It's not AI Doom, It's a Fourth Turning
Michael Arrington reads today’s AI panic, sovereign debt, geopolitical tension, and institutional decay as overlapping symptoms of a Fourth Turning rather than one clean “doom” event. The historical pattern he takes from the book is an approximately 80-year cycle culminating in crisis, after which society either fails or rebuilds stronger. He cannot tell whether the decisive trigger was 9/11, 2008, debt, China, AI, or their interaction: “We should record four different versions of this answer, and then you can use whichever one turns out to be right.”
AI development will not meaningfully slow because any US laboratory that pauses risks conceding AGI to China. Arrington dismisses safety-driven regulation by OpenAI and Anthropic as partly “regulatory capture”: incumbents can raise barriers while continuing to race. His preferred—but explicitly implausible—end state is a “benevolent dictator” AI that regards humans as worth protecting; meanwhile, he is “both terrified and excited,” with no confident answer about whether the outcome is abundance, extinction, or something between.
Bitcoin is Arrington’s hedge against the institutional side of the Fourth Turning, while crypto may become the native transaction layer for autonomous AI. Governments cannot stop spending or repeatedly devaluing money, whereas “Bitcoin, realistically, is impossible to stop—and that will save us all.” He also sees crypto as the least cumbersome payment rail for agents and sketches a possible model whose fixed weights are globally available and not subject to censorship by one company.
The most actionable investing edge discussed is psychological selection at the founder level, not another spreadsheet metric. Arrington’s team undertook a year-long program—roughly four hours monthly—covering Jungian and Freudian personality patterns, what a friend called “psychology as a weapon.” He argues that mild narcissism can fuel extraordinary achievement, while psychopaths should be avoided; the practical distinction is whether praise creates attachment or is merely interpreted as weakness.
TechCrunch’s breakthrough came from serving unknown founders before conventional media considered them newsworthy. Arrington began in 2005 with four readers and standardized startup profiles; Google Alerts then brought founders to his posts, and they circulated the coverage to friends and “always their mothers.” His 2006 scoop that Google would buy YouTube—four days early—made the publication a destination for leaks after established outlets mocked him: “Who is this boy? This didn’t happen.”
Arrington’s earliest venture returns came from relationships and taste formed through reporting, but he openly distinguishes conviction from certainty. He backed Uber after Travis Kalanick described three ideas during a drive, invested about $100,000 in Airbnb despite not being “100% sure,” and narrowly missed a similar Stripe check after existing investors objected. The lesson is not that each outcome was obvious: “Those were stupid-money investments,” produced by proximity to exceptional founders and access at the earliest stage.
His cycle playbook is to treat capitulation as a signal and reinvention as optional once a durable edge is found. When a partner said, “I think crypto might be dead,” Arrington thought, “This is what I was waiting for”—the bottom had arrived; his best investments have generally occurred in bear markets, when prices and competition fall. For personal fear, the host advises younger builders to attack it; Arrington’s professional advice is to identify what you do unusually well, delegate the rest, and compound that advantage.
1. The Fourth Turning makes today’s crises look cumulative, not isolated
Arrington identifies two books that permanently changed his worldview: Guns, Germs, and Steel and The Fourth Turning, published, as he recalls, around 1997 or 1998. The latter argues that major US crises recur roughly every 80 years, with echoes in China, Rome, and Britain.
His generational mechanism is intentionally blunt: prosperous leaders become comfortable and weak, their failures precipitate crisis, and a younger generation fights through it and rebuilds. The victorious cohort then raises children in easier conditions, eventually restarting the cycle—“good times make weak people” translated into a political theory.
The historical markers are the War of Independence, the Civil War, and World War II. Arrington suggests the current period may already count as the crisis, but he refuses false precision about its catalyst: “We just don’t know” whether the crucial event is 9/11, 2008, unpayable debt, China’s rise, AI, or a chain connecting them.
His analogy is 1930: someone living after the 1929 crash might have mistaken the Depression for the entire crisis, without yet seeing German rearmament or World War II. Likewise, today’s apparently separate shocks may only be stages of one longer rupture.
2. AI is both the accelerant and the least predictable variable
The host presses the contradiction: AI promises medical breakthroughs, new technologies, and abundance, so why should it cause a once-a-century destabilization? Arrington says he can imagine failure, points to the many counterweights, and notes that AI is already widely used in wars rather than treating its promised benefits as decisive.
He calls AI “simultaneously terrifying and amazing” and suspects it may ultimately prove more revolutionary than crypto, while admitting he could be wrong. The host frames the possible endpoints as the world ending or becoming a utopia; Arrington says the latter would be terrible and remains both scared and excited.
China complicates the simple race narrative. Arrington points to ghost cities, property and debt problems, capital controls, food and energy dependence, and public dissatisfaction; the host counters that China is shipping meaningful robotics, AI, and open-source innovation while US incumbents pursue centralization and regulation.
3. Nobody can safely pause an AI race that competitors will continue
The host recounts dinner with an Anthropic employee who said he was “enjoying the last six months” and insists he was serious. The host objects that the man’s partner wants children; Arrington replies that he hoped it was a joke and says he has heard similar views.
The host’s pushback—worth keeping—is that anyone assigning such odds should close the lab. Arrington’s rebuttal is the race dynamic: Anthropic stopping would not stop OpenAI or China, so “we have to push this forward, and we don’t know what happens when we get there.”
His conclusion is uncompromising: no American laboratory can slow development, because China will overtake it, reach AGI, and “win.” Safety rhetoric therefore doubles as competitive strategy; repeated congressional appearances and demands for regulation can protect leaders from new entrants.
Asked for an ideal outcome, Arrington rejects Sam Altman or Dario Amodei controlling the pace and reaches instead for the impossible hope of a “benevolent dictator”—an AI that loves, protects, or at least preserves humanity. The host’s blunt “I don’t fucking know, dude” is the more candid forecast of the conversation.
4. Arrington’s judgment of Altman opens into a broader founder-psychology framework
Arrington calls Altman “evil” and says he thinks Altman is a psychopath, then immediately concedes he is not a psychiatrist and cannot diagnose him. His stated basis is long familiarity, beginning with Altman’s pre-Y Combinator startup, plus an assessment of exceptional intelligence, charisma, and sales ability.
The larger point is not Altman alone: Arrington believes technology contains unusually high concentrations of narcissistic, psychopathic, and schizoid traits. Arrington Capital therefore trained partners through a year-long Pathwise program in Seattle, meeting roughly four hours monthly to study personality patterns and adapt interactions accordingly.
A friend called the method “psychology as a weapon,” though Arrington frames it as learning whom one is dealing with. The first signal is often physical and intuitive—“the hair on the back of your neck stands up”—but he says reliable judgment requires observing small inconsistencies accumulate over time.
5. Narcissism can be investable; psychopathy is a disqualifier
The conversation distinguishes ordinary narcissistic traits from a clinical disorder. Name-dropping, insecurity, hunger for validation, intolerance of criticism, and a need to prove something can make relationships painful, yet also produce relentless founders: “Maybe half the people we invest in are narcissists,” Arrington says before softening the number.
His operating rule is that narcissists respond to sincere praise and should not be criticized publicly. In one demonstration, a self-described narcissistic founder recognized Arrington’s technique immediately—“Damn, I love you. You taught me well”—but still responded positively because the validation itself mattered.
Psychopaths, by contrast, imitate normal emotion without sharing the underlying empathy and may read compliments as evidence that the giver is weak. Arrington recommends firmness and physical presence—not violence—when negotiation makes withdrawal impossible, and says his fund tries to avoid such people entirely.
He learned that distinction painfully after hiring a charming, intelligent intern who was later fired over sexual harassment, then allegedly presented himself to another fund as an Arrington Capital partner. Arrington also admits, “I made mistakes, and we invested in psychopaths”; the goal is improving the filter, not pretending it is infallible.
6. TechCrunch found distribution by treating unknown founders as the stars
After leaving a startup sold for $35 million—against $17.5 million invested and a then-standard 2x liquidation preference—Arrington received only about $150,000, bought a Porsche Boxster, and took time away. Returning, he found the interactive web moving faster than conventional technology coverage.
TechCrunch began in 2005 as his research notebook: company name, product description, and funding to date, with little opinion because “I didn’t know what I was doing.” The accidental distribution engine was Google Alerts: obscure founders discovered the posts, commented, and forwarded them throughout their networks.
Arrington’s 2006 Google–YouTube scoop changed the inbound flow. A friend financed by Sequoia heard a Sequoia partner boasting about the deal and called him; Arrington published the news four days before the announcement, endured ridicule, and was vindicated. “I literally never told that story” before this interview.
He then rented a Silicon Valley house and hosted barbecues that drew hundreds until police shut them down. Although deeply introverted, he had built both a publication and a gathering place for founders whom mainstream journalists ignored until they were already large.
7. Editorial obsession created authority—and nearly destroyed its owner
Arrington rejected the journalistic shortcut of describing a product without understanding it. Even infrastructure companies he disliked required enough study to explain them clearly, turning each post into real work and making sleep feel dangerous: an important story might break while he was offline.
He worked through nights, slept when birds began chirping, gained weight, and developed sleep apnea. “My health was terrible. But I won. I dominated for several years”—a formulation that captures both the competitive payoff and its cost.
His April Fools’ prank exposed how much authority TechCrunch had accumulated. He published that Google was building nuclear weapons, beginning plausibly with a nuclear plant for data centers; the Wall Street Journal reported the claim after reading only the opening, and he appended screenshots as it realized the mistake.
Arrington admits he “used that power irresponsibly,” even if it drove traffic. His broader editorial stance was equally controversial at the time: he openly sided with founders and treated them as rock stars, helping normalize technology journalism that disclosed rather than concealed its point of view.
8. Burnout led to AOL, CrunchFund, and an awkward conflict of roles
Brad Garlinghouse, then at AOL after Yahoo, helped initiate the TechCrunch sale when Arrington weighed more than 136 kilograms and could barely sleep. Arrington credits Garlinghouse with giving his next career a push and says the timing simply matched his burnout.
AOL backed the first CrunchFund alongside established venture investors. Its board approved the arrangement, but announcing the fund on TechCrunch ignited criticism because Arrington remained both an influential publisher and an investor in the companies the site covered.
Arianna Huffington publicly fired him by tweet; AOL simultaneously insisted he was not fired. Arrington says the contradiction led him to demand an additional payout, suggesting $5 million, after which he was free to continue the fund rather than work for AOL.
Health took longer to repair. After later developing prediabetes and being offered medication, he instead took a year away and got into shape; today he says he feels much better, even as the hosts’ joking contrast between “fat Mike” and successful Mike lands badly.
9. Reporting relationships produced Uber, Airbnb, and one painful miss
During a drive with Travis Kalanick, Arrington heard three startup concepts and immediately preferred Uber, which Garrett Camp had asked Kalanick to run. He covered the company before others cared and gained access to invest at a very early stage.
Airbnb carried less certainty. “I thought, ‘I’m going to do it,’ but I wasn’t 100% sure it would work”; the approximately $100,000 check nevertheless became “a pile of money” for the fund’s LPs. Pinterest and other relationships produced similarly outsized first-fund returns.
The miss he still remembers is Stripe. The brothers were willing to accept a small check of roughly $100,000 despite the round having closed about six months earlier, but existing investors refused. Arrington jokes that if the check had gone through, “I wouldn’t be here now.”
The second and third CrunchFunds held about $30 million each, matching his preference for the earliest stage rather than spreadsheet-heavy later investing. The work eventually became repetitive, however, and he chose another field where he could be a beginner again.
10. Crypto restored the learning curve—and capitulation still marks bottoms
Arrington had encountered Bitcoin and Coinbase through TechCrunch, but his full crypto turn came in 2017 after initially dismissing a woman’s explanation of blockchain property rights. Small ICO-era investments became enormous, prompting a dedicated fund.
Arrington Capital later expanded into AI, first stretching the mandate through “crypto-related” investments and then investing directly with LP support. Crypto deal flow weakened as talent moved toward AI, but he views that as a period to survive, not proof that the underlying system failed.
His cycle rule is simple: the best investments usually come in bear markets because valuations fall and competing capital disappears. When a partner said, “I think crypto might be dead,” Arrington heard capitulation—“This is what I was waiting for”—and soon saw conditions improve.
He made more money in 2021 than during the rest of his life combined, left much of it in the fund, and then absorbed 2022. The longer precedent is March 2000, when technology appeared dead for roughly four years; surviving that collapse taught him to expect recovery unless nuclear war or AI ends the game.
11. Hard money, useful fear, and narrow strengths form his survival strategy
Arrington’s enduring crypto thesis is moral as much as financial: Bitcoin is “hard money,” more discovery than invention, and governments cannot halt it as they have devalued prior monetary systems. His Fourth Turning preparation is correspondingly simple: some Bitcoin, physical gold, mobility, passports, and responsibly owned firearms.
He is fascinated by billionaires’ multinational bunkers but does not own one, joking about a decommissioned missile silo. His darker observation is organizational: bunker owners had better treat their security chiefs well for years, because once normal authority disappears, “they will kill you.”
The host worries that universal basic income would undermine meritocracy and purpose, citing abundance, antidepressant use, and a lack of goals. Arrington agrees with the meritocratic instinct but concedes that if five million people in the United States began dying, some form of universal basic income would be introduced.
The host’s answer to anxiety is to attack concrete fears—he trained for and completed a marathon despite hating running—while refusing unproductive rumination. Arrington’s own coping references are walking and Pema Chödrön.
Professionally, the host’s rule is “never swim against the current”: identify strengths and delegate the rest. Arrington offers the matching case: he is good at hiring and choosing early-stage companies but poor at daily management, so TechCrunch had an operating leader; after one engineer quit under his supervision, he personally paid $10,000 for the engineer to remain until the AOL deal closed.
The investor he wants to be is present in a founder’s first round, without demanding leadership or control. Since investors “usually do more harm than good,” his desired edge is judgment, access, and restraint—helping someone turn a raw idea into a company, then being remembered well even if it fails.
Full transcript
So, to be clear, everything we said before starting the recording is now on the record. He is a villain. I think he’s a psychopath. I don’t think any American laboratory will be able to slow down the development of AI, because China will overtake us. They will win the race for artificial general intelligence, and they will win.
As for Airbnb, I thought, “I’m going to do it,” but I wasn’t 100% sure it would work out. I invested about $100,000, and that turned into a heap of money for LPs.
I published the news about Google’s acquisition of YouTube, and I had a scoop. Everyone laughed at me. The Wall Street Journal wrote, “Who is this boy? This didn’t happen.” Then it turned out that it was true. I was right, and I didn’t say how I got the information.
Are you lying? Am I lying? This man said, “I think cryptocurrency could be dead.” That’s what I was waiting for. If you’re disappointed in cryptocurrency, the bottom has been reached. Bitcoin, realistically speaking, cannot be stopped. And this will save us all.
Today, I’m talking to Michael Arrington. I’m glad he joined us. Michael founded TechCrunch in Silicon Valley in 2005 and turned it into one of the world’s leading publications—a place where founders and the technology community publish the latest news. He eventually sold it to AOL.
You were one of the first people at a Y Combinator Demo Day in 2007, highlighting interesting founders, and you created Crunchbase. I know you’ve said that a lot was achieved because of this, but you also made Time magazine’s list of the 100 most influential people. Then you backed Uber, Airbnb, and Pinterest, and founded Arrington Capital.
So, to be clear, everything we said before we started recording is now recorded.
I can also talk about the Time 100 list.
Oh, yes, of course. Fine. We can talk about Steve Wozniak, or about anything. Let’s talk about Steve Wozniak, who was recently on one of your wonderful podcasts. He was just here.
Yes. That was a very good performance.
Thank you. A big thank-you for coming. It wasn’t easy for us to get hold of you.
Wait, I wasn’t easy to get?
It wasn’t easy for us to get hold of you.
This is my favorite podcast. I appreciate it. I’ve watched almost every episode.
Are you lying?
So, am I lying?
No, I said that I don’t understand everything when you delve into super-technical topics. But you’re just an honest journalist. You’re great to watch.
That inspires us and all that.
But you know, we’re here to invite the best guests, and we’re here to make money. That’s our goal.
In every podcast I listen to featuring you, you always mention a concept called the Fourth Turning. According to this concept, every 100 years the world changes, and we find ourselves in 4 20-year segments. Great institutions are valued, then everything collapses and this crazy reboot happens. Is this where we are now?
That’s interesting. Have you ever heard of the book The Fourth Turning?
No, not yet. Kelly tells me about it.
I read a lot, mostly fiction for pleasure, but I read constantly. There are 2 books that made such a huge impression on me that I’ll never forget them. One of them is Guns, Germs, and Steel, which was published in the early 1990s. It’s an incredible book about how people form teams. If we were all the same color, we would find something else to hate in one another—ears or something else. It explains devotion to sports teams, and it’s true.
The Fourth Turning is another book. It’s a little sad, but it seems very accurate. It was published, I think, in 1997 or 1998. Quite recently, one of the authors died, but the other author released an updated version. You can read this updated version, and it covers the first book as well.
The point is that, especially in the history of the United States—although the authors claim that this echoes the histories of China, the ancient Roman Empire, Great Britain, and others—crises arise approximately every 80 years. The United States either overcomes them or it doesn’t. So, there was our War of Independence, our Civil War, World War II, and now we could say that we’ve already survived it.
The argument has 2 parts. First, why does this happen? And second, what can we expect? The reason is that there’s a generation of people who run the country, and it’s a weak generation. That’s the only right word to describe it. They tend to be quite rich. They live quite well and have happy lives, and they tend to spoil everything.
Then there’s a generation that wins, thanks to the younger generation—the people who, at that moment, are 18 to 20 years old and go off to fight. That generation achieves great things, gets lucky, and helps restore the country. Then they have children who are complete losers. That’s our boomer generation.
Then they have children who, in my case, belong to Generation X. I was born in 1970, and we are the people who, theoretically, would have participated in World War II and would have been generals. So, we’re a good generation. Then they say Millennials are terrible, but their children are fighting—you’ll see—in the next war.
Do you think there’s any truth in this? We’ve all seen it: good times make people weak and so on. It’s a vicious circle.
It seems that we’re now in a very disturbing situation. Many thought China’s rise would provoke events, or that our debt spiral would. Artificial intelligence suddenly began to look like a real contender. They claim that at some point in the next decade, real problems will arise for us as a country and for us as a world, and we’ll have to get through them. We may not be able to do it, but if we do, we’ll come out much stronger.
What do you think of the book’s division into these 20-year segments?
Yes. The last segment, I think, is when a crisis occurs.
How do you think this crisis relates to the 2008 bubble? Is it COVID? Is it AI?
We should write down 4 different versions of this answer, and then you can add the one that turns out to be correct. We just don’t know. I don’t know what people would have thought in 1930 if they had read this book. The crash and Depression of 1929—it’s the same thing. Of course, all of this is related. It obviously led to the rearmament of Germany and so on.
1. AI, China & the race to AGI
I don’t know, but since September 11, the world has changed sharply. We just celebrated the 20th anniversary. The United States demonstrated its military power, and the results weren’t very good. There was the financial crisis, and our debt is not going to be repaid. We all know this; we just don’t know when it will happen.
Artificial intelligence is simultaneously terrifying and amazing. I don’t know which will have the greater impact when we look back: cryptocurrency or AI. Cryptocurrency, in my opinion, doesn’t look as revolutionary as AI. I could be wrong.
But why should it cause the kind of destabilizing event that happens once every 100 years? Everyone is talking about the prosperity that will come from this: medical solutions, new technologies, travel to the stars, and species that are smarter than us. You can’t even imagine how this might not work out.
Well, I can, but there are so many counterweights. So many advantages. We now widely use AI in wars.
Right?
Yes, definitely.
And the Chinese are pretty good at this, right?
It’s crazy that we’re getting free, open-source AI code from China. Madness. This is an amazing case, actually. I like it, but yes.
2. Moving into crypto & navigating market cycles
Yes. I wonder what you think.
Well, I think it’s fantasy. Although I think China is not currently in a better position, there are a lot of problems in China now. Seeing the fall of the party and the rise of the people—hopefully without war—would be amazing.
I don’t know how stupid an American I’m being. I’m just assuming that China is thriving in robotics and AI.
No, no, no. You’ve seen the ghost cities. They put such a big focus on GDP and build cities that consist entirely of new GDP. But the problem with debt in China is also quite serious.
People there wanted to withdraw their money from China, but there’s control over the movement of capital. They still withdrew a lot of money through cryptocurrency. Then they got involved in real estate and thought it would save them. It turned out that it did exactly the opposite.
You have a population, and usually revolutions don’t happen while people aren’t starving, essentially. In China, people aren’t starving yet, but they import a lot of food products. They have to import all their energy. China has a lot of problems.
I’m trying to connect what we’re seeing with AI to the Fourth Turning and understand the causal connection. For example, in the United States we have hypercentralization, doomerism, maximum security, anthropocentrism, and OpenAI is aiming for regulatory capture. China provides us with free, open-source code. I think they’re implementing innovation much more than people give them credit for.
They’ve taken 2nd place, and they have many advantages because of that.
Undoubtedly. Yes. But creating a moat around AI seems like a complicated task. You have the model layer and the compute infrastructure. I'm trying to figure out where all this will end. I don't know where it will end, but it will be very interesting. It would also be nice to have a little physical gold and Bitcoin while we watch. Stay mobile, collect your passports—something like that.
So why Bitcoin with AI? Is it as if maximum money printing or universal basic income were happening, or just... Sorry, your question is: Why Bitcoin in the face of the threat from AI? Why own Bitcoin, taking into account the rise of AI?
This is hard money. This is the only true form of money. This is a beautiful, God-given thing. I like to think of Bitcoin as a discovery, not an invention. I like that it wasn't invented; it was inevitable that something like this would happen, just as the internet was inevitable. If you're in the United States, buy a gun.
May I ask something? Maybe we'll come back to the topic of AI. I know it's in the news, but it may be outside the scope of the interview. What would your ideal scenario for the development of AI look like? Do you want Dario and Sam Altman to manage the fund that would determine the rate of progress? What do you want?
No, no. It's simple regulatory capture. I mean, do you understand? It's obvious. Once you've occupied a leading position and called for regulation, you never have to face competition. The ideal scenario is—what is this called in Dubai?—a benevolent dictator. He loves us and takes care of us, just as we take care of animals in our zoos.
That's impossible to control. Wait, the benevolent dictator is an AI?
I think our best hope is that he loves us, takes care of us, and protects us.
No—so that he considers us necessary and doesn't simply stop caring about us and allow us to die out. Something like that.
These are big questions that, for now, I can't answer, at least not for myself. But yes, I'm simultaneously scared and excited about this.
The hardest part is that I want AGI to love us too.
Yes. And if you talk about it with people, that will be an argument in favor of security. Then you'll become an effective altruist, and then—
Oh, don't say that word. I hate it. I don't want—
Yes. It's SBF, guys.
But it inevitably leads to this. It's disgusting. It's just dirty. To me, it feels like some condescending academic is talking to me when I hear this.
I'm just curious: How will this end?
I don't fucking know, dude.
It's funny. If you start actively investing in AI, there are now 2 types of crypto funds: those that are allowed to invest in other things and those for which it's forbidden. We started a couple of years ago. We're lucky that we can invest in whatever we like. We expanded our activities into AI, first calling it a “crypto-related direction.” Then we just started investing in AI, and our investors don't mind at all.
I mean, there are a lot of similarities between cryptocurrency and AI. Fine. But not many people believe that cryptocurrency is a very convenient way for AI to conduct financial transactions.
It's the least burdensome option for an AI agent.
Yes. It's practically made for AI, right? Besides financial transactions, do you think there's a larger-scale story about the existence or development of AI on the blockchain, or about its life on the blockchain?
Why does it need to be on the blockchain? I think it's the next step between your idea and unimpeded trade.
Okay, explain it to me. How does the ledger store AI? Explain to me what you mean.
I think there is AI that exists, and cryptocurrency is generally considered a payment platform. It's difficult to understand right now, but if you had a model whose weights couldn't be changed, which wasn't subject to censorship by any company, and which existed all over the world, it would be very similar to the concept of Bitcoin. You could use it for inference.
So I see that it is, in its own way, subject to an audit of its nature. Is that what you mean?
Yes, absolutely. It's completely transparent.
Very cool.
We'll see what comes of it.
Oh my God, it must be hard to be your age. It's even harder to be younger—for example, a college student. It's like... But the world will either end, or it will become a utopia in the good sense of the word.
That would be terrible.
Last night, I was at home with an Anthropic employee. We chatted, had dinner, and all that, and he said, “I'm just enjoying the last 6 months.” I said, “Brother, come on.” His poor girlfriend is sitting there and wants children, and I said, “You can't say that.”
He was joking, I hope.
No, no, I wasn't joking.
What?
No, I wasn't joking at all. Let's talk about this.
Who is this?
He's an Anthropic employee. He's my buddy, but he seriously believes—
What do we have left—6 months of life?
And not only him. Most people really think so.
I've heard similar things, but I've never talked about this personally with an employee of one of these companies. He's the only one I've spoken to personally. The idea is that, of course, if he could stop it, he probably would.
If he doesn't want the world to end in 6 months?
Well, that's the thing. But he can't stop it.
That's the whole stupidity. You go to Dario and say to Anthropic, “If it's inevitable, then you need to close the company.”
Yes, but that won't stop anything. China will continue, and OpenAI will continue too. That's why we find ourselves in a hopeless situation where we have to push this forward, even though we don't know what will happen when we get there. I don't think any American lab will be able to slow the development of AI, because China will overtake us. They will win the race for artificial general intelligence. It's not just that the American labs won't be able to slow it down; China will win.
They talk a lot about stopping this.
Yes. It's regulatory capture.
And the limitation on regulation has been working for a couple of years now. Sam has already been to Congress several times.
Yes. All they do is raise false anxiety. I've known Sam for a long time. I met Sam when I was working at TechCrunch. He had a startup backed by Sequoia; he sold it, and then I met him when he took over Y Combinator. I've known Sam for a long time. He's a very smart human being.
There's a video where he's wearing a purple polo shirt or something like that, and he performs on stage with a presentation for the company. I forgot the name.
I forgot the name too.
In the end, he made money for the investors, but the technology was thrown out, although he was an exceptional salesman. He has exceptional charisma.
Do you think he's evil?
3. Founder psychology & investment red flags
He's evil. I think he's a psychopath.
So how can he be evil? Why? Psychopathy is a medical condition, right?
That's what's wrong with you. What's happening? You're okay—you can't do this. There are a lot of psychopaths who aren't evil. Dexter is a fictional character, but—
What a show. Do you even know who Dexter is?
Yes, I really liked it.
My friend has been watching it over the last few days, and I said, “Oh, you're so lucky to be watching this TV series for the first time.”
I'm not a psychiatrist, so I can't make diagnoses.
How did you determine this? What made you call him a psychopath? I'm asking because I'm going to ask you about psychopaths.
At Arrington Capital, we do a lot of work in the field of psychology. We have a company called Pathwise. It's a fairly small company located in Seattle, and we provide training to all our partners through their program. The program is designed to last 1 year. You attend for about 4 hours a month. I went through it for a very long time.
You spend about 4 hours per month with the group during the year, and you learn the basics of Jung's personality types and Freud's ideas. The idea is to help you understand who you're dealing with, because what you give people will change radically depending on what kind of person they are.
A friend who recommended it to me calls it “psychology as a weapon,” because it gives you certain advantages in certain circumstances. That's not how it's described. It's simply about trying to understand who you're dealing with.
There are certain signs, especially when you know a person for a long time. The easiest way to identify a psychopath is when you're close to them and literally feel the hair stand up on the back of your head. You don't know why; you just know there's something wrong with them.
Again, I probably make incorrect diagnoses, but I think it's very effective in first meetings to determine how to conduct yourself around a person. In our industry—and I mean technology in general—there are a lot of psychopaths and narcissists. It's useful to distinguish one from the other.
Yes. Maybe this is a stupid question, but do you want to meet the founders of the companies you're investing in person, or can this be done over video calls?
Certainly.
Interesting. How many founders do you meet in person before investing in them?
Not many. I try to, but we don't always do it. It's difficult. It takes too long.
I mean, we could talk about it now if you want, or we could continue.
Certainly.
Okay, let's say I'm meeting you for the first time, and you introduce me to your company.
And you start constantly mentioning names. Horrible. You know, it happens sometimes: you have a company presentation, they introduce themselves, and it lasts 10–15 minutes. You’ve seen it, right?
It’s like kindergarten. This is a basic level of insecurity pointing to narcissism. Narcissism is fascinating, because these are people who feel very empty inside and need to prove themselves to everyone. They’ll work on you with all their might. You just need to know how to deal with them. You have to be able to compliment them and understand that they don’t tolerate criticism.
Absolutely right. And, of course, you should never criticize them in an impersonal setting or in situations like that. Narcissists are great. Maybe half of the people we invest in are narcissists. I don’t think any other venture fund admits it.
Basically, we’re all imperfect. But some people are imperfect in a way that gives them a strong desire to achieve success. What’s wrong with that? Nothing. We have a very similar system to the one my partner José and I call North Star for the Founders. We look at founders and ask whether they have a hidden grudge, whether they’ve achieved greatness, and whether they’re trying to prove something to the world.
All of these are characteristics, and they can’t be faked. You can survive an earthquake, but that won’t make you a great founder. You need more than that. Simply surviving isn’t enough.
But I’ve never looked at this from the point of view of narcissism. Besides, I’m not talking about narcissistic personality disorder—the kind where I think you need psychiatric help. I’m talking about people who are prone to one of 7 personality types. That’s my conviction. If they’re a little narcissistic, it’s not that bad.
You mentioned that 50% of founders are—I mean, there are a lot of narcissists, a lot of psychopaths, and many schizoids. Is that really the case?
What about the other 50%? I don’t know if it’s 50%. Look, narcissists make up a small percentage of the population, but a much larger percentage of our world.
What is a schizoid? Is that a person suffering from schizophrenia? Have you heard the term? Multiple personalities—seeing and hearing different things?
A schizoid personality, of course, isn’t that. They simply live a very rich inner life. It takes them a long time to love you, but once it happens, they’ll be faithful to you forever. I’ve had schizoid business partners in the past, and I still have them. They’re the best.
If we talk about Mark Zuckerberg, people I’ve known for a long time call him “lizard man” or something like that. They think he’s an infantile psychopath, but I think his schizoid traits are coming through.
He now has really good connections with the public. He seems human. He’s been training. He looks amazing.
I know. Years ago, he looked weird.
We all look a little weird.
Yes. I don’t know why I needed to defend Zuckerberg.
The fact that I said he looks like a human implies that I also thought he was a lizard man.
Listen, he was a little—well, he was an eccentric, but very... I don’t know if you ever saw Bill Gates when he was studying at Harvard. He was pretty strange.
Yes.
So, what personality types don’t you invest in?
I try to avoid psychopaths at any cost. We once had someone working for us who was a psychopath.
What? How long did it take you to find out?
He was a big perfectionist, so we found out pretty quickly. In the end, we fired him because of sexual harassment of another team member. But it’s funny: when he left, because he was fired, he showed up a few months later—maybe 6 months later—as a partner in another fund.
He told that fund that he was a partner at Barrington Capital. We don’t put much information on the site for security reasons; we don’t want to disclose everyone’s names. That’s why it was difficult to say for sure. I knew the guy who founded the fund. I could call him and say, “He’s like this,” and I did. He was fired, and the entire fund essentially closed.
This guy was incredibly charming, very handsome, and very smart. He had one disadvantage that kept him from ever achieving what he wanted: he was so excessively psychopathic that people sensed it.
I wanted to ask, without putting you in an awkward position, how did it happen? How did you figure it out? How did he get through your filters?
When did we hire him? We hired him for a summer internship, and then we made it something more permanent. He was a very young guy. Honestly, at first I didn’t pay any special attention to him, but when I started getting to know him better, I realized that I was afraid of this guy. I was really afraid.
I think it’s very difficult to recognize a psychopath from a narcissist. They want to take over the world and strive for excessive achievement. It seems to me that there’s a kind of muscle memory or refined taste involved.
To be honest, it’s really difficult to determine, but there are some signs. Psychopaths imitate normal behavior. They learn to act normally because they don’t experience empathy, especially sympathy. They simply don’t have the feelings that other people have.
In theory, they don’t feel empty because of this. They just feel different, and then they understand that they scare people. They learn to pretend to such an extent that they become excellent at it, and quite often they pretend to be narcissists.
It’s hard to determine, but it’s possible if you study it, think about it, and analyze it. I think I can notice it quickly and connect the facts over a longer period of time, which is obviously easier, because they’ll make small mistakes in small things, and those mistakes will start to accumulate. That’s usually how I notice it.
4. Building TechCrunch & lessons from Steve Jobs
I’ve made mistakes, and we’ve invested in psychopaths, including one whose name we won’t mention here, but whom we talked about a little earlier, before we started. Still, it helps if you can filter some of them out.
I’d like to see the profitability of your portfolio companies broken down by personality type.
Yes, we do track that.
That’s great. Is it quite noticeable?
Yes. Narcissists are great.
Crap. Yes, they’re terrible. They treat their own husbands, wives, or partners—whatever you want to call them—disgustingly. They treat their children roughly. They tend to create new narcissists.
But yes, hire these wonderful people.
Is that so?
Yes. The team knows about it.
It’s great that you focus on the psychology of founders.
Yes, basically, it’s done to filter people out. Of course, you still need a good idea and a good team, but it’s very important to us.
Yes, and it’s served us well. Did you start doing this when you created the fund, or is it something you learned and implemented later?
I think the course was in 2016 or 2017. I used it, and then I started using it with my partners fairly early. All of our partners have taken it.
That’s interesting. I understand how this could be used as a weapon. If you talk to an AI model today—for example, OpenAI or Anthropic—and enter a person’s personality, it won’t give you tips on how to target that person effectively, because it considers that weaponization, as you said.
I don’t know. The funniest thing about this is that after I completed the course, I had a meeting with a company’s co-founder. We were sitting in a café in Seattle. His name was Chad, and Chad admitted that he was a narcissist.
We sat and talked, and I thought, “You know, I learned so much from this course. It really changed my life.” Chad said, “You’re so amazing. I don’t think anyone could—I wish you could teach me how to do that. How are you...?” He started to swell up a little, and I thought, “This doesn’t matter, but you’re also a very beautiful boy.”
I looked at him and said, “Understood.” He said, “Damn. I love you. You taught me well.”
If you compliment a narcissist, they need it, they like it, and they love you. If you compliment a psychopath, forgetting that he’s a psychopath, he’ll think, “Oh, this is a weak man.” That’s why with a psychopath you need to behave in a physically threatening way. Don’t touch him, but stand up, don’t give him more compliments, and he respects it and reacts better.
This is especially relevant when you’re negotiating a business deal and you don’t have the opportunity simply to leave. But these are simple rules. If you compliment a psychopath, he won’t react the same way as a narcissist. That’s another sign.
This is so interesting. It’s incredibly fascinating.
Yes.
And how broken we all are.
I’m paranoid. I have a paranoid character, and that was very useful to me in my work as a journalist in the past.
That’s definitely a superpower for a journalist.
Yes, although it’s not that good in interpersonal relationships, where you constantly think in advance about what can go wrong and what people’s true motives are. But in business, it can come in handy.
Yes, although there are many false positives. You need to be able to ask yourself questions.
Can we talk about the TechCrunch years?
With pleasure.
The story of the birth of TechCrunch is very interesting. You were at the first Y Combinator Demo Day in history. Was it a fund and an accelerator?
I don’t know. It was an accelerator, but at that time it was something else. It was just some guy named Paul from Mountain View, to whom startups came and who directed them. It was just another event, but in 1 day I could identify 20–25 new startups.
Did he take on the obligation of giving up 7% at an early stage?
I don’t know if it was 7% at an early stage.
Were you participating? Tell me, please. Did Paul invite you, or did you just show up and see all these startups and think, “I should look at your email”?
I think I attended the second one. It seems there was a first one where no one was there. When I came, there was a crowd in the hall, very few people, and I was the only press representative. I had my laptop open, and I was typing and blogging in real time.
There were press representatives before YC?
Yes. I founded TechCrunch in 2005.
And Y Combinator appeared a little later?
Yes.
Before Y Combinator, you covered the usual news from the technology world?
Yes. I was sitting in an apartment on the Strand, on the beach in Manhattan Beach. I had a girlfriend, and she had a job. I quit my job and spent a year surfing, playing video games, and eating burritos. It was fantastic.
This is madness, because you’re so successful. I can’t imagine taking a year off. You’d just had a couple of tough years.
If I had founded my company, I would have sold it and doubled my investors’ money, but I wouldn’t have earned anything myself because of the liquidation preference.
This was the one where there was a 1× preference, not—
Yes, the standard was a 2× preference on liquidation. I sold it for $35 million, but we had received $17.5 million in investment.
So you literally earned nothing?
No, I got $150,000. They had to pay us something so that we wouldn’t impose a veto. I bought a Porsche Boxster, but then I moved to England, and it sat in the garage for 10 years.
So I was sitting there thinking, “Okay, I need a job.” I realized that I had moved away from technology for a while. I took a short break, and technology had developed very quickly. Static web pages had become the popular web, with the ability to read and write. You could interact with these web pages and create content, just like in Google Docs.
Right.
So I started doing research. In the course of that research, I discovered that there were very few places where you could find information about these startups. I decided to start a blog and publish my research. The first few articles on TechCrunch, which I think are still there, were very well formatted: the company name, a product description, and information about the funds they had raised to date.
And that was your advantage?
No, not at all. I had no idea what I was doing. But everyone had Google Alerts, right? If something was mentioned, you could get an email notification when there was a search result—if a document appeared with your name or your company’s name.
Everyone had those notifications back then?
Yes. These founders started receiving notifications. They didn’t know who I was. I had 4 readers, but they started getting these new notifications from Google. Then they came, left comments, and sent the articles to all their friends and mothers—always mothers.
You were basically unknown.
Exactly. Suddenly, all these people who had founded companies that no one had heard of and that hadn’t been covered in the press became very large. They latched on to me as a lifeline, as a way to grow, hire new people, and do all of that.
And you created this notification system?
Sorry, what system did I create?
For example, an alert system where people are automatically notified when they’re mentioned.
That probably could still be done through Google. I don’t know.
But you went to Google, and there was a way to set up a notification if Google found a document containing a particular word. You knew about it when someone went to TechCrunch?
Everyone knew about it then.
But you consciously set it up. There were no social networks; it was just a great way to track people. That was your thing.
Yes. If someone mentioned you, you found out about it.
Two years passed, and you were at YC?
TechCrunch was flourishing. Then, in 2006, I published the news about Google’s acquisition of YouTube, and I had the story 4 days before the announcement. Everyone laughed at me. The Wall Street Journal wrote, “Who is this boy? This didn’t happen.” But it turned out to be true.
Was that a one-off good tip, or a demonstration of how far ahead you were?
I never said how I got that information, but it was a friend of mine who was backed by Sequoia. A Sequoia partner told him about it, bragging, and he called me. I’ve literally never told this story before. He called me, I wrote about it, and I turned out to be right.
That was the year I started publishing big stories, and people began contacting me with information. I published a lot of major stories.
So in 2006, the situation at TechCrunch changed. Earlier, you found the information yourself, and now people were contacting you.
Yes. I rented a house in Silicon Valley and started hosting barbecues there. These events became popular, and the police shut them down. Hundreds of people came.
That’s crazy.
Yes, it was fun. I’m also a very introverted person—not a narcissist—so I usually secluded myself in my office because the whole company was run from my house. But I liked being around people at these parties, and that also contributed to the formation of an entire community.
So in 2007, you changed your approach again and started looking for founders?
I’ve always done it this way. I arranged meetings at my house, and founders came. But it wasn’t like when I first came to Y Combinator—that’s a whole other story. These were startups without names. Who knew whether they would all survive or fail? I didn’t know who Paul Graham was. I did it because that’s simply who I am and what I did: if there was a startup, I covered it.
At least in the first few years, I covered every startup because, after the dot-com nuclear winter of the 2000s, everything had been moving very slowly for years.
So you also covered events negatively?
Well, yes, but mostly not. I was mostly on the founders’ side and gave them a chance. I encountered a lot of resistance from traditional journalists, who constantly criticized me for it, and that caused me a lot of stress.
I like the way you talk about “real journalists,” but you created TechCrunch.
Yes. Journalism has changed, and it’s now considered normal to have your own opinion. But it wasn’t like that then, and I was simply shamelessly on the founders’ side. They were my rock stars. I didn’t particularly care about celebrities.
Steve Jobs was my mentor. I spent time with him a few times in the late ’90s, when he was working at NeXT, before he sold it back to Apple, because I was one of his lawyers. When I first met Steve Jobs, he entered the room while I had a foam coffee cup in my hand, and I poured coffee on myself. I was a complete idiot. It was like meeting a celebrity.
There’s so much that’s interesting here. I sincerely love entrepreneurs. I’ll digress a bit: what was the most interesting part of Steve Jobs’ story?
The early years—the ’90s?
The ’90s?
No—yes, yes, yes. We represented his interests when he sold NeXT to Apple. That was a major event in the late ’90s because it brought Steve Jobs back to Apple.
Right. So he returned to Apple.
Yes. He had NeXT and Pixar. Pixar was sold later, but he returned to Apple. That’s why we led the negotiations on the deal as his lawyers, not as a bank. We thought we were very cool because we were lawyers, but the bankers did all the important work.
I was a relatively young specialist, so I went to his house once to get signatures. He sat down and talked to me. He was just a very cool guy. Of course, he was a little crazy, but I never noticed it. He was very charming, and I wanted to be like him when I grew up.
Did you learn anything specific from Steve—some valuable life lesson?
Don’t be a lawyer. Be active. Build.
I was in Silicon Valley, working at a law firm, and I met Marc Andreessen for the first time at Netscape. All these guys were incredibly cool, but we were lawyers, and we thought we were cool because we were lawyers. I worked on the NeXT-to-Apple deal, but I wasn’t cool. Steve Jobs was cool, right? That’s why I said, “I need to get out of here. I need to stop being a lawyer and start a company.” So I did.
And Andreessen still had hair then.
Yes. Steve was one of the people who taught me that, and so was Andreessen.
So Steve taught you indirectly?
No, I was sitting with him at home, and he told me how much he hated lawyers.
Another cool moment happened after the deal closed. The main partner on the deal was on vacation, so he told Steve, “If you need anything, call Mike.” I have a voice message from Steve, so thank God I missed his call. The attorney-client privilege has probably expired by now; everyone involved except me is already dead.
He had received a bunch of Apple shares as a result of the merger, and he left me a voicemail saying, “I want to sell everything.” And he did sell all his Apple shares. Then I had to call the bankers and find out how to do it. I kept that voice message for 10 years until I lost it.
How much did he sell them for?
I forgot how much they were worth then. He wasn’t particularly fascinated by Apple. He was probably the CEO?
He didn’t immediately become CEO, I don’t know.
He was still a little offended by Apple because they had treated him very badly in the ’80s.
I mean, he definitely died a multibillionaire. Under Tim Cook, Apple’s market cap increased 10 times, up to $4 trillion; it was about $400 billion or something like that when he died. Yes, he had a lot of money, and he had this yacht that he built.
I was on this yacht—not with him, but with his wife. I don’t think he ever stepped on it, but his wife took over its management. And now she at least spends some time on it. She spends a lot of time with my coach, and I just thought: Was Steve Jobs alive when this yacht existed, or was it completed before his death?
This is a cool yacht. Look at it in pictures—it’s very modern even now. But it’s a little crazy to be on the yacht of your deceased husband with your boyfriend. But yes, people are crazy. This is madness.
So, let’s go back to the TechCrunch days—2007, Y Combinator. You started publishing sensational stories about founders. I want to know how you worked in those days. Was it easy? Was it difficult? Were there easy hours? What was it like working in the early days of TechCrunch? What were the most difficult parts?
It turned out that I’m hypercompetitive. That’s why I didn’t like this job. Writing was difficult. Let’s say I wrote about some startup, and it wasn’t a simple startup. There were, you know, what I called “plumbing”—all this fundamental infrastructure—because I hated it and didn’t understand it.
If I was going to write an article, there was a way to cheat, and journalists do it constantly: They seem to write an article but don’t understand the product. The article is written, right? But in reality, there’s nothing to be learned. I needed to understand the product and explain it in a way that I could communicate to people. That’s why I really had to study it, and I insisted on this.
There was a lot of work involved in writing the texts. All sorts of things happened overnight. If I didn’t like the idea of going to bed and missing important news, my sleep got worse. I worked all night. I went to bed at dawn, and when the birds started chirping, it put me to sleep.
My health was terrible. But I won. I dominated for several years. I was so competitive that I could joke, for example, that I adored April Fools’ Day. One year I had some infamous posts, and another year I performed at conferences dedicated to April Fools’ Day.
I don’t even know what I was talking about, but I said, “Hey, it’s time to go. Maybe this is the most important news in my life, and I’m going to publish it. It’s on the largest scale of anything I’ve ever written, and I’m going to publish it.” And I left.
There was a lot of press. I returned to the office and published an article saying that Google was going to create nuclear weapons. The first part of the article said that Google was buying or building a nuclear power plant to power its own data centers. That read fine.
Then it got to the point that Google needed a nuclear deterrent—against Google or against China, which constantly hacked them. None of the press read beyond the first line. The Wall Street Journal reported within a minute that Google was going to create nuclear weapons.
Then I started taking screenshots of everything and adding them as updates to the post. They soon realized what was happening, because someone read it and said, “The Wall Street Journal said, ‘What the hell are we talking about? Google is building a nuclear weapon?’”
For a while, I had that kind of platform, and I used it irresponsibly.
It was another irresponsible use of the brand?
I don’t know—is it irresponsible? It attracted views on TechCrunch.
It’s debatable.
Oh, there were others—April Fools’ Day pranks. But it was a time when… Do you even know what Zynga is?
Oh, yes.
They had this strange advertising product, which was terribly boring, and it worked on another company. I forgot what it was doing wrong. But I spoke at conferences where the woman was the general manager of the company, and I said, “Hey, can you comment on this accusation, blah blah blah? I remember watching your YouTube video about this. You were standing in a crowd.” Terrible video, yes.
She was like, “This is bullshit. Double bullshit. This is not true.” In general, it turned out to be true. She was fired.
5. Selling TechCrunch & backing Uber and Airbnb
And, you know, I felt very righteous because of this, right? God, I don’t remember what she did, but I felt very righteous because of it. Smug because of it.
But yes, some of it was a fun time. It was also slowly killing me. I didn’t really start it as a business. Before that, I had founded 2 or 3 companies that, for one reason or another, didn’t work. This was just a hobby, and the first real money I earned was when I sold it.
So how did you feel? Burnout and selling don’t always coincide perfectly. Had you reached the point where you thought, “I kind of want to sell this, and I’m already burned out”? Or was it different? How would you say your health was deteriorating?
I was quite strongly burned out. Then Brad Garlinghouse, the CEO of Ripple, became a pretty good friend. He was the head of Yahoo and then moved to AOL. He said, “We would really like to buy TechCrunch.”
He helped me with it, too. This was one of the first things he did for me, and it gave impetus to my career. I love him very much. I owe him a lot.
It was just time. I weighed more than 136 kg, I couldn’t sleep, and I had sleep apnea. Now I weigh 136 kg—no, I weigh a little less. But I was so competitive that nothing else mattered except work. That was hard.
Of course, I don’t understand how it was possible to stop. I sold the company and then founded a venture fund.
Fair.
The fund was supported by AOL. They were the main investors, and then I had Sequoia and—not Andreessen; they hadn’t really done anything yet—but this was before the advent of cryptocurrency. They were large funds. This was around 2010 or 2011.
AOL’s board of directors approved it. By that time, they had already bought The Huffington Post, and that’s how Arianna Huffington became my boss. But I didn’t answer her calls because she irritated me.
I had a payout of approximately 10% of the amount they told me they owed me. In general, she approved it, but then I announced the fund on TechCrunch, and it went crazy because I was simultaneously an influential person on TechCrunch and an investor.
Arianna didn’t like the press, so she fired me via Twitter. AOL immediately said, “Dude, you’re not fired.” And I said, “Yes, but your boss just publicly fired me, so you have to pay me additionally.” I don’t know, $5 million instantly. They regretted it.
But it seems that a new generation understands what SemiAnalysis is: the analogue of large research companies. What? SemiAnalysis is an analogue of what you did—as if a large research company now launches a fund.
Yes. But then I was free.
And then I gained even more weight. Look, you can look at my photos, and you’ll see me. I was a big, fat bastard. That only stopped when my doctor said that I had prediabetes.
I said, “No. No. No. No.”
She said, “We’re going to start giving you medicines.”
I said, “No, we’re not doing anything like that.”
I took a year off and got myself into shape.
But out-of-shape Mike was successful Mike, although obviously unhealthy. But what?
Wait, what are you saying? Are you talking about the present Mike and his level of success?
Well, no. Now you’re just at the speed of a breakout, but I—
I don’t know, but I feel much better now.
Great. Yes. So the fund will allow you—
I will never forgive you this, Sam.
I didn’t mean to say anything bad.
Yes, that just makes the situation worse. Apologize.
Fat Mike was successful Mike.
Although I didn’t say it in that tone. I spoke sincerely: “I’ll watch the recording later, but you know what? There is—that is, right?”
So you’re leaving the fund—
I can’t. I’ll collapse. Mike will kill me.
So you’re leaving the fund? That’s it, it’s over. Arianna, they pay you.
No, the fund was excellent. The fund continued to work. We created 3 funds.
And CrunchFund was looking for founders through TechCrunch? Was it the same approach, or did you have all your own connections?
So, you know, we immediately invested in Uber. I was with Travis Kalanick from Uber, and we were driving from San Francisco somewhere in the South Bay on Highway 280. He told me about several startups because he had created them.
He told me about 3 startup ideas he had. One of them was Uber, and Garrett Camp had offered him the opportunity to run it. I think he had already started it, but he wasn’t yet the CEO. He told me about 2 others, and I really liked one of them.
I said, “No, no, no, this is Uber. This is amazing.” I thought, “What can be done now using an application? Other people could do this, for example, using their own cars.”
He was like, “Well, yes, but in any case…” And I don’t say it was because of me, but in the end he fired the CEO and took the company under his own control.
I wrote about it, and no one thought it was interesting until it became known. That’s why he let me invest in Uber right away, at a very early stage.
The same thing happened with Airbnb, Pinterest, and a few more companies. But that first fund was just crazy because I knew all these people, and they were my friends, because I had written about them for a long time.
Positive returns. You’re talking about several other companies that generated generational profits. These are incredibly successful investments—all of them.
Stupid. Yes, those were stupid-money investments. But when I invested in Uber, I had a premonition. With Airbnb, I thought, “I’ll do it,” but I wasn’t 100% sure everything would work out. I invested about $100,000, and it turned into a lot of money for investors. So everything was simple—amazing.
Then, over the years, we created the second and third funds, but they were very small funds. Each one had about $30 million, so even then they weren’t big. The reason they were small is that I really like the earliest stages of startup development.
I hate it when I have to look at spreadsheets. I hate it.
Agreed.
At first, I just felt a bit bored. I had meetings, just as I did at TechCrunch. I met with people, but instead of writing about them, I wrote them a check.
It seemed to me that everything repeated again and again, and I didn’t understand why people like Reid Hoffman—a well-known investor and the founder of LinkedIn—continued to invest. He has more money than he can count, but he continues to do it. I don’t know if I speak for him, but I suppose he’s also a little tired of all of it. But these people never stop.
I think it’s because they’re afraid of rethinking themselves and of failure. But I love rethinking myself. At the peak of investing in unrelated projects with AI, I said to myself, “I don’t want to study this anymore.” I wanted to learn about AI. It was at the beginning of 2017.
I invested in Coinbase and bought Bitcoin, but that was all I did. Then, in 2017, I thought, “This is amazing. I know nothing about it, so I can learn something again.”
How did you hear about Coinbase and Bitcoin in 2017? What was that?
I was at TechCrunch.
TechCrunch?
I saw them all the time. These guys were everywhere. I just knew everyone.
Maybe one question: During the second and third CrunchFund funds, were you still in contact with the founders of the companies you wrote about and going to parties, or had all of that changed?
When? The second and third funds?
Yes. Because the first fund—
No, TechCrunch didn’t even let me into the office.
Okay. Yes, yes, yes. I completely didn’t know. The first fund sounds as if you were running around some crazy social networks.
Yes. That’s why the investments started at the earliest stages.
The second and third funds sound different, perhaps more like traditional venture funds.
They were absolutely the same. They also had major successes, but they weren’t as easy as before, when I first started the fund and moved from TechCrunch to writing checks.
It took about 3 months to get everything I wanted, except Stripe. I almost got into Stripe. I met with the brothers, and they were going to accept me, but the round had closed about 6 months earlier. They said, “Yes, we’ll take a small check—about $100,000.” I thought, “Hell yeah.”
Then they came back, and the other investors said, “What? No. Absolutely not.” That’s why I didn’t get into the company, and that’s really terrible. I wouldn’t be here now if I had received that $100,000 check.
Does that mean you wouldn’t want to talk to me just because you’d become richer?
I love you, and I love this apartment, but no—I would do other things.
Fair.
Yes.
What was it like to wake up in 2017 and say, “Completely crypto, no more traditional venture capital”? Did that happen in a day or over a month?
As in all great stories, there was a woman. She explained all this nonsense about property rights to land on the blockchain, and I was like, “Oh, come on.”
But then I began paying attention to all those things. What were they called then—ICOs?
Oh, yes.
We invested a little money in a couple of them, and those small amounts turned into a huge amount. I said, “I’m going to create a fund with this money.” It was simply amazing. There was the Moon and other big winners.
Yes. These are liquid investments, but Arrington Capital is also very actively involved in private venture-capital transactions.
Yes, just not recently.
You’re just not thrilled with what you’re seeing?
Well, we concluded quite a few deals involving AI. We also completed several cryptocurrency transactions, but usually the best times for investments are periods of decline.
That’s absolutely right.
But I think people just gave up, and there was a brain drain from crypto. Therefore, we just need to survive this period a little longer. I think cryptocurrencies are now really trying to understand what will come out of this. That’s why—
I think the most successful investments we’ve ever made have always been in bear markets.
Yes. The reason is that prices are falling and there’s less competition from other investors, right?
That’s absolutely true. Someone like—well, me, I mean—
But I saw that there just wasn’t much to look at. If our deal flow hadn’t dried up while other firms’ had, I would look at it and think, “No, we’ve slowed down in crypto and are much more active in AI.” That’s life.
The most amazing thing to me is that you’ve been through so many cycles and interacted with them so closely. You were involved in the early internet. You were involved in 3, 4, 5 cryptocurrency bear markets, if we’re counting. You saw 3 or 4—
Yes. There must be a lot. I mean—
2018, 2021, and recently—that’s 3.
2022, not 2021.
2020.
Yes. It was in the spring of 2022.
And then this last one.
Yes. There are just so many cycles around these bubbles. I earned more money in 2021 than I had earned for the rest of my life put together.
I’m sure you guys did pretty well, too.
Yes, we had everything.
Fine.
Yes, yes.
I also moved to Florida in 2021.
I moved in 2021, too.
It wasn’t connected with my income at all, but I moved to Florida. The problem is that I left most of the money in the fund because 2022 was difficult. Of course, I paid taxes—thank God—and I accidentally overpaid them by a very large amount. So it was very nice to get that money back. But good times have arrived.
In bad times, for example, one of my partners—I won’t say who it is, but you know, this man—we were walking recently. It was maybe 2 or 3 months ago, and this man said, “I think cryptocurrency may have died.”
I thought, “This is what I’ve been waiting for.” If you’re disappointed in cryptocurrency, then the bottom has been reached. I’ll never let this man forget it, because soon after that, things started to improve.
That’s all, really. You wait until everyone thinks it’s completely dead, and then you rush into the pool headfirst.
I was, well, not exactly depressed, but I don’t fall into depression at all. A couple of weeks ago, I was quite depressed.
Why?
The market was terrible, and I wanted to get out of the house. I said to my wife, “Molly, I’m going to the park to take a walk. I’ll be back in a couple of hours.”
I took a bunch of photos. That day, a couple of weeks ago, Bitcoin was at $57,000. It’s incredible how that happened.
I thought it was dead, too.
You thought it was dead?
No, I mean, I didn’t think Bitcoin was dead, but the venture side is hard. We haven’t seen anything like this before.
Yes. In the venture-capital sector, everything is what it is, but I’m not losing hope anymore. The ups and downs don’t affect me at all.
Can you specify—not which one, because that’s a rude question—but maybe for the listeners: Is this because you have money now, or because—
No, no, no. Money isn’t that important to me.
Be that as it may, every rich guy says that.
If I go back to my first startup, when I left the legal profession, I founded a company. It’s the one I sold for $35 million, but I didn’t earn a penny on it.
I was at RRE Ventures, you know. I was in their old venture-capital firm, where I didn’t specialize. I was in their office in New York on the day the market collapsed. It was sometime in March 2000.
Those were difficult times. It seemed as if technology was dead for about 4 years, until Google went public. Nothing was happening. It was a venture fund that returned no money. It was a $200 million venture fund—Draper Fisher Jurvetson—that, around that time, didn’t return a single dollar. Zero. It’s statistically impossible.
It was hard. And I did what I said I would do. I went to Denmark, found a girl, and surfed in Los Angeles every day. But we recovered from that, and I’ll always believe that we’ll recover. Unless there’s a nuclear war or something like that, or unless AI really works, we’ll recover.
Knowing what you know and having experienced so many cycles, how do you wake up and make the decision about whether to spend your time on cryptocurrency or AI? How do you put the puzzle together?
I’m 56 now. I think the days of rethinking myself, at least as they relate to AI, have passed. But I’m not going to spend all my time rethinking myself.
Now I consider myself the manager of my own company and a mentor to my team, particularly the partners. Not all of them need my mentoring. The guy who manages our liquid fund is probably smarter than everyone in this room. It’s an incredible team.
I’ve met many of them. They’re wonderful.
And we’re a small company. But I feel like a manager, and I bring value to the company. I won’t go into the details of why and how, but I attracted investors and closed several deals.
For example, we conducted a SPAC for Evernode and prepared a presentation for Ripple, which, as far as I’m concerned, seems like it will be pretty cool. Unfortunately, they’re having a difficult time and aren’t public. In general, I let them do their jobs, and I get huge pleasure from that.
I get huge pleasure from making people rich, right? For example, I made 5 millionaires when I sold TechCrunch. That matters to me more than the money I earned. Again, this is a standard phrase from a rich man, but now I get pleasure from it. So I don’t know—will I do it again and reinvent myself? I don’t even think I’m answering your initial question.
No, you are. You’re answering it better. Do you like it? Is there anything like that?
I feel that the fundamentals of cryptocurrency are very durable.
I agree.
I just don’t know how to describe it. I believe in it. I don’t know how else to say it—I really believe in this. I blame you for this. I say, why must I stop believing in it if I’m in it? Do I believe this religiously?
So, only hard money can save us?
Yes.
I know. No, I agree: hard money, which governments cannot stop. We had hard money earlier, but governments saw it and always devalued it.
Yes. Bitcoin is really unstoppable. It’s impossible to stop, and that’s why it will save us all.
Yes. No, well, they’ll never slow down spending. We tried. Elon tried.
It’s as if we never will. We won’t do this. We absolutely can’t.
The only way to do this is, again, with a friendly dictator—someone who doesn’t obey democracy. You know, democracy is two wolves and a sheep deciding what’s for dinner.
What is that?
I mean, democracy doesn’t work. Churchill said that democracy is the worst form of government, except for all the others that have been tried. That’s the real problem, and that’s why we never stop spending money.
So, do you like to prepare in a certain way personally? As far as I know, you’re not particularly involved in politics.
I keep my distance from politics. I’m a libertarian. That’s why my candidates never get elected.
How do you prepare? Do you have weapons, Bitcoin, and gold?
Yes. There are 2 theories of preparation. One is weapons, and that’s all, because then everything becomes yours. Another way is to buy all these things—freeze-dried rice or whatever else people buy.
But I’m not crazy, although I am paranoid. I have weapons because I’m a God-fearing American. I think it’s literally our duty to own weapons safely and responsibly.
That’s the same thing. But I hope this won’t happen. I’m a little worried. Every damn billionaire I know has a bunker somewhere.
Can we swear on this podcast?
Yes, certainly.
Do you have a bunker?
I’m not a billionaire yet. No, I have only one house—the one I live in. I would really like to have a bunker. I really wanted one of those decommissioned missile silos.
Yeah, that would be super cool, right?
But no, I don’t have one.
These guys have bunkers in several countries. They’re also the ones in charge of everything.
Yes, they’re in charge of everything. They know what’s what.
What’s the ultimate goal? They go to their bunker, come out after a nuclear war, and everything is okay? Peace, everything? What’s the point?
As far as I understand, when they take cover in your bunker, it doesn’t matter who leads them—the head of security. You’d better be very, very kind to the head of security for several years before you need him, right?
Yes, because otherwise they’ll kill you. That would be terrible.
Yes, if this happens.
Do you have any advice for a 20-year-old guy? It sounds really crazy, doesn’t it?
No, not at all. Billionaires with bunkers sound crazy. I mean, would you buy a bunker if you could afford it, without blinking an eye?
Absolutely.
So they’re not crazy. They’re crazy in the sense that they’re actively—
I want to say it this way.
It’s truly banal. It’s as if they’re actively working toward the destruction of peace, but in reality, that’s wrong. It’s simple game theory, and people do what they do. There’s no way out of this.
We were talking about AI. Let’s say the United States says it will regulate and slow down AI development. That changes nothing, except that we’ll definitely lose, right? So it’s a closed circle.
Do you know any of these billionaires who have bunkers?
I only know what I’ve read in the press. Nobody has actually taken me to their bunker, and I haven’t been invited into the bunker group. I don’t know if Brad has a bunker. If he does, I don’t know about it. It seems to me that if they told you, it would ruin the whole point.
You want to be part of something like that, right?
Yes, sure. You want to be part of the bunker.
We could unite here in Miami. I’d like to build a bunker, and if I contribute $100 and you contribute the rest, we could build an excellent bunker.
I think you could do much better than depositing $100, but we could just build a socialist utopia in our bunker. It would be fun for a couple of weekends.
It could save lives.
I don’t know. What advice do you give 20-year-olds who are faced with all of this? What do you tell your children?
No, no, I don’t have children. I have a stepdaughter, but that ended when Natalia, my ex, and I split up. You didn’t ask about that—how it ended. I won’t even go into the details, but I don’t have children.
If I were 20, I probably would go crazy and use drugs every day. I don’t know what I’d do. I’d definitely like to become a plumber or something similar, but I don’t know. There must be some possibilities. For example, use AI all day.
By the way, did you say 28?
Yes.
Okay, you’re still quite a puppy. You’re very young. I think you’ll be fine financially. But imagine you’re 32 and have a lot of money in your account. What will you do?
I don’t know. I think the worst thing for me is that people have no purpose, so they create a really stupid socialist government and take more from the system.
Altman talked about universal basic income very early on. Maybe I can imagine the world Elon talks about, where everything is abundant, everything is free, and we can afford that. Fine.
But what about the fact that half of the adult population is currently taking antidepressants? We don’t have goals. We already live too well, we’re not afraid of anything, and we’re just getting stuck in our own problems. What happens then?
I don’t think it’s that scary.
It’s very scary. Universal basic income is terrible. It scares me because I’m such a supporter of meritocracy. I believe that a person who works less than I do should not have more than I do. That’s just my point of view.
I agree. But what happens when, for example, 5 million people in the United States start dying? What will you do? You’ll introduce some form of universal basic income.
We already have some form of universal basic income. Everyone has free medical care and food stamps—not really, but yes.
But, oh my God, these people live miserable lives.
We’re back to the Fourth Turning. I think we’ve closed the circle.
Yes. Remember the whole story about the boiling frog? It’s all coming at us.
Nobody has ever lived through an era of such sharp technological change as we’re experiencing now. It’s incredible how rapidly the world is changing. Until 1900, and then until the 1940s, the world changed very, very slowly. With this boiling-frog story, I think we don’t even understand how bad everything is.
If you took a brain from 1995—I know you probably weren’t born yet—and suddenly put it in the present, I think it would be petrified by how quickly everything changes. So much of it is frightening.
I mean, these Flock Safety cameras are fascinating. It’s just madness. They’re everywhere.
They are everywhere. And it’s not only Flock Safety. There are other companies too, some of which I’ve invested in.
Do you know what this means for me?
These are good companies.
Yeah, I’m not so sure they are.
But politics is the reason we constantly hate each other. In the 1990s, we didn’t hate each other. Republicans and Democrats seemed to get along—not completely, but sort of. Now we constantly hate each other.
I thought I was noticing politics only because I was getting older. I didn’t think the world had changed that much compared with how it used to be. Men and women used to go on dates and like each other. It seemed as if the world was pretty good.
I don’t know what’s going on now. Again, am I just getting old? Am I now the person who wants to tell everyone to get off my lawn?
I don’t know, but I’m very afraid of a lot of things now.
I can’t cope with it through pessimism. I try to simply live every day. I think that’s good for anyone who thinks too much: stop getting hung up on your thoughts and live your life.
I spend a lot of time studying this question because it’s very difficult to let go—for example, an unsuccessful investment, something missing, an excellent employee, an event. Reflection can kill you if it’s unproductive.
I don’t know if they’ll kill me, but this is definitely terrible.
Yes, it’s terrible. Productive? For me, Pema Chödrön helped in this regard.
What helps you get rid of thoughts?
6. Advice for founders: play to your strengths
Pema Chödrön—a wonderful Buddhist. I love her books. She has a book about how to get rid of dependencies; she’s phenomenal.
Taoism, in reality, is more my style. The difference is easy to find on the internet, but she feels very close to me. That’s why I’d be pleased to read this book. I don’t know who this woman is; I’ll send it to you.
Yes, yes. She’s good.
But, sorry, how does this work? How are you getting rid of obsessive thoughts? What’s wrong with you?
I have this terrible problem, it turns out.
Yes. But how do you concentrate on productive things?
Well, I have a hobby. It seems you said that sometimes you run. I don’t like running; I’m just walking.
Actually, one of the things I wanted to talk about today is you. Many of the people listening are entrepreneurs, and the best skill that I learned at the beginning of my career is to face your fears. No matter what you’re afraid of, attack it.
For me, that was marathons. When I was in my first year after law school, a partner in the office nearby ran marathons all the time. I didn’t even know what a marathon was, and I was terribly scared because I’m not made for running. I ran a marathon a couple of years later. I trained and ran a marathon, and I hated it.
My nipples were bleeding. It was a disaster, but I finished. No more need to worry about that, and I’m not afraid of it. I’ve always done it this way—one of the main principles of my life. Whatever you’re afraid of, go and do it, and you’ll overcome your fear quickly.
I also learned one thing from a salesperson who used to work for me: always use your strengths. When I was your age, I wanted to be a Renaissance man, an ideal CEO of a public company. I tried to understand what I was weak at and couldn’t master, and he said, “Listen, I was at a sales seminar, and they said, ‘Forget about all this. Just find out what you’re good at. There’s a lot of that. Get busy.’”
I wrote about this in TechCrunch: never swim against the current. In your personal life or in a relationship with partners, be a Renaissance person. Be curious about the world. But when it comes to your profession and making money, don’t worry about what you’re bad at, unless it’s something terrible that would get you put in jail, like being a psychopath.
Just do what you’re good at. That changed everything immediately. I don’t manage people; I’m terrible at it. I’m capricious and bothersome, so I always hire someone to do that. Now I have a chief operating officer who controls us.
That’s your main advice for young entrepreneurs. Was the first implementation of this principle hiring a manager? Is that the lesson?
Oh, no. I mean, at TechCrunch I hired Heather Harde. She was my CEO. I just wanted to be the guy who wrote articles. She controlled TechCrunch when there were about 50 people in the company.
But you didn’t control it?
Hell, no. I tried once to manage 1 engineer, and he immediately quit. I said, “You can’t do that.” We had already signed a deal with AOL, but the transaction wasn’t completed yet.
I said, “Listen, I can’t screw this up. They’re going to buy us, and I can’t let this ruin it. I’ll give you $10,000 if you wait until the transaction is completed.” He answered, “Yes.” We’re still friends, in fact. He waited, and then I personally gave him $10,000.
But I’m terrible at managing people.
Yes, it’s really bad.
Because I’m capricious.
But you know what’s good about this? You cope with it.
Terrible.
You cope with what you’re bad at, and you’re smart.
I think you’d be able to understand this.
Why?
Because I know what I’m really good at. I’m really good at hiring people and choosing early-stage companies that will win. I don’t need to be anyone else in my professional life, so why waste time trying to fix something that probably can’t even be fixed?
I’m almost sure this can’t be fixed.
Fair. I think I have some peculiarities of character that sometimes make it difficult to communicate with me.
Fair.
Yes. I want to finish with this: who is the best entrepreneur—the founder who is listening to this—and whom would you contact? You want to invest in them. Who would it be?
Do you mean the type of person or their name?
I need a name first. Who do you want?
Listen, we have a large volume of assets under management. Our AUM varies a lot, but we’re a hedge fund, so we never stop. We constantly invest in early stages, even when our AUM exceeded $2 billion, because I need to. We do other things, but others are doing those things.
I’m the person you want to see first in your first round. I don’t need to be the leader. I don’t need power. I think investors, as a rule, bring more harm than benefits, so I’m very careful about this question.
I’m just very glad when someone has an idea but hasn’t done anything yet. That means they want to turn it into something. That’s who I want to be next to.
I’ve discovered that even if they endure failure—which usually happens to them—the good ones will remember me, and they’ll recommend me to other people. That’s all I really want.
Maybe one last question for you. I know that you’re an amazing investor. You’ve thought everything through down to the smallest details: investment, development, the podcast, and working with TechCrunch. For me, that was like having an investor. It was really great. You’ve thought it all through.
But I hope people understand that you’re the kind of person investors like us always want to see on the cap table. I’m not just saying this because I appreciate it.
Thank you. You know that. You guys are good.
And many investors aren’t like that. Don’t be bad investors and destroy people’s lives just to make money.
I appreciate it. I really do appreciate it, and obviously we love investing together.
Maybe one last question for you. You said that you’re a bad manager, but do you like giving advice to founders? How do you combine those 2 aspects?
To me, it seems that if you give advice, then you’re managing something.
Something like that. If you give advice, how do you avoid managing?
I don’t control the investment. I can hold myself in your hands, right? At a board meeting with someone, I’m talking about everything every day.
Especially when I’m under a great deal of stress. I don’t feel strong stress anymore, but when I’m under a great deal of stress, you can’t manage people and be under that kind of stress at the same time, because of what you create.
I realized that I don’t need to do this. You should really focus on this: know your own weaknesses and improve, but think about whether you can fix them and whether you want to fix them before spending energy and time on them.
No, this is great advice. You’re leaning on your strengths and understanding, “Hey, is it worth correcting this or not?” Then you go and achieve success. I like your advice.
Again, I don’t have that many tips for you. You’re much further ahead of me at your age.
You guys figured everything out very early.
No, seriously, I didn’t earn money before I was 40 years old. I was constantly ruining everything. So you guys are amazing, and I’m very glad to be on this podcast, because for me it’s like being on the Rogan show. Damn, that means a lot.
Thank you very much. I really appreciate your participation. I’m so glad.
Yes, I really appreciate it. It really means a lot to me, and, of course, to all my partners and everyone here.
Thank you, Mike. I can’t wait to send this to your mom and show her your hatred. I’m not kidding.
Mike, thank you so much.
Thank you.