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
  • 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
  • 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
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Notes By Giorgio Parlato

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