May 25, 2021

Balaji on How to Fix the Media, Cloud Communities & Crypto | My First Million Podcast with Sam Parr and Shaan Puri

Check wout the My First Million Podcast Page

Key Takeaways

• “I invest on an ideological basis. I invest in the world that I want to build” – Balaji Srinivasan
• A common approach to doing good is: work hard, make a lot of money and donate it to charity
  • Balaji finds it a reasonable strategy but compares it to holding your breath
  • He always tries to work on things that have meaning along the way
• Balaji foresees the internet causing the collapse of many traditional institutions
  • His investments all contribute to the re-bundling of institutions in the internet era
• 1729.com encourages people to pursue Truth, Health, and Wealth (in that order)
  • Truth: Gain new knowledge
  • Health: Without health you have nothing
  • Wealth is important but shouldn’t justify sacrificing health or truth
• “Media scripts humans just like code scripts machines” Balaji Srinivasan
  • “Own a media corporation or be owned by one” Balaji Srinivasan
• Crypto is not only the next Wall Street
  • It is also the next Silicon Valley, the next Yale School of Law, and Columbia School of Journalism
• Crypto as the sequel to open source
  • “Not just open-source, it is open state and open execution” Balaji Srinivasan 
• “2000s were the tech companies, 2010s the crypto protocols, 2020s startup cities and 2030s network states” Balaji Srinivasan 
• If Balaji was an unknown twenty years old he would deeply learn computer science and statistics 
  • They give you a strong foundation to pursue whatever you’re most interested in
• COVID exposed our confusion about science
  • “Science is not about peer-review, it’s about independent replication” Balaji Srinivasan

Intro

• Balaji Srinivasan (@balajis), is an angel investor and an entrepreneur, he co-founded Earn.com (acquired by Coinbase) and worked as Coinbase’s CTO and as a General Partner at Andreessen Horowitz
  • Check out Balaji’s website, 1729.com
  • Check out the notes from Balaji’s appearance on The Tim Ferriss Show
• Host: Sam Parr (@theSamParr) and Shaan Puri (@ShaanVP)
• In this chat, Balaji discusses a wide variety of topics, including crypto, decentralization, his investment philosophy and much more

Balaji’s Investment and Work Philosophies

• “I invest on an ideological basis. I invest in the world that I want to build” Balaji Srinivasan
  • He was an early investor in crypto, repl.it, Soylent, SuperHuman, Lambda School, and many other startups
  • He wouldn’t invest in something just for a monetary gain
• A common approach to doing good: work hard, make a lot of money and donate it to charity
  • Balaji finds it a reasonable strategy but compares it to holding your breath
  • He always tries to work on things that have meaning along the way
• Balaji foresees the internet causing the collapse of many traditional institutions
  • His investments all contribute to the re-bundling of institutions in the internet era
• Balaji defines himself as a “pragmatic ideologue”
  • He’s working towards his long-term goal of transhumanism
  • He’s willing to be pragmatic and execute in the short run
• In line with his philosophy, Balaji is building 1729.com
  • 1729’s long term goals are extremely ambitious and disruptive
  • In its current form it is quite simple; “a newsletter that pays you”
    • Providing immediate benefit to users allows it to scale, and transform the world

The Why Behind 1729

• A lot of people’s time is being wasted online
• Social networks were invented and scaled long before cryptocurrency
  • You can only transfer status online
  • All social media platforms have become status games
    • The companies behind them capture all the revenue for the content created by users
• 1729 takes a different approach
  • You still build your reputation, but you also get paid for the tasks you complete
  • The tasks you complete will contribute to building your verified resume
    • This could make some university degrees useless
    • An employer could actually see what you’re able to do
• 1729 encourages people to pursue Truth, Health, and Wealth (in that order)
  • Truth: Gain new knowledge
  • Health: Without health you have nothing
    • If you submit a proof of workout you get paid $10 in BTC
  • Wealth is important but shouldn’t justify sacrificing health or truth

Media and Memetic Viruses

• “Media scripts humans just like code scripts machines” Balaji Srinivasan
  • A way to get people to do something is to show them the thing being done by others
  • Humans are memetic creatures, that’s how we learn languages
• COVID forced us to spend more time online, allowing for memes to spread faster
  • The idea of contagious memetic viruses spreading through a population
  • This concept hasn’t been studied scientifically yet, but eventually, we will be able to do that

The Evolution of Tech and Media

• After the 2008 financial crisis, traditional media collapsed while Google and Facebook revenues went vertical
  • The graph in this article shows the dynamic described
  • Tech took over media and entertainment
• Around 2013, traditional media started attacking tech companies
  • All media could do was write stories and shape narratives against tech
  • Media companies market themselves as the source of truth, while most of it is propaganda
• Tech companies are starting to realize the power of media
  • Their ability to shape the narrative instead of being in the narrative
  • “Own a media corporation or be owned by one” Balaji Srinivasan 
• With blockchain, we’re able to access decentralized truth that can be verified mathematically
  • Everyone knows exactly how much Bitcoin someone owns
  • Eventually, as property becomes digital, it can also be verified through the blockchain
• How crypto oracles will change the game
  • Crypto oracles have micro-incentives to report data from the world to the blockchain
    • They could report data about weather, crime, or real estate
  • Currently, we have this information but it is all siloed in different places
  • With crypto, you can integrate all the information
    • “You now have cryptographically verifiable facts about the world” Balaji Srinivasan 

The Network State

• Balaji is writing a book, The Network State, and publishing chapters on 1729.com
• How do you start a new country on digital land?
  • Rather than taking over a physical area, you build a community of technology progressives on the cloud
  • This community could align on using the same currency, the same rules, smart contracts, etc…
  • This would be a 20-year project
• “Geographical proximity is no longer linked to cultural proximity” Balaji Srinivasan 
  • We don’t necessarily know the people we live close to that well
  • But we might know and interact with people living in other continents
• “2000s were the tech companies, 2010s the crypto protocols, 2020s startup cities and 2030s network states” Balaji Srinivasan 

Startup Cities

• The term encompasses three definitions
  • 1. A city where startups happen (what San Francisco used to be)
    • Today Balaji questions founders when they choose to start a company in San Francisco
  • 2. A city that acts like a startup (like Miami is doing right now)
  • 3. A city that starts itself (like Prospera.hn and Culdesac.com)

The World is Becoming more “Balaji-like”

• If you’re a 9 to 5 person who likes conformity and routine, the mid-twentieth century was awesome for you
• Now we’re in the opposite situation
  • Asynchronous work, decentralization, everyone can create content, your day can be extremely varied
    • “The entire diversity of the human experience is a click away” Balaji Srinivasan 
  • Today you’re rewarded for the diversity of thought and non-conformity

What Would Balaji Do if He Was an Unknown Twenty Years Old

• He would get very good at computer science and statistics
  • Those skills are valuable everywhere
  • What physics was in the twentieth century is now computer science and statistics
    • Because so much of our world is virtual
• Balaji mentioned the Ikigai framework to find what to work on
  • Computer science and statistics give you a strong foundation to pursue whatever you’re most interested in
  • Areas Balaji would look at Crypto, Genomics, Robotics, Relocation
    • Digital nomadism is going to be huge

Growth in Digital Nomadism

• Balaji encourages anyone trying to build Teleport 2.0 to DM him
• As remote work spreads it opens the possibility for longitudinal arbitrage
  • If you’re not in the office, the only thing I care about is what time zone are you in
  • Coinbase founders moved to Argentina to face lower costs of living while being in the same time zone as the US

How Crypto Will Change the World

• Balaji thinks you can’t abolish the FDA or the Fed, but you can exit them
  • You can build a parallel system that makes the old one unnecessary
  • Bitcoin is an example of building an alternative to the Fed
• Crypto is not only the next Wall Street
• It is also the next Silicon Valley
  • Future social networks will be decentralized
• It is also the next Yale School of Law and Columbia School of Journalism
  • Smart contracts will replace current ways to think about law
  • Crypto oracles and decentralized truth will replace current journalism
• Crypto as the sequel to open source
  • “Not just open-source, it is open state and open execution” Balaji Srinivasan 

The Idea Maze

• A common view of founders is that they have a eureka moment, come up with a great idea, and build their company
  • There will be ups and downs but that’s the general trend
• The idea maze, creates a different view of the founder’s journey
  • The founder has some interests and a vague idea of the problems he wants to solve, but it’s all foggy
  • He tries out things, hits dead ends, comes back and tries a different way
  • Hitting dead ends is part of the process
• The idea maze also has a time component to it
  • Ways that might be closed at a certain time may be open later

Science vs. “Science”

• COVID exposed our confusion about science
  • People were shouting “masks don’t work because of science” or “masks work because of science”
  • They were actually repeating what they heard from some authority figure
• “Science is not about peer-review, it’s about independent replication” Balaji Srinivasan
  • Peer review can be a proxy for science if you assume that the reviewers try to replicate the results
• Science is the basis of our civilization, everything follows from it
  • But if science becomes about peer-review, it becomes subject to institutional capture
  • The risk is that people will stop trusting science
• Decentralizing science
  • The open-access movement is trying to take research out of the publishers’ paywalls and making it public
  • Reproducible research
    • Papers should be fully reproducible
  • People can’t necessarily reproduce science at home, but they can do the math
    • The more of the independent replication process you can turn into math, the more people can check the claims made by scientific papers

The Story of Balaji Got Into Crypto

• After the financial crisis hit, he spent lots of time thinking about money and economics
  • Seeing “money as energy”
    • How much energy (in joules) does it take you to build an iPhone?
    • If you can reduce the energy cost of a product, you can reduce its price
• Some of his friends suggested he look at Bitcoin in 2010 or 2011
  • He found it interesting because it was also using energy to support value
  • He was surprised by Bitcoin’s use of extra computation to increase the security of the system, rather than the number of transactions
• Only after the recovery from the financial crisis did he realize the potential of Bitcoin and crypto
• The fact that BTC recovered from its crash from $32 to $2 in 2011 convinced Balaji of crypto’s staying power

Additional Notes

• Marc Andreessen has described Balaji as the man who has more good ideas per minute than anyone else in the Bay Area
• Balaji’s first company, Counsyl, was one of the genetic testing companies
  • It was sold for $375M
• What the Effective Altruism community misses
  • “If you haven’t built, you feel guilt” Balaji Srinivasan 
  • If things are just handed to you, you feel like you don’t deserve it
  • That leads to thinking that nobody deserves it and that the system should be taken down
  • Aid in emergency situations is good, but industrialized aid that fosters a sense of dependency should be avoided

• Interesting strategies adopted by BitClout
  • Using economic incentives to bring high-status individuals to the platform
  • Users could buy coins of  their favorite creators or entrepreneurs
  • Anyone would get the chance to benefit from other people’s rise in popularity
• Cities that Balaji is watching closely
  • Dubai
  • Monaco
  • Miami
    • Americans consider it as a party destination
    • It is also considered as the Singapore of Latin America
  • Singapore
• Good conversation sparring partners for Balaji
  • Naval Ravikant
  • Marc Andressen and Ben Horowitz
  • They’re all people that can teach Balaji something
• Some of Balaji’s predictions that didn’t turn out right
  • He initially underestimated the value and potential impact of social media
  • He overestimated genomics
    • He didn’t foresee that the FDA would block a lot of innovation
• Sacrificing your health for your company will also hurt your employees in the long run

My First Million : business, crypto, future
Notes By Giorgio Parlato