the one thing that was needed to arrest the pandemic as fast as possible?

Speaker 2 Well, if folks want to read 27,000 words on this, my article in Works in Progress called The Story of Accidentate CA goes into some of the nitty-gritty.

Speaker 2 Broadly, I think a matter of incentives more than a matter of people choosing to do evil things. Although, I will say we did choose to do evil things, and we can probe on that if you want to.
But

Speaker 2 if you look at like the federal government specifically, the federal government institutionally learned one,

Speaker 2 I believe, wrong lesson, which has terrible consequences from the healthcare.gov rollout a number of years ago when Obamacare was first debuting.

Speaker 2 And the thing which many actors in the federal government and the political parties came away from is that a president can doom their legacy of their signature initiative if those bleeping tech folks don't get their bleeping act together.

Speaker 2 And so the United States has decided like there is virtually nothing up to and including like the potential of national annihilation that will cause us to actually put our chips behind making a software problem.

Speaker 2 That is somebody else who does not have to deal with an electoral mandate or getting called in front of Congress or et cetera, et cetera. Somebody else's problem.

Speaker 2 Unfortunately, software is eating the world and delivering competence in the modern world requires being competent at software. And the United States, it will tell you differently.

Speaker 2 And there are wonderful people in the government who are attempting to change this. But

Speaker 2 broad strokes, on an institutional level, the United States federal government has abdicated software as a core responsibility of the government.

Speaker 1 I understand why they didn't initially want to pursue this project. I still don't understand the answer to the question of after everything went down, now,

Speaker 1 why is it not more of a news item that this was a problem that was not solved?

Speaker 2 So I think we're memory-holding a lot of things that happened in the pandemic.

Speaker 2 And I wish we wouldn't, partly because of political incentives and we're approaching an election era and because of the quirky way that the American parties and the candidates bounce off each other,

Speaker 2 it's no one's real incentive to say, okay, like I would like to re-litigate the mask issue for a moment. We told people that masks don't block airborne viruses

Speaker 2 and we were quite confident of that and the entire news media backed us up on it and then we went like 180 a month later.

Speaker 2 No one wants to relitigate that. No one wants to relitigate California imposed redlining in the provision of medical care and that was wrong and evil.

Speaker 2 But

Speaker 2 the party that was in the case pro-redlining does not normally like saying that it is pro-redlining. And the other party does not really consider that a hugely salient issue.

Speaker 2 And so, you know, there are no debates, and no one is asking Governor Newsom.

Speaker 2 So, when you got on TV and said that you were doing geofencing for the provision of medical care, geofencing in that context was the same as redlining. Can you explain your support for redlining?

Speaker 2 And no one has asked Newsom that question. Maybe someone should.

Speaker 2 But

Speaker 2 we're surrounded by the effects of incentives and the effects of iterated games. And sometimes they don't play out the way we would ideally like them to play out.
Yeah.

Speaker 1 We can come back to this. I still don't feel like I really understand.

Speaker 1 So maybe

Speaker 1 it was that everybody has the blood on their hands. And so

Speaker 1 that's so confusing. I think if you have other kinds of emergencies, like if you lost a war, I don't think you just brush it aside.

Speaker 1 The generals would have to come up in front of Congress and be like, what happened? Why didn't we get that battlefield?

Speaker 1 Actually, we just lost it.

Speaker 2 I don't know if we maybe that didn't happen. If one goes over the history of military conflicts, I don't know how many people,

Speaker 2 losers on either side of the conflict, ever actually did that reckoning of like, hey, could we attempt to win in the future?

Speaker 2 I think there was a broad lack of seriousness across many trusted institutions in American society,

Speaker 2 in the government, in civil society, in the tech industry about

Speaker 2 really approaching this like a problem we want to win.

Speaker 2 And I think a wonderful thing about our country and our institutions is like on things that are truly important to us, we win and win outlandishly because we are a rich and powerful nation.

Speaker 2 And yet like this was obviously a thing where we should have decided to win and we fundamentally did not approach it as a problem that we needed to win on.

Speaker 1 Okay, so going back to the object level here.

Speaker 1 One would think that instead of different people calling different pharmacies and asking whether they have the vaccine,

Speaker 1 the obvious thing that people who have not read your article would assume is that either there were just some company would build a platform like this, the government would build a platform like this.

Speaker 1 I guess you explained that the government didn't do it. The pharmacies might build a platform like this.

Speaker 1 And I want to meditate on the incentives that prevented random big tech company or Walgreens from building this themselves. Can you explain that?

Speaker 2 Sure. So the federal government and the state government, the American governmental system is quite complex.

Speaker 2 And there were multiple distinct supply chains with multiple distinct technological systems tracking where these vials were headed all over the country.

Speaker 2 And there were many attempts at various levels of the government to say, hey, can we commission a consultancy to build a magical IT solution which will get these databases to talk to each other?

Speaker 2 And those largely failed for the usual reasons that government software procurement projects fail. Why didn't tech build it?

Speaker 2 I'm constrained on what I can say and cannot say. So I know a little more than this answer, but I will give you part of the answer.

Speaker 2 The tech industry, both at the level of like App Amagofaceoft, which is my funny sardonic way to refer to like some of the most powerful institutions in the world, and many other places that hire

Speaker 2 many number of smart engineers who can build the world's least impressive inventory tracking system,

Speaker 2 felt political pressure in the wake of the January 6th events in the United States.

Speaker 2 This is another thing that has gone down the rabbit hole, but in the immediate wake of the January 6 events, people in positions of authority very clearly tried to lay that at the feet of the tech companies.

Speaker 2 And internally in the tech companies, their policy teams, the teams that supposed to make the company legible to government and avoid government Yankee's permission to do business, and their communications teams, PR departments,

Speaker 2 told everyone in the company, like, mission number one right now, do not get in the newspaper for any reason. We are putting our heads down.

Speaker 2 And when people in those companies who work on public health, and a thing that might not be obvious to most people in the world is that, like App Am and Google Soft, they're literally like teams of people who their job is public health because they are the like the operating system of the world right now.

Speaker 2 And the operating system of the world needs public health care.

Speaker 2 Those teams said, Hey, we've got this thing.

Speaker 2 And other people in the company might have overruled them and said, It would be really, really bad right now to have the tech industry saying we're better at the government's job than the government is.

Speaker 2 So shut that down.

Speaker 1 Okay, so that's so insane.

Speaker 2 So It is absolutely

Speaker 2 the local incentives, like it makes sense in the meeting when you're saying it.

Speaker 2 And you are not in that meeting projecting, I am going to cause tens of thousands of people to die at the margin by making this call. And yet that call was made.

Speaker 1 Right. Okay.
So the

Speaker 1 there's two culpable actors here. One, you could say, well, the big tech companies for not taking the political risk.

Speaker 1 I think what is even more reprehensible is the fact that they probably correctly thought that appearing more competent than the government and saving tens of thousands of lives as a result will be held against them in a way that significantly matters for their ability to continue their other businesses.

Speaker 1 Now, okay, so suppose that they had built the software. Let's play with the scenario.
And then what would happen?

Speaker 1 They would get hauled in front of Congress and explain why they weren't delivered even faster because of the ultimate bottlenecks in the supply chain because you can only manage it. What would happen?

Speaker 1 Like they build it and it's like better than the government.

Speaker 2 So many things could happen. One, if you build the thing, this has sometimes been called the Copenhagen principle of culpability.

Speaker 2 If you build the thing, various actors in our system will assume, okay, now you're responsibility for not just the consequences of the thing you built, but for the totality of consequences of everything associated with the American vaccination effort.

Speaker 2 So you built the thing. Oh, you big tech geniuses.
Well, what did you do about localization? You didn't do enough about localization yet. You hate name group of people here.

Speaker 2 Like, don't you see the disparity in death rates between demographic A and demographic B? Why haven't you fixed that yet? You have killed so many people, et cetera, et cetera.

Speaker 2 And no one in government,

Speaker 2 no one who is making that moral calculation says, I have responsibility for killing people by doing nothing.

Speaker 2 The person who is doing anything has the responsibility for killing people by taking up the burden of doing something.

Speaker 2 And it is a absolutely morally defensible thing, which you will see over and over and over again in our discourse.

Speaker 1 They get hauled in front of Congress, but it's not just because they made a sin of co-mission. It's also because if you're right, then after January 6th, they would be held in...

Speaker 1 There's one answer where it's like they touched the problem, and there's another where it's they did it, they did it better than the government could have. And those seem like two different

Speaker 2 you touched the problem, and so you've immediately taken liability for any number of sins of omission, because even at the scale of the largest companies in the world, you've not allocated infinite resources to this problem.

Speaker 2 And also,

Speaker 2 the stealing a march on the government and embarrassing us will be held against you.

Speaker 2 And so like you can point back to the Cambridge Analytica thing, where Cambridge Analytica is like shorthand for there was this one time back in the day where

Speaker 2 the news media in New York and the government in DC and places like it talked to each other a bit and convinced themselves that a small team of people with a budget of approximately $200,000 have rooted the United States presidential election.

Speaker 2 Now, rooting the the United States presidential election, perhaps on behalf of a foreign power, would be an enormously consequential thing. Good thing that did not happen in the world that we live in.

Speaker 2 However, people believe very passionately in that narrative.

Speaker 2 And as a result of that narrative, they did like very aggressively attempt to clip the wings of tech and tech's core businesses, like say advertising. Right.

Speaker 1 There's so much that's crazier. Okay.
One question you might have is, we figured out that

Speaker 1 we couldn't delegate to big tech or any of the competent actors and that the native infrastructure that we had that was specifically earmarked for dealing with public health emergencies was extremely incompetent to the extent that Discord servers vastly outperformed them.

Speaker 1 Supposing that public health is not uniquely incompetent among the different

Speaker 1 functions that the government is supposed to perform that don't get tested until the actual emergency is upon hand. How would we go about if the president cures this and is let's say concerned that

Speaker 1 the people who are running the

Speaker 1 nuclear bomb reaction aren't up to snap or the earthquake reaction?

Speaker 1 Is there some stress that is test that you could perform on these institutions before the thing goes down that you could learn beforehand, whether they're competent or not?

Speaker 2 If I look at like the experience of the last hundred years and a little more back to the flu pandemic in 1918, if you read histories of the flu pandemic, a vastly less wealthy, vastly less technologically sophisticated nation with many less people involved in the actual like fixing of this problem, competently executed on nationwide vaccine campaigns and other various measures.

Speaker 2 And so

Speaker 2 in some fashion, like we should be urgently concerned with what decayed institutionally in the interim.

Speaker 2 I think one of the things that health departments specifically faced is that if you had just given them the kind of vanilla vaccination campaign, maybe they would have done better than they actually did.

Speaker 2 I'm not positive of that. I do think there are actually,

Speaker 2 and here I have to stop for a disclaimer. I think that people in county health departments did real important work.
I think they probably did work that saved lives on the margin.

Speaker 2 I do not think the United States should be satisfied with our performance in 2020 and 2021. We should be very dissatisfied and we should get better for the future.

Speaker 2 And that requires like recognizing that we underperformed by a lot.

Speaker 2 There was a political decision made that the successful administration of the

Speaker 2 vaccination was not going to be measured solely by saving lives.

Speaker 2 The prioritization schedule that came up, which was Byzantine and complicated and routinely befuddled professional software engineers and health administrators, and which I could not diagram out on a whiteboard, even if you paid me a million dollars to get it right on the first time,

Speaker 2 was downstream of the United States' political preferences. And so schedule 1A versus 1B versus 1C was

Speaker 2 in the first five seconds of the discussion dictated by medical necessity, but immediately after that was about rewarding plums to politically favored groups. And so the

Speaker 2 one of the complexities of this is that the

Speaker 2 pharmacies and healthcare departments are not set up to discriminate along the axes of whether one is politically powerful or not, because that is not a thing that they have to do in most vaccination campaigns and not a thing that they have to do on like the typical Tuesday of providing medical services.

Speaker 2 We asked them to do this like radically new thing, which is in part responsible for the failures that we had.

Speaker 2 If we had had a much simpler tiering system, for example, we would have had more than 25% of the shots successfully being

Speaker 2 delivered in the state of California in

Speaker 2 January of 2021.

Speaker 1 For people who are not aware, what was the political tiering system that you're referring to? Oh, goodness.

Speaker 2 So this was different in different places. And confusingly, different places in the United States use the same names for these tiers for different people.
But

Speaker 2 in the state of California,

Speaker 2 tier 1A comes before 1B, comes before 1C, comes before the tier 2, et cetera, et cetera.

Speaker 2 So 1A was descriptively speaking at the start, and this changed over time on like a day-to-day, week-to-week basis, sometimes in mutually incompatible ways at the same time. It was an entire mess.

Speaker 2 Descriptively, tier 1A was, okay, healthcare professionals and a few others and people above the age of 75. Nope, wait, we'll change that to 65.
Tier 1B was, we're going to put a few favored

Speaker 2 occupational groups here and some other folks.

Speaker 2 And Tier 1C was people who doctors think will probably die if they don't get the vaccine, if they contract COVID, but who have not appeared in Group 1A or 1B yet. And so

Speaker 2 who got 1A? Well, healthcare professionals, so like doctors administering the vaccine. That sounds like pretty reasonable.
Also, veterinarians.

Speaker 2 Because veterinarians are like urgently required by society at the time? Not so much because the California Veterinarians Association is good at lobbying. And that isn't just me alleging that.

Speaker 2 They sent a letter out to their membership saying, we are so good at lobbying, we got you guys into 1A. Congrats and go get your vaccine now.

Speaker 2 I have that on my website.

Speaker 2 Okay, so like tier 1B school teachers were classified as a tier 1B. Why? Because go figure teacher humans have political power in the state of California.
And they said,

Speaker 2 well, we'll accept not being in 1A, but we are going no lower than 1B.

Speaker 2 And probably no one in that meeting ever said, like, I definitely think that 25-year-old teachers who are currently under stay-at-home orders should be in charge, should be like in front of the line of people who will die if they get COVID.

Speaker 1 So

Speaker 2 like we made that choice.

Speaker 1 So

Speaker 1 in your article, you discussed that the consequence of that was not only the misprioritization of the vaccine, but the bureaucracy around allocating it according to these tiers, resulting in 75-year-olds not having the capacity to fill out the

Speaker 1 pages of paperwork that require you to decide what tier you're in.

Speaker 2 The state of New York commissioned a consultancy to administer to 75-year-olds a 57-page web application, which required uploading multiple attachments to check for their eligibility.

Speaker 2 And like, talk with a technologist if you don't believe me. We try to remove everything from a web page that people successfully get through it.

Speaker 2 Like if you can make it, you know, two to four form fields, that's already taxing people's patience.

Speaker 2 And you're asking people who might be like suffering from cognitive decline or be less comfortable in using computers to do something which would like literally tax the patience and cognitive abilities of professional software engineers.

Speaker 2 And that wasn't an accident. We wanted to do that.
Why did we want to do that? Because it was extremely important to

Speaker 2 successfully implement the tiering system that we had agreed upon. Why was it extremely important to implement the tiering system? Because that was society's prioritization.

Speaker 2 Was that the correct prioritization? Hell no.

Speaker 1 Right. Okay.
So, can we just count up everything?

Speaker 1 It just before, so it's enraging, not only because obviously people died, but because like nobody talks about it.

Speaker 1 It's it was um, there's all kinds of controversies about COVID, about whether, I don't know, a vaccination and

Speaker 1 a side effect kind of things and whether the masking orders were too late, too early, whatever.

Speaker 1 And then the main thing about whether we got vaccines in people's time on arms on time because of these political considerations. So you're not allowed.
Yeah, go ahead.

Speaker 2 Can I jump in with one bit of of optimism?

Speaker 2 We achieved something incredible, which was getting like the first cut of the vaccine done in two days as a result of many decades of science done by very incredible people.

Speaker 2 And we successfully got that vaccine productionized in a year.

Speaker 2 We should have gotten it productionized in far less than a year, but the fact that we were able to do it in one year and not three was enormously consequential. And so we should feel happy about that.

Speaker 2 A little annoyed that we didn't have better protocols at the FDA in places to get that vaccine prioritized for testing much faster than was. Quite annoyed at the fact that

Speaker 2 that was a political football and people probably made decisions that pessimized for human lives and optimized for defeating a non-preferred political candidate.

Speaker 1 Are you talking about the fact that the vaccine was announced the day after the

Speaker 1 election results or something, right?

Speaker 2 Yes, I'm basically subtweeting that.

Speaker 2 And I strongly believe that was a political decision, but what I don't know. I'm just a software guy.

Speaker 1 So, okay, the particular kind of craziness that we had during this, during the two,

Speaker 1 2020 and 2021 about equity and wokeness, how much was that uniquely responsible for the dysfunctions of this tiering system and geolocation slash red lining?

Speaker 1 Basically, if it was, if that happened in another year where there wasn't a bunch of cultural craziness, would it have gone significantly better?

Speaker 2 It's difficult to ask that question because we were clearly in a unique time in 2020 and 2021. And yet,

Speaker 2 point to me in the year in American history in which American society was truly united and had no social issues going on.

Speaker 2 And if people like counterfactually, like, point to, say, World War II, I will say, like, read more history there.

Speaker 2 But be that as it may.

Speaker 2 Was it the case that

Speaker 2 strong societal feelings in the wake of

Speaker 2 Geor Lloyd's death in 2020 and the racial

Speaker 2 reckoning strongly dictated policy? Yes. As a positive statement rather than a normative statement, that is absolutely the case.

Speaker 2 There's this thing we often say in the tech industry called bike shedding, which is if you're building a nuclear power plant and

Speaker 2 many people cannot sensibly comment on like, what is the flow rate through the pipes to cool a nuclear reactor.

Speaker 2 But if you build a bike shed next to the nuclear power plant, it's very easy to have opinions on the color of the bike shed. And so in the meetings about the nuclear power plant, you will have...

Speaker 2 a truly stupid amount of human effort devoted into what colors you should paint the bike shed.

Speaker 2 So it is very difficult for most people in civil society to successfully inject a vaccine into someone's arms, to successfully manage a logistics network, to successfully build a nationwide information gathering system to centralize this information and pass it out to everyone.

Speaker 2 And we aggressively train the entire American professional managerial class, starting at seventh grade or earlier, in decrying systemic racism, which, to be clear, is a problem.

Speaker 2 And so, any

Speaker 2 discussion about what should we do with

Speaker 2 with regards to information distribution, which goes out to a broad audience in the American professional managerial class who essentially call all the shots in the US system,

Speaker 2 will almost invariably get bent to, I have no particular opinions on server architecture here and nothing useful to comment, but

Speaker 2 what's our equity strategy? And the equity strategy dominated discussions of the

Speaker 2 correct way to run the rollout to the exclusion of

Speaker 2 operationalizing it via via medical society, medical necessity.

Speaker 2 People brag about that fact.

Speaker 2 That fact is enormously frustrating to me. And if you say it with exactly those words and emotional valence, people will say, no, no, that's not exactly what we meant.

Speaker 2 But when they're talking to other audience, they will say, no, this is absolutely what we mean.

Speaker 1 Yeah, okay. So I mean, even on that point,

Speaker 1 maybe the culprit here is a scarcity mindset involved here with caring more about the proportion rather than just solving the problem.

Speaker 2 This is one of those few times where we were genuinely up against a scarcity constraint.

Speaker 2 Physical reality was there were a scarce number of vials and we needed to have a prioritization system. And some people who urgently needed the vials were not going to get them first.

Speaker 2 Everyone was going to get them eventually. But the mad rush.
in our political system to dole out favors around the prioritization for those first vials

Speaker 2 exceeded the actual distribution and successful injection of the vials as a goal. Again, California reported to the federal government that it was only successfully injecting 25% of its allocation.

Speaker 2 It had the most desirable object in the history of the world.

Speaker 2 And rather than adopting any sensible strategy for getting it into people's arms, was bickering over who should get it first.

Speaker 2 We should be outraged about this, and we're mostly not.

Speaker 1 I don't even know what to ask next because it's so obviously outrageous. And

Speaker 1 there's no clear answer, at least to me, of why there isn't more outrage about it.

Speaker 1 Also, what the solution to it is, I mean, literally in the exact context of what would we do the next time there's a pandemic, it's not clear to me that we've learned the lesson, let alone the broader lesson of if there's a different kind of emergency, if there's some isomorphic emergency, what would our state capacity be better?

Speaker 1 And you mentioned the point about 100 years ago, we have maybe would be able to deal with this problem better. So I don't know what changed.

Speaker 2 One of the things that America used to do is when the federal government lacked state capacity for something, it would say, who in civil society or private industry has capacity for this?

Speaker 2 And then say, congratulations, by order of the president, you are now a colonel in the United States Army.

Speaker 2 Like, what do you need to get it done, sir?

Speaker 2 And that was an option. That was an option that was not taken.
But,

Speaker 2 you know, I will play no fights in either of the two administrations that both individually made terrible decisions.

Speaker 2 But, you know, plausibly some more enlightened counterfactual administration could have gone to Google and said, who is literally your best person for solving the

Speaker 2 data problem that they currently find ourselves in? Great. Will they accept a commission as colonel? Great.
Here's an order from the president. You have a swearing-in ceremony starting in 30 seconds.

Speaker 2 And like, we you will present your like project plan tomorrow. And again, like the successful project plan was made by a bunch of

Speaker 2 like rank amateurs at this topic on Discord in the course of a couple of hours. And similarly, like they're, you know, this is like one part of the huge overall vaccination effort.

Speaker 2 But you could imagine going to Amazon and saying, like, hey, Amazon, we hear you're pretty good about getting packages between A and B. This package has

Speaker 2 a really hard thing about it. It has to be cool as it's delivered.
That's like a totally unsolved problem in materials science, right? And Amazon would say, we literally do that every day.

Speaker 2 Back in December, people were getting on the night in the news and saying, this is going to be an unprecedented logistics challenge because the vaccine has to be kept at ultra-low temperatures, which are the same temperatures at which milk is transported.

Speaker 2 We understand how to do cold chain logistics. So Amazon would correct that misperception.
They say, oh, you guys seem to know what you're doing. We have an absence of that here.
Congratulations.

Speaker 2 Here's your colonel uniform in the United States military.

Speaker 2 And now your job is we are going to give you a CSV file every day, interface with this other colonel, please, from Google, on like where this thing needs to go.

Speaker 2 And you get it there on time every time.

Speaker 2 And if you can't get it there on time every time, like call the White House and we will like find you political cover is what a functioning system would have done.

Speaker 2 And granted, the American system is dysfunctional in its own way. I think another thing that's been underdone in the course of the last couple of years is like looking internationally.

Speaker 2 I don't know if any country anywhere with vastly different political systems is happy with the outcomes that it got.

Speaker 2 Some were obviously vastly better than others, but there are journals of like comparative international politics.

Speaker 2 And why are those journals writing anything but like who succeeded at what margins and who did not?

Speaker 2 And what do we learn about like the proper functioning of political systems, civil society, and like the United States consider it as one like hugely complex machine?

Speaker 1 No, that okay, that's a really interesting point. I actually asked Tony Blair, Tony Blair Institute, they were recommending to the British government different ways of distributing the vaccine.
And

Speaker 1 they made the obvious recommendation that you should give everybody one dose now and then do the second dose later.

Speaker 2 You know, obvious things like this, which would have saved lives.

Speaker 1 Um, any British government didn't do a good job there.

Speaker 2 No government, I think it's actually a very interesting question.

Speaker 1 There's governments all across the world, which have very different political systems. They have

Speaker 1 hopefully, I don't know, different infrastructure regulates to this.

Speaker 1 Why did nobody get this right?

Speaker 2 Um, so on the like give people, uh, the catchphrase for this was first doses first. Yeah, that was uh not the procedure in many nations, which have many smart people in them.

Speaker 2 And it was not the procedure in the United States until, I think, you know, first doses first, you can like sometimes trace policy back to individual blog posts.

Speaker 2 And so, to the extent that one can be traced, I think it was Alex Tabarak on Marginal Revolution who was right.

Speaker 2 This is very obvious and overdetermined. If we want to win at this, like first doses first is objectively the correct policy.

Speaker 2 And after, you know, this like ping-ponged around the political system for a while and they, you know, talked to medical experts and et cetera, they were like, yeah,

Speaker 2 yeah.

Speaker 2 It turns out that

Speaker 2 this is the equivalent of like saying, you should probably consume calories at some point in the typical week. That is better than not consuming calories.

Speaker 2 Well, we checked with the medical experts and it took six weeks of meeting, but they definitely agree.

Speaker 2 Eating beats not eating for a living. So we're going to do that now.
And

Speaker 2 on the one hand, like it is a genuine strength of the United States that like,

Speaker 2 you know, he's not exactly some rando, but uh relative to like the the topic in question, some rando on the internet like wrote up a 2,000-word blog post and we stopped doing stupid things.

Speaker 2 We could have stopped doing the stupid things sooner. Yeah.

Speaker 1 But

Speaker 1 that doesn't answer the question of why, like nobody got it right.

Speaker 1 If you think there's something particular to the late stage bureaucracy that we have or something, maybe another country is fresher.

Speaker 1 But even the countries that have more authoritarian models who can just, you know, crack down or something, they did abysmally as well.

Speaker 1 They made errors often in many cases that were worse in Americas.

Speaker 1 There's like so many countries, Patrick. Why did none of them get it right?

Speaker 2 I'm underinformed on much of the

Speaker 2 international comparison, partly because in 2021, I was sort of busy.

Speaker 2 But

Speaker 2 I remember Israel,

Speaker 2 for a variety of institutional reasons, having a

Speaker 2 broadly functional response on this, in particular around end-of-the-day shots, which

Speaker 2 end of shots are, in the grand scheme of things, a minor issue, but they're

Speaker 2 a good, like, quick heuristic for, do you have good epistemics on this at all? Okay.

Speaker 2 You know, physical reality of the COVID shots is there's five, eight, or ten shots in a single vial. That single vial

Speaker 2 goes bad after 12 hours.

Speaker 2 That is a bit of an oversimplification. It doesn't actually go bad, but for

Speaker 2 essentially regulatory reasons, we have to pretend it goes bad after 12 hours. It can't be resealed.
Okay, so if you vaccinate two people,

Speaker 2 then the other shots are on a timer, and those shots will decrease in value to zero after however many hours are remaining on the timer and then get thrown in the trash can.

Speaker 2 So, quick question to test if you are a rational human being. At the margin, would you prefer giving a shot to the most preferred patient in your queue of patients who needs it for medical needs? Or

Speaker 2 like the trash can, you prefer the most preferred patient. Now, follow-up question.
Would you prefer giving it to the least preferred patient or the trash can?

Speaker 2 You still give it to the human rather than the trash can. And Israel adopted the policy of like, if the shots are expiring,

Speaker 2 forget the tearing system,

Speaker 2 forget anything else. Literally walk out into the street and say, I've got the COVID shot.
I need to administer it in the next 15 minutes. Who wants it?

Speaker 2 And in the United States, we had a policy ban on doing that. We said, no, to protect the integrity of the tiering system, to like,

Speaker 2 you know,

Speaker 2 embrace our glorious cause of health equity, you should throw that shot out. And that policy was stupid.
And it was announced by governors proudly in December

Speaker 2 in front of news cameras. And then a couple of weeks later,

Speaker 2 reality set in and they were like, people told them,

Speaker 2 sir, turns out that throwing out the vaccine, is stupid.

Speaker 2 And the governor did not go on the nightly news again and say, I gave

Speaker 2 a very confident policy speech a month ago in front of this news camera where I said that I would prosecute anyone who gives out end-of-day shots.

Speaker 1 But he literally said that.

Speaker 2 He literally said that.

Speaker 2 Oh, man. This is almost a direct quote.
And you can see the actual direct quote in my previous writing on this, but I will not just prosecute people.

Speaker 2 I will go aggressively to try to maximize the reputational impact to your firms and your licenses.

Speaker 2 Like we were pointing metaphorical and when it came down to it, literal guns at physicians in the middle of a pandemic

Speaker 2 for doing unauthorized medical care. Crazy.
But what, you know, when the system corrected, it did not do, it did not correct all the way.

Speaker 2 The governor did not go out and say, hey, that thing I said a month ago was effing insane. I take that back and apologize.
No, it was like, okay, we're going to like quietly pass out the words.

Speaker 2 That's no longer the policy, but we don't want to own up to the mistake.

Speaker 2 And people in, say, like the regulatory departments of pharmacies make rational decisions based on the signals that you are giving them.

Speaker 2 And the rational decision a pharmacy makes is not, okay, we've been quietly past the word that the old policy is persona non grata.

Speaker 2 But can we really trust the quiet word here? One, because like, do we trust that this actor is not going to change their mind in two weeks and consequence us for something we authorized today?

Speaker 2 Just throw out the shots. And pharmacies did not cover themselves in glory.
A lot of pharmacists did. some pharmacists did, but

Speaker 2 pharmacies, like institutionally, we deliver almost all the medications for almost all the diseases routinely in America.

Speaker 2 We cannot blow up either that like position of societal trust or our business results over one drug for one disease.

Speaker 2 And so throw out the shots and make sure we can still deliver medical care in California tomorrow.

Speaker 2 That

Speaker 2 I understand how that decision was made.

Speaker 2 We should not endorse that decision.

Speaker 2 There were individual acts of heroism by particular pharmacists who said, essentially, in as many words to us when we called them and said, hey, what's the procedure for getting the shot?

Speaker 2 Okay, an individual like the one you just described cannot formally get the shot right now.

Speaker 2 So I would tell that individual to go to the county website, tell whatever lies are necessary to get an appointment with me.

Speaker 2 They come in for an appointment and I will inject them rather than verifying the lies that were on the appointment card. Because basically, F the rules, I swore an oath.

Speaker 1 Honestly, I don't know where to begin with some of these things. Okay,

Speaker 1 I want to understand a bunch of the things.

Speaker 1 First of all, can we just go back to 25% of the vaccines that were allocated to California were actually delivered in people's arms? Literally the entire world economy was bottlenecked on this, right?

Speaker 1 It's like...

Speaker 2 So if you want another funny anecdote, I then asked some people in positions that might know, so how real do you think that 25% number is?

Speaker 2 And they said, well, the good news is in addition to being incompetent at delivering the vaccine, we're also incompetent and counting. So it was probably a bit of an undercount.

Speaker 2 I'm like, oh, so the good news is like the true count was like 100% or 95% or something. Well, no,

Speaker 2 not nearly close to that. But we got better at counting after the governor yelled at us because he was embarrassed.
We were the 48th state in the nation.

Speaker 1 Counting the item, which is a bottle. Like, where's the thing that is going to like rescue us from the thing that is destroying the world?

Speaker 2 We had, so like pharmacies, generally speaking, could today, if you ask, you know, someone deep in the bottles of pharmacy's accounting department, could you by the end of business today give us a count of like how many bottles of aspirin the pharmacy has physically in the world?

Speaker 2 By the end of the day, they would have a shockingly accurate number for that. It wouldn't be exact, but it would be like shockingly accurate relative to that number is like truly millions.

Speaker 2 And if you could say like, break it down by address, please, like, where are they physically present in the world? Yeah, easy problem. You know, like managing inventories of drugs, that's what we do.

Speaker 2 The United States could not do that

Speaker 2 and did not perceive that to be an urgent problem to be solved.

Speaker 1 I mean, I do want to ask you about the actual finance and software stuff at some point, but I think this is like such an important,

Speaker 1 I mean, the world is about to stand still. We still haven't learned the lesson.
So I'm just going to keep going on this topic because I still don't understand the, okay.

Speaker 1 So here's, here's another question that's sort of related to this.

Speaker 1 You have many rich tech industry friends and I read your article and you're saying, we're trying, I'm filling out these grants grants for 50K or her and that's like taking up all my time.

Speaker 1 And I'm trying to raise, you know, a couple hundred grand here, a couple tens here. And I'm thinking to myself, how is this not as trivial a problem as, hey, XYZ,

Speaker 1 if you give me a money that you can find between your couch cushions, we will save thousands of lives and get the world economy back on track.

Speaker 1 Well, how is raising money for this hard? Or why was it hard, you know?

Speaker 2 So again, like trillions of dollars are on the line. The United States is spending tens of billions of dollars or more on its COVID response strategy.
Like

Speaker 2 the true biggest issue is like, why is it come down to like Patrick McKenzie's ability to fundraise in the tech industry for us to like have a system here?

Speaker 2 Okay, bracketing that, like the tech industry underperformed my expectations for what the tech industry should have accomplished here.

Speaker 2 There were some bright spots and less bright spots regards the fundraising project.

Speaker 2 For those of you who don't know, the total budget of this project was $1.2 million, which is not quite couch cushion money, but is not large relative to the total amount of resources that the tech industry can deploy on problems.

Speaker 2 And in some cases,

Speaker 2 I looked at my email this morning to refresh my memory. I sent a CEO at a particular company, and I'm not going to name people, but they're welcome to claim credit if they want to claim credit.

Speaker 2 I emailed a CEO at a particular company. Hey, I saw you like to tweet about this on Twitter.

Speaker 2 I'm essentially raising a seed round except for a 501c3 charity. And

Speaker 2 we urgently need money for this. Here's a two-page memo.

Speaker 2 And that I sent that email at 4:30 p.m.

Speaker 2 and uh 4 30 p.m california time and uh he got back to me uh there was some internal emails of like router to this person routed to this person he run that by blah blah blah 930 the next morning he said i'm personally in for a hundred thousand dollars out of my own pocket my banker is going to contact you as a wire cleared the same day so yay for that uh on the like yes

Speaker 2 less yay side like uh tech is not exactly a stranger to having bureaucracies and in some cases it was a matter of like oh indicatively uh we want to support that but we have a process And that process went on for six weeks.

Speaker 2 And by the time six weeks was over, it was May and

Speaker 2 not to the credit of funders.

Speaker 2 By May,

Speaker 2 most people in the professional managerial class who had prioritized getting a vaccine for themselves and their loved ones had succeeded at that.

Speaker 2 And they said, okay, so the vaccination supply problem pretty much solved, right? I'm like, no, it is not solved right now.

Speaker 2 It is solved for the people who are smartest about working the system in a way it was not solved for even them back in January.

Speaker 2 But there are many people who are not yet vaccinated, and they say that's a vaccine hesitancy issue. No, it is not merely a vaccine hesitancy issue.

Speaker 2 It is still the case that there are logistical problems. It is still the case that people don't know that you can just Google the vaccine now.

Speaker 2 It is still the case that around the edges of the American medical system, in places that are like underserved, et cetera, people don't have it or they can't get transportation, et cetera, et cetera.

Speaker 2 You should continue funding this team for the next couple of months so that we can do what we can around the edges here. And

Speaker 2 I was told,

Speaker 2 again, you know, people can do what they want with their own money. And I understand that charitable

Speaker 2 funders rather have many things. It's just like, okay, relative to the other places we can put money to work in the world,

Speaker 2 further investment in the American vaccine supply situation as of May and looking forward doesn't make sense for us. Could you do it in another nation? And we said, like, okay,

Speaker 2 were the American effort, we have some advantages here. We would not have them in the other the other nation.
We did talk to people there.

Speaker 2 We tried to see if we could help a team there or go or go there, et cetera.

Speaker 2 But we don't see that there's a path to positively impacting the problem there in a way that there's manifestly a path to positive impact here. And

Speaker 2 we lost that argument. We didn't get the money.
The last $100,000 in was my daughter's college education fund.

Speaker 1 Oh my God. Okay.

Speaker 1 Look, I agree that

Speaker 1 it shouldn't be up to tech to solve this huge society-wide problem. But given that nobody else is solving it, I still don't understand.

Speaker 1 Have you gone back to any of them or have any of them reflected on, yeah, maybe I should have just wrote you a million-dollar check and saved you all this hassle so you could have gotten back to business?

Speaker 2 So, you know, ultimately I'm the CEO, like responsibility for fundraising lies with me.

Speaker 2 And so, like, I thought any number of things about how could I have done that better, how could I have strategized?

Speaker 2 You know,

Speaker 2 I did not stop fundraising efforts, but I stopped lighting up new conversations for a number of weeks because i thought okay we've got we've got the two million dollars that we need to run this till the end of august and that's my sort of internal target for uh the point at which it uh doesn't quite stop being useful but it uh starts like actually being you know a question on the margins where it's not a question until the end of august uh so could i have done better probably uh the some of the folks in uh the broader effective altruist community uh i'm not a member but i've read a lot of stuff that they uh have written over the years and i broadly consider them positive they are the but forecares of vaccinate CA, but ask me about that in a moment.

Speaker 2 But some EA funders

Speaker 2 talked to me after my piece about it had come out and said, this is physically painful to read.

Speaker 2 We wrote bigger checks with less consideration to projects that had far less indicative of success. Why didn't you just ask us for money? And

Speaker 2 like the answer to there was twofold. One, I thought I had high quality introductions and a high quality personal network to people who are likely already going to fund it.

Speaker 2 And so I didn't light up additional funding sources. And two,

Speaker 2 like, like, this is a true answer. I'm a flawed human who has a limited number of cycles in their day and was running a very, very complex operation.

Speaker 2 And it literally didn't occur to me, hey, maybe those people that have been making a lot of noise about writing a lot of money for pandemic checks would be willing to write a pandemic check, which like that was not entirely an irrational belief for me because I had like reached out to people who are making a lot of noise about writing money for pandemic checks.

Speaker 2 And they said, not in the United States, not in May. And I thought, oh, well, it's, you know, if I light up a conversation totally gold with someone now, it's likely to just get a know again.

Speaker 2 I should try to like scrimp and save and break the piggy bang for my daughter's college education fund, which, by the way, she'll go to college folks. No worries.
But

Speaker 2 it's a like, how far down the list of like plan A, plan B, plan C? We were down to like plan C at that point.

Speaker 1 Just to be clear, I'm definitely not blaming you.

Speaker 1 It goes back to the Copenhagen.

Speaker 2 No, but I should turn me a little bit because

Speaker 2 I should be rigorous about my performance.

Speaker 1 I think, you know, you go back to the commission versus versus omission.

Speaker 1 It's like the exact same reason that we shouldn't have blamed Google if they got involved and did this themselves and maybe made a mistake.

Speaker 1 It's like, come on, to remove the bottleneck that was basically stopping all global economic activity and

Speaker 1 causing

Speaker 1 millions of deaths, you had to,

Speaker 1 for the action you were taking about it,

Speaker 1 take money out of your daughter's college fund.

Speaker 1 It's so insane.

Speaker 2 And I, so can I say this and isn't like there's a positive takeaway here.

Speaker 2 So there actually is a positive takeaway in that there is one tiny actor who understands that he has unitary control over some decisions, who is capable of like betting boldly on those without a huge amount of process when it is important to bet boldly on things.

Speaker 2 Not to shoot my own horn here, this is literally what happened. So

Speaker 2 like on the first day,

Speaker 2 we're getting in Discord together and there's a bunch of infrastructure we have to sign up. We have to like, you know, get hosting, yada, yada, yada.

Speaker 2 And there is a like annoying mechanical mechanical step at this point where it's like you have to put down a credit card for a potentially unbounded expense.

Speaker 2 And people were like, okay, you know, there, there's a list of things that we want to do. But since there is no money here, you know, like I'll take this one and you take this one.

Speaker 2 And after I like heard this conversation go on for two minutes, I said, this is not a conversation we should be having. Here is

Speaker 2 a debit card for my business, which I've just spun up on the back end because like this is literally my job, which has $10,000 on it.

Speaker 2 Spend the $10,000 on anything accelerates this project there is no approval process there isn't don't get a receipt don't worry about the paperwork right now um and why did i do that because we were like doing things like well you know okay there's like a scrape like the information about where hospitals exist and what their phone numbers are is probably like scrapable from the internet for free or we could buy a commercial database but that's like a stupid amount of money it's like two thousand dollars i'm like relative to the importance of this project two thousand dollars is a trivial amount of money just spend the two thousand immediately rather than spending like four hours writing a scraper uh And

Speaker 2 we don't think about that in government procurement and in charities. We have some sacred virtues about like, you must minimize waste.
You must minimize opportunities for corruption. You must

Speaker 2 maximize for like the funders of the charities for their like, you know, line item

Speaker 2 support of individual things that charities buys. And those sacred virtues conflict with winning.
And at the margins where they conflict, we should choose winning.

Speaker 2 We should choose human lives over reducing corruption.

Speaker 2 And one of the few things we are reflecting on is the

Speaker 2 tremendous amount of waste and fraud that happened in the PPP loans and other corona stimulus things. And I'm like, okay, I'm not just saying this to be contrarian, folks.

Speaker 2 We should be glad there was waste in like COVID stimulus. If there was no waste, we were clearly not choosing the right margin to focus our efforts on.

Speaker 1 So, by the way, for the people who don't have context on how much money typically goes around in Silicon Valley, they think, oh, 1.4 million, how hard should that be to raise?

Speaker 1 If you right now, given your reputation, like literally treated out, I'm not going to tell you my idea, but I'm raising $50 million seed around or something.

Speaker 1 I would be like, that's going to get filled.

Speaker 1 I think people don't understand.

Speaker 1 I have friends who are 16 years old who have some GBT wrapper and they like, they don't have to worry twice about raising $1.4 million.

Speaker 2 Not trying to brag folks, just telling you the reality of Silicon Valley and also the reality I put in a document. I

Speaker 2 misapplied the, like, I have some knowledge of how

Speaker 2 seed funding would work if I attempted to raise seed funding for a for-profit company. And I thought originally, like,

Speaker 2 we're probably going to be charitable, uh, uncharitable, but I'm going to pitch this to people as essentially like a seed investment, which they expect to like spend all the money as quickly as possible and go to zero while while driving the total addressable market of the company to zero.

Speaker 2 But a bum this is what passes for humor with me.

Speaker 2 And so I told folks pretty confidently in the first couple of days, I'm pretty sure I can get us $8 million.

Speaker 2 And then

Speaker 2 was actually able to deliver on 1.2 after far more toothpulling.

Speaker 2 But like, yeah, descriptively, if I was asking for a seed stage investment, if I wanted to get $8 million wired by tomorrow, I think I could probably do that.

Speaker 2 And that is a civilizational inadequacy because I can literally get $8 million for a blank check for something that has a profit motive behind it.

Speaker 2 But if I write on the check, hey, we want to fix the manifesting ability of the United States to figure out where the COVID vials are, that blank paper becomes less valuable by the fact of writing that.

Speaker 2 So maybe on reflection,

Speaker 2 I just shouldn't have told people

Speaker 2 and said, oh, the blank check company was, you know, this thing and where we came in 501c3, which

Speaker 2 some ethics issues in that, but the ethics issues are less bad than allowing people to die.

Speaker 2 Yeah.

Speaker 1 Okay, so

Speaker 1 the last episode I released, at least while we're recording this, was about with an AI,

Speaker 1 a former AI researcher who thinks that the field is progressing in such a way that you'll need to nationalize the research in order to protect American national security.

Speaker 1 And when I hear this about the inability of the government to

Speaker 1 keep track of vials of COVID vaccines or to get them in people's arms, should

Speaker 1 for any other emergency that we might be worried about, whether AI, I don't know,

Speaker 1 the fallout of a nuclear war or something,

Speaker 1 should we just discount any government response to zero?

Speaker 1 And then just, if your plan requires some sort of competent administration by the government, discount to zero, it has to be something on the side.

Speaker 2 So discounting to zero is like the opposite of wisdom here because we didn't accomplish zero. We accomplished a

Speaker 2 extremely impressive thing in aggregate, which vastly underperformed like the true thing that we were capable of.

Speaker 2 And so, you have to keep both of those parts of the equation in our minds at the same time. Um, I think that people in tech need to become radically more skilled at interfacing with government

Speaker 2 to the extent that it is, uh, you know, we have some manifest competency issues in government right now.

Speaker 2 We can't simply,

Speaker 2 you know,

Speaker 2 sit out here and gripe about this on podcasts and et cetera, et cetera. We've got to go out and do something about it.

Speaker 2 And there was a,

Speaker 2 I think it's been reported that there was a meeting among tech leaders

Speaker 2 early in the vaccination effort where a bunch of people got in a room and were like, this is going terribly. I hope someone fixes it.
And I hope someone fixes it is no longer a realistic alternative.

Speaker 2 I think we have to be part of that solution there.

Speaker 2 Partly, it's like having higher fidelity models for how Washington works than simply, oh, they're bad at everything.

Speaker 2 it is important to understand

Speaker 2 that the government has some manifest competence issues.

Speaker 2 It's also important when working with the government to understand that, like, telling the government to its face you have manifest competence issues is not the maximally effective way to keep getting invited to the meetings.

Speaker 2 I was very religious about not criticizing anything about this Californian response effort in 2021 because we needed to be in the room where it happens.

Speaker 2 And, you know, that was a choice made. And

Speaker 2 am I 100% happy with that choice? No, but

Speaker 2 we kept some relationships that we really needed.

Speaker 2 And I'm not saying don't criticize the government, obviously, but

Speaker 2 be strategic about this sort of things. Like play like you were attempting to win the game.

Speaker 2 And on the government side, one, like dispelling the massive UG feel that surrounds software. This is going to be a part of the future, whether you like it or not.
We need to get good at it.

Speaker 2 We can no longer accept incompetence at this as the

Speaker 2 routine standard of practice in Washington. Two,

Speaker 2 you know, it is enormously to the United States' credit that we have an extremely functional, extremely capable tech industry.

Speaker 2 Maybe we shouldn't treat it like the enemy.

Speaker 2 Just putting that out there. Again, this is the thing the United States has done before.

Speaker 2 Like, there are laws in place. There are decades of practice.
We could put a colonel's uniform on somebody. Like, think seriously about doing that next time.

Speaker 2 Do I think we have institutionally

Speaker 2 absorbed all the correct lessons from this?

Speaker 2 No.

Speaker 2 When I see after action reports, the

Speaker 2 after-action reports praise a lot of the things that people think are very important for maintaining their political coalition,

Speaker 2 which were either not productive or anti-productive.

Speaker 2 And they failed to identify things that were the

Speaker 2 true issues. And to the extent that they identify things that were the true issues,

Speaker 2 the

Speaker 2 sort of recommended action is, well, I hope someone fixes this next time. And

Speaker 2 it's no longer sufficient. Like the default case is that the ball will be dropped.
And goodness, those of us who are involved in vaccinate CA kind of dread what we call the pet signal, where,

Speaker 2 God willing, there will not be another like worldwide pandemic killing millions of people as long as we live. If there is one, like we know what numbers to text to get the band back together.

Speaker 2 Society should not rely on us as plan A.

Speaker 2 How did this happen?

Speaker 1 The point about griping a podcast, that's definitely what I'm doing. But I just,

Speaker 1 maybe you're

Speaker 1 too humble to say this yourself, but I do want to commend you for, there are very few people, I think, who kind of...

Speaker 1 You tweeted it out. There are probably other projects that other people could have taken up that were not taken up.
In this case, you tweeted it out.

Speaker 1 You saw that there's a a thing that could be done and you did it. You like quit your job and you did this full time.

Speaker 1 You even, what this, and the reason you had to div into your kids' college fund was because somebody who had promised a donation didn't follow up on it, right?

Speaker 2 So effectively, every time that

Speaker 2 we had, you say, a verbal green light with regards to money, I would advance the company, the charity. Charities are companies, by the way, folks.
I don't know if that is obvious.

Speaker 2 It was called the Shots Incorporated.

Speaker 2 So So I would advance Call the Shots the money that was sort of soft committed before the money would actually arrive in the bank on the theory that like this accelerates our impact.

Speaker 2 We should always choose acceleration over other things, like say minimizing credit risk.

Speaker 2 And then, you know, some of the people who had like soft committed did not actually end up wiring money at the end of the day.

Speaker 2 And I was like, oh, shoot. Well, you know,

Speaker 2 choices now are either don't run the last payroll or do run the last payroll and do not recover the money I've advanced the company.

Speaker 2 Well, okay, you know, do run the last payroll.

Speaker 1 Did you end up recovering it in the end?

Speaker 2 No,

Speaker 2 it ended up being a donation of from me personally to the effort.

Speaker 2 What the fuck?

Speaker 2 That is the least important part of the story, folks.

Speaker 1 Sure. But overall, I'm just like...
Like, kudos isn't obviously enough to commend to convey what I mean to say here. But like, I mean, yeah,

Speaker 1 I'm glad you did that. And I'm grateful.
Like, four-figure amount of of lives, you just like, it's hard to sort of plot that on a graph and make sense of what that means. But

Speaker 2 if I can be pretty explicit about it, you know, to the extent kudos are deserved to anyone, you know, Carl Yang for taking up the torch and finding like 10 people in the tech industry who would jump into something at nine o'clock.

Speaker 2 Those 10 people, the

Speaker 2 other board members, the hundreds of volunteers, the team of about 12 people who worked on it full-time

Speaker 2 for very full definitions of full-time, virtually ceaseless for five, six months. And there were other you know projects in civil society there were many people doing this as their day jobs uh like

Speaker 2 the american response effort is not one like small group of people anywhere it's the collection of all these things uh bouncing off of each other and uh i think like um you know i'm happy about our individual impact i'm happy that if you uh like descriptively speaking if you googled uh for the vaccine at any point like vaccine near me after a certain day uh you know before a certain day there was no answer after that day there was an answer that answer came from us a little dissatisfied that that didn't come from like people with you know vastly more ability to have caused that to happen much earlier.

Speaker 2 But like

Speaker 2 the ultimate takeaway is not about this little tiny piece of the puzzle. It's how can we make the total puzzle better next time.

Speaker 1 So as you can tell by now, Patio 11 is somebody who loves digging into the weeds of how the financial system actually works.

Speaker 1 And so it goes to figure that he used to work for this episode sponsor, Stripe. Stripe is how millions of businesses around the world move money and accept payments.

Speaker 1 And one of the advantages of Stripe scale is they can invest in fractional optimizations, which are not viable for individual businesses, but add up to massive revenue and conversion increases.

Speaker 1 For example, last year, Stripe shaved 300 milliseconds off the render time for its payment links.

Speaker 1 You can think of Stripe as an entire company full of patio 11s dedicated to making sure they can figure out how to make the payment rails work smoothly for you and that's why technology companies like amazon and open ai and even traditional companies like ford and hertz choose to partner with stripe now back to my conversation with former stripe patrick mckenzie okay let's talk about some finance so

Speaker 1 You write, in addition to saving thousands of lives to vaccinate CA, what you've been doing over the last year or two is writing this finance newsletter, which is very excellent called Bits About Money.

Speaker 1 And you explore the plumbing in the financial system. My first question about this, crypto at its peak was worth $3 trillion or something like that.

Speaker 1 If you buy the crypto skeptic perspective that you have, how do we think about this number? What does it represent?

Speaker 1 Was it just the redistribution of wealth from savvy people or from dupes to savvy people? Or to the extent that useful applications didn't come out as $3 trillion, what does it represent?

Speaker 2 So

Speaker 2 I think I have two broad perspectives on this. One, people often treat the market cap of something as like implicitly that is some sort of cost on society.

Speaker 2 And I think the true cost to society of crypto has been

Speaker 2 that anytime one engages in attempting to do a productive enterprise, some actor in society has said, okay, I will stake you with some of society's resources, which these resources are rivalrous.

Speaker 2 They cannot be applied to any other thing society needs in the hope that you will produce something that is worthy of being staked with this.

Speaker 2 How much have we spent on crypto, not on trading tokens around, but on building infrastructure and spending rivalrous resources that we can't get back, whether that's

Speaker 2 GPUs or ASICs or electricity that could have gone to other things in China, but went into mining or the time of talented and intelligent people that could have been building other software products, but was instead building crypto?

Speaker 2 That number is in the tens of billions or hundreds of billions of dollars. What do we have to show for that tens of billions or hundreds of billions of dollars?

Speaker 2 I am very crypto skeptical, and I could give you an answer to that question. I think crypto-like fans would not like to hear it from me.

Speaker 2 So I prefer Vidalik Buterin's articulation of this question from 2017. He asked, at the time it was $0.5 trillion.
A trivial number, only $500 billion in market cap.

Speaker 2 He said, have we, and I'm paraphrasing a tweet thread, have we truly earned this number? How many of the unbanked have we actually banked?

Speaker 2 How many distributed applications have a meaningful amount of value doing something which is meaningful? And he has about six other meditations on this. And I i think you know like

Speaker 2 crypto folks certainly aren't accountable to me in some case uh uh manager you're not even accountable to buterin even though he's uh you know a uh uh clearly like a leading intellectual in the community you're you're accountable to like producing positive value in the world but like what is the answer to buterin in uh in 2024 how many of the unbanked have we truly banked what is the best use case for crypto right now once crypto has a responsive answer for that that is sized anything like proportionate to the hundreds of billions of dollars, tens of billions or hundreds of billions of dollars of resources that we've staked crypto with, I think crypto people should feel enormously proud of that accomplishment in some future where it hypothetically arrives.

Speaker 2 And in some future where that hypothetically arrives, you have my sword. I will love your initiative.
However, for the last many years, we have been saying, you can still get in early.

Speaker 2 You can still get in early. You can still get in early because the value has not arrived yet.
And so that is my like capsule summary on crypto for 14 years in.

Speaker 2 We've staked a group of talented people who are very good at giving a sales pitch with tens of billions or hundreds of billions of dollars.

Speaker 2 And look at what we have built.

Speaker 2 This would be a failure in any other tech company. So capital F failure.

Speaker 2 So either like radically pivot and unfail it, or maybe we should stop continuing to stake you with money.

Speaker 1 So two potential responses

Speaker 1 from the crypto optimistic perspective. One, I have people who help me with the podcast who are around the world.
Not that many, but like the couple I have are around the world.

Speaker 1 I have a clip editor in Argentina. I have a shorts editor in Sri Lanka.

Speaker 2 And all of these people,

Speaker 1 have asked me. I haven't prompted them.
I asked them, how should I pay you? And they say USDC.

Speaker 1 And so maybe

Speaker 1 it wouldn't be that much harder for them to set up a Wise account. But I think it's notable that all of them prefer the just, well,

Speaker 1 how should I get paid? The first answer is a stablecoin. Absolutely.

Speaker 2 That is evidence. And

Speaker 2 some tech-savvy people have a good payment rail. Well, they have a payment rail that they did not have access to 15 years ago.

Speaker 2 But like at the cost of tens or hundreds of billions of dollars.

Speaker 2 You know, like counterfactually, if one had thought like, okay, we really want to work on that payment rail specifically, another way one could hypothetically have, you know, deployed $10 billion

Speaker 2 is on like the best-funded lobbying campaign in history in the United States to work on like AML and KYC regulation to allow more easy transfers of money worldwide.

Speaker 1 But why does it have to be compared against the best possible counterfactual use case? It's the sins of commission versus omission again, where it's like, on the margin, it made things better.

Speaker 2 Don't judge it by like hypothetical worlds. Just like keep in mind that hypothetical worlds might exist.

Speaker 1 Judge it by the actual realized utility at the moment relative to the amount of resources consumed um the second point is if you look at for example the dot-com bubble literally close to a trillion dollars were invested in laying out the fiber and the cable for this artifact that now you consider is the most valuable

Speaker 1 thing that humanity has built and at the time

Speaker 1 Reasonably, people, a lot of the companies that built this went boss.

Speaker 1 There was a bubble-like dynamic where many of the investors who spent the capital to build out this infrastructure weren't paid back, didn't see immediate use cases from what they'd built.

Speaker 1 And they had just, the bubble had sort of served as a shelling point that in the future, get things rolling. And that was hundreds of billions of dollars, a trillion dollars.
Yep.

Speaker 1 Tens of billions of dollars. If in the future something cool comes out of it and it's a useful use case, that's probably worth it, right?

Speaker 2 Cool.

Speaker 2 At what point do we get to say that didn't happen?

Speaker 1 A trillion dollars?

Speaker 2 Like at what date in the future do we do we judge like

Speaker 2 someone has been right or someone has been not with respect to we have created like uh you know people in crypto have very confidently stated in various places that this is the next iteration of the internet this is uh you know will revolutionize the the uh the world not just how payments are conducted but it will be like a fundamentally new computing architecture okay like at what day do we compare notes on whether that claim was accurate or not does 2030 seem like a reasonable year or too far it seems like reasonable to me uh can i can i make a prediction of what is said in 2030 uh-huh you can still be early crypto has created like uh uh huge amounts of things but it's not achieved anywhere near its true potential.

Speaker 2 Please invest in our new crypto start.

Speaker 2 And let's check back in 2030, folks. Please, you know,

Speaker 2 tweet me if I'm wrong in 2030. I will happily eat Crow.
I want to eat Crow. Like,

Speaker 2 you know, crypto people are like, how couldn't you? be interested in programmable money. I'm like, I'm interested in programmable money.
Obviously, money is programmable money. But

Speaker 2 my friends who are trying to sell me on this since 2010 weren't wrong. We should totally smash my interests based on what I usually find intellectually edifying.
And

Speaker 2 I don't not find crypto intellectually edifying. I actually think there are some interesting things that have come out of the movement.

Speaker 2 But I find a computer built in Minecraft out of redstone to be intellectually edifying. And it's a wonderful educational device for people who don't understand how a CPU works.

Speaker 2 And I'm not proposing to use the

Speaker 2 redstone emulated computer in Minecraft to be like the next computational infrastructure for the world, because that like fairly obviously will not work very well.

Speaker 1 So another answer of what the value here is,

Speaker 1 listen, we want some sort of hedge against,

Speaker 1 and I think this is actually kind of a reasonable argument.

Speaker 1 I actually don't buy the capabilities that have been unlocked by crypto, but I do buy the argument that we want some kind of hedge against the government going crazy and KYC AML leading to state surveillance, all the compliance departments and the banks just like start seeing if you've been to political protests and debanking you.

Speaker 1 And it may seem unlikely, but it's good to have this alternative rail, which keeps the system honest, given that there's an alternative. And if things go off the rail, is this a worthwhile investment?

Speaker 1 A couple of times. I mean,

Speaker 1 society as a whole can't even count that low in terms of the other resources that it spends. So it's a good hedge against that kind of outcome.

Speaker 2 So I'm actually much more sympathetic to crypto people in this folks than they expect most people who have a traditional financial background to be.

Speaker 2 I think it is descriptively accurate that the banking system and all companies which are

Speaker 2 necessarily tightly tied to the banking system,

Speaker 2 which might be all companies. Well, let's come with a central example so that's I can set first,

Speaker 2 are a policy arm of the government. And I think

Speaker 2 You know,

Speaker 2 whether people articulate that in exactly those words or not varies a little bit.

Speaker 2 But when you have your mandatory compliance training, you'll be told in no uncertain terms that you are a policy arm of the government.

Speaker 2 And

Speaker 2 I feel for crypto folks that say that things like this feels like warrantless search and seizures of people's information in a very undirected dragnet fashion.

Speaker 2 some somewhat complicated thoughts about this.

Speaker 2 So the modern edifice of know your customer, KYC, and AML anti-money laundering dates back to the BSA Bank Secrecy Act in the United States, which was late 1970s, early 1980s. And at the time,

Speaker 2 the

Speaker 2 federal government in the United States was like strictly rate-limited in how much attention it could give to KYC and AML.

Speaker 2 And so maybe because we thought we had very limited state capacity at the time, like the government would make rational decisions.

Speaker 2 And maybe it will go after like 10 or 100 enormous white-collar crooks and drug trafficking cartels a year and not surveil down to literally everyone in society.

Speaker 2 But the regulations we wrote and have continued to write and have continued to tighten on over the years

Speaker 2 do effectively ask for like transaction level surveillance of every transaction that goes through a bank. And so

Speaker 2 it is the actual practice, and this is not a conspiracy theory. I'm making nothing up, folks.
This is like...

Speaker 2 acknowledged that the actual practice in banks is that they have descriptively about as many intelligence analysts as the American intelligence community has who get this scrolling feed of alerts that are generated by automated systems and for each alert they either go,

Speaker 2 don't worry, don't worry, don't worry, don't worry, don't worry, don't worry, don't worry, don't worry, millions of these alerts every day.

Speaker 2 And then for some tiny percentage, they say, oh dear, this one might actually have been a problem.

Speaker 2 I'm going to write a two-page, two to four-page memo and file it with the Financial Crimes Enforcement Network. And in all probability, no one is ever actually going to read that memo.

Speaker 2 But we have like, an intelligence community-sized operation running in banks to write memos that no one ever reads.

Speaker 2 Because some tiny portion of those memos will be useful to law enforcement in the future and if you had explained that trade in like a presidential debate in the in the 1980s i find it extremely unlikely that any part of the american polity would say yeah yeah i want to buy that could we perhaps spend tens of billions of dollars on it but we did that and so uh to the extent i'm like extremely copacetic with crypto folks on this point, a like this thing factually exists in the world.

Speaker 2 I agree with you that it does.

Speaker 2 B, in an ideal world, I don't think this thing would exist. I think I agree with you.
There are very real like, you know, privacy fears. And then, however, crypto has this habit.
And,

Speaker 2 you know,

Speaker 2 people who are good at sales have various sales pitches that they give to various people. And crypto will...

Speaker 2 actors within the crypto ecosystem will talk an excellent game about privacy as long as number goes up.

Speaker 2 And when you say, ah, but you can choose between like being tied into the banking system, which is necessary for number go up, or you can choose privacy, they will say, excellent.

Speaker 2 I choose number go up. And so, but there's different protocols.

Speaker 1 You can use the ones that allow privacy if you care more about privacy.

Speaker 1 Right.

Speaker 2 So, yeah.

Speaker 2 Descriptively,

Speaker 2 that is a very tiny portion of crypto.

Speaker 1 Also, to riff on what you were saying about

Speaker 1 the analysts

Speaker 1 that number as many as would be an intelligence agency, these apparatchiks

Speaker 1 who are connected to the government's policy, just analyzing each transaction.

Speaker 1 As soon as the government gets the competence to run an LLM across each of these millions of queries, right?

Speaker 2 This is like a legitimate worry because as we,

Speaker 2 you know, this is funny in the echoes of like, we have extremely low state capacity for this thing that we didn't think was important, which was, you know, successfully administering vaccines.

Speaker 2 But we do have extremely high state capacity with regards to running the security state.

Speaker 2 And if they successfully manage to like get their technological Dexanova in order, which there are pluses and minuses there, but they have built some things that are extremely impressive technologically, and then just run it on this data set that we've passively been producing.

Speaker 2 The sort of

Speaker 2 implicit ongoing invasion of privacy is much worse than we kind of baked into the system in 1980 when it would have been people going down to archives to look at things in microfiche to try to do this.

Speaker 1 And I mean, I'm not even necessarily making a point about crypto here, but I think it's worth meditating on the fact that the default path with this technology is that a very smart LLM is going to be looking at every single transaction that is electronically

Speaker 1 aka every single transaction ever.

Speaker 1 And it's intelligent enough to sort of understand the implications, how it connects to your other transactions and what's the broader activity you're doing here.

Speaker 1 And maybe this is just a broader point about how...

Speaker 2 Can we step back from crypto and finance for a moment? Sure. I think this is one of the least understood things about the tech industry where we have this

Speaker 2 societal level question that is not being addressed directly, but it's being addressed by misunderstood proxy questions on

Speaker 2 taking as written that the finance industry is a branch of government in a meaningful sense.

Speaker 2 Should the tech industry also be a branch of government? And we don't ask that question directly.

Speaker 2 We have asked instead things like, should the tech industry be responsible for minimizing the spread of misinformation, et cetera, et cetera? And there was

Speaker 2 an injunction issued in a court case last year on the 4th of July, which I find oddly aesthetically motivating. The court case is Missouri et al.
versus Biden et al.

Speaker 2 But the argument made in the court case, which the judge accepted, which is extremely

Speaker 2 well supported by the record in front of him, is that various actors within the United States government

Speaker 2 puppeted the tech companies and used them as cat's paws to do, frankly, shocking violations of

Speaker 2 constitutionally protected freedoms like the freedom of speech.

Speaker 2 And that they were like, not on the level of, we've built this, you know, unaccountable, hard-to-inspect system of LLMs and heuristics.

Speaker 2 And we started like turning off a lot of people's feeds in Facebook.

Speaker 2 But like, no, like there was an individual person in the White House who was sending out emails like, when are you going to address me on this tweet, guys?

Speaker 2 We can't have things like this anymore, et cetera, et cetera. Again,

Speaker 2 a feature of the United States. We are very good about like keeping records and transparency and having a functioning legal system.
And the record before the court is

Speaker 2 like, I was following along as this was happening. And what was happening was much worse than I understood to be happening.

Speaker 2 An example of something like, as we were growing up as children, would you ever think that the United States federal government would tell, I believe it was the state of Missouri,

Speaker 2 hey, you have town halls where like citizens can come in and speak their mind and advocate for their policy preferences.

Speaker 2 And you probably have a civics class and talk about like the First Amendment and things. Yeah, someone said something we don't like in a particular town hall.
Take down the recording from YouTube.

Speaker 2 That happened.

Speaker 2 That is a violation of the Constitution of the United States. That is against everything in the traditions and laws and culture of the United States.
That is outrageous.

Speaker 2 And yet it happened.

Speaker 2 And

Speaker 2 we have not repudiated the notion of using tech as cat's paws or using,

Speaker 2 in some cases,

Speaker 2 this is like literally written in the decision, by the way, which I would urge everyone to read. There was an individual in a non-governmental organization which was collaborating with the

Speaker 2 governmental organizations in doing this, which said,

Speaker 2 to get around,

Speaker 2 I'm not quoting exactly,

Speaker 2 to get around legal uncertainty,

Speaker 2 including very real First Amendment concerns, comma, in our ability to do this, Rather than doing it in the government directly, we are outsourcing it to a bunch of college students who we have hired under the auspices of this program.

Speaker 2 Like,

Speaker 2 what?

Speaker 2 Like, one,

Speaker 2 just as a dangerous professional here, you've violated the

Speaker 2 character from the wire, Stringer Bell, Stringer Bell's dictum on the wisdom of taking notes on a criminal conspiracy. But you literally wrote that down in an email.

Speaker 2 The outrageous part is not that you wrote that down in an email.

Speaker 2 The outrageous part is you, like, with full knowledge of it, engaged in something that is outrageously unconstitutional, immoral, illegal, and evil

Speaker 2 to the applause of people in your social circle. And everyone involved in the story thinks that they are the good guy in it.

Speaker 2 If you write that email, you are not the good guy in the story.

Speaker 1 Okay, so on that, by the way, so what is your sense of what the judicial end result of deliberations on this will be?

Speaker 2 I think there will be a limited hangout and walk back of some particular things. And do I predict that,

Speaker 2 and probably, you know, there does exist an injunction. I would predict that that continues to happen in the future.

Speaker 2 What do I know? I'm just the software guy, but do,

Speaker 2 like,

Speaker 2 people want to achieve power. The tech industry descriptively has power because it is good at achieving results in the physical world.

Speaker 2 This is certainly not going to be the last time time that someone desiring power thinks like, okay, can I force you to give me the power that you have accumulated?

Speaker 2 And like that is, you know, ultimately, like, this is fundamentally a political decision about how we construct our democracy. And we should make good decisions about that.

Speaker 1 Well, I mean, maybe that's the point or the crux here, which is that.

Speaker 1 Through the story you illustrated of the vaccinate CA and the lack of accountability that showed in our institutions, the idea that you're going to go back to Congress and get them to pass some law that says, oh, we're KYC, AML.

Speaker 1 We realize that with LMs, it's going to be a bad deal with regards to privacy. We're going to roll that back.

Speaker 1 We don't like that the collusion between tech and whoever's in power and being able to dictate what can get taken off the platform.

Speaker 1 And that we think about the violence of free speech, we're going to pass laws to take that back.

Speaker 1 There's no sense in which there's society that comes to a consensus, and here's the privacy concerns we have, here's the free speech concerns we have. So,

Speaker 1 at least one argument goes: the solution has has to be that you just go off a rail, you start a new rails for these kinds of things that cannot be constrained in this way.

Speaker 1 And it's not a matter of just changing the KYC law. Or that just not, that's implausible given the manifest

Speaker 1 declining state capacity we've talked about.

Speaker 2 Yeah, I don't accept that that is the only thing.

Speaker 2 uh possible for us. I don't accept that the United States is incapable of doing nice things.

Speaker 2 We can't accept that. We have to be optimistic about the future.
Otherwise, what are we doing here?

Speaker 2 And, you know, in the tech industry, like we know it is not like a physical law of reality or of large institutions that one cannot make systems that work. Like making systems that work is the job.

Speaker 2 We have a few existence proofs.

Speaker 2 Like

Speaker 2 we should increase our engagement with government

Speaker 2 on, you know, like, hey,

Speaker 2 state capacity, we can help you build some of that stuff.

Speaker 2 Also,

Speaker 2 you know, Constitution of the United States is a document. We feel like kind of attached to that document.

Speaker 2 We understand, like,

Speaker 2 again, incentives rule everything around us. Tech industry was in early 2021 very concerned about being told in no uncertain way by people in power, if you embarrass us, we'll end you.
And

Speaker 2 the

Speaker 2 one thing in the record, judicial record of this case is that the White House routinely, White House and other government actors routinely overreached and asked the tech companies we would like you to censor this and this and this and this.

Speaker 2 And the tech companies said no in a bunch of cases. And so like

Speaker 2 continuing to negotiate for the right outcome rather than the one that people in power merely want is important.

Speaker 2 There are some things that will feel unfortunate and maybe a little bit outside of the

Speaker 2 like our true sweet spot of what we would want to be doing on Tuesday in the tech industry, where like maybe we have to ratchet up the amount of public policy advocacy that we do.

Speaker 2 Lobbying is a dirty word in the tech industry. It probably probably shouldn't be.
Maybe we, you know, not just lobbying, but like

Speaker 2 when the do not embarrass us order came down and people were getting very quiet about the fact of feeling constrained by this,

Speaker 2 maybe we should have spoken out more and spoken more boldly about it.

Speaker 2 Maybe when it was like the routine case that the White House was, you know, telling Facebook, Twitter, et cetera, et cetera, everyone knows the names.

Speaker 2 Companies like on a tweet-by-tweet, communication-by-communication basis, and also with regards to broad rules that affected the entirety of the citizenry of the United States and residents of the United States, and also everyone else in the world, because these are the operating systems of the world.

Speaker 2 Like giving direct orders on there's a certain kind of free speech, rather, there's a certain kind of speech act, which we find vexatious, and we would like you to stop that everywhere.

Speaker 2 Like,

Speaker 2 very plausibly should get on the nightly news and say, I received the following email from the White House that says we should stop this everywhere.

Speaker 2 Like, if you point a gun at me, I will comply with this at the point of the gun. That is what it will take.

Speaker 1 But it almost requires civil disobedience in the sense of, if you're right about the earlier statement that in 2021, there were going to be serious political repercussions on the tech companies.

Speaker 1 So,

Speaker 1 okay, so say that that's right. And then they published this email, like, here's what the White House just sent me, the take on this tweet.

Speaker 1 And now Twitter's market cap has just collapsed because people realize the political implications of what Jack Dorsey just got up and said at the time.

Speaker 1 So then the solution is that you need tech companies to basically sacrifice their

Speaker 1 capacity to do business in order to, I mean, maybe that is a solution, but like that's not a story about like optimism about the ability of the U.S. government to solve problems this way.

Speaker 2 You need to have a risk tolerance, right? Like we

Speaker 2 every business everywhere, including the financial industry, including the tech industry, is like balancing various risks. And the risk tolerance was poorly calibrated.

Speaker 2 One can achieve results in the world by doing things like embarrassing government officials.

Speaker 2 And

Speaker 2 embarrassing a person in a position of authority is

Speaker 2 not a zero-risk behavior. It is relatively low-risk in the United States relative to other places.
That was extremely important for vaccinate CA.

Speaker 2 People thought at the beginning, are we going to get in trouble for publishing true information about vaccine availability that will embarrass the state of California?

Speaker 2 And I said, I have a very high confidence that no matter what we do visa the state of California, that you cannot get in serious trouble in the United States for saying true things.

Speaker 2 The First Amendment exists. We have backstopping

Speaker 2 infrastructure here. And if push comes to shove, we will shove back and we will win.

Speaker 2 And

Speaker 2 this is just me as a guy who took the same civics course

Speaker 2 that everyone took and does not have a huge amount of resources relative to, say, the entire tech industry.

Speaker 2 Like, maybe we need to have a certain amount of infantimal fortitude. Like, a, okay,

Speaker 2 you know, you've asked us to do something. You've, you've threatened us with

Speaker 2 taking away all the wonderful toys and the great business models that make this an extremely lucrative area to work in.

Speaker 2 and to sacrifice a value that is very important for us to continue to do that.

Speaker 2 No, we're going to fight you on this one.

Speaker 2 And then you know

Speaker 2 the comms trained part of me is like don't use the word fight is we are going to collaborate with stakeholders across civil society to to achieve an optimal uh outcome balancing in the uh multiple uh disparate and legitimate interests of uh uh various arms of the government and civil society and blah blah blah blah blah

Speaker 2 Sometimes that requires fighting. We should fight when it does.

Speaker 1 On Tyler's podcast, you said something like, America doesn't have the will to have nice things and Japan does. But if you think about

Speaker 1 your own essay about working as a salary man, you're working 70 hour weeks and you're killing yourself to get that marginal adornment on the products you're making.

Speaker 1 Isn't it more efficient? Isn't it better that we have a system where we put in 20% of the work to get 80% of the results?

Speaker 1 We spend the rest of the effort on, I don't know, expanding the production possibilities Frontier. And

Speaker 1 it's good that we don't have the will to have nice things. We just get it done.

Speaker 2 I don't think these trade off against each other at the relevant margins.

Speaker 2 Nothing about culture is monocausational.

Speaker 2 Also, I don't think culture is a

Speaker 2 sufficient explanation for some of the differences that are achieved in the United States versus the Japan, for example.

Speaker 2 There's a great book, Making Common Sense of Japan by a person whose name I am blanking out at the moment.

Speaker 2 An argument he makes in it, persuasively and at length, which I don't think is 100% true, but is more true than most people in

Speaker 2 well-informed on either side of the Pacific believe, is that when people say

Speaker 2 they do this because it is Japanese culture, what they're often saying is:

Speaker 2 you know, I usually have a model for why people do things driven by incentives. And I understand this incentive, this incentive, this incentive.

Speaker 2 And then there's some error term in this equation that I don't understand. I'm going to call that error term culture.

Speaker 2 I think culture is a real thing in the world, to be clear, but I often think that we that we reach for that error term far faster than we should. So

Speaker 2 as my minor observation about culture, with respect respect to,

Speaker 2 you know, there are places in pockets of the United States that have the will to have nice things.

Speaker 2 And often they discover, sometimes surprisingly, that the only thing you need to do nice things at the relevant margin without spending more money, without having people like kill themselves over 90-hour weeks for the entirety of the career, you can just choose to have nice things.

Speaker 2 Let's choose to have nice things. Let's not be embarrassed about choosing to have nice things.

Speaker 1 So you understand all this financial plumbing.

Speaker 1 If you were an investigative reporter, what is the thing you're looking at that the average reporter at some newspaper wouldn't know to look at to investigate a person or a company or a government institution?

Speaker 2 I have an enthusiasm for the minutiae of banking procedure in a way that few people have enthusiasm for the minutiae.

Speaker 2 Sometimes banking procedure causes physically observable facts to emanate into the world.

Speaker 2 And if you know that those facts are going to emanate, then like you can have a claim made about a past state of the world. I did this thing or I did not do this thing.

Speaker 2 And that claim will, if it is true, cause metadata in other places, and you can look for the metadata. This is actually how a lot of frauds are discovered because the fraud is

Speaker 2 basically the definition of fraud is you're telling someone a story. The story alleges a fact about the world.
The story is not true. And you're using the story to extract value from them.

Speaker 2 Most frauds will allege facts about the physical world. As the physical world gets more and more mediated by computers, as

Speaker 2 it gets increasingly increasingly sharded between different institutions, there will often be institutions who are not under the control of the fraudster, who

Speaker 2 have information available to them, which will

Speaker 2 very dispositively answer the question of whether

Speaker 2 the

Speaker 2 alleged fact happened or not.

Speaker 2 And as a reporter, understanding how institutions and society interact with each other and the physical reality of, okay, if this thing happens as alleged, then these papers will be filed, then these API costs will call, et cetera, et cetera.

Speaker 2 And then, you know, like doing the core job of reporting and like finding people at the institutions who will tell you the truth.

Speaker 2 As an example of this, Mt. Gox many years ago was

Speaker 2 insolvent, and that fact was

Speaker 2 widely rumored, but not reported, presumably because the

Speaker 2 global financial news industry didn't find it convenient to have someone call into the Japanese banking system and ask the right questions in the right way.

Speaker 2 The CEO of Mt.

Speaker 2 Gox alleged on Bitcoin Talk that the reason that they were not able to make outgoing wires was because they had caused a distributed denial-of-service attack on their bank's ability to send foreign currency wires.

Speaker 2 That bank was Mizoho. Mizoho is the second largest bank in Japan.

Speaker 2 Many people at, say,

Speaker 2 well-regarded

Speaker 2 financial reporting institutions in New York City find it incredibly exotic and difficult and maybe in some ways kind of unknowable to extract facts from Misajo, which

Speaker 2 there are addresses. FedEx will deliver letters to them.
They have phone lines. We also have fax machines.
We love our fax machines.

Speaker 2 Like, could you send a fax to anybody at Misahoe and say, hey, quick question. Are you sending like wires today?

Speaker 2 And Misaho would like receive the facts, look at it kind of quizzically, and say, in response to your facts earlier, yes, we are still sending wires because we are the second largest bank in Japan.

Speaker 2 Do you have any other easy-to-answer questions for us?

Speaker 2 You know, like financial reporting, dropped the ball. I'm just asking like individuals at Mizoho simple questions about reality.
Maybe you should do that next time.

Speaker 2 And

Speaker 2 to the extent that you understand,

Speaker 2 okay,

Speaker 2 like one, understand that the CEO is giving out gold on Bitcoin talk under his own name, where these are, like, obviously reportable statements, the statements of alleged facts about material reality, and maybe like chase down the truth value of that.

Speaker 2 That's hard. It's so much easier to just like repeat what he says on Twitter and say, as said by this person on Twitter, and then like quote the Bitcoin price feed.
But reporting is hard.

Speaker 2 Like, be good.

Speaker 1 Why aren't short sellers doing this? Because they should have an economic incentive to dig to the bottom of this, right?

Speaker 1 And so, but we should have a deluge of financial information from short sellers who called banks and traced through the API calls.

Speaker 2 Yeah,

Speaker 2 that is an ongoing interesting question. I think short sellers provide an enormous service for the world in like being essentially society's best salutes of financial fraud.

Speaker 2 And yet they fail to detect lots of them.

Speaker 2 And not just throwing short sellers or reporters or anybody else on the bus.

Speaker 2 I failed to detect SPF's various craziness despite having sufficient information available to me as a well-read person on the internet to have detected that. Like, where were the freaking wallets?

Speaker 2 Everybody

Speaker 2 assumed someone else was looking at it, essentially. So that's one reason.

Speaker 2 Short sellers often assume, okay,

Speaker 2 I need to find a...

Speaker 2 like first get put on the path of something and have a differentiated point of view.

Speaker 2 And then like another issue for short sellers is you have to find an instrument and you have to find another side of the trade to successfully do that. And there was

Speaker 2 without being an expert on Bitcoin micromechanics, it was like difficult in size to make the trade. Mt.
Cox is insolvent right now, other than like pull money out of Mt.

Speaker 2 Gox, which people were definitely trying to do. I got a number of interesting business proposals in the 2012-ish timeframe from people who said,

Speaker 2 hey, you're an American and you clearly understand like international banking and you live in Japan.

Speaker 2 Could I like cause you to get some yen and have you wire that to me in America and you can take a percentage? And I said, I really don't like where this is going.

Speaker 2 And they said, well, there's this company and I've got some money over there and they can send yen, but they can't send dollars. And I'm like, is that because they don't actually have the money?

Speaker 2 And they're like, no, no, no, it's a Japanese banking thing. I'm like,

Speaker 2 no, it's not.

Speaker 2 You know, Japanese banks are very good at sending wires. And they said, no, no, no, it's really this thing.
This is totally clean.

Speaker 2 I'm like, you would not be having this conversation with me if it was totally clean. You need a money launderer.
I will not be your money launderer.

Speaker 1 How hard is money laundering? If, on one hand, you mentioned earlier the state capacity that banks have where every transaction is analyzed and flagged.

Speaker 1 And if it's notable enough, they write a report about it.

Speaker 1 How sophisticated does the cartel need to be in order to move around seven-figure amounts of money, let's say?

Speaker 2 So

Speaker 2 the definition of money laundering is like extremely stretchy and like taffy.

Speaker 2 And there's a spectrum of people, much like there's a spectrum of sophistication and financial fraud, there's a spectrum of sophistication and money laundering.

Speaker 2 So

Speaker 2 if you want to look at

Speaker 2 probably the most sophisticated money laundering in history, he's currently a guest of the U.S. government, but wherever SBF is staying.
He was sophisticated?

Speaker 2 Oh, this is a disagreement I have with a lot of people. SBF was extremely sophisticated.

Speaker 2 Like a person, not just SBF. I think people

Speaker 2 like identify him uniquely, right? They identify

Speaker 2 the inner circle uniquely as being at fault here there was an entire power structure there which was extremely adept at figuring out how power worked in the united states and exercising it towards their own ends and then it blew up but until then goodness uh like um you know They decided we need regulatory licenses.

Speaker 2 They're called money transmission licenses in the United States. And those are done on a state-by-state basis.
They got 50 regulators to sign off on it, et cetera, et cetera.

Speaker 2 Like there are many objective indices of them being very good at their jobs until they lost all the money.

Speaker 1 So but it was more about politically getting people to look the other way rather than we figured out how to structure the wire in a way that won't get flagged.

Speaker 2 It's not merely a matter of getting them to look the other way. But if you go back to the original SBF interviews where he's telling the founding myth of Alameda, he says like very loudly,

Speaker 2 you know, the reason why I got this opportunity to do Bitcoin arbitrage between Japan and the United States is because I was able to do something that the rest of the world wasn't.

Speaker 2 I was able to, he doesn't say this in this many words, I will say it, suborn a Japanese bank

Speaker 2 because you need that as like one of the pieces to run this ARP. And then I pulled

Speaker 2 tens of millions of dollars out of this.

Speaker 2 I don't think people like really listened to what he was saying there.

Speaker 2 And he literally says in the interview on Bloomberg, if I was a compliance person, this would look like the sketchiest thing in the world.

Speaker 2 This looks like it's obviously money laundering because it is money laundering.

Speaker 2 And then

Speaker 2 interestingly, Michael Lewis retells this story and he locates the story in South Korea rather than in Japan.

Speaker 2 And some people who are involved say we tried it in South Korea and Japan, which people would like to pull on more threads there. Like there's still lots of that story that we don't know.

Speaker 2 But anyhow, how sophisticated do you have to be to launder tens of billions of dollars around? SBF did that. So like that is A-Bar for sophistication.
He was eventually caught.

Speaker 2 He was not caught for laundering tens of billions of dollars round. He wasn't even under suspicion for laundering tens of billions of dollars round.
SBF was Tether's banker.

Speaker 2 Alameda research, you know, one of the parts of like the corporate shell game that they were playing, moved tens of billions of dollars of cash around the financial system, largely under like full color of law,

Speaker 2 on behalf of Tether to move it from wherever Tether had it, goodness knows, or wherever their buying customers had it, to, I think at the moment it's mostly at Catcher Fitzgerald.

Speaker 2 Some shoe has to eventually drop there. I will eat a lot of popcorn when it does, but be that as it may.
There's many other ways to launder money. You can like do things like,

Speaker 2 let's say

Speaker 2 I establish a shell corporation and I buy a piece of real estate in New York City and then I rent that real estate out to people and I collect a stream of

Speaker 2 rents from that. And that money looks clean because there is an exclusive business.
It's my shell corporation that is renting this real estate that really exists to a totally legitimate person.

Speaker 2 This money is clean. And the money that I like put into the system to buy to buy this on behalf of the shell corporation, I'm just going to wire it to a lawyer.

Speaker 2 And the lawyer is going to answer any question from the bank with, I don't know where it came from. I don't have to tell you.
I'm a lawyer. It's a real estate transaction.
What do you want from me?

Speaker 2 In one sense, that's money laundering.

Speaker 2 If the original

Speaker 2 money was the proceeds of crime, in another sense, that's how every real estate transaction goes down at those scales. And so like.

Speaker 2 Often, like,

Speaker 2 facility at money laundering is one facility at operating the economy plus

Speaker 2 willingness to do that to hide the proceeds of some other crime um i think i would be really good at money laundering i'm glad i haven't done it professionally uh but uh yeah that

Speaker 2 it's fascinating intellectually uh previous communications departments i've worked at probably uh would have like explicitly anti-endorse that sites

Speaker 2 what can one do it's we are originally confident that you're not laundering money i i would be much wealthier if i was uh

Speaker 1 well as a separate topic but when you look you you emphasize that people tend to undercharge for the products they serve If you have identified somebody who actually does charge for products where they can get away with, what psychologically do they have that the rest of us don't?

Speaker 2 So I think interestingly,

Speaker 2 here is one of those places where culture is not necessarily merely the error term, but is actually descriptive in some ways.

Speaker 2 Without pointing fingers at particular examples, because it gets contentious, there are like some cultures in the world that

Speaker 2 institutionally have adopted more of a,

Speaker 2 how do you put put it? Pro-capitalist, pro-mercantilist, et cetera, like less of an ingrained skepticism regarding like earning money and accumulating resources as a goal.

Speaker 2 And there's other cultures which have an extreme ingrained skepticism about earning money and accumulating resources as a plausible goal.

Speaker 2 And those cultures generate people who have very different negotiation strategies.

Speaker 2 And when you like impact people with different negotiation strategies against the reality of a well-operated, I don't know, Google, for example, they arrive at very very different numbers.

Speaker 2 What's the, is it Amy Chua, who wrote Market Dominant Minorities

Speaker 2 piece about

Speaker 2 a book about that subject, etc. Like one of the one of the things in that is that, you know,

Speaker 2 like

Speaker 2 All people are equal in the eyes of God and hopefully in the eyes of the law, but like not all cultures like physically make the same decisions with regards to the same facts on the ground.

Speaker 2 And that causes some disparity in outcomes. And so that is one tiny part of that thesis, which I don't

Speaker 2 actually a lot of books. I don't necessarily endorse every word in every book that I read, but I think there is something to that.
I think another thing is that

Speaker 2 there's a certain personality type cluster, I guess you would say, of people that got into tech. And many of us,

Speaker 2 it is overadvanced that the tech industry and the pathologies of the tech industry are caused by the nerd versus jack distinction in American high schools heavily overadvanced amount of truth to that not zero uh and uh like many of us were you know

Speaker 2 we came up we feel we were large largely getting beaten down by the system around us we were not worthy yada yada yada and then we have uh uh carry uh those issues into our professional lives and uh some people uh work their way out of it quickly some do not um some people work in uh you know they for class and et cetera reasons go to institutions like stanford and hear from i don't know who you hear things from if you go to Stanford, because I certainly didn't go there, but I don't know, an elder fraternity brother that says, yo, bro, this is the way the world works.

Speaker 2 You really got to negotiate when you get in the offer with

Speaker 2 your discussion with Google. I've talked to so many brothers and they don't negotiate.
And so the ones that do make a whole lot more money. And you're like, wow, good for that.

Speaker 2 Most people don't like get that talk from their elder fraternity brother because they do not go to Stanford or don't have an elder fraternity brother. And so like,

Speaker 2 until vaccinates, yeah, the most important thing I'd probably done professionally was writing a piece on the internet about salary negotiation.

Speaker 2 I think it's subtitled, Make More Money, Be More Valued, which is just an exhortation for descriptively, mostly young people who had some of the issues I had when I was young and growing up.

Speaker 2 Like, hey, you're allowed to negotiate. That's not a moral failing of you.
You have no less right to the marginal dollar than a company has to the marginal dollar. Like, go get it.

Speaker 2 And then you can put it towards all sorts of interesting ends.

Speaker 2 500,000 people a year read that piece, and it's now 12 plus years old.

Speaker 2 I keep a folder in Gmail about who has written and said, I got $25,000 to $100,000 per year more as a result of reading the piece. I used to keep a spreadsheet.

Speaker 2 I stopped keeping the spreadsheet after it dicked into the eight figures. I'm like, keeping the spreadsheet was just an ongoing source of stress for me.
Eight figures? Yeah.

Speaker 2 Per year. Like, you would assume that 500,000 people read it per year.
Some take the advice. Most who take the advice probably don't write me to say, hey, I took the advice.
Thank you.

Speaker 2 And maybe I missed some emails, yada, yada. So, like the true economic impact is probably larger than that.

Speaker 2 There are probably people who have like the inverse of that spreadsheet where it's like, darn it, we got quoted Patty 11 against us again.

Speaker 2 But

Speaker 2 like, because you got these numbers, and there's only like a few firms in the tech industry that do hire scaling at you know, scale hiring.

Speaker 1 Anyhow, okay. Um,

Speaker 1 there's less people today who are in their 20s who have prominent software businesses than maybe 10 or 20 years ago.

Speaker 1 Having been in the software industry last 10, I don't know how, when you started exactly.

Speaker 1 Is your sense that this is because the nature of software businesses has changed, or is it because the 20-year-olds today are just less good?

Speaker 2 I've met many young and talented people over the course of 20 years in the software industry, and young and talented people continue being young and talented.

Speaker 2 I think one thing that is partially explanatory is that when there's a new frontier that opens up, the existing incumbents, both in terms of institutions and in terms of people with deep professional networks and personal resources and similar,

Speaker 2 like do not immediately grab all the value in that new thing. It's Terra Nova.

Speaker 2 And so to the extent that tech is no longer Terra Nova, I think you would expect less people who are less resourced, who are younger, et cetera, to rise to the heights of prominence in tech.

Speaker 2 To be clear, I'm not at the heights of prominence in tech. And when I ran companies, I was not running companies like some other guests of this podcast run companies.
It was bingo card creator.

Speaker 2 I was making bingo cards for elementary school teachers while living next to a rice paddy in central Japan.

Speaker 2 But

Speaker 2 that's kind of like my dominant hypothesis.

Speaker 2 There are

Speaker 2 some things that are affecting the youth that I think are negative.

Speaker 2 I think some products that the tech industry has created do not maximize for the happiness or productivity of people that consume those products,

Speaker 2 TikTok, et cetera. But

Speaker 2 I continue to be bullish about the UTS. And I have two children who

Speaker 2 knock on wood will accomplish things in their lives. And so I'm intrinsically skeptical about, oh, the kids these days, they're just bad kids.

Speaker 1 How much do you worry about

Speaker 1 video games as a method, as a sort of wireheading that somebody like you, but 20, 30 years ago, or 20, sorry, now has access to Factorio and will just wirehead themselves to that instead of making a really cool software product.

Speaker 1 How much should we see this in the productivity numbers?

Speaker 2 Oh, goodness. I don't know about the productivity numbers generally.
I do know that Steam keeps a counter of like how much I'm playing video games in a year time. And the

Speaker 2 knock-on would have accomplished a few things in my career.

Speaker 2 And also, like against that,

Speaker 2 what was my Steam counter up to?

Speaker 2 So Steam didn't include World of Warcraft. World of Warcraft was at least a thousand hours for me.
Factorio recently was 750.

Speaker 2 And then if you like some over 20 years, I've I've probably played video games for

Speaker 2 4,000, 6,000 hours. And so that, that's, you know, two to three years of professional effort if one thinks that it trades off directly with professional effort.

Speaker 1 But do you? Because if you then include every single young guy who's

Speaker 1 a nerd and often they, you know, how much are we worried that their, a bunch of their productive time is going to video games instead of making the next software business?

Speaker 2 I worry at least about a little bit about it for myself.

Speaker 2 One of my, so I recently started working for an executive assistant, and one of the first suggestions that he gave was: hey, Patrick, will you friend me on Steam so that I can

Speaker 2 see how much you're playing in a given week? And so, if you're like not making your priorities happen, we can have an honest discussion about priorities.

Speaker 2 That's really good advice, given that I spent far too much time rat holing on Factorio relative to my true preferences.

Speaker 1 You've got a really confident DA

Speaker 2 there. Go, Sammy, go.

Speaker 1 Hey, boss, can we go? Can we have a honest conversation tonight?

Speaker 2 I don't know if I'm inserting those words into his mouth, but the suggestion was genuinely his. And he heard, you know, on the one hand, Factorio, wonderful game.

Speaker 2 I actually think Factorio matters far more to the world than most video games do, but that's an entirely different piece that I'm trying to write at the moment.

Speaker 1 Be that as it may. Have you read Byrne's piece on this? The Factorio mindset?

Speaker 2 Yes.

Speaker 2 I love many things, Byrne writes. I think I luckily have a differentiated point of view on this one, so I will hope to get it out to the internet someday.
But,

Speaker 2 you know, on the one hand, I I loved it. I think Factorio Space Exploration mod specifically was the best video game I ever played.

Speaker 2 And yet I spent 750 hours on that over the course of a year. And I was

Speaker 2 on sabbatical and recharging from six very hard charging years at Stripe and also running the United States vaccination location information effort.

Speaker 2 But

Speaker 2 there's a question of like at relevant margins are you maximizing for your true values and I was like a little worried about that and so now my EA checks on me.

Speaker 2 Do I worry about it for other other people? Um,

Speaker 2 I will say that when I was young, and a World Warcraft Raid Guild leader who spent a thousand hours on that, that it was a substitute advancement ladder for me.

Speaker 2 The actual job I was working sailing around in central Japan gave me no scope of control over things.

Speaker 2 And I thought, if I was a startup CEO, I could make decisions right now, I could build something awesome, but I don't have that ability, and I don't see myself as being the kind of person who could become a startup CEO.

Speaker 2 So,

Speaker 2 if I can't be satisfied in my

Speaker 2 nine to five in terms of making things happen in the world, at the very least, I can make sure we kill the dragon in two hours.

Speaker 2 Don't stand in the fire. Come on.
Team leaders, you need to make sure that people are equipped with the resist gear before they get there.

Speaker 2 Oh, we're having like internal spats about allocation of resources. Like we need to have a better DKP system.

Speaker 2 By the way, World of Warcraft raid guilds and all other

Speaker 2 places where intellectual effort comes together in the video game community are much more sophisticated than people give them credit for.

Speaker 2 When I started Vaccinate CA, I told people my sole prior leadership experience is having 60 direct reports in a raid guild, and that's true. And also, like,

Speaker 2 we won't rat hole on the subject, but like, there are parts of Vaccinate CA that are very, very definitely downstream of the

Speaker 2 intellectual efforts about managing raid guilds specifically.

Speaker 2 If there were multiple people internally who are like, yep, like we are running the raid guild playbook right now.

Speaker 2 But

Speaker 2 be that as it may,

Speaker 2 like, you can do something with your life, like, choose to do something, something with your life.

Speaker 2 And then, if you want to play, you know, a reasonable amount of video games, then play a reasonable amount of video games.

Speaker 2 And then, like, with respect to individual people, I sometimes worry that you kind of get into,

Speaker 2 I think, I've struggled with depression at some points in my life. Many people struggle with underdiagnosed, undertreated depression.

Speaker 2 I think sometimes you get into a self-destructed spiral measured against like your true values and similar values and preferences, where

Speaker 2 due to depression and other factors, you aren't making as much progress on the true goal as you do.

Speaker 2 You use video games as an escape from that, and not just video games, books, television, et cetera, et cetera.

Speaker 2 There are many poisons available in life. You pick your poison, use that to escape.
The amount of effort you put into the poison causes you to have less effort available to do the thing.

Speaker 2 So you get less good results.

Speaker 2 thing so helping people out of those self-destructed spirals uh is uh something that we as a society could stand to get much better at speaking of bird by the way i noticed that a bunch of my theater writers are finance writers there's you

Speaker 1 burn matt levine

Speaker 1 is there some reason why finance has hogged all the writing talent I think there are many good writers in the world.

Speaker 2 Derek Thompson, for example, has written some.

Speaker 2 He's a chemical engineer and he's written some things which I barely understand.

Speaker 2 I have enough of an engineering degree to appreciate half of the chemistry and I can't appreciate the full totality of why

Speaker 2 uranium hexafluoride or whatever is a terrible substance to work with. And he has some excellent writing on why that is a terrible substance to work with.

Speaker 1 But the broader question being, why does finance have a greater concentration of writing talent? And not just about current bloggers, but you know,

Speaker 1 finance histories are some of the best history books out there,

Speaker 1 the Bethany McLean and so forth. And I'm curious why this is.
Is it just an intrinsically more interesting subject?

Speaker 2 There's some path dependence. If I had ended up working in a water treatment plant, I'd be writing about water treatment plants because I like writing.
And I am positive.

Speaker 2 I know enough about myself to know that a discussion about how alum works in water treatment plants, which is something I read when I was like six, that could totally captivate me for multiple years on end.

Speaker 2 And I would write about that if I was captivated by it.

Speaker 2 I agree with the point Matt Levine made once, which is that finance and the tech industry have for

Speaker 2 a while been a relatively reliable way to turn intelligence into money.

Speaker 2 Many good writers are very intelligent. Not all people who are very intelligent are good writers.
I think it is a skill that more intelligent people could learn. But simply if we

Speaker 2 create an incentive system which will tend to allocate

Speaker 2 not yours truly, but descriptively, like a lot of

Speaker 2 the country's top brains into like particular fields where they will become experts at those particular fields, I would expect also a lot of the writing talent to to be there because good writing is good thinking.

Speaker 2 That's a Paul Graham quote, I think, but it's broadly true.

Speaker 1 Speaking of which, so you went to Japan because, if I'm remembering this correctly, you thought that after the dot-com boom that the programmer alone

Speaker 1 demand will diminish and it will require some combination of skills. Separate from what, and you weren't the only one.
There were many other people who thought this way.

Speaker 2 The Wall Street Journal said it, and the Wall Street Journal had never been wrong in my experience as a 19-year-old who knew nothing about anything.

Speaker 1 But separate from the object-level predictions that you might have gotten wrong about the software industry, at a meta-level,

Speaker 1 what was a mistake you made? Did you just not anticipate,

Speaker 1 how would we characterize that?

Speaker 2 Sure.

Speaker 2 So I had a whole lot of rigor. chasing a decision that had no basis in fact.

Speaker 2 So believing in the Wall Street Journal that all future engineers would be hired in places like India and China and not the United States.

Speaker 2 And so there would be no future engineering employment in the United States. I made a spreadsheet of like, okay, here are the languages my university teaches.
Here's my best estimate of the number of

Speaker 2 people in that country who speak it, Americans who speak it,

Speaker 2 the

Speaker 2 amount of their software that gets sold here, amount of U.S. software that gets sold there, blah, blah, blah, blah, blah, these together, sort by column H descending.

Speaker 2 And this is like LARPing it having rigor here. But it felt like a good decision-making process to me in the time.

Speaker 2 Now, the meta discussion is like, don't LARP it having rigor actually have rigor?

Speaker 1 But what would that look like in this context?

Speaker 2 What was Joe done differently ultimately happy with the decision decision my i made although like

Speaker 2 as presented is the wrong decision uh the uh i'm happy about it for other factors about life uh working in japan as a uh as a young engineer there are some very rough parts about that but like on a metal level

Speaker 2 maybe this is an early opportunity to trust institutions less and trust like systemically viable reasoning patterns more like okay the wall street journal has asserted uh assuming i'm remembering this article right and i'm pretty sure sure I am because it was a inflection point in life for me.

Speaker 2 The Wall Street Journal has asserted that no future Americans will get hired as software companies. Assume this is true.
What happens in the American software industry? And

Speaker 2 maybe I did not have enough knowledge to confirmate predict that at the moment, but I can confirmate predict some things now.

Speaker 2 Like software companies are going to start to break as older engineers age out of the engineering population and they have no one coming up to replace them, et cetera.

Speaker 2 Like the industry institutionally must hire people every year. And hiring freezes are necessarily

Speaker 2 temporary as a result of that. That's as close to the law of physics as one can have.

Speaker 2 So

Speaker 2 if you are telling me something

Speaker 2 which says the law of physics has been suspended and will be in the future, I don't agree to that. How would I learn the law of physics?

Speaker 2 did not know anyone in software engineering at the time, which is partly why I was getting my advice from this from the Wall Street Journal. But if I had been slightly more agentic about it, it,

Speaker 2 I was at a research university in the United States. I could have found someone who knew someone who was in the software industry to explain this to me.

Speaker 1 Couldn't you use that same logic to say that the journalism jobs won't go down because senior journalists will have to be replaced by new journalists?

Speaker 1 And that's true, but that doesn't take that many people to study journalism. And it actually would have been a bad call to major in journalism and pursue that as a career.

Speaker 2 But the fundamental thesis was that for journalism is that the total size of the pie is decreasing in journalism due to structural factors. And the Wall Street Journal's thesis was not simply that

Speaker 2 the size of the pie would decrease in the wake of the dot-com bust, which I don't think they even got as far as articulating that, although it's been 25 years, but was more like, oh, companies will maximize for cost of labor, et cetera, and therefore ship out all the jobs.

Speaker 2 I see. I see.

Speaker 1 You've emphasized that

Speaker 1 founders should do more A-B testing. That's like one of the main themes of your blog, if you go back through it.

Speaker 1 So

Speaker 1 they're optimizing on this. What do they tend to over optimize on?

Speaker 2 So interestingly, I was the marketing engineer earlier in my career and really thought that that was important.

Speaker 2 And in terms of like high-level advice I would give a founder, I would probably tell them a little bit about marketing engineering, but wouldn't spend 95% of my time talking about that unless that was explicitly what they brought me in on.

Speaker 2 What do founders spend too much time on? Playing house and chasing status is are both two sort of like well-known pitfalls where you can get addicted, which is not quite the right word.

Speaker 2 Your incentives will draw you into playing the role of

Speaker 2 the CEO of a successful company

Speaker 2 before your actions have earned the company its level of success.

Speaker 2 Like the fundamental nature of early stage businesses is that an investment in you is not a vindication of what you have achieved. It's an advance on your future accomplishments.

Speaker 2 And you need to like rigorously pursue actually making those future accomplishments. And there's many ways to rigorously pursue it.
Like

Speaker 2 talk to more users, write more software, make something excellent, get more people to use it, get better at selling it, et cetera, et cetera.

Speaker 2 That's an important strain of Silicon Valley culture. I'm glad we have it.
I'm glad we are popularizing it to as many places in the world, including to me in central Japan.

Speaker 2 And yet, you know,

Speaker 2 there. There are always other games that are going on, and those other games are less important, but they are very, very attractive games.

Speaker 2 Not video games here, but why don't you go to a conference? Why don't you meet more interesting people? Why don't you show up at the best parties, et cetera, et cetera.

Speaker 2 Showing up at the best parties does not, at most margins, increase the number of users you talk to. It doesn't write functioning code, like do those things that actually matter.

Speaker 2 And

Speaker 2 some distractions like proudly wave, I'm a distraction from everything that matters. And some don't.
Some definitely like say, I'm real work. I definitely feel like real work.

Speaker 2 And

Speaker 2 they're just not. And so don't do the things that don't matter, which sounds vacuous.
And yet.

Speaker 1 Okay, I want to go back to vaccinate CA and I want to close the loop on one question that I had that I don't know if we got a good answer to that I think is important,

Speaker 1 which was, suppose you're the president of the United States. Maybe you're a new one.
So this one's been replaced and you're looking back on what happened.

Speaker 1 If you personally were president, what is it that you're doing to

Speaker 1 bring accountability to what happened and making sure that in a future crisis, which might look different than COVID, things are ready to snuff.

Speaker 1 Maybe you like fire the right people, but beyond that,

Speaker 1 there's a lot of different things that could go wrong. How do you make sure that we're ready for them?

Speaker 2 One cultural practice of the tech industry that I think it would be more

Speaker 2 salubrious for the broader civil society to adopt is

Speaker 2 the concept of blameless post-mortems. We talked about earlier about who to blame for various failures, et cetera, et cetera.
I broadly believe that

Speaker 2 there is some amount of blame which performs useful societal purposes.

Speaker 2 And then beyond that, like the diminishing returns set in pretty quickly. And we are,

Speaker 2 you know, the magic word in Washington is accountability. We want accountability for failures, et cetera, et cetera.
People are terrified of accountability.

Speaker 2 And that

Speaker 2 causes there to be fields of distortion around things that actually happened, mistakes that were actually made, opportunities that were not pursued,

Speaker 2 and similar. And so

Speaker 2 changing our general practice about how we accomplish accountability towards a direction of, okay, first let's get a dispassionate record of what actually happened.

Speaker 2 It's less important that it was a, you know, this named official. It's less important that it was under this legislative authority, et cetera, et cetera.
What did we do? Okay.

Speaker 2 Now, how did what we do lead to the outcome that we got? Given that what we did led to this outcome,

Speaker 2 what could we have done better?

Speaker 2 Okay.

Speaker 2 Given that there are these things that we could do better, how do we like inject that back into the currently running system such that the next time this happens, we don't do the mistake again?

Speaker 2 Sometimes that will involve in someone losing their employment, although hopefully not that frequently.

Speaker 2 A non-zero amount, that is important to say.

Speaker 2 But

Speaker 2 there's many things that we've postmortem of the experience. And I don't know if we have like several thousand hours of time to go over all of them.

Speaker 2 There should be an inquiry. It's an easy thing to say.

Speaker 2 Let's at a minimum like ask all involved parties, hey, can you write down the history of the COVID experience? Just dispassionately

Speaker 2 record dates, times, actions taken.

Speaker 2 We want it to be to be truthful and comprehensive and highlight what you think is the most important part about this.

Speaker 2 Like that that is step one. Like maybe we ask for step one and then try to get to step two.
Yeah.

Speaker 1 Final question. What are you going to work on next?

Speaker 2 I don't exactly know what will be my next big professional

Speaker 2 splash in. I've been on semi-sabbatical this year.

Speaker 2 I've been writing bits about money, but bouncing between like 20 and optimistically 80% productive relative to what like 100% productive looks like to me.

Speaker 2 I might do a software company next. I might raise a small VC fund, not entirely decided.
Might do something entirely different. At the moment, kind of focusing on

Speaker 2 family-oriented things. And our family immigrated from Japan to the United States and are going through

Speaker 2 all the fund adjustment issues. And I'm partly,

Speaker 2 I focused very much on career and other things over the course of the last eight years.

Speaker 2 And I'm rebalancing that to help them on this adjustment and then figure out whatever happens next for the next chapter of life.

Speaker 1 Excellent. Patrick, thanks so much for coming on the podcast.

Speaker 2 Thanks very much for having me.

Speaker 1 Hey, everybody, I hope you enjoyed that episode with Patrick McKenzie.

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Speaker 2 Cheers.