
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
- 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
- Crypto oracles have micro-incentives to report data from the world to the blockchain
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)
- 1. A city where startups happen (what San Francisco used to be)
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
- Asynchronous work, decentralization, everyone can create content, your day can be extremely varied
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
- Seeing “money as energy”
- 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