Lex Fridman PodcastMichael Saylor: Bitcoin, Inflation, and the Future of Money | Lex Fridman Podcast #276
EVERY SPOKEN WORD
150 min read · 30,369 words- 0:00 – 1:43
Introduction
- MSMichael Saylor
Remember George Washington? You know how he died? Well-meaning physicians bled him to death. And this was the most important patient in the country, maybe in the history of the country, and it's, and we bled him to death trying to help him. So when you're actually inflating the money supply at 7% but you're calling it 2% because you wanna help the economy, you're literally bleeding the, uh, the free market to death. But the sad fact is George Washington went along with it 'cause he thought that they were gonna do him good, and the majority of, of, uh, the society, most companies, most, most conventional thinkers, you know, the working class, they go along with this because they think that, uh, someone has their best interest in mind. And the people that are bleeding them to death believe, they, they believe that prescription because their mental models are just so defective.
- LFLex Fridman
The following is a conversation with Michael Saylor, one of the most prominent and brilliant Bitcoin proponents in the world. He is the CEO of MicroStrategy, founder of Saylor Academy, graduate of MIT, and Michael is one of the most fascinating and rigorous thinkers I've ever gotten a chance to explore ideas with. He can effortlessly zoom out to the big perspectives of human civilization and human history and zoom back in to the technical details of blockchains, markets, governments, and financial systems. This is the Lex Fridman Podcast. To support it, please check out our sponsors in the description. And now, dear friends, here's Michael Saylor.
- 1:43 – 14:01
Grading our understanding
- LFLex Fridman
Let's start with the big question of truth and wisdom. When advanced humans or aliens or AI systems, let's say five to 10 centuries from now, look back at Earth on this early 21st century, how much do you think they would say we understood about money and economics, or even about engineering, science, life, death, meaning, intelligence, consciousness, all the big, interesting questions?
- MSMichael Saylor
I think they would, uh, probably give us a B-minus on engineering, on all the engineering things, the, the hard sciences.
- LFLex Fridman
A passing grade.
- MSMichael Saylor
A pa- pa... Like, we're, we're doing okay. We're working our way through rockets and jets and electric cars and, uh, el- electricity transport systems and nuclear power and space flight and the like. And, you know, if you, if you look at the walls that, uh, grace the great court at MIT, it's full of all the great thinkers, and, and they're all pretty admirable, you know? Ne- if you could be with Newton or Gauss or Madame Curie or Einstein, you know, you would respect them. I would say they'd give us, like, a, a D-minus on economics. Like, uh, m- you know, an F-plus or a D-minus.
- LFLex Fridman
You, you see, I have an optimistic vision. First of all, optimistic vision of engineering, because everybody you've listed, not everybody but most people you've listed is just over the past couple of centuries, and maybe it stretches a little farther back. But mostly all the cool stuff we've done in engineering, the p- is the past couple of centuries.
- MSMichael Saylor
Ah, I mean, Archimedes, you know, had his virtues.
- LFLex Fridman
(laughs)
- MSMichael Saylor
I... You know, I, I studied the history of science at MIT, and I also studied aerospace engineering. And, and so I clearly have a bias in favor of science. And, and if I look at the past 10,000 years and I consider all of the philosophy and the politics and their impact on the human condition, I think it's a wash. For every politician that came up with a good idea, another politician came up with a bad idea.
- LFLex Fridman
Yeah.
- MSMichael Saylor
Right? And it's not clear to me that, you know, most of the political and philosophical, you know, contributions to the, to the human race and the human conditions have advanced so much. I mean, we're still taking, you know, taking guidance and admiring Aristotle and Plato and Seneca and the like, and. And on the other hand, you know, if you think about, uh, what has made the human condition better, fire, water, harnessing of wind energy. Like, try to row across an ocean, right? Not easy.
- LFLex Fridman
And for people who are just listening or watching, this beautiful, sexy ship from 16th cen- 17th century.
- MSMichael Saylor
This is a 19th century handmade model of a 17th century sailing ship, which is of the type that the Dutch East Indies Company used to sail the world and trade. So that was made, you know, the original was made sometime in the 1600s, and then this model was made in the 19th century by individuals.
- LFLex Fridman
So both the model and the ship itself is engineering at its best. And just imagine, just like rockets flying out to space, how much hope this filled people with, exploring the unknown, going into the mystery, um, both the, the entrepreneurs and the business people and the engineers and just humans, what's out there, what's out there to be discovered.
- MSMichael Saylor
Yeah, the, the metaphor of human beings leaving shore, sailing across the horizon, risking their lives in pursuit of a better life is a incredibly powerful one. In 1900, I suppose the average life expectancy is 50. During the Revolutionary War, you know, while our founding fathers were fighting to establish, you know, life, liberty, pursuit of happiness, the Constitution, average life expectancy of, it's like 32, somewhere between 32 and 36.
- LFLex Fridman
Yeah.
- MSMichael Saylor
So all the sound and the fury doesn't make you live past 32, but what does, right? Antibiotics.... con- conquest of infectious diseases, if we understand the science of, of infectious disease. Steri- you know, sterilizing (laughs) a knife and harnessing antibiotics gets you from 50 to 70, and that happened fast, right? That happens from 1900 to 1950, or something like that. And I- I think if you look, look at the human condition, you ever get on one of those, uh, rowing machines where they actually keep track of your watts output when you're on the...
- LFLex Fridman
Yeah.
- MSMichael Saylor
Yeah, it's like, 200 is a lot.
- LFLex Fridman
Mm-hmm.
- MSMichael Saylor
Okay. 200 (laughs) is a lot. So a kilowatt hour is, like, all the energy that a human, uh, a trained athlete can deliver in a day.
- LFLex Fridman
Mm-hmm.
- MSMichael Saylor
And probably not 1% of the people in the, in the world could deliver a kilowatt hour in a day. And the commercial value of a kilowatt hour, the retail value is 11 cents today.
- LFLex Fridman
Mm-hmm.
- MSMichael Saylor
And, uh, the wholesale value is two cents. And so you have to look at the contribution of politicians and philosophers and economists to the human condition. And, and it's, it's, like, at best a wash one way or the other. And then if you look at the contribution of John D. Rockefeller, when he delivered you a barrel of oil, y- and the, you know, the energy in, in oil, liquid energy, or the contribution of Tesla, you know, as we deliver electricity, you know, a- a- and what's the impact on the human condition if I have, um, electric power, if I have chemical power, if I have wind energy, if I, if I can actually set up a reservoir, create a dam, spin a turbine, and generate energy from a hydraulic source? That's extraordinary, right? And, and so our ability to cross the ocean, our ability to grow food, our ability to live, it's- it's- it's technology that gets the human race from, you know, a, a brutal life where life expectancy is 30 to a world where life expectancy is 80.
- LFLex Fridman
You gave a D-minus to the economists. So are they too like the politicians, a wash, in terms of there's good ideas and bad ideas, and, and that tiny delta between good and, and bad is how you squeak past the F-plus onto the D-minus territory?
- MSMichael Saylor
I think most economic ideas are bad ideas. Like-
- LFLex Fridman
Most?
- MSMichael Saylor
Right. Well, you know, like, um, take us back to MIT, and you wanna solve, um, a fluid dynamics problem, like, like design the shape of the hull of that ship.
- LFLex Fridman
Mm-hmm.
- MSMichael Saylor
Or you wanna design a- an airfoil, a wing. Or if you wanna design, uh, an engine or a, a, a nozzle in a rocket ship, you wouldn't do it with simple arithmetic. You wouldn't do it with a scaler. There's not a single number, right? It's vec- it's vector math, you know, computational fluid dynamics is n-dimensional higher level math, you know? Complicated stuff. So when, when an economist says the inflation rate is 2%, that's a scaler. And when an economist says, "It's not a problem to print more money because the velocity of the money is very low, the monetary velocity is low," that's another scaler. Okay, so the truth of the matter is, inflation is not a scaler. Inflation is an n-dimensional vector. Money velocity is not a scaler. Um, the velo- saying, "What's the velocity of money? Oh, oh, it's slow or it's fast," it ignores the question of, what medium is the money moving through?
- 14:01 – 33:37
Inflation
- MSMichael Saylor
- LFLex Fridman
You said table. Some of that also is the task of visualization. How to extract from this complex set of numbers patterns that, uh, somehow indicate something fundamental about what's happening. So, like, you, you... Summarization of data is still important. Perhaps summarization not down to a single scalar value, but looking at that whole sea of, of numbers, you have to find patterns. Like, what is inflation in a particular sector? What is maybe, uh, change over time, maybe different geographical regions, you know, things of that nature. I think that's kinda... I don't know even what that task is. Uh, you know, that's what... You could look at machine learning, you can look at AI with that perspective, which is like, how do you represent what's happening efficiently, as efficiently as possible? That's never going to be a single number, but it might be a compressed model that captures something, something beautiful, something fundamental about what's happening.
- MSMichael Saylor
It's an opportunity for sure, right? Um, you know, if we take, um, for example, during the pandemic, the, uh, the response of the political apparatus was to lower interest rates to zero and to start, uh, start buying assets, in essence printing money. And the defense was there's no inflation.
- LFLex Fridman
Yeah.
- MSMichael Saylor
But, of course, you had one part of the economy where it was locked down, so it was illegal to buy anything. You couldn't... You know, it was either illegal or it was impractical, so it would be impossible for demand to manifest, so of course there was no inflation. On the other hand, there was instantaneous immediate inflation in another part of the economy. For example, um, you lowered the interest rates, uh, to zero. At one point we saw the, uh, the swap rate on a 30-year note go to 72 basis points. Okay. That means that, uh, the value of a long-dated bond immediately inflates. So the bond market had hyperinflation within minutes of these, uh, financial decisions. The asset market had hyperinflation. We had, uh, what you call a K-shaped recovery, what we affectionately call a shake, K-shaped recovery. Main Street shut down. Wall Street recovered, all within six weeks. The inflation was in the assets, like in the stocks, in the bonds. Uh, you know, if you look today, you see that a typical house, according to the Case-Shiller Index today is up 19.2% year over year. So if you're a first-time home buyer, the inflation rate is 19%. Uh, the formal CPI announced at 7.9%. You can pretty much create any inflation rate you want by constructing a market basket, right, a weighted basket of products or services or assets that yields you the answer. I think that, you know, the fundamental failing of economists is, is first of all they don't really have a term for asset inflation, right?
- LFLex Fridman
Uh, what's an asset? What's asset hyperinflation? You mentioned bond market swap rate and asset is the... where the all... majority of the hyperinflation happen.
- MSMichael Saylor
Yeah.
- LFLex Fridman
Uh, what's inflation? What's hyperinflation? What's an asset? And what's an asset market?
- MSMichael Saylor
And-
- LFLex Fridman
I'm gonna ask so many dumb questions.
- MSMichael Saylor
In the conventional economic world, you would, you would treat inflation as, uh, the rate of increase in price of a market basket of consumer products defined by a government agency, okay?
- LFLex Fridman
So like they, they have, uh, like traditional things that the regular consumer would be buying. Y- the government selects like toilet paper, food, p-... toaster, refrigerator, electronics, all that kind of stuff. And it's like a representative, a c- c- basket of g- goods that lead to a content existence on this earth for a regular consumer.
- MSMichael Saylor
They define a synthetic metric, right? I mean, I, I'm gonna g- say you should have 1,000 square foot apartment and you should have, uh, a used car, and you should eat, you know, three hamburgers a week. Now, ten years go by and the apartment costs more. I could adjust the market basket by, you know, they call them hedonic adjustments. I could decide that it used to be in 1970 you needed 1,000 square feet, but in the year 2020, you only need 700 square feet because we've manur- miniaturized televisions and we've got more e- efficient electric appliances. Because things have collapsed into the iPhone, you just don't need as much space. So now, I, you know, it may be that the apartment costs 50% more, but after the hedonic adjustment, there is no inflation because I just downgraded the expectation of what a normal person should have.
- LFLex Fridman
So the synthetic nature of the metric allows for manipulation by people in power? (laughs)
- MSMichael Saylor
Pretty much. Uh, uh, the, I, I guess my criticism of economists is rather than embracing inflation based upon its fundamental idea, which is the rate at which the price of things go up, right? They've been captured by, uh, mainstream conventional thinking to immediately equate inflation to the government-issued CPI or government-issued PCE or government-issued PPI measure, which was never the rate at which things go up. It's simply the rate at which a synthetic basket of products and services the government wishes to track go up. Now, the problem with that is, is two big things. One thing is the government gets to create the market basket, and so they keep changing what's in the basket over time. So I mean, if, if I keep tr- if, if I said three years ago you should go see 10 concerts a year and the concert tickets now cost $200 each, now it's $2,000 a year to go see concerts, now I'm in charge of calculating inflation. So I redefine, you know, your entertainment quota for the year to be eight Netflix streaming concerts, and now they don't cost $2,000. They cost nothing and there is no inflation, but you don't get your concerts, right? So the problem starts with continually changing the definition of the market basket. But in my opinion, that's not the biggest problem. (laughs) Uh, the, the more, uh, the more egregious problem is the, the fundamental idea that assets aren't products or services. A- a- assets can't be inflated.
- LFLex Fridman
What's an asset?
- MSMichael Saylor
A house. A share of Apple stock. Um, a bond. Um, any, a Bitcoin is an asset. Um, or, uh, a Picasso painting. So, uh-
- LFLex Fridman
Not a consumable good.
- MSMichael Saylor
Yeah.
- LFLex Fridman
Not a, uh, not, not, not an apple that you can eat.
- MSMichael Saylor
Right. If I throw away an asset, then, uh, I'm not on the hook to track the inflation rate for it. So what happens if I change the policy such that, let, let's take the classic example, a million dollar bond at a 5% interest rate gives you $50,000 a year in risk-free income. You might retire on $50,000 a year in a low-cost jurisdiction. So the cost of Social Security or early retirement is $1 million when the interest rate is 5%. Uh, during the, the crisis of March of 2020, the interest rate went, on a 10-year bond, went to 50 basis points. Okay. So now the cost of that bond is $10 million. Okay. The cost of Social Security went from $1 million to $10 million. So if you wanted to work your entire life, save money, and then retire risk-free and live happily ever after on a $50,000 salary, living on a beach in Mexico, wherever you wanted to go, you had hyperinflation. The cost of your aspiration increased by a factor of 10 over the course of, you know, some amount of time. In fact, in that case, that was like over the course of about 12 years, right? As the inflation rate ground down, the asset traded up, but the, you know, the conventional view is, oh, that's not a problem because it's good that, that assets, it's good that the bond is highly priced because we own the bond. Or, um, well, what's the problem with the inflation rate in housing being 19%? It's an awful problem for a 22-year-old that's starting their first job that's saving money to buy a house. But it would be characterized as a benefit to society by a conventional economist who would say, "Well, housing va- h- ha- asset values are higher because of interest rate fluctuation, and now the economy's got more wealth." And, uh, and so that's-
- LFLex Fridman
Right.
- MSMichael Saylor
... that's viewed as a benefit.
- LFLex Fridman
So the... What's being missed here? Like, the suffering of the average person or the, uh, the struggle, the suffering, the pain of the average person, like metrics that capture that within the economic system. Is that, is it, when you're talking about-
- MSMichael Saylor
One way to say it is a conventional view of inflation as CPI understates the human misery that's infic- inflicted upon the working class and, and on, uh, mainstream companies, uh, by, uh, by the political class. And so it's a massive shift of wealth from the working class to the propertied class. It's a massive shift of power from the free market, uh, to the centrally governed or the controlled market.... it's a massive shift of power from the people to the government. And, and, you know, maybe one, one more illustrative point here, Lex, is, is, uh, what do you think the inflation rate's been for the past 100 years?
- LFLex Fridman
Are we talking about the scaler again?
- MSMichael Saylor
If you, if you took a survey of everybody on the street and you asked them what do they think inflation was or what is it, you know? You remember when Jerome Powell said, "Our target's 2% but we're not there"?
- LFLex Fridman
Mm-hmm.
- MSMichael Saylor
If you go, uh, around the corner, I have, uh, posted the deed to this house, sold in 1930. Okay? And, uh, the number on that deed is $100,000, 1930. And if you go on Zillow-
- LFLex Fridman
Mm-hmm.
- 33:37 – 54:47
Government
- LFLex Fridman
you gave economists a D-minus. I'm not even gonna ask you what you give to governments. Uh, do you think their failure, economists' and government failure, is malevolence or incompetence?
- MSMichael Saylor
I think, uh, policymakers are well intentioned, but generally all, all government policy is inflationary and all government... It's inflammatory and inflationary. So, what I mean by that is, you know, when you have a policy, uh, pursuing, uh, supply chain independence, if you have an energy policy, if you have a labor policy, if you have a trade policy, if you have a, uh, you know, any, any kind of foreign policy, a domestic policy, a manufacturing policy, every one of these po- a medical policy, every one of these policies interferes with the free market and, and generally prevents some rational actor from doing it in a cheaper, more efficient way. So when you layer them on top of each other, they all have to be paid for. If you want to shut down the entire economy for a year, you have to pay for it, right? If you wanna fight a war, you have to pay for it, right? If you don't want to use oil or natural gas, you have to pay for it. If you don't wanna manufacture semiconductors in China, and you wanna manufacture them in the US, you gotta pay for it. If I rebuild the entire supply chain in Pennsylvania, and I hire a bunch of employees, and then I unionize the employees, then not only am I, uh, I idle the factory in the Far East, it goes to 50% capacity, so, so whatever it sells, it has to raise the price on. And then I drive up the cost of labor for every other manufacturer in the US because I competing against them, right? I'm changing the condition. So everything gets less efficient, everything gets more expensive. And of course, the government couldn't really pay for, uh, its policies and its wars with taxes. We didn't pay for World War I with tax, we didn't pay for World War II with tax, we didn't pay for Vietnam with tax. In fact, you know, when you trace this, what you realize is the government never pays for all of its policies with tax. It pays for-
- LFLex Fridman
'Cause it's too painful to ask, to raise the taxes to truly transparently pay for the things you're doing with taxes, with taxpayer money, 'cause they feel the pain.
- MSMichael Saylor
Either that's one interpretation or it's just too transparent. Like (laughs) -
- LFLex Fridman
Ah.
- MSMichael Saylor
... if people, if people understood the, the, the true cost-
- LFLex Fridman
Of war, they wouldn't wanna p- go to war.
- MSMichael Saylor
If you were told that-... you would lose 95% of your assets, you know, and 90% of everything you will be ever will be taken from you, you might reprioritize your thought about a given policy and you might not vote for that politician.
- LFLex Fridman
But you're still saying incompetence, not malevolence? So fundamentally, government creates a bureaucracy of incompetence, is kind of how you should look at it?
- MSMichael Saylor
I think a lack of humility, right, like, uh, like-
- LFLex Fridman
(laughs)
- MSMichael Saylor
... if, if people had more humility then they would realize, uh-
- LFLex Fridman
Humility about how little they know? How little they understand about the function of complex systems?
- MSMichael Saylor
There's a phrase from Clint Eastwood's movie Unforgiven where he says, "A man's gotta know his limitations."
- LFLex Fridman
(laughs)
- MSMichael Saylor
I, I, I-
- LFLex Fridman
Where-
- MSMichael Saylor
... think that a lot of people overestimate-
- LFLex Fridman
Yeah.
- MSMichael Saylor
... what they can accomplish and experience, uh, experience in life causes you to, uh, to reevaluate that. So I, I mean, I've done a lot of things in my life and, and generally my mistakes were always my good ideas that I enthusiastically pursued-
- LFLex Fridman
Mm-hmm.
- MSMichael Saylor
... to the detriment of my great ideas that required 150% of my attention to prosper. So I think people pursue too many good ideas, you know, they all sound good, but there's just a limit to, to what you can accomplish. And everybody underestimates the challenges of, uh, of implementing an idea, right? A- and, uh, and they always overestimate the benefits of the pursuit of that. So I, I think it's an overconfidence that causes an over exuberance in pursuit of policies and, (sighs) as the ambition of the government expands, so must the currency supply. W- you know, I could say the money supply, but let's say the currency supply. Um, you can triple the number of pesos in the economy, but it doesn't triple, uh, the amount of manufacturing capacity in the said economy, (laughs) and it doesn't triple the amount of assets in the economy, it just triples the peso. So as you, uh, increase the currency supply, then the price of all those scarce desirable things will tend to go up rapidly and the confidence of, uh, all of the institutions, the corporations, and the individual actors a- and trading partners w- will collapse.
- LFLex Fridman
If we take a tangent on a tangent, and we will return soon to the, uh, the big human civilization question, um, so if government naturally wants to buy stuff it can't afford, what's the best form of government? Uh, anarchism? Libertarianism? So not even g- there's not even armies, there's no b- borders, that's anarchism, r-
- MSMichael Saylor
The least.
- LFLex Fridman
The smallest pos-
- MSMichael Saylor
(laughs)
- LFLex Fridman
... the smallest possible, the less-
- MSMichael Saylor
The best, the best government would be the least, and the debate will be over that.
- LFLex Fridman
When you think about this stuff, do you think about, okay, government is the way it is. I, as a person that can generate great ideas, how do I operate in this world? Or do you also think about the big picture? If we start a new civilization somewhere on Mars, do you think about, like, what's the ultimate form of government? What's, uh, at least a promising thing to try?
- MSMichael Saylor
(sighs) You know, um, (sighs) I have laser eyes on my profile on-
- 54:47 – 1:05:57
War and power
- LFLex Fridman
What the hell are we doing here, us humans on this Earth? How do you think of humans? How special are humans? How did human civilization originate on this Earth? And what is this human project that we're all taking on? You mentioned, uh, fire and water, and apparently bleeding you to death is not a good idea. I thought, always thought you can get the demons out in that way, but, um, that was a recent i- invention. So what, what's this thing we're doing here?
- MSMichael Saylor
(sighs) I think what distinguishes, uh, human beings from all the other creatures on the Earth is, is our ability to engineer. We're engineers, right?
- LFLex Fridman
To solve problems or just build incredible cool things?
- MSMichael Saylor
Engineering, harnessing energy and technique to make the world a better place than you found it, right? From the point that we actually started to play with fire, right? That, that was a big leap forward. Uh, harnessing the power of, of kinetic energy and missiles, another, another step forward. Ev- every city built on water. Why water? Well, water is, uh, bringing energy, right? If you actually, if you actually put a turbine, you know, on a river or, or you, uh, or you capture a change in elevation of water, you've literally harnessed gravitational energy. But, you know, water is also bringing you food, it's also giving you, you know, uh, a cheap form of, uh, getting rid of your waste, it's also giving you free transportation. You want to move one ton blocks around, you want to move them in water. So I think, I mean, the, the, the human story is really the story of engineering a better world. Um, and, and, uh, the rise in the human condition is determined by those, uh, groups of people, those civilizations that were best at harnessing energy, right? If you, if you look, you know, at the Greek civilization, they built it around, around ports and seaports and, and water and created a trading network. The Romans were really good at harnessing all sorts of, of engineering. I mean, the aqueducts are a great example. If you go to any big city, you travel through cities in the Med, you find that, you know, the carrying capacity of, of the city or the island is 5,000 people without running water. And then if you can find a way to bring water too, it increases by a factor of 10. And so human flourishing is really only possible through that channeling of energy, right? That eventually takes the, the form of, uh, air power, right? I mean, that ship, I mean, l- look at the intricacy of those sails, right? I mean, it's, just the model is intricate. Now think about all of the experimentation that took place to figure out how many sails to put on that ship and how to rig them and how to repair them and how to operate them.
- LFLex Fridman
There's thousands of lives spent thinking through all the tiny little details, um, all to increase the efficiency of this, the effectiveness, the efficiency of this ship as it sails the water. And we should also note there's a bunch of cannons on the side, so obviously.
- MSMichael Saylor
Another form of en- engineering, right? Uh, uh, energy harnessing with explosives.
- LFLex Fridman
To achieve what end? That's another discussion. Exactly. Um-
- MSMichael Saylor
Suppose we're trying to get off the planet, right? I mean ...
- LFLex Fridman
Well, there's a selection mechanism going on, so natural selection. This, whatever, however evolution works, it seems that one of the interesting inventions on Earth was the predator-prey dynamic, that you want to be the bigger fish. That violence seems to serve a useful purpose if you look at Earth as a whole. We as humans now like to think of violence as really a bad thing. It seems to be one of the qu- amazing things about humans is we're ultimately tend towards cooperation. We want to, we like peace, uh, if you just look at history. We want things to be nice and calm. (laughs) And, um, but just wars break out every once in a while and lead to immense suffering and destruction and so on. And they have a kind of, uh, like resetting the palate effect. It's, it's one that's full of just (laughs) immeasurable human suffering, but it's like a way to start over.
- MSMichael Saylor
We're called the apex predator on the planet. And I, I, I Googled something the other day, uh, you know, what's the most common form of mammal-
- LFLex Fridman
Hmm.
- MSMichael Saylor
... life on Earth?
- LFLex Fridman
By, by number of organisms?
- MSMichael Saylor
Count.
- LFLex Fridman
By count.
- MSMichael Saylor
And the answer that came back was human beings.
- LFLex Fridman
Yeah?
- MSMichael Saylor
I was shocked. I couldn't believe it, right? It says like, uh, uh, apparently, if we're just looking at mammals, the answer is human beings are the most common, which was very interesting to me. Uh, I, I almost didn't believe it, but I was trying to fi- you know, eight billion or so human beings?
- LFLex Fridman
Yeah, it's a lot.
- MSMichael Saylor
There's no other mammal that's got more than eight billion? If you walk through downtown Edinburgh in, in Scotland and you look up on this hill and there's a castle up on the hill, you know, and you talk to people and the story is, "Oh yeah, well, that was, uh, that was a British castle, before it was a Scottish castle, before it was a Pict castle, before it was a Roman castle, before it was, you know, some other Celtic castle, before it was..." You know, then they found 13 prehistoric castles buried one under the other, under the other. And you get the, you get the conclusion that 100,000 years ago, somebody showed up and grabbed the high point, the apex-... of the city and they built a stronghold there and they flourished, and their family flourished, and their tribe flourished, until someone came along and knocked them off the hill. And it's been a f- a nonstop, never-ending fight by the, the aggressive, most powerful entity, family, organization, municipality, tribe, whatever-
- LFLex Fridman
Off the hill.
- MSMichael Saylor
... for that one hill, going back since time immemorial. And, you know, you scratch your head and-
- LFLex Fridman
Yeah.
- MSMichael Saylor
... and you think, it seems like it's, like, just this never-ending-
- LFLex Fridman
But doesn't that lead-
- MSMichael Saylor
... wheel.
- LFLex Fridman
... if you just, all kinds of metrics, that seems to improve the quality of our cannons and ships as a result? Like, uh, it seems that war f- just like your laser eyes, focuses the mind on the engineering tasks.
- MSMichael Saylor
It is that. And, and, and it does remind you that the winner is always the most powerful. And, and we, we throw that phrase out, but no one thinks about what that phrase means. Like, like, uh, who's the most powerful or the, you know, or the most powerful side won? But they don't think about it and they think about power, energy delivered in a period of time, and then you think, a guy with a spear is more powerful than someone with their fist, and someone with a bow and arrow is more powerful than the person with the spear. And then you realize that somebody with bronze is more powerful than without, and steel is more powerful than bronze. And if you look at the Romans, you know, they persevered, you know, with artillery and they could stand off from 800 meters and blast you to smithereens, right? They... You know, you study the history of the Balearic slingers, right? And, you know, you think we invented bullets, but they, uh, they invented bullets to put in slings thousands of years ago. They could have stood off 500 meters and put a hole in your head, right? And so there was never a time when, uh, when humanity wasn't vying to come up with an asymmetric form of projecting their own power via technology.
- LFLex Fridman
And absolute power is when a leader is able to control large amounts (breathes deeply) of, uh, humans that are facing the same direction, (breathes deeply) working in the same direction to, to leverage, uh, energy.
- MSMichael Saylor
The most organized society wins.
- 1:05:57 – 1:37:18
Dematerializing information
- LFLex Fridman
A lot of the engineering you talked about had to do with ships and cannons and leveraging water. What about this whole digital thing that's happening, been happening over the past century? Is that still engineering in your mind? You're starting to operate in these bits of information.
- MSMichael Saylor
I think there's two big ideas. Uh, the first wave of ideas were digital information, and that was the internet wave been running since 1990 or so, for 30 years. And the second wave is digital energy. So if I look at digital information, this idea that we want to digitally transform a book, I'm gonna dematerialize every book in this room into bits, and then I'm going to deliver a copy of the entire library to a billion people and I'm gonna do it for-... pretty much de minimis electricity. If I can dematerialize music, books, education, entertainment, maps, right? That, that, uh, is an incredibly, like, exothermic transaction. It gives, i- i- it's a crystallization when we collapse into a lower energy state as a civilization and we give off massive amounts of energy. Like, if you look at what Carnegie did, the richest man in the world created libraries everywhere at the time, and he gave away his entire fortune. And now we can give a better library to every six-year-old for nothing. And so what's the value of giving a million books to a, eight billion people, right?
- LFLex Fridman
Mm-hmm.
- MSMichael Saylor
Right? That's, that's the explosion in prosperity that comes from digital transformation. And, uh, when we do it with maps, you know, I, I, I transform the map, I put it into a car, you get in the car, and the car drives you where you want to go with the map, right? And how much better is that than a Rand McNally Atlas right here? It's like, it's like a million times better.
- LFLex Fridman
Yeah.
- MSMichael Saylor
So the first wave of digital transformation was the dematerialization of all of these informational things which were non-conservative. That is, uh, you know, I could take Beethoven's Fifth Symphony, played for by the best orchestra in Germany, and I could give it to a billion people and they could play it 1,000 times each at less than the cost of the one performance, right? So, so I deliver culture and education and erudition and, and intelligence and insight to the entire civilization over digital rails. And the consequence to the human race are first order, generally good, right? The world is a better place, it drives growth, and you create these trillion-dollar entities like Apple and Amazon and Facebook and Google and Microsoft, right? That is the first wave. The second wave ...
- LFLex Fridman
Do you mind? I'm so- sorry to interrupt.
- MSMichael Saylor
Yeah.
- LFLex Fridman
But that first wave, um, it feels like the impact that's positive, you s- said the first order of impact is generally positive. It feels like it's positive in a way that nothing else in history has been positive. And then we may not actually truly, uh, be able to understand the orders of magnitude of increase in productivity and just progress of human civilization, um, until we look back centuries from now. It just feel ... M- or maybe I'm ... Like, the, just, like just looking at the impact of Wikipedia.
- MSMichael Saylor
Right.
- LFLex Fridman
The, the ... Giving access to basic wisdom or basic knowledge and then perhaps wisdom to billions of people. If you can just linger on that for a second, what's your sense of the impact of that?
- MSMichael Saylor
You know, I, I would say if you're a, a, a technologist/philosopher, the impact of a technology is so much greater on the civilization and the human condition than a non-technology that it's almost not worth your trouble to bother trying to fix things a conventional way. So le- let's take an example. Um, I have a foundation, the Saylor Academy, and the Saylor Academy gives away, uh, free education, free college education to anybody on Earth that wants it. And we've had more than a million students. And i- if you go and you take the physics class, the lectures were by the same physics lecturer that taught me physics at MIT. Except when I was at MIT, uh, the cost of the first four weeks of MIT would have drained my family's life, collective life savings for the first, last hundred years.
- LFLex Fridman
Yeah. (laughs)
- MSMichael Saylor
Like, a hundred years worth of my father, my grandfather, and my great-grandfather, they saved every penny they had. After a hundred years, they could have paid for one week or two weeks of MIT.
- LFLex Fridman
Yeah.
- MSMichael Saylor
That's how fiendishly expensive and inefficient it was. So ...
- LFLex Fridman
Yes.
- MSMichael Saylor
I went on scholarship. I was lucky to have a scholarship. But on the other hand, I sat in the back of the 801 lecture hall and I was, like, right up in the rafters. It's an awful experience on these, like, uncomfortable wooden benches that you can barely see the blackboard and you gotta be there, uh, synchronously. And the stuff we upload, you can start it and stop it and watch it on your iPad or watch it on your computer and rewind it multiple times and sit in a comfortable chair and you can do it from anywhere on Earth and it's absolutely free. So I, I think about this and I think, you want to improve the human condition, you need people with post-graduate level education. You need PhDs. And I know this sounds kind of elitist, but you want to cure cancer and, you know, you want to go to the stars, uh, fusion drive. We need new propulsion, right? We need, we need extraordinary breakthroughs in every area of basic science, you know, be it biology or propulsion or materials science or computer science. You're not doing that with an undergraduate degree. You're certainly not doing it with a high school education. But the cost of a PhD is like a million bucks. There's like 10 million PhDs in the world if you go do the, i- if you check it out. There's eight billion people in the world. How many people could get a PhD or would want to? Maybe not eight billion, but a billion?
- LFLex Fridman
Mm-hmm.
- MSMichael Saylor
500 million? Let's just say 500 million to a billion. How do you go from 10 million to a billion highly educated people, all of them specializing in ... And I don't have to tell you how many different fields of human endeavor there are. I mean, your life is interviewing these experts and there's so many.... right? You know, it's, it's, it's amazing. So, how do I give a multimillion dollar education to a billion people? And there's two choices. You can either endow a scholarship, in which case you pay $75,000 a year, (laughs) okay, 75,000 ... Let's pay a million dollars in, a million dollars a person, I can do it that way.
- LFLex Fridman
Mm-hmm.
- MSMichael Saylor
And you're never ... Even if you had a trillion dollars, if you had $10 trillion to throw at the problem, and we've just thrown $10 trillion at certain problems-
- LFLex Fridman
Yeah.
- MSMichael Saylor
... you don't solve the problem, right? If I, if I put $10 trillion on the table and I said, "Educate everybody, give them all a PhD," you still wouldn't solve the problem. Harvard University can't educate 18,000 people simultaneously, or 87,000 or 800,000 or eight million. So you have to dematerialize the professor and dematerialize the experience, so you put it all as streaming, on-demand, computer-generated education, and you create simulations where you need to create simulations, and you upload it. It's like, the human condition is being held back by 500,000 well-meaning, um, average algebra teachers.
- LFLex Fridman
(laughs)
- MSMichael Saylor
I, I love 'em. I mean, please don't take offense if you're an algebra teacher, but instead of 500,000 algebra teachers going through the same motion over and over again, what you need is, is, like, one or five or 10 really good algebra teachers, and they need to do it a billion times a day or a billion times a year for free. And if we do that, there's no reason why you can't give infinite education, certainly in, uh, in science, technology, engineering and math, right? Infinite education to everybody with no constraint. And I, I think the same is true, right, with just about every other thing. You ... I- i- i- if you wanna bring joy to the world, you need digital music. If you wanna bring, you know, enlightenment to the world, you need digital education. If, if you, you know, wanna bring anything of consequence in the world, you gotta digitally transform it, and then you gotta manufacture it something like 100 times more efficiently as a start, but a million times more efficiently is, is probably opti- you know, that's, that's hopeful, maybe have a chance and ... If you look at all of these, uh, space endeavors and everything we're thinking about, getting to Mars, getting off the planet, getting to other worlds, number one thing you gotta do is you gotta make a, a fundamental breakthrough in an engine. People dreamed about flying for thousands of years, but until, until the internal combustion engine, you didn't have enough, you know, enough energy, enough pow- enough power in a light enough package in order to solve the problem. And w- and the human race has all sorts of those fundamental engines and materials and techniques that we need to master, and each one of them is a lifetime of experimentation, of someone capable of making a seminal contribution to the body of human knowledge.
- LFLex Fridman
There's certain problems like education that could be solved through this pro- process of dematerialization. And by the way, uh, to, to give props to the, uh, 500K algebra teachers, th- when I look at YouTube, for example, one possible approach is each one of those 500,000 teachers probably had days and moments of brilliance, and if they had the ability to contribute to ... In the natural selection process, like the market of education, where the best ones rise up, that's, that's a really interesting way, which is like, the best th- th- the best day of your life, the best lesson you've ever taught could be, um, found and sort of broadcast to billions of people. Uh, so all of those kinds of ideas could be made real in the digital world. Now, traveling across planets, you still can't solve that problem, uh, with dematerialization. What you could solve, potentially, is dematerializing the human brain where you can transfer, (laughs) transfer hu- like, you don't need to have astronauts on the ship, you can have a, uh, floppy disk carrying a human brain.
- MSMichael Saylor
Touching on those points, you'd love for the 500,000 algebra teachers to become 500,000 math specialists and maybe they clump into 50,000 specialties a- as teams and they all pursue 50,000 new problems, and they put their algebra teaching on autopilot.
- LFLex Fridman
Yeah.
- MSMichael Saylor
That's the same-
- 1:37:18 – 1:48:56
Digital energy and assets
- MSMichael Saylor
respect.
Episode duration: 3:56:54
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