心理、价值与数据：Santiago Santos 如何穿越市场

This is an issue I had with my parents, with my mom, and I love her. But she was like, “You need to be more well-rounded.” I’m like, “That’s the biggest load of bullshit I’ve ever heard in my life. I don’t want to be well-rounded. That’s mediocre.”

1. The Kid From Mexico Who Erased His Own Accent

All right, guys. I have a very special guest here for you today: Santiago Santos. Thank you so much for joining us at the Selini Summit. We’ve got a great room that they’ve set us up with right next to the conference venue.

For those of you who aren’t in the know, this is a very special conference. Only the best people are here, and Santiago is one of the best of the best. Thank you for joining us.

Thank you, man. You’re fluffing me up. An in-person podcast hits differently.

It’s kind of funny. You guys obviously wouldn’t know this, but Santi and I just spent the last hour and a half together talking while we were setting up this recording. We probably recorded a podcast before the podcast.

We talked about literally everything, from his life in Monaco to driving Ferraris to his birthplace of Mexico and how that impacted his investing. I wasn’t going to start there, but now I kind of need to ask you about it. You probably don’t know this: he doesn’t have an accent, but he was born in Mexico.

Yes, fully. Most people think I’m American. You make a conscious choice. Growing up, I was like, “Okay, how can I perfect the accent?” It’s like, how badly do you want it? For me, it was, “I just know that if I have an accent, consciously or subconsciously, someone’s going to judge you.”

One of the things my parents always made me believe growing up was that they didn’t give me much money; they provided education, and we had the fortune of traveling. They kind of instilled this idea of, “You can do anything.”

Before then, growing up, the Internet was kind of not around, so you didn’t really have as good an understanding as you have today of what’s happening in the world. Right now, it’s very anxiety-inducing because you see huge success outside your village.

But back then, my parents were like, “Look, you want to be the best? Okay, well, we can.” If you quite literally go to the investment committee and say, “I want to go and take a summer class at Harvard Summer School” in middle school, they’re like, “Okay, we can do that.” But you have to go to the investment committee for those kinds of things.

For me, it was always, “I don’t want to be the best in my school. I want to be the best in the country.” If I can be the best in the country, you just work backward from who is the best ever.

And then, for me, it was like, “Okay, if I really want to win the game, I need to remove these things that are going to inherently put me at a disadvantage.”

So you actively worked on the accent?

Yes.

You were sitting there practicing words, or what was the process?

You listen to yourself. You listen to how other people speak, and then you record yourself and look at yourself.

I never understood it. Anyone can perfect their accent. I hate to say it, but it’s kind of lazy if you have an accent, unless you’re conscious of it. Some people might say, “Look, I love my heritage,” but you can talk like this and there’s inherently a communication barrier.

You want to be very articulate, and if you’re sitting across from someone, you want to make sure that they understand you, because you want to remove any sort of degradation in the message. I think accent just computes into that equation, and I recognized that early on. I was like, “I definitely need to remove my accent as quickly as possible.”

I think what they call that in Internet speak is “high agency.” This is something that I think is really important in the world of AI, which we’re going to get into.

But I want to start with the fact that you are known for talking about crypto, and you are known for starting a company called Inversion, which was going to invest in crypto companies. You were previously a partner at ParaFi, which is one of the best-performing hedge funds in the space.

2. Why Crypto Actually Matters Outside America

A lot of people ask: Is crypto useful for first-world countries? Is it useful? Is Bitcoin useful if you live in America? You come from Mexico. Is that one of the reasons that you got interested in crypto? Is it more useful for countries outside of America than it is for your average U.S.-born citizen?

100%. You travel, right? Anytime you travel, you understand that the financial system really breaks down. Anytime you travel, anytime you go to the airport, you try to change money.

For me, the friction pisses me off. In your day-to-day interactions, if you want to be a good investor, observe where there’s friction. Anything that’s not seamless, that doesn’t feel effortless—that’s what you should be paying attention to.

Humans, I think there’s this anxiety, this shaming in society around liking leisure, as if it’s a bad thing. I moved to Europe from the U.S., and they sort of know how to live life here. Ancient Athenians had a whole class of people who were just paid to think, and there wasn’t this shaming of grinding culture and glorifying it. What’s the point of life if you don’t have time for yourself?

I think the calculus is there: Can I have leisure? Can I have time to myself? Can I think and not feel like I’m missing out or I’m not working hard?

Right. No, it was more so this: I think a lot of people talk about what good crypto is, right? What is the actual value of crypto? I think people are sort of lost on that.

One of the things that is often brought up is the case of a non-sovereign digital currency that’s useful, or remittances, or whatnot. More importantly, to take it back to the beginning and ask a more succinct question: How has growing up outside of a first-world Western country impacted your approach to investing?

Totally. There’s very little financial opportunity and inclusion. Remittances are the first or second source of income for Mexican families, and if you do the calculus, they get ripped off every time money moves from the U.S. to Mexico. It’s at least 5% or 6%. You’re like, “There ought to be a better way of doing things.”

This is my point around friction. Everything in our lives has become seamless with technology. The cost of production has gone down dramatically—Internet, mobile, all of these things have gotten better—except for certain pockets of the economy, where our day-to-day interactions still, by design, have a lot of friction.

Finance, I would argue, especially outside the U.S. and in developing countries, is very inefficient. For me, Bitcoin was an asset that presented the opportunity to move money cross-border faster, better, and cheaper. You had to hedge, but if it’s fast and instantaneous, to me that was the aha moment, and to this day it still is.

Now, through stablecoins, everything else is TBD, but that is a killer use case and will continue to be a killer use case no matter what the price of Bitcoin is. People want dollars; they’ve always wanted dollars. Give them dollars, especially in digital format.

It’s kind of interesting because your path didn’t start in crypto, so you’ve actually had a couple of different careers. When I was doing some research on you, one that stood out to me was that you actually spent 3 years in biotech, and biotech is coming back in a big way.

When you look at all of the things that are happening right now, talk me through how you got into crypto. When you were first starting out, how did you get into this world? Take me through your journey.

Usually, it starts with some sort of trauma. Talk to any founder, talk to anyone—there are key inflection points in your life, and everyone has trauma.

For me, my middle sister got sick. I’m the youngest, and I’m incredibly grateful—it could have been me. I’m sitting there after investment banking, following the cookie-cutter path: 2 years of investment banking, 2 years at a growth equity fund.

Life’s sort of laid out. You could stay there and make a good living, but at some point, after making a certain amount of money, you’re like, “Okay, what else can I do with my life? Is this the most fulfilling, rewarding thing?”

You trade less money for more relevance, and that’s something we’re going to come back to in this entire podcast. You will always trade more relevance for a little less money after a certain level of fulfilling your hierarchy of needs.

To me, I don’t necessarily think that I want to be investing in growth-stage companies and technology, like the next Salesforce.

At some point, it just didn’t move the needle for me. By that time, I’d already discovered crypto, and one of the things that has always bothered me is this idea of friction. I think crypto can become a new operating system that removes friction, combined with this idea that the world is incredibly unequal. Mexico is one of the more unequal places in the world. So is Brazil.

After traveling a lot, you really appreciate the inequality, and unfortunately, technology just increases inequality. That’s the bear case of AI: if you look at inequality in a place like the U.S., since the global financial crisis, it has only gone up. I think it explains a lot of the phenomena that are happening. You have an affordability crisis, and you have the rise of social media.

All of these things—I think if you really want to understand the world, for me, it’s always been, “How do humans conduct themselves, and what’s the psychology behind that?” I think we are unfortunately in a crisis of affordability combined with extreme connectivity, so you understand what the other person has. Look at any coup d’état in the history of the world: systems fail when people understand that they are very disadvantaged, and the system is not working for them.

I keep coming back to that. Anything in my life right now is about asking, “Where can I have the most amount of impact?” I think you and I grew up and discovered crypto reasonably early on. I didn’t consciously understand it at the time, but it felt very exciting to enter into a field where there was no expert and think, “Okay, I’m going to cut my teeth here.” It’s very rewarding.

I also started noticing—I was living in San Francisco at the time—that the smartest people started to pay attention. They started to talk about obscure forums and Reddit chats. Some of the smartest cryptographers and people at Stanford were paying attention, and you were like, “Okay, there’s something real here.”

That was very much at odds with what you would hear if you went and talked to someone in a social setting. They’d be like, “Oh, wow, crypto was drug money and the Silk Road. Are you really sure you want to do that?” My mom, I think, broke down in tears when I told her that I was interested in this stuff.

I had a similar story, although mine was mostly about health insurance. My mom was really freaked out that I wasn’t going to have health insurance.

Really? It’s a common theme. You have to lose all these benefits.

Yeah. But you have to put yourself in the frontier. If you’re young, you have very little to lose. If you look at the asymmetry of that trade, especially when you’re young, you can really put yourself out there. There’s very little downside, with potentially infinite or unbounded upside.

That was true in crypto. I felt that in crypto, and I said, “What’s the worst that can happen?” The worst that can happen is Bitcoin kind of dies. I have this sort of deviation, this tangent in my career.

How old were you at the time?

I was 24, I think. I started investing in crypto right after college, and then, yeah, I was around 24. I was like, “What’s the worst that can happen?” It obviously felt really uncomfortable. On any given day, when the market’s up or down 20% or 30%, you’re like, “Oh, okay.”

3. Marginally Delusional: How Outsiders Win

Yeah, no, it’s tough. I think one of the things that drew me to crypto specifically is that it was a low-hierarchy industry. I think looking for low-hierarchy industries is very important. What do I mean by that? I specifically mean that anyone, if they’re competent, can really make an impact.

It’s very hard to make an impact, even if you’re exceptionally competent, in basically any industry. If you’re in the consulting world, it doesn’t really matter how competent you are—you’re not making an impact for a lot of years. In crypto, if you’re the best of the best, or now in AI if you’re the best of the best, you can make an impact.

I think AI is breaking down these barriers, and I want to ask you about that. The world almost seems flatter now because of AI in many ways, and you’ve been a power user. You actually wrote a great article on this, and I want to get your take on how you think AI is changing the world right now.

I think experts are overrated.

Mhm.

And generalists—we can talk about what the word “generalist” means—this is the time to be marginally delusional and apply yourself. You can do anything. That’s sort of been true since the internet happened. You have the Library of Alexandria, which is called YouTube. You don’t need to go to an educational institution.

Credentialism is still a thing, but I definitely agree with you: crypto is open source, and I found people in crypto were more willing to share knowledge with you. I’ve benefited immensely from people who were earlier than I was and just taught me the ways of private-key management.

How do you parse that out of people? How do you get people to share information with you?

There’s an art to asking questions, and there’s an art to being especially curious when you’re young. If you reach out to someone who understands human psychology, people love talking. If you give someone a space where you’re genuinely curious and interested in what they’ve done—“It seems like you’ve been incredibly successful. What were you doing here?”—they’re going to open up and share with you their life story and insights.

I think far too often—and I’ve been guilty of this; I don’t do enough of it—people don’t realize there’s no downside. If you see someone successful, no matter who they are, you can probably, as far as I know, send them an email or go where they are and position yourself through that. Something good comes out of it.

You go talk to someone and say, “I’m really interested in your career.” If you’re young, they’re going to take you up on that, probably more than you would think. I’ve seen this every single time. We’re a social species. If you understand human psychology, then you’ll be good at everything else.

This is why I say that if you look at the history of innovation, it’s mostly people from the outside. It’s mostly people who were delusional. Elon Musk is not a space or aerospace engineer; he just has this ability to wield power and stake a grand vision. That inspires people.

If you’re like that, it doesn’t require you to go to Harvard. What does it require? It just requires you to look at yourself in the fucking mirror and say, “I can do this.” Unfortunately, it’s your parents, your grandparents, or the school system that tells you that you can’t do it, and you just have to snap out of that. At some point, I realized my parents were not right.

Yeah. You know, your mom was not right.

It’s true. I looked back, and I said, “Mom, I love you. Do you have confidence that you raised me in a good way?” She answered, “Yes.” I said, “Okay. That’s all I need to hear.”

I only need you to love me. If I have a royal fuck-up, I can come back here and still sit down for dinner, and you will show me love. I think that just inspired an immense amount of risk-taking appetite, because now that I think about being a parent, all you need to do for your kids is give them time, love, and a support system. Not money, but time, and make them feel like there’s a net that will catch them if they fall.

I had that privilege. I didn’t really realize it at the time, because I felt like my parents were just weird in the way that they raised me. But looking back, I’m incredibly grateful for it. It’s the reason why I credit all my success to that singular moment of thinking, “Okay, I genuinely think that anything is possible.”

I don’t want to go to sleep anymore, especially now. I’ve learned more in the last 6 months. You talk about AI.

We’ll get into it.

It’s like a renaissance. It’s the most exciting time of my life.

I think what would be fun for people to hear is: what was the first big risk that you took with your life, and how did you feel while you were taking that risk? Walk us through your calculation.

I don’t think I was that calculated back then.

That’s not a bad thing, by the way. Sometimes you just need to—

I think grossly miscalculating risk is obviously a thing. Maybe I’ll go as far as saying I don’t think you really want to know the true risk, and this is the fault of experts.

Mhm.

You ask experts, and they’re like, “This is not the best.” They’re paralyzed because they maybe know too much. You have to be marginally delusional and naive about the risks out there.

The biggest risk I took was probably—I don’t know, there were so many. I guess the first one was probably going to talk to a girl.

Oh, yeah. We were actually talking about this prior to the podcast.

I was super shy.

Santi’s dad used to make him go up and talk to girls in bars. I mean, that’s good training.

My dad looks at me and says, “Okay, you understand business.” I was a J.P. Morgan banker at the time, and he says, “Why are you so shy when it comes to social interactions?” I was like, “I don’t know.”

It sucks to be rejected, right? The fear of rejection is probably the biggest bottleneck to unlocking potential. I wasn’t very good. To this day, I’m not particularly good at being that kind of person who goes up and talks to someone.

People have a fear of public speaking. To me, it’s fear of speaking privately, because I value my space, and I never want to intrude on someone’s personal space. If they’re deep in thought or what have you, I never want to be perceived that way. But, yeah, my biggest risk was going and asking a girl to dance at a likely quinceañera or something.

I mean, that’s a good place to start. A really good place.

You’re chatting: “Hi, how are you?” Cringe stuff.

Yeah. No, for sure.

It has to be that. It can’t be some, “I made an investment in Bitcoin.” Definitely not. That felt like a walk in the park relative to the sweat and the anxiety of—

It’s amazing how these basic things can still affect us so deeply. It’s like, yeah, bet my entire net worth on a coin that just launched yesterday in 2021. Sure, why not? Go talk to the girl on the subway who’s really pretty. Wow, that’s super difficult.

But it’s funny that you say public speaking is easier for you than speaking privately. But you worked on that.

Yes.

And I think this is a common theme with you: You tend to really think deeply about things and work on them, and try to come out the other side as a better and more well-rounded person because of it.

4. "We Haven't Found A Sector": Killing His Own Thesis

This actually leads me to my next question. You started a company called Inversion, right? Or a fund. The premise of this fund was to go find companies that crypto technology was going to massively impact and change, and then potentially go buy them out, integrate crypto technology, and resell them.

Maybe it’s a tough question, but it’s been a few years, and I haven’t seen anything. I know you’re working hard. So, what’s going on there? What’s happening behind the scenes?

We’ve been incredibly busy looking at 20-plus sectors where we felt that crypto, particularly stablecoins, could meaningfully transform that business.

It’s structured as a company, like a holding company, for a very intentional reason. Having been at a fund or multiple funds, you’re just going to be more trigger-happy. You have committed capital, and the clock starts ticking. So I had an analyst, and he’s like, “Well, we need to deploy.”

It’s incredibly demoralizing—not incredibly; it is demoralizing—when you do a lot of work in a particular sector and there’s some sunk-cost fallacy where you want to do a deal. You’re trigger-happy. But my first and only order of business is protecting shareholder capital. There are just times when, if it doesn’t clear a return—meaning, if I can’t outperform the benchmark—I’m not going to make an investment.

So I sent out an investor letter yesterday to our shareholders, and I said, “Look, we haven’t found a sector.” My mistake was that filtering for crypto has led us to evaluate businesses that are more fragile than businesses that I would want to own.

I’ll give you an example of that: remittance companies, going back to this idea of why I like crypto—moving money cross-border. Remittance companies have a place in the world. It’s been a challenging business. If you look at any remittance company, either Remitly or Wise, they’re not making money. The unit economics are not great.

Even though fees have come down, the larger ones and the smaller-scale ones need to have a huge regulatory footprint, and they have no pricing power. They’re agents, and the people who break the laws of physics of making money available simultaneously in 2 parts of the world are agents and fulfillment partners. The intermediary there is the remitter.

What we’ve observed is that a public, larger remittance company says stablecoins are going to transform its business and release all this working capital. So, message received. I then go talk to a representative sample set of similar remittance companies and bring in founders of companies within the crypto universe that are trying to build this network of moving money across borders. At the end of that, we can’t make this business more efficient.

I don’t think there’s a group of people in crypto or elsewhere that have gone as far as we have to really try to understand where crypto is going to fit in, especially for businesses. That’s not to say that the technology isn’t real. That’s not to say that there can’t be good, profitable businesses. I’m talking about businesses that are not crypto-native.

Certainly, you could look at Binance, Tether, the exchanges, and likely Hyperliquid of the world. They are the new entrants, and there’s no question that those are phenomenal businesses. But when it comes to traditional businesses—FX, credit, tokenizing part of their book—I think a lot of times—well, not a lot; in every instance—we weren’t convinced that the impact of the transformation was sufficient and commensurate with the risk that we would be taking.

When you’re doing turnaround stories and trying to fix businesses that are inherently challenged, the bar is much higher, right? You’re probably going to underwrite a base case that’s still overly optimistic. So we need to see—or I need to see—a very healthy margin of safety to make that investment, and we haven’t done that.

So I went out to my investors yesterday and said, “Listen, guys, this is what we’ve learned in this entire journey.” And, by the way, I end by saying, “If you have evidence to the contrary, of crypto really fitting in, I would like to know now.”

Mhm.

Because I’d rather be proven wrong now. If not, I definitely think there’s a huge opportunity in just buying good businesses.

5. Buy Boring: Why Technology Is Orthogonal

I think Warren and Charlie were smart because they just found really good operators, gave them money, and just compounded. So that was my mistake. I think Inversion—I’m still going to keep going, by the way. Inversion, to me—

How do you keep going?

You keep going by buying good businesses.

So forget crypto. You’re now a PE firm.

Technology is orthogonal. If you buy a good business that has moats and pricing power, and you just implement technology, that’s a better business.

What I found is you definitely want to start by first looking at businesses that have produced meaningful cash flow through any market environment. That’s a good business. Is there disruption risk from technology or elsewhere? That’s just it. You don’t want to buy anything else, and if you can’t find it, don’t invest. Buy the benchmark.

There are a couple of things that are always going to be true. There are a bunch of businesses that have no succession plan, right? People are retiring. There’s a huge opportunity in Germany, Japan, and the U.S., but we mostly focus in the U.S. just because of rule of law and what have you.

We want to buy smaller businesses that have proprietary data sets. For instance, I’ll give an example: critical power.

Okay.

Every hospital, school, and hyperscaler needs to have critical power, like a generator, in case power goes down. The grid’s not getting any better. Jonah right here can tell you that.

They need it. It’s federally mandated that you need to have critical power and these generators, and there are people who go and service them on a regular basis. A big part of the revenue is contracted. It’s not going to go away no matter what happens. No matter what latest model comes out, that generator needs to be constantly serviced and inspected. If not, you go to jail.

That seems extremely high-stress. So if you don’t maintain it properly, you go to jail?

The people in charge of the hospital are in breach of their fiduciary responsibility. By law, you need to have these critical power units, and you need to have—

Okay. So there’s an industry out there that is mission-critical because if you don’t get it right, as a hospital administrator, you can go to jail. I’m repeating that because we’re going to clip that.

Yeah. Incredibly fragmented, with geographic constraints, right? You have to service these markets. It’s in high demand, and there are labor shortages.

Okay.

And so that’s an example of a business that is like software but better, right? It has contracted recurring revenue, all-weather. And, by the way, there’s a lot there that could be optimized with AI.

Right.

Since they have routing and scheduling, and just a whole—like, the way they even produce the reports to their clients—all of that, on the margin, is very key to having a margin uplift in that business and having the capacity to take on more clients.

Most of the businesses we’ve talked to—we started this a couple of weeks ago—they all say the same thing: “We don’t have enough people on staff, and we find that there’s a delay in the time that we can dispatch and service.” A big part of our revenue is that we can bill 3 or 4 times the rate for emergencies, so it’s a scheduling issue.

Oh, well, I think there’s a solution: You buy that type of business, implement good practices and better scheduling, and they don’t get paid in time, so there’s factoring there.

So what I'm trying to say is I feel incredibly comfortable going after this type of thesis. There's always going to be an opportunity to acquire a business, implement best practices, and utilize technology that benefits the business. But, just to crystallize the one-liner, the mistake that I made was thinking that technology is at the center of why you want to buy a business. It's orthogonal, meaning it enhances, but you still have to buy a good business. I don't want to buy it. It's as simple as that, right?

6. The Only Fund Manager Who Wouldn't Deploy

I mean, when you say it like that, it's extremely simple. But I think people can often muddy what makes a good business a good business or what makes a good investment a good investment. When I was working at all the previous hedge funds I was at, I always used to say, “You need to be able to summarize your pitch in a paragraph. If you can't do it, then it's probably not a good investment.”

People can overcomplicate it, but there's so much in what you said that I think our viewers are going to want to dive into. Number 1 being: you were a fund manager, and every fund manager wants to deploy capital because that's how they get paid, and you didn't. You're probably the only fund manager that I've ever—I've talked to a lot of fund managers, Santi. There are a lot of people who, behind closed doors, are going to say, “Yeah, well, I don't really believe in the thesis anymore, but I've got $100 million to deploy. I've got to deploy it.”

Well, they're charging 2%.

Right. Exactly. Was it hard for you?

Well, I'm not charging 2%.

Okay. Do you think it would have been different if you were?

Of course. No matter how you look at yourself, you can't look at yourself in the mirror and say your incentives are not going to change. You're deluding yourself, right?

That's very refreshing, honestly. And I think it's true. Again, if you understand your psychology, I just knew that if I start a fund and go from a $20 million fund to $2 billion, you bet your last dollar that my psychology will change. The way I think about investing will change. So you become less of an investor and you become an asset manager.

You go look at the larger private equity funds and larger investment firms. They've done that. Benchmark and others have held the line on saying, “We actually think this is a sensible right size for the opportunity we're attacking.” I appreciate that Benchmark has now raised a larger fund, but for a long time they kept their fund at around $300 million or $400 million.

In crypto, I think we should talk about generalists and experts, because crypto, for instance, is that type of industry that will constantly tempt you to take a shortcut that is somehow going to contradict your core values and principles. There's always that—

That's, I think, been a big topic of discussion around tokens and equity, and we need to hold the line.

Yeah. So maybe dive into that. Why were the incentives in crypto wrong? Did crypto fail because these incentives were incorrect, or was it always going to run into these issues?

Well, crypto doesn't fail. I want to make clear that I can simultaneously love the technology and be incredibly bearish about valuations and other stuff happening, which is not inherent to crypto. There's fraud everywhere. There are scams everywhere. There's an incentive problem in every industry, especially in finance, in healthcare—everywhere.

Is the incentive problem worse in crypto, though?

I would say no. It just hurts more because it's an industry that has very high-principled values and stakes them. But the manifestation of that is just not there. And maybe it's naive, right? It's like governance. Well, you look at every single democracy, and turnout rates in elections are very low.

People just want to make things easy for people to go back to enjoying their day. That's why AI is so great, because I think we might just go into a world where there's more leisure time and you own back your time. That is the ultimate goal in life, I think: can you have time and freedom, and nothing else?

Mhm.

Yeah. But my biggest fear is, are you going to slow down? And I think, no, on the contrary.

We can get to that. But back to crypto, I think there's this double standard. The implementation of it gets distorted, and that is painful for sure. You look at people talking publicly: “Oh, real-world assets are all the rage. We want to do transformative finance,” and then they prioritize meme coins.

I don't have anything against memecoins. I think, again, in an affordability crisis, people buy more lottery tickets. In a bear market, in recessions, people want to get out of there. It's a very primitive thing to want. Memecoins are just a manifestation of it. Crypto is empowering it because crypto sort of opened the floodgates to people who otherwise wouldn't have access to investment products and don't have them in their local economies and markets. Crypto is just that way to express that. It's sort of like open markets—laissez-faire.

I'm pretty laissez-faire. Just let markets kind of run amok, right? But I think, as an industry, we can definitely do better. We can self-regulate. We can self-police. The Token Transparency Act is a good example of that, right?

We don't need—for so long, we blamed a regulator for the fact that crypto is not taking off. Now that excuse has kind of gone away, and it's like, well, we can definitely, as an industry, look at ourselves in the mirror and say there are best practices that we can implement that I think will push us higher and instill more confidence and trust. It's not surprising that we're not taken as seriously by other people who are skeptical when there's just a normal way to conduct yourself, right?

Like, for instance, I don't want to give specific examples, but—no, let's—we can get into it. You know what's funny, though? Whenever I talk to people like you, you're moving from crypto to a much broader set of the investable universe with what you're doing right now. Whenever we have these conversations, it's like we're talking about an ex-girlfriend that we loved so much, and now she kind of just—you know, she has BPD and she fell off the rails.

But, you know, we still have so much love and respect for her. [Laughter.] I want to go back to something you said about going to investment committee with a very clear mind, right? I think the biggest mistakes I've made in investing are trying to be clever in how I make money.

Mhm.

You want to feel smart. You want to feel validated, right? Investing is, for me, the best sport in the world because it forces you to—if you want to be good at it—you're constantly learning.

And if you're managing capital, you have capital. Think about how wonderful this is: there are people who have dedicated their entire lives to solving problems, who are incredibly passionate, who don't have capital and need it, and are going to look to you for it. They're willing to dedicate 30 minutes or an hour or many weeks of their time because markets are inefficient and money should move like water, but it doesn't. Somehow, you find talent that is undiscovered and needs it, and they're willing to basically brain-dump their entire knowledge and insight onto you. That's a wonderful thing.

Unfortunately, people aren't comfortable making money without necessarily having to feel clever in doing so. For instance, you could have sat in 2021, when you and I both kind of branched off on our own, and you could have heard someone like (likely Stan Druckenmiller), who, by all intents and purposes, is someone I look up to. I think he's just one of those guys you need to pay attention to when he talks. He was at his own conference and said—I think it was the Collison brothers or whatever—he said, “Go long Nvidia.” And they're like, “Really? That's the best you got?”

It's pretty good.

And right now, that's pretty solid. That's a guy who—I don't know him personally, but I feel like he's incredibly at peace with (a) changing his mind and (b) not holding himself to an identity. He doesn't have an identity crisis of, “I'm a crypto investor.” No, no, no. You're an investor, right? You just so happen to invest in crypto.

By the way, I think crypto, if you've been in the industry long enough, you have had to simultaneously be a high-frequency trader and a venture capitalist and understand risk, sprinting, and running a marathon. That's a great education to investing, full stop. If you don't think that you can branch out of that, you just need to look at yourself in the mirror and go to therapy and say, “It's an identity.” I've had it. I had it. I was like, “Oh, I'm an investment banker, and then I'm a private equity guy, and then I'm a venture capitalist, and then I'm now a crypto...” No. I'm like, “I love investing.”

I know I'm not good at other things. I think the faster you remove that identity, disassociate work from your core identity, and get comfortable with—not trying to be clever. I'm speaking from experience; this is not advice. Get comfortable with simply trying to uncover the truth.

Just simply trying to uncover the truth.

Yep. I think they're 2 different things, right?

What do you mean by that? Why is discovering the truth different from being clever? Clever people might discover the truth.

7. Make Money Or Be Right?

Clever people are likely going to try to manually distort the worldview to conform with their thought process. They're going to see new information, and they're likely going to pick apart things that confirm their bias. If you're trying to be clever—if you're in a debate, you're trying to sound clever to win the debate. In investing, it's like: Do you want to make money, or do you want to be right? You want to make money.

Making money is uncovering the truth before it becomes consensus.

Sometimes, again, going back to this idea of inversion, I'm just incredibly comfortable uncovering the truth. I started Inversion because I was like, this is a hypothesis: I want to know before anyone else how big this market is. There are narratives and hallucinations about how big crypto can be. Everyone's talking about the same things. I just got tired of it. I actually want to know how big this opportunity is. Is it going to be a $1 trillion market, $10 trillion, $100 trillion, or a couple hundred million dollars?

I was sitting with, I think, one of your former bosses, and he was like, “Why are you starting Inversion?” I want to start Inversion because I want to know before you how big this market is, right, and then make that trade. And he's like, “[__].”

No, that's Mike for sure.

I'm not saying who it was, but that's a hypothesis. Everything for me is a hypothesis, and my role—and it's fun—is a truth-seeking business. I think the process should be that we're uncovering the truth, not trying to be clever in how we pitch it to LPs, right?

I think that's fair. By the way, that can be difficult because I think some of the best fundraisers are clever, extremely clever. And you have to, as an LP—this is something maybe we can talk about—

Well, you can play the game.

Well, you have to watch out for that, though. You have to watch out for the people that sound incredible but actually can't invest. Everyone should go read the “forgotten billionaires” book, because it's a book about one of the guys who was running Long-Term Capital Management, this spectacular fund of Nobel laureates that blew up because they miscalculated risk. They didn't think the Russians were going to default on the bonds, and they did.

He says, “Look, if you look at a snapshot of all the billionaires in the 1980s, very few remain today.” Why is that? There's lifestyle creep, but a lot of it is first-, second-, and third-generation people inheriting a bunch of money. You see this a lot in Europe, and they feel some sort of guilt. That explains a lot of wokeism, I think, and grievances: “I didn't make this. I need to protect it,” which is fine. But then there's an element of, “My grandfather was an industrialist and he created this.” You're in this shadow, so you want to feel clever.

Right. There's that insecurity, and people exploit that.

You see this a lot, actually, in New York, especially with a lot of these trust-fund kids. They want to feel clever, so they want to do the SPV that Goldman pitches to them, right? They have the money, and so they disrespect Goldman. But it's one of those things—I think you see it a lot with people that come from money. They try to be in the new hot sector because they think it'll differentiate them and make them clever.

One thing that I want to ask you specifically, because I think you have a good read here, is that you wrote once about spiky people.

Yes.

It was in your essay. For those of you that don't know, this is a heuristic for figuring out who to invest in. How do you think about investing in people? As an investor, you're not just dealing with companies; you're dealing with people, and you're dealing with their drive.

This is, again, growing up. This is an issue I have with my parents, with my mom, and I love her, but she was like, “You need to be more well-rounded.” I'm like, “That's the biggest load of [__] I've ever heard in my life. I don't want to be well-rounded. That's mediocre. That's literally a bell curve. I don't want to be rounded. I want to be incredible.”

I very quickly understood and came to terms with the fact that I was just not well-rounded. I was like, “Don't tell me that. Don't ever tell me to be well-rounded. What does it even mean?” I think this is what's wrong with education. It's a problem with how we raise kids. It's a problem with society. Yes, you need a balance of EQ and IQ, but sometimes, if you're good at something, accelerate and differentiate, right?

I think hiring and investing in people—you want to just—I just love being around spiky people that don't agree with you. They don't care what other people think. They're so driven by one particular thing. By the way, there are well-rounded people that are great, and that's not a dig on them. I just felt comfortable not being well-rounded. And it comes with trade-offs, right?

8. What A 22-Year-Old Should Go Deep On In The AI Era

In today's world, it's kind of tough to figure out what to go deep on, right? When you have AI out there that can accomplish a lot of different tasks for you, it's kind of reshaping the world. What do you think is worthwhile going deep on? If you're talking to a 22-year-old today and they're asking you, “Santi, what do I spend my time on?” what are you telling them?

Young people have this, again, sort of delusion and are generally very curious. You go talk to a baby, and it will force you to really understand how very little you know about the world: Why is the sky blue? Very basic questions. At some point, the education system sands you down.

You are playing the game to get the score, and you can game these systems in the way that they've been constructed: Industrial Revolution concepts of 9-to-5 and memorization. If you apply yourself, you can get a really high score on the SAT. That doesn't make you smart. That doesn't make you a first-principles thinker. It doesn't give you agency.

I've been riding on my score for a long time. Fine.

I was an SAT tutor. I scored—I gamed it. I knew how to game it. But I think the education system and society at large, for better or for worse, just sand even the spikiest people down. They stop asking questions and conform to what a system is. I just didn't have that growing up. You would talk to my teachers, and it's like: You want to be irreverent. You want to question things. I think it starts with parents, with how they raised you.

In today's world, yeah, there's probably a trade-off. I don't know what the perfect answer to that is, because I definitely experience the same as other people, which is: Am I just an inch deep? Am I a mile wide and very shallow, and not really going deep? But I think I allow myself to just get on the river and allow myself to discover stuff. Somewhere along the way, just detour, make a pause, and I think spontaneity and creativity just don't come in expected places.

I've now gotten more into the habit of, if I get invited to an event, I just say no. And I'm like, “No, I'm going to go,” because I started to realize: Just put yourself in somewhat of an uncomfortable position, and something good comes out of that. I've definitely prioritized more in-person stuff, because there's something very human in that, and behind the camera, behind the screen, it just doesn't come through.

Especially in a world with AI, I told my team at Inversion, for instance, we're a really small team. We will automate everything except judgment, and something that—

How many people?

We're 3 people.

And how much money are you able to disclose?

We raised $26.5 million. We spent very little of that.

Constellation Software started with $25 million, right?

Berkshire started with small sums. And this is something that people want to get to the end state: “I want to be like Constellation—a trillion-dollar business, a trillion.” I'm like, “Yeah, but there's a process.”

I think the patience of just applying yourself with AI—if you're—I wake up every day, I'm like, “Okay, I want to prompt new stuff.” There's a whole cabinet.

I don’t want to go to bed. It’s like being a kid—you don’t want to go to sleep because you’re so excited about the next day. I’m feeling that.

The point that I’m trying to make is, you can, by the way, reinvent yourself. If you feel like you’ve been a generalist, it’s okay, as long as you have curiosity and remove any sort of message that you’ve received from the world, your parents, or your teachers that you can’t reinvent yourself. I love this quote: “You’re under no obligation to be the person you were two minutes ago.”

It starts with understanding who you are. This identity—this work—is not your identity; it is part of your identity. My bet is that if you’re curious and you allow yourself to just apply yourself creatively, I’m very long creativity with AI.

You have this guy in Australia who had a sick dog with a tumor. He just kind of iterated on it. He had some knowledge of biology and then built an mRNA vaccine. The government didn’t want to let him do it because he’s not an expert and it’s not regulated. It’s all this load of crap.

Then he finally convinced the lab to manufacture this vaccine, administered it to the dog, and the dog is cancer-free. That guy’s going to build a billion-dollar pharmaceutical company based on his maniacal endeavor to save his dog. Holy shit, if you’re not looking at that and feeling inspired, I’m sorry.

That’s why I feel like the narrative on AI is so bearish. It’s like, we’re going to lose all these jobs, we’re going to be automated, and then what’s the point of life? Society’s going to become more unequal. I’m like, no, no, no, no, no.

I probably delayed starting a company many, many years because I still have sort of an imposter syndrome, which is an insecurity that I’m not technical. Before, it was like, if you don’t know how to code, just find a co-founder.

Yeah, you don’t need that.

There’s always a degradation in the process of building. You have to have a team, an engineer, or find someone outsourced, and then you have to explain to them what you want that’s in your brain. There’s degradation in that assembly line.

Now you’ve basically collapsed that with likely Claude Code. Sure, there are going to be a lot of failed experiments and shit, archived things, but Pandora’s box is open. Creativity is just going to explode, and I think that’s remarkable.

In the same way that you spent years figuring out what industries crypto is going to disrupt, you’re now spending time figuring out what AI is going to disrupt. I assume AI-resistant sectors are on your mind. What are your conclusions—or maybe not conclusions, but initial first impressions—of how things are going to change, what’s resistant, and what’s going to be disrupted?

I’ll tell you what smart guys are talking about. The software investors are telling you, “Software is obsolete. It’s a commodity. Services are important.” Good luck to all the software companies that just try not to have any professional services attached to them because it’s lower margin.

So services, okay?

People in other tech industries tell you that hardware is back. I look at that and say, okay, all that is very human.

My point is, in a world where you can automate most processes, you want to be investing in the extremes. Definitely AI is at the forefront of that, but also what makes us very human, and that is the human experience.

You look at the tickets to the World Cup and Wimbledon—crazy, like 15,000. People are craving the offline. People are craving those interactions, so I think those types of interactions are only going to be way more valuable.

Vintage—we’re talking about cars. You don’t want the hypercar that looks like a futuristic version. No, you want the vintage one, the nostalgia factor. That, I think, is going to be even more valuable.

People are sort of pining for a world that doesn’t exist, in that sense, with the cars. I mean, we were talking about the Ferraris before and how the new Ferrari—

By the way, a lot of the reasons why they’re manufacturing these cars—and I had, I think, some sort of conversation with Jonah about the Porsche and stuff—is regulation, right? This sort of woke idea is forcing especially European car manufacturers to build hybrids.

It’s like, no, no, your Porsche enthusiast wants the feel of the naturally aspirated engine. But regulations bind and force you to go down a path that is obviously wrong.

AI-resistant sectors are top of mind. No matter what happens in the world of AI, you still need to have compute. You still need to have regulations behind that, and energy, and all of that is something that just does not go away.

Healthcare is obviously, I think, going to be big. I’ve always wanted to invest in healthcare, but again, I’m not a biotech engineer, so I know my limitations, right?

But I’d actually be very long pharma companies that have a lot of data. If you have a proprietary data set that you can then run the model against, those guys are going to discover things, because I heard it from someone like you: for the first time ever, you’ve had someone who can make relationships across data sets and has deep domain expertise in neuroscience, the microbiome, sleep, and cognition.

You’ve never had a single scientist with that amount of cross-domain expertise as you have with “Fable 5.”

One hundred percent.

When I was at a company likely called Elysium, we had 12 “Noble” laureates.

You were collecting them like Pokémon. How did you get 12?

Crazy. Eric Marcotulli just kind of went after us, and journalists came after us, like, “Oh, this is…” Anyway.

Talking about incentive problems, the world of academia has many of them. If you talk to a scientist who’s dedicated his entire career to a specific theory of aging, and then a new body of research or a new paper comes out that disproves it—telomere length or mitochondrial health or some other theory of aging—they will be very, very defensive.

The mafia of academia is worse than any other mafia because it discredits you.

Because it discredits you.

I think now the beauty of AI is it doesn’t care, and it breaks through that. For better or for worse, I think that’s handicapped our ability to do drug discovery.

Again, in investing, are you willing to put aside your ego, your credentials, and feeling accomplished and relevant to uncover the truth? It’s very uncomfortable because it sort of forces you to reinvent yourself.

If you’re 60 years old and your entire theory of what causes a particular pathology is X, and someone comes along and disproves that, I haven’t met someone who has been like, “Yeah, I was wrong.”

Yeah.

But in investing, if you’re going to be as stubborn as that, you’re going to lose all your money.

I think that’s why, in every discipline, the faster you just get into the mode of truth-seeking, the better you will be and the happier you will be. It is sometimes uncomfortable, but I think spiky people just become spiky. You’re not born with spikiness.

In the same way that you perfect an accent, you just—I think you just apply yourself by saying, “I want to uncover the truth.” What makes someone great? Well, observe, right?

X-ray, diagnose—not necessarily copy, but adopt elements. I think it always boils down to whether you’re willing to be truth-seeking.

The great thing about AI is—and there’s so much to talk about. I know we’ve got to wrap.

The hallucination risk is real with AI, and you have companies that are very specifically talking about model weights and information that is being served. I think that’s something to pay attention to.

For your partners in journalism, the danger—and I’m very optimistic; I don’t want to end on a negative note—is that we feel like, as we become hyperconnected, we simultaneously think that we’re informed. That’s very far from the truth, because the algorithm serves you something that is self-serving.

We are deluding ourselves into thinking that we’re informed, which means markets are more inefficient. Even experts just socialize with the same experts at the same conferences. There needs to be someone like Elon who says, “I’m going to break from all of that and just think from first principles.”

And that’s the beauty. This is why this is the best moment in time to be a generalist, because if you just wake up and prompt and say, “I want to understand this—”

Genuinely. Then you look at the history of innovation. All the major discoveries either happened by accident or were made by people who were not in the same field: penicillin, stem cells.

Because it gives you a new way of looking at things.

AI just accelerates that, so—

It is—

AI is the new way of looking at things, I think. That’s—

That’s how I would synthesize that, and that’s why I’m so excited. Santi, thank you for coming on the pod and being truth-seeking. This was really fun. That was a serious conversation; most of our conversations have a lot more smiles. But seriously, thank you for coming out and talking to me.

This was an awesome conversation. I'm super excited for all you guys out there to hear it.

Thank you. We should do this more often.

Absolutely.