Fireside Chat with Naval Ravikant - New Frontiers 2019

[0:00] (audience applauding) - I'm in Silicon Valley in California right now, where I've been an entrepreneur and investor for about two decades. Moved there straight out of school, started, starting companies because I loved science and technology, and technology is the business of science or applying science, and so started a couple of companies. One that made optical amplifiers, one that became what is today Google Earth, one that was called Epinions, went public as part of Shopping.com.

[0:33] Dozens of failed efforts, things you've never heard of, things that you might yet hear of. I started AngelList, which is the largest online platform for start-up fundraising. We've now raised over a billion dollars, almost all for seed-stage startups. We also operate the largest free talent start-up recruiting marketplace, where about half the start-ups in the English-speaking world find talent on there. We own Product Hunt, which is where companies go to launch their product. We've also spun out CoinList, which is a giant, well lit, regulated marketplace for crypto and ICOs.

[1:06] I've been an angel investor in companies like Twitter and Uber and Wish and Postmates, and a bunch of others. Co-authored a blog called Venture Hacks. Got a little Twitter feed, and worked on the JOBS act, which was the US law that enabled crowd-funding, general solicitation, regular plus IPOs. Yeah, that's kind of it. - So I asked Naval to do that, 'cause there was no way I was gonna do justice to the bio. But for those who don't know, I mean Naval's a bit of a legend across the world now, and especially in Silicon Valley.

[1:38] And so I'm curious, from your perspective Naval, what is the opportunity for New Zealand around our technology ecosystem, and what constitutes the elements and the actors in a well functioning ecosystem? - So, it's a hard problem, systems design, I think that's Yosef was talking about. He was basically positioning New Zealand as an incubator for systems design, which is very seductive and very difficult, because trying new systems means you're automatically doing things that the rest of the world doesn't want to or need to do.

[2:09] So, it's risky. But I can throw some things out that I think are provocative and interesting. Let me just touch on two. One is digital literacy, and the other is immigration. You know, in terms of digital literacy I think that computers are the most powerful tool ever created by humanity. They allow for infinite leverage without permission, and, to me, knowing how to be good with computers is the modern literacy. It's the new reading, writing, arithmetic, and this will be widely accepted and acknowledged decades from now.

[2:41] But today we're in that transition phase where as a software engineer you're very well paid, and there's no unemployment. But as someone transitioning out of the old economy, you have this giant gap to jump. So I think it would be interesting. One system design experiment that would be interesting is to create an entirely digitally literate nation, where everybody is facile with computers. And of course not everybody is going to be in a computer related job, but just the fact that you can use this creative tool to it's maximum output gives you an advantage, a leg up, in every possible way.

[3:12] You'll make better podcasts, you'll do better, you know you'll be better at creating documents, you'll be better at coding up your ideas, you'll be better at even just using online banking or storage. Just like, if you understand mathematics fairly well, then you don't fear science books. You can pick up anything the same way. If everyone understood computers well enough, they didn't fear computers at all. They would be highly leveraged. And for innovation and employment, that could be a huge thing. It would also, interestingly, raise all the wages across the board in other professions too because there's a thing in economics called Baumol's cost disease, where the value that you have to pay someone the opportunity cost of what else they could be doing.

[3:52] Not necessarily what they are doing so, even if all the baristas had computer science degrees they get paid a lot more. So, that's an example of something radical and interesting you can do. But I don't think it's that radical, and people often would say, well why do I need to know how to code a computer? I don't need to know how to fix my car to drive my car? But it's different, the car is a utility that gets you from point A to point B, and you do the same thing over and over, whereas the computer is a creative tool and a creative process that's not gonna be automated away. And every person who uses a computer, it's like using a paintbrush or a writing instrument.

[4:23] You're using it for a different thing, for self expression on a blank canvas of possibilities. So I think having a fully digitally literate nation, and New Zealand is well positioned to do that by being English speaking country, first world rule of law, good educational system, and a fairly small enough community that you can make that kind of a push, I think would be really interesting. - And you also said immigration. - Yeah, immigration is interesting because I think people look at Silicon Valley and they say, How can we create a Silicon Valley here? And that's an experiment that's been tried all over the world.

[4:55] But really, Silicon Valley is not a place that creates entrepreneurs or wealth or technology. It is a place that attracts entrepreneurs, who create wealth and technology. And so it's really an attractor function. And that's true of almost any magnet place. Like Hollywood attracts the potential actors and artists into it, doesn't create them. There's not necessarily all Native Los Angelinas, or the natives really benefit from that. So I think that it's about attracting. So intelligent immigration policy is actually the largest wealth creator in the world.

[5:29] And it's not done that intelligently in most places. Most places it's sort of an accident, happen stands of history like, oh we have a technology university here, we have good weather and so on. So I think that if you look at, especially in the, and I'm focused in technology industry, obviously you're for immigration you can do lots of things. You can say, I wanna attract people to make an impact. I wanna attract teachers. But whatever you're doing you can do it intentionally. And at least in the technology industry, these people, thanks to again computers, are the most leverage people in the world.

[6:01] So they're earning power is very high, so they actually choose to live in the nicest places. So they want to live in places with good weather, and clean water and clean air and high quality in life and culture. And I think in all of those things, New Zealand scores really well. The time zone is great, the access to the Pacific Rim is great. So, New Zealand to me already has a lot of the elements to use immigration policy as a force multiplier. So I think it really just comes down to both attracting and screening sort of the right people for the limited resources that you have.

[6:32] And you know, look at the (inaudible), four hundred visas, it's gonna make a big difference. Four hundred is not a lot of people. You can fit 'em in one small neighborhood, or one small cluster of houses, but it can, in theory, change things. - And on the technology side, I'm curious if you could speak to the trends that you're seeing? Some of the significant trends of importance and why they're important. - We're actually kind of in a good phase of, I think, technology innovation right now. Is it good or bad, I don't mean to judge, but we've gone through different phases where we are creating and discovering and rolling out new platforms and systems that change things.

[7:06] So for example, mobile phones was a platform, the internet was a platform, personal computers were a platform that changed things quite a bit. And then we go through exploitation phases on those platforms where we build lots of apps. There was the mobile social phase where we built Facebook and Twitter and so on. And those are interesting apps, but it's kind of a lower level of innovation or it's equally necessary, but not as paradigm busting. I would say now, interestingly, technology is going back into that paradigm busing phase where investors, angels, entrepreneurs are getting bold enough.

[7:41] Emboldened and enough to take the risk do to things like, hey now we're gonna have to develop super sonic airplanes, we're gonna send rockets to Mars, we're gonna build electric cars, we're gonna build autonomous vehicles, we're gonna build VR and AR, we're gonna get remote working right so that it feels like you're actually there. Do is gonna do synthetic biology and hack humans, which is both scary and exciting. Scary first, exciting later. Unfortunately that's, (crowd laughs) It's the nature of technology that the destructive power arise before the creative power.

[8:13] You get to have a nuclear weapon before you get to have a functionally safe nuclear plant. You get to have, unfortunately on social media, you get combat before you get civil discourse. So, even if you go back to human history, you get gunpowder before you get steam engines and airplanes. So, it's just unfortunately, the nature of technology that the disruptive and the dissociative power arrives first. So, we're gonna get all the dysfunctional, dystopian things, you know, maybe VR and AR, it's like a place for people to rally who couldn't rally in the real world.

[8:49] Or for, you know, how the internet famously adopts porn and gambling before any other application. But eventually, you will see the fruits come out of that if we live long enough. And synthetic bios is an interesting one that regard. AI today is going through a machine learning, a machine vision revolution where computers are getting very, very good at pattern matching and problem solving, if a very specific kind of problem. But it does mean that we're gonna see very intelligent agents living in the networking cloud and changing how we do things.

[9:21] So I think all of those are very interesting. And I give full credit to people like Elon Musk, who just really up the bar on what's conceivable. Just by doing audacious things, or trying audacious things, even if they fail, even if they're not good at it, even if you have problem with the financial shenanigans. It's just at least the vision, I think, inspires people to move forward. And he's not the only one. There's a bunch of entrepreneurs now, who are kind of just trying to do audacious things. - And on that point, some people say we want to shift away from this cult of entrepreneurship or this worshiping the entrepreneurs.

[9:53] How do you feel about that? - There's definitely a cult of entrepreneurship in Silicon Valley. There's kind of a hierarchy which is all the status derives from the entrepreneur and then it sort of filters down to the other people in the ecosystem who help makes things happen. And then, of course, the users and customers and broader society that they stand upon. I just think it's a nature of humans, that you're always gonna have a bit of hero worship, you're always gonna create a cult. You go to Hollywood and there's a cult of the celebrity. I mean, there's such a cult that they give each other awards every year and then we tune in to watch it.

[10:24] So, it's just a nature of politicians. We create a cult around the top politicians without looking at all the people they stand on. It's just kinda how humans are hardwired. It's how we get inspired. So I think it's completely fine to use an entrepreneur as a source of inspiration, but I think it's silly to use them as a source of truth. Like, in fact, it's silly that I'm up here and I'm kind of giving you all this so called truth and really I just have very narrow specialization in a very narrow set of things, but somehow, for some reason, somebody wants to hear my opinion on everything.

[10:56] That's the cult of personality kind of poking through. But still, you gotta pick some monkey to get in front of the tribe, you know. At various points, this might turn right now. - And on of those things that you've been a specialist at is blockchain and so I'd love to here, what is blockchain, why is it important? - Yeah, I got into cryptocurrencies and blockchains back in 2013 and it was, to me, it first fascinates as technology solution to a very particular computer science problem called the Byzantine General Problem. But all you need to understand is what they solve is a way of getting a bunch of people who don't know each other and don't trust each other, to still agree on something.

[11:33] And this is a much harder problem than it may sound like. Humans are highly, cooperating, organizing creatures. Much more so than almost any other species in the natural domain, and that allows us to do amazing things, like we can all get in this room and work together to what we believe is a better future. It also allows us to do terrible things, like get together in a battle field and kill each other and name some ideology. You know, monkeys don't have Christianity or Fascism, they don't come up with those ideologies, so they don't murder each other in large quantities. But that ability to unite together is both our super power and our curse, because when you get together, how do you operate that network of people?

[12:10] How do we make decisions? And historically, we've had a couple of answers, and they all have different trade offs. The old answer used to be the most brutal monkeys in charge. That used to be the king, and that's still how much of the world lives today, under dictators. Then there it was just the smartest and most violent few monkeys who get together are in charge, and that's aristocracies, or if it's as smart as the elites, but you have a small number of people sort of running things for society. Religion was another one. I talked to God, God gave me the answers, you listen to me.

[12:41] There was another model around democracy, where we're all equal, we all vote, but you also can end up with mob justice, mob rule. Where the majority turn as the minority. So, you just all these different systems of organizing people and the last few hundred years, we've created one called markets. And this could be markets and, you know, things you like and things you don't. But it's essentially just this idea that we can trade things and sort of self organizes and there's a merit model in terms of how much money I put in, or what assets I put in, what I get back.

[13:12] But no one's really if you look at the global credit markets, debt markets, equity market, money markets, commodity markets, no one's really in charge. So what blockchains do is they bring the ability to have markets into any digital domain. So you can take any digital network and there are a lot more digital networks out there than we think. So, for example, Uber is actually a digital network that's routing cars around. You're local public utility is actually a digital network that's routing power around, especially if we all had solar and we were trading that power.

[13:44] Today we have cell phone carriers that are top down, but actually each of our phones is broadcasting bluetooth and wifi and we have wifi access points at home, you can stich together a digital network. And a blockchain based network isn't owned by anybody, it isn't run by anybody. I think we're sort of a temporary blimp in history where all of your connections with your friends are controlled by one small set of people out of Palo Alto, or all the digital news media in the world is run basically by Twitter and YouTube and a very small number of people.

[14:15] So it is the nature of the current generation of technology that it is a highly centralizing force. We have replaced geographic oligopolies with global monopolies. Well at the same time, there's sort of this long tail of independent actors, but that fat middle that used to exist in the old world is gone. When you would have ten eCommerce retailers and now you just have one that's kind of controlling the whole internet retail. When you would have had hundreds of local taxi dispatchers, but now all taxis are dispatched out of San Francisco by Uber or Lyft.

[14:45] So that trend line is very worrying because that's not the internet, I think, we were all promised. We were promised a decentralized internet where we kind of all collectively control outcomes. But, like an any system, you have to have rules, you have to have consensus, you have to have ways of rewarding people who contribute to the network. You have to have ways of punishing cheaters who harm the network. And blockchains use mathematics, cryptography, peer-to-peer networking, to create digital consensus and allow truly, leaderless digital networks and I think that is what is compelling about them.

[15:16] And we're starting with the financial applications because money is a ledger, it's something that we've historically had to put a king in charge for, or a state and they have a habit, you know, when you hand somebody the ability to print money, then they just print more of it, and so it finds its way into their pockets and their friends' pockets. And it may be not a problem in New Zealand because it's a famously uncorrupted country, but, yeah, even there right, it's always something, but compared to other parts of the world that are outright kleptocracies, that can be problematic.

[15:47] So you have things like bitcoin that essentially separate money from any individual controlling the money, and then it becomes collective money. In theory, I'm tryin to do that for a programmable financial system, and I think you'll see, as blockcahins get good at tackling those problems and they demonstrate that they can secure something as hard to secure as the ability to make an issue and transfer money, then they can be trusted in all other aspects of life. So I think it's rally interesting. - And people say the cryptocurrency markets down 90 percent plus in the last year, isn't it over or was it a fad?

[16:24] How do you respond? - Yeah, I mean, look it's a highly speculative market. It's this weird combination of money and code and governance. And dot.com went through this in 1999, 2000, so I've seen this kind of movie before. And crypto's a really hard problem. Crypto is you're basically saying I'm going to create digital gold. I'm gonna make it unhackable even though the reward will be hundreds of billions of dollars. Trust me, I don't have a bug in this code, 'cause if I do, you lose all your money.

[16:55] It's very hard to secure and transfer. It's still very, very much in development. It feels like the computers were in the 1980's. Not where the internet was in 1990s, but it's moving faster. So there's still a lot of fundamental, development work to be done. Crypto is not simple computer science. It is bleeding edge computer science, game theory, attack vectors, hacking. You're trying to solve some very hard problems. So it's gonna take time to figure out. And today, for example, the total stock of bitcoin in the world is valued at about 80 billion dollars or 70 billion dollars, if you take in account losses and so on.

[17:31] Actually started higher, it would be about a hundred. But the total gold supply in the world is somewhere around seven or ten trillion dollars. And bitcoin does a lot of things that gold does, some better, some worse. Better in the sense that it's digitally transmissible, easier to secure, more scarce. Worse in the sense that there might be a bug. You can get hacked, you might lose your passkey which I've seen happen to friends of mine. So it's still much less certain. It's much more new, gold's been around forever.

[18:02] So what you have right now, is the market is pricing bitcoin as being somewhere between one five hundredth the chance of being digital gold to being one one thousandth to one one hundredth, and when the market changes its mind on these very little probabilities, you these massive swings in the price. So it does end up being a very speculative instrument today, and it's like an angel investment, or like an early venture investment where you can lose are your money, or most of it, but, and there's a lot of risk involve, but there's also a lot of reward. These are not ready for prime time yet, but they'll get there.

[18:32] - We're gonna go deeper on the blockchain, crypto, ethereum in the like. I do wanna just while we have everyone, talk a little about, you're famous on Twitter now. Where did this come from? And if you could talk a little bit about your becoming famous in terms of talking about the inner game of entrepreneurship. - Yeah, so fame is a curse. I don't recommend it for anybody. You wanna be, this is glib, but you wanna be rich and anonymous, not poor and famous. This is the disease of social media. Everybody is getting their five seconds of fame and becoming a celebrity and celebrities are the most miserable people in the world.

[19:06] So it's not necessarily a good thing to go for. That said, I think what happened was, like anyone who's been an entrepreneur, I was running extremely high stressed lifesyle. And one of the things that makes entrepreneurship especially stressful, is that not only are you supposed to have all the answers, you're doing very hard work, but you're supposed to never show weakness because you're board members, you show them weakness, they're not gonna fund you, they're not gonna trust you. You show it to your employees, they're gonna run for the hills. You're customers, they're not gonna buy from you.

[19:37] You're partners, they're not gonna partner with you. So you have to show extreme stability. And it's the nature of the technology business that 99 out of 100 start ups effectively fail, 'cause the winners are so out sized and so rare. So most entrepreneurs walking around know that they don't know have product market fit, to live in mortal terror of it, they're not allowed to talk about it, and everybody has to pretend they're winning and crushing it all the time. And this is highly stressful. Most people, I think, just melt down under the stress and they just hide it.

[20:07] 'Cause we're not taught the modern coping tools on how to work with it. And maybe ancient cultures had better answers, you know, you meditate, you walk in nature, you have closer family ties, you had bigger tribes, or you're just much less likely to go from being fresh out of school to landing into running a hundred person company. So these are just very modern pressures and stresses. And just like anybody, I had to kinda work through it. And as I worked through it, I started using Twitter as my open diary on what I had learned that was useful to me.

[20:38] And I think if anybody else was talking about this, it wouldn't be that interesting, but because I'm in the tech business and supposedly successful and I'm talking about it, I think that gives people license to talk about it. So I just decided, five or six years ago, that I was done being miserable and I was gonna be happy, you know (chuckles). And I know this sounds easy in hindsight, but it was sort of like, well this entire time, I've just assumed that happy people aren't successful, and if I'm gonna be successful then I can't be happy, I have to be miserable. If I'm gonna make a difference in the world I have to be unhappy along the way.

[21:10] And I just sort of shifted my mindset, and decided actually, I'm out of time, it's not or never, there's no future to live for, and if I don't figure out how to be happy, I'm gonna die unhappy. And I made it a discipline, and just like diet, and nutrition, and exercise, these are highly, personal disciplines that are unique to each of us, and we have to find what works for us. And nobody else can make your diet work for you, 'cause it's a battle that's fought everyday at every meal, and no one can make your exercise and fitness routine work for you, 'cause not even just a half hour, you go to the gym or workout, it's literally how you carry yourself, how you move, what activities you volunteer yourself for.

[21:50] So the same way, I think your internal mental state is just as malleable, but just as hard, and just as individual. And so I just started documenting my journey, and a lot of people actually thought it was strange, and I did lose some business contacts, and definitely some business over it, and some people were attracted to it, but part of being happy is not caring what other people think, and so I don't care anymore. - So we're gonna go much deeper on this part two. We're back up here on the main stage at 2:30. So hope to see you there.

[22:20] We'll open the space for Q&A as well. Please join me in thanking Naval Ravikant. - Thanks for sitting through this. (audience applauding)