Balaji Srinivasan: role of decentralization, China/US breakdown & more

1. 0:00 – 6:01

   Bestie Guestie Balaji Srinivasan is introduced

   1. JCJason Calacanis0:00

      So, uh, we have Balaji here, uh, and obviously, Balaji's an expert in everything. But Balaji, you're used to (laughs) being interviewed, uh, one-on-one. Uh, I've had you on my podcast a couple years ago. We had some major, great discussions. You've been on a bunch of other people's. But, uh, today, we'll, we'll see how you do on, uh, on the squad here with five people passing the ball. You've, you've listened to the pod before?

   2. CPChamath Palihapitiya0:24

      Yeah, yeah, I'll pass. So 20% each or whatever, it's fine. Yep.

   3. JCJason Calacanis0:27

      Okay, perfect. Well, I mean, we will have-

   4. CPChamath Palihapitiya0:30

      (laughs)

   5. DSDavid Sacks0:30

      (laughs)

   6. JCJason Calacanis0:30

      ... all in stats. We'll do a, a thorough breakdown.

   7. DSDavid Sacks0:32

      Yeah, good luck, good luck trying to get 20% with this moderator, this ball hog.

   8. CPChamath Palihapitiya0:35

      (laughing)

   9. JCJason Calacanis0:36

      Says the guy who has the largest percentage.

   10. DSDavid Sacks0:39

       Look, you're, you're supposed to be a non-shooting point guard, Jason.

   11. CPChamath Palihapitiya0:42

       (laughs)

   12. JCJason Calacanis0:43

       (laughs)

   13. DSDavid Sacks0:44

       Nobody wants to see you brick three-pointer after three-pointer.

   14. CPChamath Palihapitiya0:48

       (laughs)

   15. DSDavid Sacks0:48

       Just bring the ball down the court and pass it. Just pass the ball.

   16. CPChamath Palihapitiya0:52

       Just pass it, ball. Get outta the way, Jason.

   17. JCJason Calacanis0:54

       That's, that's, that's coming from the guy who has 24% of airtime, David Sacks, with the most number of monologues.

   18. DSDavid Sacks1:00

       Yeah, exactly. I, I, I, I, I fit exactly what I'm supposed to be doing, which is one quarter.

   19. JCJason Calacanis1:04

       All right.

   20. DSDavid Sacks1:04

       It's statistically proven.

   21. CPChamath Palihapitiya1:06

       (laughs)

   22. DFDavid Friedberg1:07

       We're going all in. Let your winners ride.

   23. JCJason Calacanis1:12

       Rain man, David Sacks.

   24. DFDavid Friedberg1:16

       I'm going all in. And I said. We opened sources to the fans, and they've just gone crazy with it. Love you, besties. Queen of Quinoa. Going all in.

   25. JCJason Calacanis1:24

       Hey, everybody. Welcome to another episode of the All-In Podcast. With us again this week, Chamath Palihapitiya, the Dictator, in, um, just a great sweater, and David Freiberg.

   26. CPChamath Palihapitiya1:36

       You should touch this. You have no idea the material that it's made from. It's made from, like, the, the chin hair of, like, a baby goat.

   27. JCJason Calacanis1:45

       A Billy goat? (laughs)

   28. CPChamath Palihapitiya1:45

       No, a, a baby goat that's then-

   29. JCJason Calacanis1:47

       Really?

   30. CPChamath Palihapitiya1:47

       ... plucked by a Tibetan Sherpa, who literally is forced to, uh, use lotion and camphor to keep their hands soft so that they don't disturb the innate properties of the thread.
2. 6:01 – 16:09

   Balaji's day in the life, Coinbase background, comparing crypto with early 2000's p2p music industry, China's lawful evil

   1. CPChamath Palihapitiya6:01

      I have a question for Balaji.

   2. JCJason Calacanis6:03

      You are, in my opinion, I, but I think a lot of people would say, one of the most incredibly well-read, thoughtful, you know, uh-

   3. BSBalaji Srinivasan6:14

      Commentators?

   4. JCJason Calacanis6:15

      ... commentators that we have. Frankly, like, you know, not just in tech, but I just think generally in our society. I would give you that. I think you're incredible. I'm curious, how did you become such a polymath? Was this just one of these things where you've always been curious about everything? Like, just tell us about, I'm curious about like how you grew up, first of all. And then second, how do you spend a normal day? Uh, I just wanna know those two, and then, then we can just jump in. I'm just curious, 'cause I find you-

   5. BSBalaji Srinivasan6:40

      Sure.

   6. JCJason Calacanis6:40

      ... extremely well-read and extremely knowledgeable.

   7. BSBalaji Srinivasan6:43

      Well, thank you. I appreciate that. Um, you know, I, I try to learn from, from everybody. What do I do? Uh, I think normal people go to the club or they, they go out and have fun, and I, I read math books and history books and science books and stuff like that. That's how I have fun. I find that more interesting. Um, nothing wrong with, with going out. People do that. I go for walks and stuff. I, I work out. Um, but, so I, I do a lot of that. Um, and, uh, I have, I, I mean, other than that, I just, I just read a lot, and I, and I, I think I remember a moderate amount, and so I cite that.

   8. JCJason Calacanis7:24

      And for people that know-

   9. BSBalaji Srinivasan7:24

      It's nothing, it's something really much more complicated than that, but that's it.

   10. DSDavid Sacks7:27

       I think we call that a polymathetia. (laughs)

   11. JCJason Calacanis7:31

       (laughs)

   12. BSBalaji Srinivasan7:31

       (laughs)

   13. DSDavid Sacks7:31

       (laughs)

   14. That's funny. (laughs)

   15. BSBalaji Srinivasan7:32

       The only difference between polymath-

   16. DSDavid Sacks7:34

       (laughs)

   17. BSBalaji Srinivasan7:34

       ... would be you if he could stop going to the club.

   18. DSDavid Sacks7:37

       (laughs)

   19. BSBalaji Srinivasan7:37

       And, uh, so he lost that last 40%.

   20. JCJason Calacanis7:40

       I will make an observation, which I was actually talking to Sacks about this, which is, there's some people who are great at business and learn the tech because that part is necessary to put it together. And there's some people who are fundamentally like scientists or academics and then get into business in order to advance technology. And, uh, there's nothing wrong with the first group, and I think that's totally, you know, fine and legitimate. Like, business people first, and then they get into tech. I'm really part of the second group, I think, where, you know, I'm fundamentally an academic at heart. You know, I spent almost the first three decades of my life meditating on mathematics, um, and just kind of got into tech relatively later in life than, than many others.

   21. BSBalaji Srinivasan8:19

       All right. And you spent your career, uh, building companies. Everybody, uh, remembers, uh, earn.com, uh, twitter.com.

   22. JCJason Calacanis8:25

       By the way, that's actually doing extremely well at Coinbase. Coinbase Earn is on track for 100 million revenue. Actually, it's much more than that in terms of GMV. It's broken out separately in their, um, not their S1 but their quarterly filing, so you can go ahead and check me on that. And the other assets that we added after I joined Coinbase are more than 50% of Coinbase's revenue, again, in their filings. And Coinbase Custody and all of its, um, assets come from Rosetta, which is something that we did there. And we launched USDC when I was there, and that is, whatever, $100 million a day. So they got a lot of value out of that acquisition. Just a, just a FYI.

   23. BSBalaji Srinivasan9:03

       And you were the CTO for a while of Coinbase-

   24. JCJason Calacanis9:06

       Yeah.

   25. BSBalaji Srinivasan9:06

       ... obviously. What was your take on Coinbase's Lend product, the SEC coming in and saying, "Hey, pump the brakes, we want a bunch of information," and then they've just, Brian Armstrong and Coinbase announced that they're not gonna do the Lend product? What's your take on that?

   26. JCJason Calacanis9:22

       So, I don't speak for Coinbase anymore.

   27. BSBalaji Srinivasan9:25

       Of course.

   28. JCJason Calacanis9:25

       Okay? I'm, you know, in my personal capacity. But I do think that this is sort of the beginning of an era where y- we're going to be rolling back the alphabet soup, uh, that FDR put in place. That is to say, you know, the, the SEC is not set up to go after millions of crypto holders and developers. They're set up to go after a Goldman and a Morgan. You know, just like the FAA is not set up to go after millions of drone developers, they're set up to go after Boeing and Airbus. And the FDA is not set up to go after millions of biohackers, they're set to go after, you know, Pfizer and Merck. So the entire 20th century alphabet soup, that regulatory apparatus, is meeting something that it's not really set up for. And, uh, it's gonna be, it's, uh, the, the problem is not, the problem is not any one actor like Coinbase or Kraken or what have you. Their problem is that technology has shifted, and they've got many more people to deal with, and many of those are individuals who are more risk-tolerant than companies. So, so I don't think they're, they're gonna be able to maintain the, the status quo of 100 years ago, the statutes that they're citing. I think that's gonna either get knocked down in court or going to be technologically invalidated. There's gonna be sanctuary cities and states for crypto, or there's gonna be international entities like what El Salvador is doing, and Switzerland. So I don't believe that that era is going to maintain. But I think there's gonna be a big conflict over it, so we'll see.

   29. BSBalaji Srinivasan10:49

       How do you think it's different this time, though, Balaji, to the, like, crackdown? Because folks said the same thing, um, going into kind of the Napster era when, you know, everything was basically peer-to-peer, um, sharing of media files that were technically copyright, and there was, you know, some regulatory regime that, you know, had oversight over that copyright. But then the DOJ got wrangled in, and they went in and they made an example out of arresting a couple hundred kids, I think, and it basically caused everyone to back away entirely from the market, similar to kind of what we may be seeing happening in China right now. But is it not possible that we see a similar sort of response this time around, where they, they kind of take this targeted, make an example approach, to kind of share pe- to scare people kind of out of the, uh, the frenzy that's, uh, that's, I think, driving a lot of people onto these platforms, rather than going after the platforms themselves? So kind of saying, "Look, this is, this is a violation of securities laws. You guys are getting prosecuted. Here's the 100 examples." And suddenly 80% of the, uh, attention kind of gets vacuumed out.

   30. JCJason Calacanis11:53

       Yeah, so I'd say a few things about that. First is, I think 2021 is different from the year 2000 in the sense that China is an absolutely ruthless and very competent state.Um, whereas the US, uh, government I would consider... You know, there's a difference between lawful evil and chaotic evil. Do you guys know that? From Dungeons and Dragons? Okay. So the Chinese government is lawful evil. Um, they are very organized, um, and they plan ahead, and when they push a button, they just execute like (clicking sounds) like this, the whole of society, and they don't leave, you know, round corners or, or things left out. The US government is, today, in 2021, not the 1950 US government, the 2021 US government is like this shambolic, chaotic mess that can't really do anything and is optimized for PR and yelling online. Um, and that's a whole important topic. But to your... So, so that's one thing where I think there, there's a difference in just state capacity. But in, that's not to say they're not gonna try with what they've got. The other thing is that, um... So to your Napster point, um, there was thesis and antithesis, but there was synthesis. That is to say, you know, Napster led to Kazaa and LimeWire, and actually the Kazaa guys went and did Skype, so something legit came out of that. But the more important or more on point thing is, it led to Spotify and iTunes. The record companies were forced to the negotiating table.
3. 16:09 – 39:43

   China declares crypto transactions illegal, comparing and contrasting the US and China's future outlook

   1. JCJason Calacanis16:09

      just fill everybody in for a second who don't know what happens. Uh, on the taping today, September 24th, Chinese government has announced that doing any transactions in cryptocurrency is now illegal. Holding it, apparently you can still hold it, and this comes after Bitcoin servers being kicked out of the country. So yes, they've pushed the button. Go ahead, Balaji.

   2. To Friedberg, I would say, um, BitTorrent is what kept the record industry honest, and that kind of forced them to the table of iTunes, so to Chamath's point also. I wouldn't call it more evil, I'd call it more good. Um, and BitTorrent also lurks out there as kind of this, you know, peer-to-peer enforcer-

   3. BSBalaji Srinivasan16:45

      Like a check.

   4. JCJason Calacanis16:45

      ... that... It's a check, exactly, and it's not gone. And in fact, it's a basis for new technologies, and I think there's, that's another flare-up. The other thing is that with crypto, the upside, even though the state wants to crack down on it harder, the upside is also greater and the global internet is bigger. And so I think the rest of world, meaning all the world besides the US and China, is a huge player in what is to come. That's India, but it's also, you know, Brazil, it's every other country that's not the US or China, and so that's a new player on the stage. And then third, to, um, to, Chamath, to your point about, um, yes, China banned crypto,

   5. DFDavid Friedberg17:18

      Yeah.

   6. JCJason Calacanis17:19

      Well, you know, what's interesting is people talk about China copying the US. Nowadays actually in many ways, especially on a policy front, the US is copying China without admitting it, but it does so poorly.

   7. Good example, yeah.

   8. For example, lockdown. Okay? The Chinese lockdown, you know, was something where it wasn't just sit in your rooms, it was something with like drones with thermometers and central quarantine where people were taken from their families and centrally quarantined, and a thousand ultra intrusive measures that the population by and large complied with. I mean, forget about a vaccine mandate, we're talking about like... You can see all the videos and stuff from, from out of China the government itself has published.

   9. BSBalaji Srinivasan17:57

      Yeah, they didn't seem real at first. (laughs) They were pretty crazy.

   10. JCJason Calacanis17:59

       They didn't seem real at first, right.

   11. BSBalaji Srinivasan18:00

       Yeah.

   12. JCJason Calacanis18:01

       And, and so, you know, the thing is that for the US to follow that, it's a little bit like, as a mental image, imagine a lithe Chinese gymnast going and doing this whole gymnastics routine and then a big...... you know, lumpy American following and, and not being able to do those same moves, right? The Chinese government, you know, is, is as I said, lawful evil, but they are set up to just snap this, snap that, do this, do that. (laughs) The US government is absolutely not, and the US people are not. Whatever you do, 50% will oppose.

   13. Well, I mean, also our system is a democracy, is it not? Like, so you cannot just do that. Even if the government wanted to weld people into their homes, we have a democratic state here where we have to discuss these things and there's a legal framework to it, so it's not even possible.

   14. Yes, even in the, in the 1950s, the 1940s, 1930s, the US was still a democracy, but it basically managed to exert a very strong top-down control on things. Today, we have something for, where for a var- like, you know, under FDR or in the '50s, a very conformist society which was able to kind of drive things through. Even though it's a democracy, it was something where mass media was so centralized that a relatively few, relatively small group of people could get consensus among themselves, and then what they print in the headlines, I mean, who's gonna go and figure out the facts on their own? This gets into the media topic later. So it was de facto centralized at the media level, the information, production, and dissemination level, and then you kind of manufactured consent from there. Today, it's you're combining that democratic aspect, the legal aspect, with a new information dissemination thing which has destabilized, I think, a lot of things.

   15. Saxe, what's your take?

   16. DSDavid Sacks19:31

       Yeah, well I'd love to get Balaji's take on a, an article that came out this week in the Wall Street Journal. I think it was a really important article, it came about four days ago and it was entitled, um, Xi Jinping Aims to Reign In Chinese Capitalism and Hue to Mao's Socialist Vision. And it, the article describes how, we, we've all seen and talked about on this pod, how they've been cracking down on tech giants, they've been cutting down their tech oligarchs down to size like Jack Ma, how he disappeared under house arrest, and, you know, and, and we've seen that, you know, they stopped the, the Ant IPO. But, but this article went beyond those steps and really talked about Xi's, uh, ideological vision. And, and what it basically says is that what's going on here isn't just the CCP consolidating power. They actually want to bring the country back to socialism. And what they say is that, that within the CCP, or at least, um, Xi's view of it, capitalism was just something they did as an interim measure to catch up to the West, but ultimately, they are very serious about socialism. And, you know, reading this article, I had to wonder, "Well, gee, did we just catch a lucky break here? In the sense that, look, if they're abandoning, or if they abandon the thing they copied from us, which is market-based capitalism, they use that to catch up, maybe this is the way that actually, this is a thing that slows them down." And the thing that, that historically that it brought to mind is that if you go back into the f- the 1500s and you compare Europe to China, China wa- the Chinese civilization was way ahead. I mean, it w- the standard of living was way ahead, technologically it was way ahead. Europe was a bunch of squalid, warring, tribal nation states. And then what happened is a single Chinese emperor banned the shipbuilding industry. Any ship with more than two masts, uh, was banned, and so exploration just stopped in China. It, they became very, uh, inward facing. Whereas the European states explored and discovered and conquered the New World, colonized the world, and that led to an explosion of wealth and innovation, and as a result, Western Europe and then its sort of descendant, the United States, ended up essentially conquering and dominating the modern world. And so I guess, you know, to bring it back to my question to Balaji, is there a chance that what Xi is doing, returning to socialism, could this be like the Chinese emperor who banned, uh, shipbuilding? Or am I reading way too much into this single Wall Street Journal story?

   17. JCJason Calacanis22:07

       So my short answer on that is, I think it is, uh, I think the socialist thing is real, but I think it's better to call it nationalist socialism, um, (laughs) with, with the implications that has.

   18. DSDavid Sacks22:20

       (laughs) Right.

   19. JCJason Calacanis22:20

       Uh, whereas I think the US is kind of going in the direction of what I'd call maybe socialist nationalism. You know, where it's, it's like different emphasis in terms of what is prioritized, but, you know. And I think in many ways China is like the new Nazi Germany, woke America is like the new Soviet Russia, and the decentralized center is gonna be the new America. I can elaborate on that. But basically, with respect to this, one thing I try to do is I try to triangulate lots of stories. So rather than, for example... And, um, nothing wrong with a Wall Street Journal, you know, p- piece, like, looking at it, but for every WSJ piece you read, it's useful to get, like, you know, what is CGTN or Global Time saying, even if you discount it just to see what they're saying, and then you also triangulate with, let's say, the Indian or Russian point of view. And by doing this, you, I, I, I feel that it's better than just reading 10 American articles. And, you know, especially reading primary sources. Like, there's this good site called Reading the Chinese Dream which actually translates primary sources and then you can kind of form your opinions from that versus like a, like a, quote, "hot take." Right? I'm not saying you are, I'm just saying that that's what I try to do. So-

   20. DSDavid Sacks23:30

       I think we've really gotten China right here. I mean, I think that if you, if you look at what's happening, I think we've, we've basically forecasted this orchestration of essentially the re-vertical integration of China. You know, we have China Inc where the CEO is Xi Jinping and where there is a... It, it, it's, it's, it's almost like they've, they've changed the game, where what they are playing essentially is like Settlers of Catan or something, where the goal is just to hoard resources. And I think that they have enough critical resources for the world, and the clever part of what they did was the last 20 or 30 years, they leveraged the world to essentially finance...... their ability to then have a, um, stranglehold on these critical resources, whether it's chips, or whether it's rare earths, or other materials.

   21. JCJason Calacanis24:19

       They leveled up.

   22. DSDavid Sacks24:20

       And I think that was the genius.

   23. JCJason Calacanis24:21

       Yeah. They leveled up-

   24. DSDavid Sacks24:22

       Well, they, they lev- they leveled up on our capital-

   25. JCJason Calacanis24:24

       Yes.

   26. DSDavid Sacks24:24

       ... and now that all that infrastructure's there, and now that we are addicted to the drug, they can then change the rules of the game and say-

   27. JCJason Calacanis24:29

       They, they leveled up with our operating system. It was a brilliant move, but-

   28. DSDavid Sacks24:33

       They, they allowed entrepreneurs to believe that they could be entrepreneurs. They allowed an entire society to basically level up economically.

   29. JCJason Calacanis24:39

       Why did nobody see this coming, Chamath? Nobody saw this coming.

   30. DSDavid Sacks24:42

       No.
4. 39:43 – 48:37

   Chances of a revolution in China, predictions for the next 1-2 decades

   1. BSBalaji Srinivasan39:43

   2. JCJason Calacanis39:43

      I, I think what we're gonna see next is, and I think we should talk about what we think will happen next with China, I think China's on the brink of having a revolution. If you look at what happened to the Uighurs, obviously you can't practice religion there. Students in Hong Kong can't protest. You can't publish what you want. Founders can't start companies. Now you're not going to be able to play video games as much as you want. You can't use social media. And today, you can't have any control over your finance. If you squeeze people across this many vectors this hard, this quickly, I think Friedberg's right, it could result in massive-

   3. BSBalaji Srinivasan40:18

      China's not like a uniform people and a uniform culture.

   4. JCJason Calacanis40:21

      Of course, yeah. But I mean, I mean, we just listed like seven or eight things they're doing to-

   5. BSBalaji Srinivasan40:25

      But there, but there are many-

   6. JCJason Calacanis40:26

      ... squeeze their-

   7. BSBalaji Srinivasan40:26

      ... many provinces, many cultures, many differences, many differences of experience, by the way. I mean, you know, the rural population in China doesn't experience much of what I think is driving industry and driving this inequality and perceived inequality and the changes that are underway. I don't think that a, a revolution is generally supported unless you have, you know, enough kind of concentrated swell across the population. I don't know how you could see something like that happening in a, in as diverse a population as, as China.

   8. JCJason Calacanis40:51

      I support China's limits on social media use by children.

   9. (laughs)

   10. I could, I could use that here for my kids. (laughs)

   11. I... Clearly, Sacks is letting his kids use whatever they want. I mean, we definitely need to have some of those over here. Balaji, what do you, what do you think is gonna happen, worst case, best case, for China in the next two decades?

   12. Well, so one thought I wanted to give is basically that in some ways, this is inevitable because China and India are 35% of the world. Asia was the center of the world. And one way of thinking about it is that America and the West executed extremely well over the last couple of centuries and Asia didn't, with socialism and communism. And now that they've actually got a better OS, it's not like the US really could restrain them, you know? Um, so in that sense, that's also part of their internal narrative in a, in a way. I mean, of course, Mao killed millions of people there. They screwed up their own stuff. But their narrative is, they were colonized by the West. And the Opium Wars, they're patronized as copycats, emasculated on film. For decades, they're like heads down in sweatshops. They built plastic stuff. They took orders from all these overseas guys. And, uh, and now it's their time to stand up and take back their rightful position in the world. And that's like, that's their narrative. And so it's, it's important to not, not agree with it, but at least understand where it's coming from because they want it more, I think. Um, and so I, I, I disagree, Jason, with your, with your view that they're gonna have a revolution. I think that's, like that's the kind of, that's a Western mindset where, you know, Australia, for example, is having these COVID protests.... in, in China, the harder the crackdown, the less more crackdown, like, th- the easier it makes the next crackdown. It's, it's like, it's something where, uh, the difference-

   13. It's not going to be an easy revolution, that's for sure. But we saw protests. You saw Tiananmen Square, you saw Hong Kong-

   14. CPChamath Palihapitiya42:34

       Well, you, you've not seen anything-

   15. JCJason Calacanis42:34

       ... and you're going to see Taiwan.

   16. CPChamath Palihapitiya42:35

       ... since. That was 30 years ago.

   17. JCJason Calacanis42:37

       It, it's still proof positive that if you squeeze people, they will take to the streets.

   18. CPChamath Palihapitiya42:41

       Jason, remember-

   19. JCJason Calacanis42:42

       I, I don't think so.

   20. CPChamath Palihapitiya42:42

       And we started-

   21. BSBalaji Srinivasan42:42

       The, the quality of life in China has accelerated-

   22. CPChamath Palihapitiya42:45

       It's incredible.

   23. BSBalaji Srinivasan42:46

       ... at such a pace over the past 30 years. The average person in China is so much better off than they were five years ago, 10 years ago, 20 years ago, 30 years ago. Revolutions don't come out of that amount of progress, right? When, when, when your life ... when you go from $4,000 a year in average income to $20,000 a year in average income.

   24. JCJason Calacanis43:02

       What happens if they don't have jobs in their recession?

   25. CPChamath Palihapitiya43:04

       The only time you revolt is because of economics.

   26. JCJason Calacanis43:07

       That's what I just said.

   27. BSBalaji Srinivasan43:08

       And there, there is-

   28. JCJason Calacanis43:08

       So, what happens if there's a, uh, if they have a, um, market crash?

   29. BSBalaji Srinivasan43:12

       They're growing at 8% a year. The GDP is growing 8% a year. The population is seeing an incredible benefit and the cost is-

   30. JCJason Calacanis43:17

       Okay, what if that reverses? What if that reverses? Would you see a revolution then?
5. 48:37 – 58:11

   Decentralized citizen journalism, the end of corporate journalism

   1. JCJason Calacanis48:37

      ex machina.

   2. DSDavid Sacks48:37

      I think, uh, look, I think that's a great point to end on, Jason, 'cause there's other stuff we're gonna talk about.

   3. JCJason Calacanis48:41

      Yeah.

   4. DSDavid Sacks48:41

      Uh, so one, one of the things that, you know, Balaji's commented on that I give him, you know, a tremendous amount of credit for is, uh, corporate, is, is the idea of corporate journalism. In fact, Balaji, you, you're the first person I heard that term from, corporate journalism, which is a recognition that all these reporters actually are employees of companies and they have a company culture and they often, uh, ha- they have owners. The companies do. Those owners often have an agenda. There's often a dogma inside these corporations. And, um, and it really got me to see journalism in a new light because these journalists portray themselves as the high priests of the truth, who are there to speak truth to power, when actually, they're really just kind of the lowest paid functionaries on the corporate totem pole. And, uh, and, you know, eh, eh, i- in contradistinction to what you've called citizen journalists, who are people who are writing, uh, what they see as the truth in blogs or bl- you know, formats like this, where they are not getting paid for it. You know, we're doing it because we want to put forward what, what we know to be the truth. And, actually I'd love to hear you speak to that because I think this is like one of the most powerful ideas that I've heard you put forward.

   5. JCJason Calacanis49:58

      Sure. So, so much I can say about this. The first thing I would do is I'd recommend a book that recently came out by Ashley Rinseberg called The Gray Lady Winked. And the reason it's very important, and I put it up there, frankly, with the top five books I'd recommend. I know I've recommended other books. Top five books I'd recommend, Gray Lady Winked. It goes back through the archives... You know how th- The New York Times calls themselves the paper of record, they call themselves, you know, the first draft of history. They've literally run billboards calling themselves the truth. But it's just owned by some random family in New York and, you know, this guy Arthur Sulzberger who inherited it from his father's father's father. And so you have this, like, random rich white guy in New York who literally tries to determine what is true for the entire world. His employees write something down, we're supposed to believe that this is true. And I simply just don't believe that that model is operative any more, because I think truth is mathematical truth, it's cryptographic truth, it's truth that one can check for oneself rather than, you know, argument from authority, it's argument from cryptography. And, you know, one of the things with bitcoin, with cryptocurrencies, is given decentralized ways of checking on that. Now, to the point about corporate media, it's, they're, they're literally corporations. These are publicly traded companies with financial statements and quarterly, you know, reports and, and goals and revenue targets. And so once you, you know, kind of are on the inside of one of these operations, you realize that that hit piece, uh, or, or what have you, is being graded in a spreadsheet for how many likes and RTs it gets on Twitter. And if it gets more, they're gonna do more pieces like that, flood the zone with that. And if it doesn't, then they're gonna do less. And they're all conscious of this. You know, for example, Nicholas Kristof wrote an article, I think it's like, uh, it's The Articles No One Reads or An Article Someone Will Read, where he noticed that his Trump columns get something like 5X more views than his other columns. It's like this huge ratio. And so at least some folks there are privy to their, to their pageviews. So, and of course they're looking at their Twitter likes and RTs, even if they, those are not directly pageviews, they're, they're certainly correlated with the pageviews on the article. So, all these folks are literally employees of for-profit corporations, they're trying to maximize their profits. But we believe them when they market themselves as the truth, like the NYT, or as democracy itself, like The Washington Post, or fair and balanced, like FOX. These people equate themselves with, like, truth, democracy and fairness. They weren't exactly around at the founding, okay? They weren't, they weren't part of the Constitution in 1776. The Post Office is, but these media corporations were started later on and have kind of glommed themselves on and declared themselves, like, part of the establishment, you know? And, uh, and- and they are not. And the last point, and I'll just, you know, g- give you guys, you know, th- the floor after this, but we didn't go and say, "Oh, BlackBerry, do better. Blockbuster, do better. Barnes & Noble, do better." We just replaced them, disrupted them with better technological versions. And so the idea that, "Oh, you know, New York Times, do better," that's completely outmoded way of thinking about it. We need to disrupt, we need to replace, we need to build better things, we need to have things that have, like, on chain fact checking, that have voices from overseas, that have voices that are actually experts in their own fields, that have voices that are not necessarily corrupted by these for-profit motives.

   6. Explain what you mean by on chain fact checking.

   7. Ah, okay.

   8. Give an example.

   9. So this is, this is a very deep area. But fundamentally, the, the breakthrough of bitcoin was that an Israeli and a Palestinian or a Democrat and a Republican or a Japanese person and a Chinese person all agree on who has what bitcoin on the bitcoin blockchain. It is essentially a way of, in a low trust environment but a high computation environment, you can use computation to establish mutually agreed-upon facts. And these facts are who owns what million or billion of the roughly trillion dollars on the bitcoin blockchain. And that's the kind of thing that's, I mean, people will fight over a $10,000 shed, you know? When, when you can establish global truth over a byte which says, you know, do you have 20 or 5 or 10 BTC, you can actually generalize that to establish global truth on any other financial instrument. And that's tokens and that's, you know, loans and derivatives, and that's a huge part of the economy. And then you can generalize it further to establish other kinds of assertions, and that gets a little bit further afield, but not just, you know, proof of work and proof of stake, but things like proof of location or proof of identify. Uh, there, there's various other facts you can put on there. So you start actually accumulating what I think of as not the paper of record, but the ledger of record, a ledger of all these facts that-Some of them are written by so-called cryptoracles, some of them arise out of smart contracts, but this is what you refer to. And as a- a- a today model of what that looks like, it's sort of like how when someone links a tweet to prove that something happened, people link an on-shane record to prove that something happened. Concrete example, do you guys remember when Vitalik Buterin made that large donation earlier this year?

   10. Yes.

   11. Okay. So (overlapping dialogue) uh, Chamath, you're nodding, you want to talk about that? Explain what- how it happened?

   12. DSDavid Sacks54:56

       I think that you basically tweeted out something that was essentially trying to raise, uh, money to, uh, secure necessary equipment and pharmaceutical supplies to India during a pretty bad-

   13. JCJason Calacanis55:08

       Yes.

   14. DSDavid Sacks55:08

       ... COVID outbreak. Uh, and then I think you- you decided that you were gonna donate some money, and then Vitalik basically stepped up and actually gave quite a large sum. I- I- I'm not exactly sure the exact number, Balaji.

   15. JCJason Calacanis55:18

       Yeah. So it was, it was an enormous amount in illiquid terms of, uh, of, uh, this meme coin, these Shibu coins. But the thing is, that everybody, when they, when they wanted to prove that this had happened 'cause it was so unbelievable, such a large amount of money, it was marked at on the- on the order of a billion when he gave it. Do you know how they proved it? They didn't link a tweet. They linked a block explorer, okay, like an on-shane record, that showed that this debit and this credit had happened. And the big thing about this is, you know, we take for granted, when you link a tweet, um, you're taking for granted that Twitter hasn't monkeyed with it. But guess what? Twitter monkeys with a lot of tweets these days. A lot of people get disappeared. And so it's not actually that good a record of what happened anymore. "This is deleted." "This guy got suspended." This, you know, like even the Trump stuff, forget about, like, Trump himself, but that historical archive of what happened, you can't link it anymore. It's link rotted. Just from that, like I know it's one of the thousand most important things about it, but it's an important thing.

   16. In the example of, say, Taiwan, um, and China believing Taiwan is part of the one China, uh, concept, and Taiwan believes it is a, uh, country, and everybody in the world has a different vote on that, how does the blockchain clarify what is the fact about is China a country or is it a province?

   17. Very good question.

   18. DSDavid Sacks56:33

       Doesn't have to.

   19. JCJason Calacanis56:33

       What it- well, what it does is it- it clarifies the facts about the metadata. Who asserted that it was a country and who asserted that it was a province and what time did they do so? And, uh, you know, what money, how much BTC did they put behind that or what have you? So it doesn't give you everything, but it does start to give you unambiguous, like, proof of who and proof of when and proof of what, and then from that, at least... Yeah, go ahead.

   20. Yeah, I mean, like the way I've- the way I've kind of explained it to family members who've asked is, you know, that the concept of a chain is difficult, I think, for people to, that- that aren't, you know, have- don't have a background in computer science to really grok is like, but everyone understands the concept of a database, you know, there's a bunch of data in there. Except in this case, the- the- the- the data that makes up the database is what's being verified by everyone and it's distributed, so everyone has a copy of it.

   21. DSDavid Sacks57:22

       I want to know what you guys think about, uh, this week in the Facebook dumpster fire. Let's move to something splashy and interesting.

   22. JCJason Calacanis57:27

       C- Can I say one thing? There's a book, Friedberg, on what you just mentioned, which is called The Truth Machine by Casey and Vigna, and it gives a pop culture explanation of the ledger of record type concepts I just mentioned.

   23. Which- which I don't think, I don't think a lot of people grok yet, Balaji, to your point, and- and I- I think, you know, we're- we're skipping past it, but it's a really important point, which is historically, databases have sat on someone's servers and whoever has those servers decides what data goes in the database and how they're edited and what's allowed to come out of the database. So in this notion, generally a database with information in it can be held by lots of people who generally as a group kind of vote and decide what's going to go into it. And that's- that's the power of decentralization and how it changes, you know, the information economy which drives the world, um, a- and it's gonna have a lot of implications. Right?

6. 58:11 – 1:18:43

   Facebook's tough stretch continues: leaker might come forward with SEC, lawsuit over FTC payouts, public sentiment turning on big tech, decentralized social media

   1. JCJason Calacanis58:11

   2. DSDavid Sacks58:11

      Facebook's worst month ever, uh, continues. We talked last week about Facebook ha- having a lea- internal leak called the Facebook Papers. Uh, this is a- a continuous leak to not only the Wall Street Journal, but apparently members of Congress are also getting it and the leaker... And the SEC.

   3. JCJason Calacanis58:30

      And the leaker apparently works in the safety, uh, group, uh, according to a congressperson who has been getting it, and they are going to uncloak themselves and that they were leaking this out of frustration that there is human trafficking, democracy issues, and obviously self-harm in girls using Instagram and, uh, you know, this research. But that's not all. Facebook, uh, is admitting, uh, for the first time this week that Apple's privacy updates are hurting their ad business. And I think the story you're referring to is that two groups of Facebook shareholders are claiming that the company paid billions of extra dollars to the FTC to spare Mark Zuckerberg and Sheryl Sandberg from depositions and personal liability in the Cambridge Analytica saga. From the political- Politico article, quote, "Zuckerberg, Sandberg, and other Facebook directors agreed to authorize a multi-billion dollar settlement with the FTC as an express quid pro quo to protect Zuckerberg from being named in the FTC's complaint, made subject to personal liability, or even required to sit for a deposition." According to the article, the initial penalty was 106 million, but the company agreed to pay 50 times more, five billion, to have Zuck and Sandberg spared from depositions and liability. Uh, here is the money quote. "The board has never provided..." uh, this is from the group of shareholders suing, "The board has never provided a serious check on Zuckerberg's unfettered authority. Instead, it has enabled him, defended him, and paid him, paid billions of dollars from Facebook's corporate coffers to make his problems go away." Chamath?

   4. DSDavid Sacks1:00:02

      I have one, um, prediction. The Facebook whistleblower... Uh, you know, when you are a federal whistleblower, number one is you get legal protection, but number two, which people don't talk about much, is you actually get a large share of the fines that are paid by the act of your whistleblowing. You know, there was a couple of SEC claims that I think were settled last year where the whistleblower got paid I think like $115 odd million or something, and just an enormous amount of money. And the SEC has done a fabulous job in, you know, using whistleblowers as a mechanism of getting after folks and, you know, I think the SEC said they've collected almost a billion dollars since this whistleblower program started that they've paid out or something. Just a- an enormous amount. And I had this interesting observation which is, this person?... leaked a bunch of stuff, or whistle blew, to the Senate, to Congress, to the SEC. There probably will be an enormous fine. This person may actually make (laughs) billions of dollars, which will then make every other employee at Facebook really angry about why they didn't leak it first. (laughs) Because all, like, I guess all this stuff was sitting around and apparently now they've shut it down, right? So that, that entire data repository around this whole topic is no longer freely available for employees to peruse, so.

   5. JCJason Calacanis1:01:18

      Oh, what, under a Qui Tam thing?

   6. DSDavid Sacks1:01:21

      Well, I, I think it was more like, like, I guess, like, all of this data was sitting inside of some Facebook ins- internal server, right?

   7. JCJason Calacanis1:01:27

      No, no, I mean, I mean, w- this, this leaker makes money under, like, a Qui Tam provision, something like that?

   8. So the SEC will pay, uh, for information that results in, um, a fine. And so, they just recently announced, um, that they, uh, paid out $114 million whistleblower payment. That was the highest, uh, ever. Um, and that they ... this whistleblower's extraordinary actions had, uh, and high-quality, uh, information proved crucial to successful enforcement actions. I don't think they announce all of these whistleblower payouts. Um, they just pay them. So they're not all public.

   9. DSDavid Sacks1:02:04

      So that's, so that's, that's my one observation, is I, I actually think this whistleblower may make billions of dollars, so more than any of us made at Facebook, which I think is hilarious. But the second thing, which is more important, is that there was an article in the Wall Street Journal about how sentiment amongst Americans has now really meaningfully changed. And, uh, Jason, I don't know if you have those stats, but this is a plurality of Democrats and Republicans where it's, like, 80% of anybody now basically says, "The government needs to check big tech."

   10. JCJason Calacanis1:02:32

       Uh, The Wall Street Journal published an article, uh, yesterday highlighting a new poll conducted for the Future of Tech Commission. It found that 80% of registered voters, 83% Dems, 78% Repubs, agreed that the federal government, quote, "Needs to do everything it can to curb influence of big tech companies that have grown too powerful and now use our data to reach far into our lives." Findings are based on a survey of 2,000 or so registered voters.

   11. DSDavid Sacks1:02:55

       I think it's a really, um, really, really tough road that these guys will have to navigate these next few years.

   12. JCJason Calacanis1:03:01

       Can I, can I offer some contrary views here?

   13. Yeah, please.

   14. So, um, you know, th- the whistleblower thing, you know, real whistleblowers, in, in my view, are like Snowden or Assange who are, you know, basically overseas and, um, or, or in prison for, for telling what the US government is doing. And the difference is, I'd say, their whistleblowing, if accepted and acted upon, would reduce the power of the US government. Whereas these, you know, kind of awards and so on, I think they, they do distort incentives. It's not like they're giving a billion dollars to Snowden for blowing the whistle on the NSA. The military-industrial complex is not happy with that. But this money is being given because the government is currently mad at Facebook and wants to do something that is like a quasi-nationalization of Facebook. Now, very similar to what happened in, in China where basically all the tech CEOs, they, they just do it much more explicitly there. They just basically decapitate all of them, say, "Okay, you're going, you know, spending time with your family." In the US it's done in this sort of denied way and so on. But, uh, the, the US government getting more control over Facebook is not a solution to Facebook's real problems. It's just gonna mean backdoor surveillance of everything. Every single thing that was pushed back on, every end-to-end encryption thing that they implemented, now the Keystone Cops in the US government, not ... They don't just surveil everything, then their database gets leaked and it's all on the internet just like what happened under the, uh, SolarWinds hack. So, I'm not denying that there are, you know, uh, like, bad things about Facebook. I actually think on net it's probably being, uh, more beneficial than, than many people say. But I don't believe that the federal government is a solution to those problems. I think the solution looks more like decentralized social networking where people have control over their own data, not simply the US government quasi-nationalizing the thing.

   15. So, you know, people bring up this decentralized social network thing and as if it is a better solution. I think you believe it's a better solution. But I, I rarely hear anybody talk about, "Well, if there's slander on a decentralized network, if there's child pornography, if your personal banking information or your, you know, you were personally hacked and that information was put on a decentralized social network," that cannot be reversed and stopped because it's decentralized, correct?

   16. It depends. Um, you know, the thing is, it's basically about the degree of p-

   17. Wait, why does it depend? You just said that the blockchain couldn't be changed and that all the facts were permanent. So why does it depend now?

   18. Well, for something like child porn, for example, it's actually being used for that, you're not gonna find lots of people who are running those nodes. It- it- it- it is, it's something where edge cases are always used to attack something. Uh, there's a famous cartoon which says, "How do you want this wrapped?" And it's called control of the internet. And it's either protect children or stop terrorists, right? And so, when you, when you talk about an edge case like that, I mean, the, the CSAM stuff, child porn, you know, that was, that's used by Apple to justify intrusive devices that are scanning everybody's stuff. The, I think the answer to a lot of those things is if, if you're doing something that's bad, there's usually ways of going after it that don't involve this gigantic surveillance state that was, after all, only built o- i- i- in the last 10 or 20 years. There's normal police work that you can do. Um, if they're actually, like, uh, you know, a bad guy, there's other forms of police work. You can get search warrants. You don't have this completely lawless thing where you just, you know, some guy in San Francisco hits a button and you're digitally executed. And so, so, you know, it's not that there isn't any possibility for rule of law, it's just that it has to actually be exercised in this, this, this form.

   19. DSDavid Sacks1:06:41

       I think we're on ... Listen, I think we're a long way away from decentralized social networking actually being the norm or being a solution, Jason. I think we're at the step of actually figuring out, uh, w- how much tolerance we have for...... probably specifically Facebook and Google's specific business models. And it's those business models that I think are coming up against privacy. They theoretically now, and we'll figure this out, may be coming up against mental health and, you know, our child welfare policies and what we all view about that. And those are fundamentally governmental issues that they should adjudicate. And I think the more important thing that I take away from all of this, is that we've all kind of let it probably get a little bit too far. And I think now that there's a plurality, um, something's gonna happen. I don't think it's gonna be right. I don't think it's gonna be just. It's kind of like trying to perform surgery with a rusty knife. There's going to be all kinds of collateral damage-

   20. JCJason Calacanis1:07:41

       You're- you're speaking specifically to how to police Facebook, Twitter, social networks.

   21. DSDavid Sacks1:07:45

       I think it's just like social media. I think e- we've jumped the shark at this point, and so... and- and I think folks will want to rein it back in.

   22. JCJason Calacanis1:07:50

       Would you see decentralization as the solution, like Balaji?

   23. DSDavid Sacks1:07:54

       I- I- I do think that that's the ultimate solution for two key things. One is, the most important thing that we all want is to know what the actual economic relationship we're having with folks that we spend time with is. So when we spend time with friends, that's friendship. There's no economic relationship there necessarily, okay? When we spend time with a lot of these applications, there is a subtle economic relationship that is actually hidden from us, which is that we believe we're getting value for free, but really what's happening is we're giving back a bunch of information that we don't know. When you move to a world of decentralization, you shine a light on how people make money, and you allow us to vote. Do I want it, do I not? That single feature will provide more clarity for people than any of this other stuff will, because it'll force people to then step into an economic relationship with these organizations. And I think that that's just fair, because those folks should be allowed to make money, but we should also be allowed to know what the consequences are and then decide.

   24. JCJason Calacanis1:08:54

       David, you are a big proponent of freedom of speech. Uh, we saw massive, uh, election interference, the Russians trying to use social media to create division, uh, other countries doing it to each other. It's not just the US and Russia, it's China and Russia and everybody doing it to each other. Do you believe that something like election interference and those bots would be solved or it would get worse because of decentralization? Are you a fan of decentralization or would you rather have a centralized Facebook, Twitter, and somebody responsible, like Zuckerberg or Jack, to- to mitigate this for democracies around the world?

   25. DSDavid Sacks1:09:27

       Well, e- the- the- the problem that we have is, we do have a problem of social networks spreading lies and misinformation. Um, however, the people who are in charge of- um, of censoring those social networks keep getting it wrong. So they allow disinformation to be spread by official channels, whether it's, you know, um, you know, whether it's, uh, a- a corporate journalist-

   26. JCJason Calacanis1:09:54

       Are you going to say doctor? (laughs) Are you gonna say Dr. Fauci? (laughs) Masks...

   27. DSDavid Sacks1:09:57

       No, man. Th- there- there- there's so many official channels that get things wrong.

   28. JCJason Calacanis1:10:00

       Yeah, yeah.

   29. DSDavid Sacks1:10:00

       Um, we talked last week about the, uh, Rolling Stone ivermectin hoax. There's been absolutely no censorship of that manifestly wrong story. There's no labeling of it. But then a subjective opinion, like what Dave Portnoy posted about AOC attending the MET Gala, which can't be factually wrong because it's just him- an opinion, that gets fact-checked and labeled. It's bizarre. So the situation we have today is, we're not preventing misinformation, we're just enforcing the cultural and political biases of the people who have the power. And that is always a problem with censorship, and this is why I agree with Justice Brandeis when he said, the- that, you know, "The s- sunlight's the best disinfectant." The- the answer to bad speech is more speech. We need to have more free and open marketplaces of ideas, and that ultimately is how you prevent, um, disinformation.

   30. JCJason Calacanis1:10:52

       So decentralized Twitter, decentralized social networks, do you think that is too much sunlight and too unruly, the fact that things could be spread on there and got stopped?

Episode duration: 1:28:42