资本市场的一切，都由算法驱动

You can form billions of dollars of capital around simply stating a new idea. Every once in a while, someone basically crystallizes a notion right at the right time, in the right way, that sort of becomes the foundational viewpoint or opinion on a certain era.

Everyone is a little panicked. They don't know what's going on, and someone just needs to set the story and set the narrative. It doesn't even have to be right, but there's just a sort of confidence of, “This is happening. Follow me.” Capital just follows the billion-dollar PDF around the field.

We're going to have the chance to talk about, as we do on a daily basis, you and I, 57 different ideas. But I'm always interested to begin with a couple of questions about investing. I sit near you, we share an office, so I get to hear a lot of these stories every day.

I think it would be really fun for you to turn your observations from all those—God knows how many hundreds of conversations with founders of these companies and with the capital that has backed them in the past—to share what you've learned from that frontier over the last 18 months, framed as advice for founders and advice for capital. I just don't know very many investors who are looking at situations like you are, with such a high rep count. What have you learned in the first 18 months of doing this?

I've learned a lot. You really realize that in, let's say, long-term private markets, the great filter, so to speak, for funds is fundamentally their storytelling ability. Their product, which is realized cash returns, takes a decade. So the thing that you're selling in the interim—whether it's through a quarterly update, your event, or just your one-on-one conversations with your LPs—is really just narrative.

A particular situation that's very interesting, that we've seen a lot of, is twofold. One is that the business is kind of old but has started to do well recently. That's an interesting scenario because it's one of these instances where, merely because the company's story—the narrative of the company—is that it's 7 years old, it's very difficult for those companies to get funding.

Let's say the company has really started to inflect. Maybe it's because of AI or maybe it's because of something else, but they're 6 or 7 years into their life. The story is, “Well, okay, fine, you grew 200% last year, but in absolute terms, you're only at $8 million of revenue and you're 7 years in.” Whereas I think literally, if you just changed the name, told a different story, and arbitrarily started the clock 2 years ago, that company would actually be really hot. The fix, I think, is just to be more flexible on narrative and story.

A sort of derivative of that problem is just the number of businesses where they're in a spot where it's kind of working, things are starting to go well, but they're faced with 3 choices. They're basically not going to raise a significant up round, and so they're staring down a bridge round, a strategic M&A or acquisition, or cutting to profitability. Those are just really hard situations.

If you're in that situation, I think that's where you really want to get creative with the cap table. If you have some cash, buy back your investors, convert everyone to common, and really start to spend more time on the cap table. Otherwise, I've been shocked at sort of how hostile insider bridge rounds really are. I think this is an underdiscussed part of venture.

How so?

They just have 3× liquidation preferences, warrants, ratchets, or other things. There's sort of this interesting idea that if you're extractive to the downside, everyone sort of boos you, but if you're extractive to the upside—where you say, “I want the right to invest at the same price in 2 years from now”—they're both similarly extractive. But because one is an optimistic extractive, everyone loves that one.

What advice would you give to founders in thinking about their cap table from the start?

Well, obviously, in a highly volatile, highly uncertain period right now, no one knows if it's the death of software. I think it's certainly the most unprecedented and uncertain time since at least the transition to the internet. So I think what you want in that time is a lot of optionality, the ability to be nimble, and the ability to really be able to do what is right for the business and not be constrained by the cap table.

Maybe your business needs to become a services business. Maybe you need to acquire other companies. Maybe you need to run profitably for a while. Maybe you need to change your whole business model. If per-seat pricing goes away, maybe you need to pivot to usage. Maybe you need to fire a bunch of your customers.

In volatile times, it's always useful to have optionality. I guess the general piece of advice is that unless you're certain you want to try this one thing and it's going to be huge or zero, you should think about optionality. That usually means raising less, raising from investors with a wider mandate, and not getting stuck in all these weird problems where you need to continue to raise more money.

If you don't, it's bad for employees, it's bad for recruiting, people's options get underwater, and they start to leave. All those things reduce optionality. Which is also true for investors, by the way. They're the same problem.

It's funny because, in general, I think commitment is a much better strategy than optionality. But in highly volatile times, where it's hard to tell the future, you basically just want to control for being able to be super nimble, turn on a dime, do what you want, and not be constrained by, “Oh, we're set up. Our capital is set up in such a way that we can really only do this one thing.”

1. The Billion Dollar PDF

Go back to the investors and the construction of an effective narrative for building an investing firm before you've delivered the 10-year investment returns. You have this great idea called the billion-dollar PDF. Can you describe what you mean by that and what the interesting components of a billion-dollar PDF tend to be?

This is an idea that you and I came up with in a joking way that turned out to be true, I think, the more we thought about it. Every once in a while, someone basically crystallizes a notion right at the right time, in the right way, that sort of becomes the foundational viewpoint or opinion on a certain era.

I think it's just this idea that everyone's a little bit uncertain, everyone is a little panicked, they don't know what's going on, and someone just needs to set the story and set the narrative. It doesn't even have to be right, but there's just this confidence of, “This is what's going on. This is happening. Follow me,” almost.

When those come together, they set a new narrative that everyone can rest on for a period, really until the next PDF comes along. The billion-dollar PDF thing is this idea that you can form billions of dollars of capital in one way or another around simply setting a new idea.

You can think of capital as 10-year-olds playing soccer. They all sort of follow the ball around, and capital just follows the billion-dollar PDF around the field.

It's probably a good excuse to talk about this joint notion of posting, which I guess a billion-dollar PDF is just the ultimate form of or something. The furnace that is the timeline of predominantly X—that's where I get my timeline. There are other places as well, but it seems like these notions have really taken over people's desires and attention.

Everyone ultimately wants to have a spot on that timeline. It's a strange phenomenon. I'd love you to riff on it. There are 5 or 6 subcomponents of the timeline that I want to ask you about, but maybe just start with how you're thinking about this strange modern phenomenon.

I think it's downstream of technological change, and I think the technological change is really the unifeed. What people don't appreciate about X is that everyone gets served the same 500 tweets per day, and it has hundreds of millions of daily active users.

The thing that people who don't post don't realize is just how many people are reading. Whatever the poster-to-lurker ratio on these things is, it's enormous. It's really hard to feel the impact unless you're actually getting onto this feed and seeing all the people you didn't know were reading X all day commenting on your thing.

I'm always surprised when I post a good tweet and whoever texts me about it is someone I literally had no idea read Twitter all day. It could be someone I know well; I had no idea that they read Twitter all day. But everyone reads Twitter all day.

The unifeed, I think, is the technological catalyst for this phenomenon. It is X, by the way. It's interesting how X is sort of the Lindy social network. It's probably never going to reach the scale of the others, but it fills this vital role.

It's interesting to me how, however long it's been—I’m probably almost 20 years in now—it's still more important than ever, sort of a source of truth for the whole world.

And what that means is everyone is reading the same thing. It’s the global newspaper, right? In the same way that people would talk about the latest article in the journal 30 years ago, now it’s the latest tweet or the latest essay on X. I think what that creates is that all the most important people in the world, at least when it comes to capital markets, politics, and journalism—

Entrepreneurship, man.

Entrepreneurship.

Technology.

They’re reading their daily paper every morning, and these things really form opinion. They price securities, dictate where capital flows, and certainly write policy.

There’s this idea that another great filter, perhaps, is that your institution will only survive if it’s timeline-native. What that means is that it’s reactive to and reflexive to the timeline: reactive, meaning that it is constantly monitoring the timeline, and reflexive, in that its actions then affect the timeline, which it then reads and reacts to.

You can think of the White House as obviously being like this. Venture capital is like this. Certainly, public equities are like this. There’s this idea of, “What is the story?”

One of the things I get emails about the most is a comment I made somewhere about how posting is the last great meritocracy. I get emails about that because people are like, “That really clicked in my head,” and I started posting. Posting changes your life if you’re good at it. That’s still true today, maybe more true than ever, and it is a meritocracy in a weird way.

Now there are the algorithms and AI and all this stuff, but in some ways it’s a lot more meritocratic than it used to be. Like everything, it’s been lottery-fied. In the old times, you had to grind away and build this huge following, and then by virtue of having a big following, you could post a really inane tweet and it would be very popular. But that doesn’t happen anymore.

Now you can literally be a new account, write a good post, and then the algorithm selects you and displays you in front of 500 million people. It’s this weird thing where you have the global newspaper that everyone reads and that everyone finds highly influential. There’s also this meta thing where it’s the newspaper if you could see all the influential people reacting to the articles in the newspaper and, by virtue of reacting to it, making the thing more important.

2. Algorithms and Power Laws

Anyone can post to it. People are still very much underestimating how much policy gets dictated from the timeline, how many venture rounds are done on the timeline, and how many businesses are built on the timeline. I think increasingly everything will just become timeline-native. I think TPBN is a great example of this.

Certainly, right? When we’re recording this, every other day someone writes some sort of pornographic fanfic about AI, and it moves the public markets dramatically. I think, again, it comes back to this billion-dollar PDF idea: when there’s uncertainty, people are just looking for what is the story and what is the most compelling story.

The way that it works on the timeline is that it’s not this well-considered book that comes out and everyone talks about for a year. It’s what sounds smart, feels good, and has to be entertaining. Maybe that’s another change: a good post has to be very entertaining because people are on the timeline to be entertained. They can lie to themselves and say they’re on it for other reasons, but it’s just to be entertained. That’s obviously what the algorithms are selecting for.

There’s this idea that the most entertaining, somewhat interesting, somewhat correct thing is going to set the actions and the consensus for everyone on a day-to-day basis. This translates into their actions.

Is this all just jet fuel on the fire for the notion of power law in general? One of the things I’ve noticed in our show is that it used to be that all the variance was quite low. The very best one did a bit better, but not a crazy amount better than the worst one in terms of performance, and that has completely changed.

Now there seems to be this threshold—we were just talking about this this morning—that if you breach the containment, if you breach this threshold, it literally feels like you have taken over the world’s brain and shoved everyone’s eyes at your thing for a short period of time.

Yeah.

The impact of those handful of things is so much bigger than all the rest of them combined. What you’re playing for is really to be just one of these breakout things. Is that the right way to think about the timeline—that actually is all that matters, that you get one of those? You should be living at the edge of the distribution as much as possible in what you’re posting about and writing about.

I don’t know. Everything’s downstream of technological change. The reason podcasts followed a normal distribution was because the technology delivering them was an RSS feed. Now it’s an algorithm, and it’s clips. I mean, even the medium, right? I’m sure an obscene number of your viewers are watching or listening on YouTube, which is new.

Even if you subscribe to a podcast on YouTube, they’re not going to show you every single episode in chronological order. I think this stuff is all just downstream of technology. I don’t think it’s something that’s changed in the content or in the listeners. It’s just how it’s delivered.

In that sense, maybe one world where the podcast world lags behind the YouTube world is that the podcast world is still highly naive about serving content to the algorithm. If you get deep into the Twitter group chats, especially now that they’ve posted the algorithm, there are all these very specific things that you can do around replies, likes, length, and all these ultimately numerical factors that the algorithm’s selecting for.

Streamers and people on YouTube certainly understand that. Podcasts, I think, maybe feel a little bit random because they still really aren’t into the meat of understanding that we are recording this video for an LLM to review and decide what it wants to show people, and then people will decide if they like it or not. That first filter we don’t really think about, but that is the case.

Does that stress you out? Does that feel deeply dystopian?

I hear a lot of lamentation over the death of books. People don’t read anymore. It’s so interesting to me because I’ve read a lot of books. I like books. I spend a good portion of my life reading books. But it doesn’t really bother me that people don’t read anymore. I don’t see the big crisis that everyone laments about with books.

The attention-span thing may be true. It’s certainly way harder for me to read a book on a pure focus basis. But I feel like the sum total of the interviews that I listen to, the things that I read, and all this stuff are great. I don’t think I lack an appetite for books just because they’re harder to read. I think I’m feeling nourished from the other sources.

If you think about porn, it’s more obviously bad because people don’t have sex and they watch porn, and it’s fairly straightforward that sex is better than porn. That seems like an obvious thing. But people will hold that up right next to books, and I don’t know. To me, the book thing feels a little bit like a swan song for a technology that there will still be a place for, but it was the best way we had of delivering information.

Now there are new ways, and they’re more compelling and more interesting. You have to caveat that, of course, with the fact that I’m very sensitive to language and the terms that we use: “terminally online,” “brain rot.”

We recognize these are terms of death and rotting and destruction, and very negative, nihilistic terms. And so you do have to balance that with the fact that we didn’t call it—we didn’t pick neutral or positive terms for these activities. I don’t think anyone would ever self-conceive of reading a lot of books as being this very negative thing. So the counterargument would be that, no, actually, we have this deep sense that it is bad.

And I think maybe everything is just less forgiving. If you’re highly disciplined and motivated, the way that you can use new media is better than ever. But if you’re not, then it’s just going to be worse than ever.

You mentioned the White House, and I’m curious: this is certainly the first White House that feels completely timeline-native and reactive.

Yes, I think it’s the first modern administration, for better or worse.

Yeah. What else does that mean? What else does “modern” mean in that context, other than timeline-native?

It’s just highly reactive and reflexive to the timeline. I think it’s hyper-aware. Maybe in the same way that past administrations would be sort of addicted to polling, I think it looks more at the timeline than polling, which is all about understanding the wants and desires of the median and average person.

But the timeline actually sort of shifts back to a more republican model, which is that you’re caring about whatever it is, a few hundred thousand people who are influential. Ben Sasse, the former senator, has this great notion that Washington is now mostly people who want to be like TikTok and YouTube stars. That’s mostly what congressmen and senators want to be. And he condemns it, which is true in some very simple sense: you would hope that congressmen and senators are primarily interested in governance. But they’re not.

But on the other hand, I think maybe a shift of this that I’m only just putting together now is: maybe polling drives governance, whereas if you’re really only polling the timeline, you can sort of think about it as this is why the people who do well in politics now are just optimized for content. They’re basically content creators.

Because the polling is the timeline. And that’s interesting again because who is on the timeline? I mean, the readers are probably a more accurate sample of the median people in the country, but the posters who are dictating what the timeline thinks of something are a really, really small group.

3. Peak Guy

And so it’s almost just like, if the original sort of vision for who voted was white male landowners, maybe the version of people who matter for policy now is just the good posters. I don’t know if that’s a good or bad thing, but it’s certainly a very different group that I don’t think correlates super tightly to any particular demographic trait necessarily.

You’re friends with many or most of the great posters. What makes a great poster?

I think it’s not that dissimilar to writing. I do think that being a little bit tortured and having a bit of a messed-up personal life, just in general, are part of it.

Like comics or something.

Yeah, and maybe posting is a little bit like a writer mixed with a comedian or something like that. It certainly has a comedic element: you need to have a riff that resonates, and it’s sort of this instant hit. It’s phrased in an interesting way. They’re sort of a blend of comedy, poetry, and writing.

Do you think we’re at—you’ve used this funny phrase before—that we’re at peak guy? What does that mean?

I think we are at peak guy. It’s hard to say where to start this. There’s a pagan understanding of God as being in and around you, everywhere. Everything is animated. Everything is controlled and dictated by the gods.

Then in the Renaissance, you could say that God lives above the clouds, but there’s a guy up there that you can talk to. And then when we discover what’s past the clouds, we go, “Okay, well, there’s no guy up there.” And then we discover space. So basically, you have to just keep going, “Well, okay, maybe he’s beyond space.” And maybe we don’t know that it’s a guy anymore, or a distinct person or something that you could address and talk to.

But it’s this conceptual thing. God just moves farther and farther away and becomes more and more conceptual. But the idea is that ever since we’ve become an atheist society, we’ve been looking for things to look up to and worship. It’s sort of trite now to say that everyone has to worship or whatever. I think maybe the more precise thing would be that there’s always a role for a priest in society, and we’ve been looking for new priests.

And I think we tried scientists as priests. The scientific project has fallen apart a little bit. This is widely discussed. We looked to physics as hopefully going to provide us meaning. It hasn’t. Physics has largely stalled since the war.

And so I think we’ve moved beyond science as a source of meaning. I think there’s this billionaire class that we’ve sort of looked to as the new sources of meaning. On its surface, it doesn’t make a lot of sense that we would spend so much time caring about what billionaires think about physics or theology or health, or topics unrelated to accruing a billion dollars. But the reason we do, I think, is that this is our new priestly class.

We’ve said, “Okay, the values that are important in our society are being successful at business. And to be successful in business, you generally have to be smart and hardworking. And so these are the people that have ascended to the highest realm of piety in our value system, and so we’re going to listen to them.”

We’re willing to take scientific and medical advice from, I would say, people who are either in the billionaire class or adjacent to the billionaire class—the poster class, which is the new class, I think. And so the peak guy thing is this idea that I think we’ve had enough of the billionaire. There’s basically been a lot of billionaire worship. Part of it is that they’ve gotten way less scarce. I think billionaires—at least state-of-mind billionaires—have probably grown 100x in the last 20 years, probably more.

We sort of look to them to provide us these answers, and it has not been satisfying. And so I think this notion that I want to catch every podcast with this billionaire and study his routines and habits and care about what he thinks about these things has come to its full saturation.

I think there’s also this secondary idea: money, I think we’ve just seen, is not as powerful as we maybe once thought it was or think it is. Insofar as our political landscape is concerned, we have not seen the donor class be nearly as successful as they maybe used to be or we thought they were.

If you’re a billionaire, you’re quite limited in the things that you can do vis-à-vis an African warlord or even, certainly, a robber baron, right? And so maybe there are these 3 forces of inflation sort of driving down what it means to be a billionaire at all. And then the evolution of power structures in society is also limiting. Andrew Carnegie could take up arms against his workers, but now, if you post the wrong thing as a billionaire, you have to resign. There’s a sense that this whole class has just become less important.

And then I also think the media and podcasts—it’s just saturated. You get it. You understand this thing. But we don’t want to take life advice. We don’t want to hear about what’s happening from the billionaire class anymore. And so I would say that that whole set just feels very saturated. It feels unlikely that there’s a marginal billionaire that I’m going to learn something very interesting from on a podcast, and I don’t think that was the case 6 years ago.

So the logical question is: what is the next class as we sort of flail around looking for our next set of priests? I think it’s the poster. And I think you can see this because I think the billionaire class is a little bit deferential to the poster.

One very clear way to see this is that the science class sort of inherited the priesthood after the actual priests. And you can always look at which class is subservient to the next to see who’s next. The science class becomes subservient to the billionaire class. This is certainly the Epstein lesson, right? All the scientists are clamoring around the sort of money and glamour. And now, I think, the billionaire class has become subservient to the posting class.

And so I think you can sort of see who society collectively chooses to be like: “All right, this is the guy I want to listen to for 2 hours and base my life on.”

Subservient to the poster class—evidenced how? Why do you say they’re subservient to the posters?

I was at this thing a while ago. It was a bunch of billionaire investors. And they were all fighting over who could sit next to Tyler Cowen because he’s the most interesting person there.

Yeah, every room has a boss.

Every room has a boss. Yeah, exactly. And I think there’s very much something to that. It’s sort of that simple. And there’s sort of this line of subservience.

There’s also this interesting point about scarcity, like always. The billionaire inflation thing is the seed of their demise: if there are so many billionaires—if, you know, Grant Cardone is a billionaire and so is Elon Musk or something—it just makes it so stupid. And so, we either need a new class at the top. It’s not a decabillionaire or centibillionaire; that doesn’t—who cares? It’s something else that distinguishes. We need to reclassify the top 100 or something: robber barons.

It just seems like there are too many of them, so no one cares anymore. And it seems much easier to get a billion dollars than it does to gain the real estate in people’s minds, or on the timeline, that the top couple of posters can.

If I could just have it by decree, it would be who is a liquid, inflation-adjusted billionaire. I think that number probably hasn’t changed a whole lot. But again, I always find it so useful to take the retrospective, historic frame. Net worth is like this new idea. It’s a really new idea. If you read Pride and Prejudice, they’re talking about how wealthy all the men are. Mr. Darcy is discussed as getting £10,000 a year from his estate. That’s his wealth. It’s his cash flow. And it’s funny—there’s not a scene—

A DCF effort to show that.

Yeah, there’s not a scene in Pride and Prejudice where they’re like, “Does he have a lot of margin loan against his estate?” And there’s also not this idea of, “Well, okay, his estate’s worth, you know, whatever, £200,000,” because he would never sell his estate. It’s like, “Why would you?” It’s not viewed as his assets. So it’s just wholly conceptual, just points on a leaderboard, truly, because you can’t spend it.

I really think it’s kind of crass to say, but being a billionaire is like a state of mind between private markets and net worth as a concept.

Yeah.

And then inflation: billionaires are now sort of something you can just be dubbed. I think you’ll come to see “billionaire” as this political label that’s only tangentially related. I mean, you see this on the timeline a lot, where people get referred to as billionaires who are not rich at all, but they sort of have these traits and associations.

I think this term “millionaire,” right? Like, “millionaire”—

No one says that anymore.

Yeah, and it used to carry the same weight as billionaire, but now millionaire is sort of just this—it’s both irrelevant, but it also, when you say someone’s a millionaire, you’re sort of just saying they’re some upper-middle-class, well-to-do person with a house.

Yeah.

But it doesn’t matter if they have $5 million or $800,000. It’s this looser class thing, as maybe currency gets devalued both in the literal sense and also in the sort of what-you-can-do-with-it sense. Time is fixed, right? And so then the new scarcity is just attention you can draw on the screen.

If you think about the most interesting posters today—I’m not asking you to endorse them one way or the other, but just the people that you think are the most interesting—

Yeah.

Who comes to mind?

The distinction to draw is that there are the people that I want to get tweet notifications for because I actually think each one of their posts is really good, and that’s a vanishingly small number. Then there are good posters who have really made something of themselves because of their prolificness.

The other problem with posting is that it still does reward prolificness, which I am still sternly against. I always think Twitter should be dictated by followers divided by posts, but that’s not how it works. It just rewards prolificness.

I think there’s this idea that the most important media property won’t be watched, the most important author isn’t read, the most important philosopher isn’t understood, and the most important stock has no fundamentals. In a world of fiat currency, everything sort of becomes this weird fiat thing.

Certainly, it’s true about philosophers and authors. Does anyone really read the books these authors write? I don’t think so. I think a small number of tastemakers read the books, and then other people look at books as titles. If they’re blessed by the right people, then they’re sort of this mimetic celebration of the thing.

And even podcasts, like you said, right? Clips do a lot better than the podcast episode. I pride myself on being able to tell if a podcast, blog essay, book, or something is good without having read it, just by triangulating it. I know which of your episodes do well without listening to them because I can sort of feel it from the reception.

4. Opting Out of the Timeline

To some extent, that is the thing. You can imagine a world where there are a few clips from a podcast, but no one ever listens to the podcast. I don’t actually think that would diminish the value of the property.

It’s like everything is being processed and packaged for catching attention while taking the least amount of that person’s time.

Yeah.

I heard this interesting story about a publication that has X millions of followers—or whatever readers, however they describe it. The person behind it told me something like 95% of the readers are people who scroll through the quote highlights on Instagram or something. Whatever—they’re still a reader, and it’s just fascinating.

To me, it’s all quite depressing that we’re in a world of posters, and content has reoriented around this monolithic timeline. They’re all just feeding it what it wants. But that’s the game you sort of have to play.

I’m curious. I know you went, I don’t know, 6 months or something completely off it. You just disappeared. What was that like, and is that a path that you would encourage people to give a try, opting out?

I think my takeaway from that would simply be that one should not fool themselves into thinking they’re looking for anything other than entertainment in all the media that they consume, because it’s produced to be entertaining, selected to be entertaining, and edited to be entertaining. The job to be done of what’s on the screen is to entertain you.

And so, I think that’s the big lesson. I’m not going to tell people how much entertainment they should have in their life, but that is what it is fundamentally. Rolex or Nike can convince you that their thing is an investment or an asset versus a liability, and so then you’ll spend way more money on it.

Podcasts, posts, and essays can convince you that what you’re reading is useful for you, productive, and anything other than watching TV all day. Whether I want to spend 1 hour a day on the timeline or 8 hours a day on the timeline is just about how much I want to be entertained.

Anything else that I would say about it, I think, is really, really milquetoast, in the sense that you don’t really miss anything. If you’re not a complete hermit, you hear about what’s important; it gets filtered through you. Probably the most enlightened way to consume this media is not to read it yourself and just get the filtered takes from people around you at dinners and lunches and stuff. You just let them, first of all, expose themselves to the radiation, and then come back and tell you what’s interesting or not on there.

Our friend Jesse thinks about it this way. He refuses any algorithm in his life. And we’re like, “Well, how do you know? It includes news, which is just an algorithm. How do you know what’s going on?” He said, “Well, people tell you.”

Yeah, that would be my takeaway. The freedom-versus-impact question.

Do you believe that trade-off is real?

I think it’s real. One of the questions I’m interested in is that there seems to have been a type of person that’s largely gone extinct. Again, I unfortunately think this is probably all just explained away by technology, which is a boring but maybe accurate explanation.

The Theodore Roosevelts or the Andrew Carnegies of the world were able to spend a lot of their time in leisure, a lot of time away from their businesses. What’s so interesting about Carnegie, for example, is that he’s arguably still the richest person, or very close to the richest person, who’s ever lived.

But I’m fascinated by this idea: is that necessarily true? Does the idea that you have to be working 22 hours a day to get these world-changing outcomes necessarily hold true? I think it’s interesting. Larry Ellison is the contemporary figure who sort of bucks this trend.

He claims to have started Oracle very much with the intention of being able to disappear for 2 weeks to sail or whatever, and still, by all accounts, sort of drops in and drops out. Can you still be a player and not be jacked in 24/7? It’s unfathomable that the president of the United States could be off the grid for a month. But is that true in business? I don’t know. Is a lot of hard work performative? Maybe.

In the case of Carnegie, it's interesting because he was self-conscious his whole life about joining the sort of society, maybe at the posturers of his day. He knew that, for him, money wasn't going to be enough. He wanted to be accepted into society, be well-read, be a man of letters, and do writing and stuff.

5. AI and White-Collar Jobs

In that sense, there's nothing new under the sun. I firmly believe this to be true: the end state is just posting. The number of billionaires and founders who turn to Twitter after they accrue their wealth, or start a podcast or start a business—

Start a—yeah, start a YouTube channel.

Yeah, it is just the end state. I think the way that you could look at that is that, once you accrue wealth, you want to accrue fame. The other way of looking at it would be that wealth is less valuable, and you actually realize that the scarce asset is attention and influence. You're almost hedging against the rapidly devaluing nature of your money and trying to switch to what is actually scarce.

I find it very interesting that the 7 or 8 people that you and I are most interested in are not posters. They're sort of an interesting opposite, and they've resisted the temptation or something like that. That makes me wonder if it's almost like a trap. But it's such an interesting concept that hard work is performative—that's the phrase you used.

It actually makes me wonder, with that hard-work-being-performative thing, how you're thinking about AI and the job-displacement question, which you and I have talked about a bunch and which I'm super personally interested in. It seems to be the issue around which people are rallying with their anti-AI fears: that it's going to destroy jobs in a way that prior technological changes didn't, because it's so ubiquitous, it's intelligence, and it's moving so fast. Even if you compare it to prior technological changes, which all displaced jobs or changed jobs or whatever, it happened more slowly, and that's why this one's so scary.

But it gets at questions about what work really is in the modern sense, especially white-collar work. I'm curious how you're thinking about AI and job displacement.

The short-to-medium-term prognosis is hard to speculate on and could very well be bad. A friend of mine told me that he has kids in college and a 10-year-old, and he's very worried about the kids in college but not the 10-year-old. I think that is directionally correct.

From the 10-year-old's perspective, I think it's great. First of all, anything that can be automated should be automated. It's really hard to argue against that when you really think about it. The notion that I might be in the last years of my life in which I ever have to sit down in front of a computer and do things with it is tremendously liberating.

I don't really understand this idea that we're at peak jobs or that we're going to run out of jobs. To me, it's very obvious that every white-collar job is totally fake and made up, in the sense that these are not necessary, largely—obviously, there are exceptions to this—for shelter and food and medicine and other necessities. I'm not talking about those, but most jobs do not touch those, or, if they do, they touch them in a very derivative way.

What is your job as an allocator? Because capital is inherently inflationary, you can't just leave it alone. This is one of the great evils of money: once you get it, you can't just leave it alone, because then it goes away. You have to do something with it. My job is that when you have money and you don't want it to go away, you have to give it to someone. You give it to a bunch of people, and then I take it and put it into things that are productive. Hopefully, you don't lose your money; you get more money.

Is this useful? Is this good? Yeah, sure. But it's not real. It's fun and useful, but not in a direct way. To me, there are an unlimited number of jobs that you can create in those sorts of scenarios. We're going to have unlimited wants and desires, and our economy is solely driven by our unquenchable desire to consume things. We're going to come up with new things to consume.

Again, in the short term and medium term, that might be volatile, and there might be a lot of job loss and so on. That's not good, and there could be a lot of despair. But in the long run, we're just going to invent new things to do. We've already solved all of our problems.

The worry that we're not going to have more jobs doesn't really resonate with me, because I feel like we just make up stuff for us to do. That's sort of the whole point of it. That's good. It's better than being idle. Maybe more people should be idle, but I think there are all sorts of ways that this shows through the cracks.

The work-from-home thing, I think, is a strong indication that most people don't have 40 hours of work to be done. They maybe have 40 hours of meetings to sit in, or they have 40 hours that they have to be on standby. I think working from home wouldn't be that important if, let's imagine, you worked on a factory line and could set up the microcosm of the factory in your backyard, but still had to be on the line 10 hours a day.

I guess working from home means maybe you can have lunch at home and you don't have a commute anymore, but it's not this huge improvement. The reason people are so attached to working from home is that they actually have 2 or 3 hours of work to do per day. Work-from-home Fridays are a soft launch of the 4-hour, 4-day workweek.

I think this is all fine. To me, the fact that we can continue paying people to work from home or work 4 days a week or whatever is just a sign that we actually need less labor time from people than we used to, and we're still able to be just as productive.

Some of these jobs may be made up, and actually people will be happier not shuffling bits from one place to another on a screen or something. I'm curious how you think about searching for one's vocation. You texted me one time something that stuck in my head: that we all have some sort of moral duty to steward our gifts.

If you agree that that's true, I'd be curious for you to expand on that. That then reframes success and failure in a cool way that maybe cuts through this priestly-class thing of looking to others to tell us what to do versus looking internally. Can you expand on that?

There's something, even just aesthetically, bad about waste. One of the worst things that you can waste is your gifts—your skills, attributes, things that you're uniquely good at, and things that you can do for others that others can't.

6. The Next Era of Finance

For me, one of the great challenges has been trying to understand how to best use those skills. First of all, figuring out what they are, which is easier said than done, and then figuring out how you can use them. There are two modes, I guess. One is that you use them in a very pure and unadulterated way, and you don't try to integrate your work with how you use your gifts. This would be the person who has a day job in order to support their craft or something.

The other, perhaps more ambitious, version is trying to integrate commerce and their work with their gifts. This gets into the “should you pursue your passion?” thing, and I think it's really difficult. But you said something to me: the thing that you're spending most of your time on really ought to spark and utilize your genius and gift. If you're not doing that, it's obviously not the thing that you should be spending most of your time on.

There are proxies for this. I think people who are having a lot of fun at their job—that's a very strong indicator that you've combined the two well.

What do you think the future of finance looks like? In the '80s, the last era was built by those people from KKR, mostly doing leveraged buyouts. Those firms are obviously really important and really big, but they were started a long time ago, and in many cases they're still run by people who were the founders or are close to the founders, getting up there in age. What do you think the next wave of finance looks like?

The founder is incredibly important, and the founding act is incredibly important in any business, country, or organization, really. I do think that it's notable that the current paradigm in which we live—the largest and most important finance firms—comes out of a culture of leveraged buyouts, which, first of all, is a debt-driven idea. It's financial engineering.

It's extractive insofar as the primary goal is to make a thing more profitable, and I'm not trying to disparage leveraged buyouts. I don't think they're as evil as people say, but the core idea behind them is using debt and financial engineering to make a lot of money in a way that the quality of the business itself is maybe ancillary to the core trade. And those are the founders and founding acts of these large firms today.

And so, with the Apollos, Blackstones, and KKR's of the world, I think in a lot of cases the leveraged buyout is a very small part of what they do today, but I do think it's still in the core culture. One thing that we've pondered before is: What does the next 20 or 30 years look like if the largest financial firms in the world had seed investing as their founding act? It's equity-driven, it's power-law, it's hugely optimistic, and it's largely qualitative.

What would a Blackstone or an Apollo look like if that was the core seed at the start, at the inception of the firm? I don't have a great answer. I just think that it is notable, in the same way that equity financing is a far newer idea than debt financing. Equity financing is obviously a far more optimistic idea: It's uncapped to the upside.

So there are all these philosophical ideas around equity versus debt, and debt is far more ancient. Debt obviously has a very controversial past about whether it's morally good at all. I do think there's this idea of what if the crux of finance is with these wildly optimistic people versus people who might be more conservative, more concerned about the downside? Maybe one way of looking at it is a shift from the qualitative to the qualitative.

What other differences are interesting to you between East Coast and West Coast finance? The people doing it, the optimism versus not pessimism but realism, or dollar orientation.

There's truth to the caricature, which is that the East Coast is extractive, pessimistic, and downside-oriented, while the West Coast is naive, stupid, and unsophisticated. I think that is true to some obvious extent. I think they're merging now. And look, it's no coincidence that the West Coast is definitely eating the East Coast.

Venture capital has created the biggest businesses in the world, and private equity has not. Where private equity has, it's largely been through acquisition and, again, financial engineering. So it's sort of inarguable that venture capital is this much better force for the world. It's this tiny little asset class that has produced all the most important things in the world.

It's also this sort of civilizational technology, which is that you're willing to give young people millions of dollars to try a very speculative idea with basically no retribution or downside if it doesn't work. So it's clearly this amazing force. I think it's been a very interesting flip in compensation between East and West.

When I was growing up, my understanding was that Wall Street is where you would get paid huge amounts of cash on a yearly basis. You would have no enduring equity value, but you would get paid a lot of liquid cash on a fairly regular basis. The West Coast was this idea where you would be rich on paper. You would have equity that would maybe be an enormous payoff in some distant future.

And I think what's sort of interesting is, you could argue—and I would argue—that those have started to flip now. On Wall Street, because all these businesses have gone public, you're comped on RSUs and you're thinking like a firm. Maybe especially at the top end of the firm, you're less worried about carrying any one fund and you're more worried about the stock price and performance of the firm as a whole.

And then, interestingly, the Valley has almost moved toward an annual cash basis. Given how these markets work, companies staying private creates these mature secondary markets. These de facto yearly tenders are becoming almost a parallel liquid marketplace.

So you're actually paid huge amounts of cash in Silicon Valley, and I think we've seen that certainly with the AI stuff, and even with venture capital firms getting acquired, GPs leaving their firms, and all this sort of stuff. It actually is becoming more liquid, more mercenary. I think I'm always interested in these structural shifts and how that starts to change things.

The Valley is a place where you're liquid, you're getting cash out yearly, and you're jumping from firm to firm. Wall Street is a place where you have a bunch of RSUs and you're thinking more about the long term and the enterprise value of the firm.

If you add all this up, where are you looking for opportunity? You have such an interesting mandate because you could do a venture-style growth-equity deal, or you could do a special-situations, private-equity-style deal. You've historically, across your career, invested in dozens of software companies. So far, I think wisely, you've avoided companies that could get railroaded by Claude Code or something like this.

Nonetheless, I think you're still curious about where there might be value in software. As a pure investor, how are you approaching this very strange, high-volatility, high-uncertainty landscape?

We've largely sat on the sidelines. We're very fortunate to have such a wide mandate in terms of what we can do and look at. Maybe the only consensus view is the niche, sort of apocalyptic vision at some of the core cells at the labs. But outside of that, I think it's really a jump ball, and so it's hard to say.

7. The New Economics of Software

The one thing that maybe I could say in general is that markets lack a lot of nuance. SaaS is a business model. It's literally just a business model based on the idea that you usually pay per person per month or per year for access to a tool that helps you use your computer.

I think in that sense SaaS is in a lot of trouble, but I don't think for a lot of these businesses that are being really sold off today out of fear that that is actually what is important to the business at all. It is actually interesting to me. I wrote a post recently about the idea that a public market manager being long the Magnificent 7 is, without taking a specific view on the trade, probably good capital allocation.

Sometimes you just have to do the really obvious thing and follow the consensus, because consensus is usually right. One of the pushbacks that I got to that is, “Well, these things are the biggest companies in the world; they're priced to perfection.”

But I think it's underrated that the 52-week variance on these things is nearly 100% for the biggest companies in the world, and so they're not priced well at all. The market lacks extreme nuance. I think it goes back to what we were talking about: Probably someone smarter than me could draw out a much clearer picture, but there's something to do with passive flows and the marginal price of a security.

What's informing the marginal price of securities is the posts in the group chats that random people are writing, that the algorithms have chosen.

I mean, in this way, I've actually never thought of it before, but the algorithm—the AI, frankly, because that's my understanding of what's driving most of the algorithms now on Twitter and YouTube and stuff—is pricing the market in some very real sense. It's choosing the narrative that it wants to show to people, and then those people are pricing off that.

I just think it's another lesson: markets are not efficient, and there's no nuance. That would be the big thing that we're seeing today. I think there's a lot of delusion in either direction. The most honest thing for a lot of managers to do would be to sit it out, but they're structurally unable or unwilling to do that.

So you just hope for the best and put capital out the door, and it's a problem for tomorrow. I think a lot of things are still getting priced irrationally in the private markets in ways that are totally unrelated to the quality of the business, but are more a function of the incentive structure of the funds.

You mentioned that SaaS is just a model, and there's good and there's bad. What do you think about this trend of super-CapEx-heavy, token-heavy, real-world-asset companies? There's this new genre of company that seems to have emerged as really dominant.

I was looking the other day, curious in our portfolio what percentage was not pure bits, and it's like 60-something percent is not just software, based on the market value of our investments. I was surprised by that. It's a really high percentage, whereas VCs have mostly historically been all software for the last 10 or 15 years.

What do you make of this class of business—this trend toward lower gross margins and things like this?

One way that you can look at this is that we were really in the late innings in, let's call it, 2016 or 2017, of returns in venture capital being very high. We've now seen 20 years of venture returns being very good, and logically, capital is going to flow into the asset class.

The problem is that the venture market is largely constrained. The amount of great businesses that are started is relatively fixed, probably downstream of how many great founders there are. I think there's just a finite amount. More and more capital flows into venture, but there's basically a finite amount of companies. There's a bit more money going into the same amount of companies.

This was becoming a real problem right before AI and COVID: there's only so much money that you can cram into a B2B software business, especially when, annoyingly, the companies are getting cheaper and cheaper to start. Functionally, what you saw, and what you still see to some extent, but what you really saw, was that all this capital was just flowing to landowners and to compensation packages, basically.

It was this real problem. Capital hates getting blocked. It's like water: it wants to find the most efficient path. It was getting blocked because it wanted to flow into venture because of the backward-looking higher returns, but it was just constrained. You had to cram so much money into these companies.

A lot of what inspired me to start my fund was seeing this problem: the amount of money these companies are raising is unrelated to the amount of money they need. Then, almost as if by deus ex machina, all of a sudden there were 2 great categories that could just soak up this capital.

I really do believe, in some sense, that businesses and assets are sponges for capital. The excess capital, if—in an era when we had negative interest rates and stuff—has to go somewhere. If it has nowhere to go, it will create somewhere for it to go.

I think there was a very fortuitous arising of these high-CapEx businesses, of AI—the ultimate high-CapEx project—and, obviously, all the hardware stuff. In some sense, you could say that the capital markets were desperately looking for a place to put the capital, and there was no place. These companies almost got created downstream of capital, which I think is a little bit different from the narrative that most people would look at.

That's the philosophical view. The economic view is that I think part of the reason SaaS is getting punished so much today in the market is because it was this idea that you're selling a copy of a string. Fundamentally, that's what a software product is. The marginal copy of a string is very close to zero, and so, with zero marginal cost, the thing that you're selling should be highly profitable.

The vision was that you would have high upfront costs, and then you would have very high gross margins and, hopefully, one day, very high net margins—although the net margins seem to never materialize until private equity gets its hands on things and forces that net margin out.

That era is largely just a downstream coincidence of selling strings. Now I think we're in an era where we're selling compute. When you're selling compute, you can't write the prompt once and then sell copies of the output. You have to do the compute every single time, and so the marginal cost obviously is not zero.

I think this is a fundamental, huge change to the software business. I think it means that this era of high gross margins being the norm is just going to go away. What's going to make up for it, I think, is lower gross margins, much thinner net margins, and just much more scale.

That's what you're seeing: capital is flowing to the top-end provider at scale. It would have been unthinkable that we talked about companies with $3 trillion to $4 trillion market caps 10 years ago. A big part of that is inflation, I believe, but another part of that is just the scale dynamic.

I think it's uncontroversial to say we're going to have $10 trillion companies and so on and so forth. Because margins are going to drop, all the returns are going to accrue to scale. Obviously, low-margin, low-scale is not a very good business.

Maybe it's a bit of a Walmart effect in software. If the SaaS provider is the mom-and-pop shop, Walmart's coming to town. I think the future looks like low gross margins, razor-thin net margins, and huge scale.

You have this funny view that the whole myth of how difficult it is to beat the market—however you want to define the market—is wrong. I'm curious for you to expound on that.

Post–Jack Bogle, one of the deeply held truths of the market is that it's extraordinarily difficult to beat the market, so you shouldn't even try. You should just opt out of the battle. I think you have a very different view on this.

I would take 2 different cuts at this. One would be that I think Buffett and Munger were my main teachers on investing. Buffett says that he wants his estate outside of Berkshire to be put in the S&P. That's his advice to the general public.

I think people would take that to say that Buffett is saying you can't beat the market. I don't think that's what he's saying. I think he is saying that, for the average person, you shouldn't try to beat the market. Implicit in that statement is that he's leaving out any sort of active investor.

The anecdotal side would be Buffett saying, “You should put all your money into the S&P. That's the most rational thing you should do.” On the other side is the empirical argument: most professionals don't even beat the market after fees.

This is the great one-two punch: the godfather of investing says, “Don't try,” and then the seemingly smartest people, those with the best incentives in the world, can't do it.

The other thing is that I think, for a professional money manager—and this is the paradox with the Buffett thing—it is really hard to beat the market because you have all these other factors that the average person doesn't have. This is sort of the Peter Lynch argument. I increasingly think Peter Lynch was a genius about this.

8. Underwriting Emerging Managers

When you're a professional manager, by and large, you have all these mandates, you're running a business, and you have customers that you need to keep happy. I think it's actually more difficult for the professional money manager to beat the market than it is for the average amateur.

How many people do you know who bought Bitcoin and did really well, or bought a Tesla and then bought the Tesla stock, or bought an Apple computer and bought the Apple stock? You can't run a hedge fund that way, but they've outperformed just doing that.

I think there's a little bit of this weird thing where, in isolation, none of the advice is wrong, but it's not as difficult as people think to outperform or do better than the average. There's this notion that gets caught up in all sorts of other things that sullies that view.

I wanted to ask for an LP's perspective—basically, what you would do if you were an LP and what you'd be looking for.

I get asked a lot by LPs where they should put their money, which managers are good, or whether they should invest in a particular fund. One thing that struck me is that I think you have to take a somewhat cynical view of these things—or maybe it’s not actually cynical, just a more realistic view. These are businesses first, and their product is returns, but they’re businesses. You have to recognize what sort of customer you are.

The question of where to put your $500,000 check is probably not answered by putting it into a marginal $5 billion growth fund. I actually get asked that a lot: Should I put $1 million or $2 million into this fund? The answer is, well, it’s probably going to be a good fund, but could you find something much better to do with that $1 million? Probably. It sounds obvious, but in reality, it’s not.

I think what people don’t understand is that, basically, if you’re a principal who can’t write sovereign- or institution-sized checks, you’re a totally different customer, and the businesses are not designed to serve you as a customer. The growth fund is probably a great place if you have to park $100 million somewhere. It’s probably a very, very good place, but it’s not a good place to park a $500,000 check.

If your business is set up to service sovereigns, large endowments, and so on, your product is just so different from what you’re going to serve for someone smaller. This gets into the question of what you do if you have a small check. I think this is where the emerging-manager stuff is really underrated: looking for places where the manager is actually most tightly aligned to returns, either because returns are critical to future funds or because that’s actually how they’re going to make all their money.

Are there features of the emerging-manager situation that you find interesting or attractive, one way or the other?

It’s probably similar to how I look at everything, but especially for an emerging manager, when you’re truly just underwriting the person, I think people still fail. They probably overweight the investing thesis and track record, and underweight just the facts about the person. You and I are both big believers in the idea that how you do one thing is how you do everything.

The more that you can probe, I think the personal financial situation of a manager is an incredibly underrated thing to ask about. If you have a couple hundred million dollars in your bank account and you’re raising a $30 million fund, that’s very different from someone who has $1 million in the bank and is raising $100 million to go do a thing that they’re trying to make the most money from. There are 2 very different places to start from when underwriting.

One sort of notion I have about this is whether someone is looking up or looking down at something. Take the same, let’s say, $250 million funds. One is from someone who has $500,000 in the bank, and one is from someone who has $500 million in the bank. These are obviously going to be treated very, very differently.

For the latter, for the $500 million person, the $50 million fund is going to be this—

Plaything.

Plaything, yeah. Toy isn’t meant to be pejorative. The toy might very well do better because it’s held with a looser grip. There’s less on the line. You’re going to be less paralyzed by the sheer quantities of dollars. I feel like that is generally not super recognized.

You see it all the time in new ventures. If you’re helming something that is, let’s say, 2 or 3 zeros more than you have, there’s just a sort of monumentality to it that is a bit intimidating. You can scale this all the way up: You have someone who’s worth $100 million running a $10 billion fund. It’s just a big, scary thing.

I don’t care who you are: When you’re taking bets that are an order of magnitude larger than any amount of money you’ve ever had, there’s just a psychological factor there, versus when you’re taking bets that are maybe negligible to you. I think this also gets back to part of the reason I think it’s easier for individuals to outperform.

It’s easy to take a flyer on a stock with a very marginal fraction of your net worth that you don’t feel you need to explain and that you’re not going to be judged on later. It’s harder to do that with a dollar amount that’s more money than you have, because it’s going to affect your track record, you’re going to have to explain it, and there are all these other factors that are not related to whether you think this is a good investment or not.

You and me are also interested in what I’ll call the underbelly of finance, and you have this funny idea around the sort of feudal-like system that is emerging in the world of SPVs and the big private companies. Can you share that idea?

There is this funny notion. It’s sort of specific to the labs, but it’s a broader thing as well, I suppose. We’re recreating the feudal system from first principles, where there are the lords—Elon, Zuckerberg, Dario, Sam—and they can make landed gentry by giving out allocations.

These allocations are sort of the best general example of generational wealth. You get an allocation in SpaceX or Waymo or whatever, and you get to charge huge fees on it. It’s this wholly synthetic product where someone gives you a sort of arbitrary number. Again, they know you don’t have the money, so they know you’re going to go fill it.

You get to go out and basically say, “I have been given a deed—literally, the king has given me 500 acres in his country—and Elon has given me $100 million to allocate in SpaceX.” You get to go out and charge fees and make a bunch of money from it. There’s this thing of, “Do you have an allocation?”

I’m interested in it because it’s a purely relational, wholly synthetic thing that I’m not sure has ever existed before, or certainly not at the scale and magnitude where you can, due to your relationship, get this landed estate and then take it to a sovereign or a foundation, and they will pay you for that access. It’s pure, unpaid-for access.

Maybe where it’s different is that you could say that’s just brokering, but the difference is obviously that brokering is a one-time transaction, whereas these allocations live on forever.

What’s the most egregious fee setup you’ve seen in one of these?

No GP commit, a 10% one-time upfront fee, with some carry structure, generally, where you’re demanding that you get paid life-changing amounts of money with zero risk, and then you also get a huge amount of upside. The other thing is that they often don’t have a term limit. I’ve seen a few that don’t have a term limit.

Famously, there were a lot of SpaceX ones. I think people were doing that 10 years ago, and I know there are certainly some that just collect the fee forever. But to his credit, you’re very happy to be paying that 2% on the SpaceX thing that you did 15 years ago, and so it’s sort of a win-win.

It’s not to say these are all bad. It’s just funny, because it’s not investing and it’s not strictly brokering. It’s this very different thing that is a wholly insider-access game. Then, of course, there’s all the fraud and bad behavior that I think comes with all the bubble stuff.

How do you think about your own productivity, for lack of a better word? We talked before about how content is really just entertainment, not learning. We shouldn’t kid ourselves about that. Therefore, it is largely unproductive, which is fine; it’s entertainment. To the extent you care about yourself personally, how do you think about being a lot more productive with all these insane tools?

I certainly care about productivity. For me, by far the most generative thing is conversations, which I guess are downstream of relationships. I think part of the reason my book reading has gone down is that I’m friends with a lot of people who read a lot of books. If I could only keep 1 thing, it would be conversations with people that I find interesting.

I also think I’m uniquely tolerant of distasteful and weird people. Part of the reason I get asked a lot, “What’s your media diet?” is that conversations are my answer, and it always feels like the answer falls flat with people. I think it’s because they’re not friends with weirdos.

A lot of my friends, I think, are people that people would largely find strange at best and distasteful at worst. If I can’t predict what a person is going to say after knowing them for a while, I like them a lot. That’s obviously a very high-variance thing.

Old books are good. I’ve read a lot of old books in my life, but I think YouTube remains underrated.

There's a lot of really obscure things on YouTube. YouTube sort of remains the Library of Alexandria of our time, maybe ever. But YouTube doesn't feel generative. I think the only thing that's generative is conversations.

So far in early 2026, I would say chatbots can lull you into feeling generative, but if I actually look at the actions that I've taken, you can feel really productive after a good 2-hour session on a chatbot. But I actually don't think they're ultimately that generative.

What is the right balance between simplicity and complexity when you think about great investing ideas? I mean both the ones that you've done yourself and the ones that you've studied.

I really do think people value complexity for the sake of complexity a lot. I think a lot of investors are in the “feel clever, look smart” game more than the money game. Personally, I think this has been a big area of self-development for me, which is that the clever thing is not always the thing that makes money.

I think you either have to say, “I am looking for investment ideas that are so complex that no one is going to do them,” or it should actually be quite simple. I'm a bigger and bigger believer in simplicity, which is that you probably want to be long Elon Musk, or something at that level of idea. I actually think the gift is being able to sell that idea. A lot of the investing media serves people who are really good at dressing up those ideas in a way that makes them feel differentiated and smart enough compared with what is actually just long Elon or long Bitcoin.

I think of a guy that I know who exclusively does bankruptcies. He makes a lot of money, but that's very complex and very difficult. It's a tremendous amount of work. It's grimy, it's difficult, and there's a lot of risk and interpersonal stuff. To me, that's an example of getting paid for complexity.

Whereas a good example of simplicity is that you should just buy big companies when they're at their 200-week moving average. I love that idea because it's just so simple, but it's right.

One story that I absolutely love, cutting through the mess and getting to complete clarity on how to evaluate an investment, is from Richard Rainwater. There were stories about him that said you would basically come into his office with a yellow legal pad and write out your thesis on one page. Then you would tell him what percentage of your net worth you were going to put in the deal, and based on your 1-page thesis and the percentage of your net worth that you were going to put in, he would say yes or no.

I think that's genius. People don't do that because it's really hard. It makes things much harder. First of all, it's hard to write a compelling thesis in a page; it's much easier to do it in a 400-page slide deck. Second of all, no one wants to say, “Well, I'm only putting 3% of my net worth in this.”

To me, that's one of the simplest, clearest examples of really cutting to “Is this a good investment or not?” that I've ever heard.

One of the natural points of leverage now is the ability to hire extraordinarily well, which means two things: attracting an amazing, differentiated talent pool and then selecting from that group effectively.

Yeah.

That's something that you thought a ton about in building your business. It seems like a skill that, if you got good at it, would be unbelievably valuable in this era specifically, where the returns to outlier talent seem to be going up and up and up. What did you learn about the 2 stages of that process? I'm especially interested in attracting a unique pool of talent in the first place.

Maybe the most practical thing, and I think it's very low-hanging fruit, is just the job description. I think job descriptions are one of these things where they're written for nobody, to be read by nobody, and they're sort of this token document. It's more about whether the job description exists than what's written in the job description.

I tried to write one that followed a very simple rule. I was obviously going to post it on Twitter and LinkedIn, and I think anything you post has to be a good standalone post. It can't just be something that you wouldn't share if you didn't know me.

The second thing was really that what's so important in any sales pitch, which is what a job description should be, is to disqualify who you don't want. The nice thing about a divisive statement is that when it resonates, it deeply resonates with the person.

9. Silicon Valley’s Hidden Philosophy

I just tried to think, “Okay, what are all the traits that I would want someone to have?” and try to make them—again, to go back to the idea that how you do one thing is how you do everything—the type of person that I was interested in. Obviously, the skills and the experience were going to be table stakes. I tried to write out traits and ideas that would really be inspiring and, for the right person, be like, “Whoa, this person really gets me, understands me,” and would make people mad.

One of the things that got the most reaction was, “You're an ideological minority at a top-10 school.” What I love about that is that it's entirely open for interpretation. I would get people who would be angry that I only wanted someone from a top-10 school. The nice thing about “top-10 schools” is that it's a fully ambiguous statement.

There are some schools that I think uncontroversially are top 10, so I would get those people. But you can also just assert that your school is a top-10 school, and I had a few people from schools that I wouldn't say were anywhere close just assert that. I thought that was great. I had people select themselves out because they were like, “I don't know if my school was. I'm not going to apply.” That's great because I don't want those people.

“Ideological minority” was really interesting. I had a certain idea in mind, but people gave me all kinds of answers about what ideological meant because I didn't necessarily mean political. There were all kinds of answers around how that person stood out at their school.

I think those statements are great because they're highly ambiguous. They're also an inherent test of confidence. I would even get a few posts that were like, “Hey, I think this is—you should hire me. I didn't go to a top-10 school. You're an idiot.” I love that person, too.

I think the more you can do statements like that, where they get this sort of reaction, the better. You imagine what you would have to do in an interview to get at all of those various traits. Statements like that are very much underutilized in job descriptions.

It's a cool idea, baking the interview into the job post itself.

It seems to me like an underrated area of inquiry today—and I know you're interested in it—is the cultural and intellectual traditions behind major movements. I think that's certainly been true in this wave of technology, and it's not something I see talked about or written about very much.

I'd love you to riff on your interpretation of the key sets of beliefs behind the people and institutions that are ushering in the biggest wave of technological change that we've probably ever seen.

I'm interested in mispricings in qualities and attributes about things, people, and places. I don't know if this has always been true, but it's true today. I think there are some qualities and attributes that are widely recognized and priced efficiently, let's say: height, IQ, résumé, et cetera. Then there are other traits and characteristics that we've just decided collectively not to price.

In Silicon Valley, people underrate the philosophers and thinkers and the memetic ideas that underpin the whole thing. I think there is a real philosophy—some sort of neo-Buddhist utilitarianism—that underlies the technological developments in Silicon Valley.

It's interesting because you see Will MacAskill get involved with SBF and FTX. There are these sorts of thinkers, like Nick Land, whose ideas percolate underneath the surface in the Valley and are influential on everyone but aren't necessarily named. Now they have been.

You could say the same thing about Curtis Yarvin. I thought it was remarkable for years how you could hear Curtis's ideas coming out of the mouths of the big tech leaders without being named. There are things like Leverage Research and all these intellectual characters that I think are underrated.

In the same way that I think people's religious beliefs are generally underrated by secular people in terms of how important they are as a guiding light, I think these sorts of cultural and philosophical ideas are underrated in the Valley's development of these technologies.

Like it or not, the models are highly utilitarian. They have this weird mix of religious ideas from Judaism and Buddhism, plus this sort of utilitarian bent that turns into effective altruism. People sort of think, “Okay, this is just cultural, whatever,” but these things matter.

It just feels to me that this whole cultural epicenter has been highly underrated in general in informing why these things get built, what the worldviews inherent in them are, and what the inherent worldviews are in the people who build them. It almost feels to me that Wall Street in the ’80s was vain, almost pagan: the strong and the beautiful are what’s most important. There’s a hedonistic aspect to it, and there’s an openness that’s a little bit nihilist because it’s all just about getting money.

It’s not the same notion, and I think at the crux of that is that technology views itself as totally self-righteous. The thing that they are building is not nakedly sin-driven or driven out of greed or ambition; it’s driven out of this nominally altruistic idea of, “No, we’re building this thing, this product that the whole world uses. It’s positive-sum,” which is true on the surface. But I do think that it’s almost pathological to the point where there’s no recognition of all the other factors. It’s almost shadow-esque.

There’s none of this notion of, “Well, if you work in finance, you need to try to translate the gains from finance into something worthy”—into art, into architecture, into philanthropy, into culture in general, or into the place that you live. None of that exists because I think tech views itself as, you know, the ultimate philanthropy is the business that you’re building. I don’t think Silicon Valley today has the same sort of reflexive need to justify, document, or even launder what they’re doing through going to book parties, the arts, and all this sort of stuff.

I think it’s an interesting difference, and I wish that more people would try and document this stuff because it’s all there. All the crazy, all the sex, drugs, and rock and roll is there in its own nerdy, autistic way. And the culture—again, I think culture is just vastly underrated—and religious beliefs, whether literally religious or sort of pseudo-religious but filling that void.

As always when we talk, I wish we had 3 more hours. Thanks for doing this for me again. Thanks for your time.

Thanks for having me.