WEBVTT - Lessons from The River (Maria Interviews Nate About His Book) 0:00:15.604 --> 0:00:27.844 Pushkin. Welcome back to Risky Business, a show about making 0:00:27.924 --> 0:00:30.564 better decisions. I'm Maria Kanakova. 0:00:30.364 --> 0:00:31.364 And I'm Nate Silver. 0:00:32.084 --> 0:00:33.844 So today Nate and I are going to be doing 0:00:33.924 --> 0:00:38.044 something slightly different. Today is Tuesday, as always, which is 0:00:38.084 --> 0:00:41.124 when we tape August thirteenth, which is a really important 0:00:41.164 --> 0:00:44.124 date because it's the day that Nate's book comes out. 0:00:44.484 --> 0:00:47.404 So today, instead of being co hosts, I am going 0:00:47.444 --> 0:00:50.204 to get in the interviewer's seat and put Nate in 0:00:50.284 --> 0:00:52.564 the hot seat where I get to ask him also 0:00:52.684 --> 0:00:55.804 some really hard questions about his book. How does that sound? 0:00:55.884 --> 0:00:59.044 N I have to be on your podcast, Maria. I'm 0:00:59.044 --> 0:01:00.364 glad that Nate guy is off this week. 0:01:00.404 --> 0:01:01.524 He's a fucking jerk. 0:01:05.924 --> 0:01:10.444 I really enjoyed reading On the Edge, which is out today. 0:01:10.524 --> 0:01:13.364 So by the time that everyone is listening, I hope 0:01:13.364 --> 0:01:16.484 you've already bought a copy, but if not, go ahead 0:01:16.484 --> 0:01:19.924 and buy it right now. So first of all, Nate, congratulations. 0:01:20.564 --> 0:01:23.644 I know that this was a long time coming labor 0:01:23.764 --> 0:01:25.164 of many many years. 0:01:25.564 --> 0:01:25.804 Yeah. 0:01:25.964 --> 0:01:28.524 No, I spent basically three years of my life where 0:01:28.524 --> 0:01:32.444 I'd say this is my main professional focus talk to 0:01:32.524 --> 0:01:34.564 two hundred people, and I know I just I would 0:01:34.604 --> 0:01:38.004 recommend email really smart people and ask to have a 0:01:38.004 --> 0:01:39.924 conversation with them and pretend it's for a book, and 0:01:39.964 --> 0:01:42.364 then don't write the book. That's probably still worth it 0:01:42.404 --> 0:01:45.364 in some sense. But no, I actually went ahead and 0:01:45.404 --> 0:01:45.684 wrote the. 0:01:45.684 --> 0:01:48.244 Book, and we're very glad you did. So I'm going 0:01:48.324 --> 0:01:53.044 to start with Nate. In the book, you make this 0:01:53.124 --> 0:01:57.204 distinction between two communities. You have the village and you 0:01:57.284 --> 0:02:01.324 have the river. Talk me through what exactly those mean. 0:02:02.844 --> 0:02:04.804 Let's start with the village, even though it's not the 0:02:04.804 --> 0:02:06.324 focus of the book, just because it's a little bit 0:02:06.364 --> 0:02:09.724 easier to define in a term that's more conventional. Village 0:02:09.724 --> 0:02:14.084 is basically the kind of liberal, progressive East Coast establishment. 0:02:14.284 --> 0:02:17.924 So it's the New York Times, it's Harvard University, it's 0:02:17.964 --> 0:02:21.804 think tanks and nonprofits, it's you know, government when you 0:02:21.844 --> 0:02:23.964 have a Democrat in office. At least, it's kind of 0:02:23.964 --> 0:02:27.604 the expert class, the professional managerial class, that whole cluster 0:02:27.684 --> 0:02:28.364 of attributes. 0:02:29.644 --> 0:02:31.444 By contrast, the river is kind. 0:02:31.284 --> 0:02:34.324 Of the world that I suppose I inhabit, or I imagine 0:02:34.244 --> 0:02:37.964 myself inhabiting. It's the world of calculator risk taking, where 0:02:38.044 --> 0:02:42.244 people are some combination of being very analytical and extremely 0:02:42.324 --> 0:02:45.964 wildly competitive. So like poker is an archetypal maybe the 0:02:46.084 --> 0:02:50.244 archetypal river activity. But as I discovered this world in 0:02:50.244 --> 0:02:53.884 the book, you know, I found that the venture capitalist 0:02:53.924 --> 0:02:57.284 and the effective altruists, and the hedge fund people and 0:02:57.884 --> 0:03:02.044 the sports betters, even the crypto people, they all have 0:03:02.084 --> 0:03:04.604 a common vocabulary. They all talk about things in roughly 0:03:04.604 --> 0:03:08.444 the same ways, and so it's like it's not a place, 0:03:08.484 --> 0:03:11.284 it's a discrete community. I mean, in Las Vegas and 0:03:11.284 --> 0:03:14.204 Silicon Valley you might get closer to an actual network, 0:03:14.244 --> 0:03:16.644 but like they're just these people that I think are 0:03:16.644 --> 0:03:20.404 often poorly understood by the mainstream media and yet are 0:03:20.884 --> 0:03:26.004 incredibly wealthy and powerful. Many of the richest people in 0:03:26.004 --> 0:03:28.884 the world have some of these river tendencies, and like, 0:03:29.004 --> 0:03:32.484 surprisingly to me, would take my emails and my phone 0:03:32.484 --> 0:03:36.004 calls because they kind of recognize like a fellow traveler 0:03:36.084 --> 0:03:38.204 a little bit. And then what I discovered is that 0:03:38.244 --> 0:03:40.724 the kind of conceit of the proposal that actually there's 0:03:40.724 --> 0:03:44.644 a commonalities in how people think was more literally true 0:03:45.164 --> 0:03:47.844 than I had thought, and that there's more literal crossover 0:03:47.884 --> 0:03:51.604 poker players who become effective altruists or hedge funders who 0:03:51.604 --> 0:03:55.764 host poker games, or venture capitalists who do sports betting 0:03:55.844 --> 0:03:58.324 is a metaphor for some of these things. So it's 0:03:58.364 --> 0:04:00.084 a real place of a real group of people that 0:04:00.484 --> 0:04:03.444 I think, Maria are in our circles, maybe not the 0:04:03.444 --> 0:04:06.084 only circles to run in, but certainly one common type. 0:04:06.204 --> 0:04:09.884 And I felt like I had the opportunity tell a 0:04:09.924 --> 0:04:11.404 really good story about these people. 0:04:11.484 --> 0:04:13.564 I did not. I think I got lucky. 0:04:13.644 --> 0:04:16.164 I think I'm running in my like ninety eighth percentile 0:04:16.724 --> 0:04:19.244 run good for how some of these topics really blew up. 0:04:19.284 --> 0:04:21.844 I mean AI in particular, although that was a fairly 0:04:22.244 --> 0:04:26.604 incidental thing in the book Effective Altruism, and particularly Sam 0:04:26.644 --> 0:04:30.324 Bakman Free who had talked to first before the collapse 0:04:30.324 --> 0:04:33.924 and then got to talk to you afterwards as well. 0:04:34.124 --> 0:04:40.284 Yeah, so you draw some really interesting parallels between worlds 0:04:40.324 --> 0:04:44.324 that I didn't necessarily connect, like obviously poker, sports, bedding, 0:04:44.604 --> 0:04:50.364 Like yes, you know, I get why those things are related. 0:04:50.604 --> 0:04:53.484 Then you go into finance, you go into venture capital 0:04:54.324 --> 0:04:57.484 and the hedge fund world in Silicon Valley, you go 0:04:57.604 --> 0:05:01.524 into AI and people who are kind of the AI researchers, 0:05:01.524 --> 0:05:04.604 And I actually love your little side where you have 0:05:04.644 --> 0:05:07.324 the physical risk taker, yes, where you have the astronauts, 0:05:07.364 --> 0:05:09.204 and I love that you have a female astronaut. By 0:05:09.204 --> 0:05:11.284 the way, Wait, did you on purpose, like did you 0:05:11.364 --> 0:05:14.364 try to have two women or did that just so happen? 0:05:15.004 --> 0:05:17.124 You know, because as you know, like it's something that 0:05:17.564 --> 0:05:20.964 like is interesting to me. And when you're talking about 0:05:21.044 --> 0:05:25.164 risk takers, people often assume men, and so I was 0:05:25.284 --> 0:05:27.324 very curious if that was a deliberate choice or if 0:05:27.324 --> 0:05:30.444 it just so happens that these most interesting stories happened 0:05:30.444 --> 0:05:30.964 to be female. 0:05:31.044 --> 0:05:35.404 No, there there was a deliberate choice made to I mean, look, 0:05:35.444 --> 0:05:37.604 it's a careful balance to strike because it is a 0:05:37.644 --> 0:05:42.404 world that's very male. Also a world that is Poker's 0:05:42.404 --> 0:05:44.084 a little bit more diverse, but the rest of the 0:05:44.164 --> 0:05:48.564 river is quite white and or Asian and or Asian sometimes, 0:05:49.804 --> 0:05:53.444 so there was a deliberate choice to like not sugarcoat 0:05:53.444 --> 0:05:55.604 this and pretend it's all fifty to fifty. But like, 0:05:56.084 --> 0:05:58.684 but also the I call them characters, the people I 0:05:58.724 --> 0:06:02.884 talked to, like Catharine Sullivan, this astronaut's amazing and she 0:06:02.884 --> 0:06:06.444 has an amazing stories and she was studying like oceanography 0:06:06.484 --> 0:06:09.164 in Nova Scotia and beat out like ten thousand other people. 0:06:09.404 --> 0:06:14.164 I'm an astronaut and mean, it's an amazing story. Cataline Carico, 0:06:14.484 --> 0:06:16.964 I had to learn all the names pronounced correctly for 0:06:17.004 --> 0:06:19.124 the audiobook, but no, I've forgotten them. Who was this 0:06:19.164 --> 0:06:22.084 woman who like smuggled money in a Teddy Bear to 0:06:22.204 --> 0:06:25.964 move out of Hungary and then was just shot upon 0:06:26.084 --> 0:06:28.444 in the establishment while she was working on MR and 0:06:28.524 --> 0:06:33.724 A vaccines and eventually joined biointech and won the Nobel Prize, 0:06:33.724 --> 0:06:35.724 come won the Nobel Prize for her work on MR 0:06:35.764 --> 0:06:37.804 and A vaccines. I mean, they have amazing stories. Or 0:06:37.844 --> 0:06:40.844 someone like our mutual friend but one of the best 0:06:40.844 --> 0:06:43.004 poker players in the world. I think Maria ho who 0:06:43.044 --> 0:06:45.804 has great stories to tell too, so so or Vanessa 0:06:45.804 --> 0:06:48.124 Selps is another person that we know, but like it's 0:06:48.164 --> 0:06:50.844 just an amazing person. So yeah, I mean when you 0:06:50.924 --> 0:06:53.484 find people like that and you want to tell their stories. 0:06:53.484 --> 0:06:57.524 And there was but there's also sections that directly tackled 0:06:57.524 --> 0:06:59.124 There's one section in the poker chapter about why aren't 0:06:59.124 --> 0:07:01.084 there more women in poker? And then one section in 0:07:01.124 --> 0:07:03.684 the VC chapter about why are there so few black 0:07:03.924 --> 0:07:06.244 and Hispanic and women founders? And so you have to 0:07:06.724 --> 0:07:09.884 take it on directly without it being awoke book because 0:07:09.884 --> 0:07:11.844 I'm not super woke, but you can't. But there are 0:07:11.844 --> 0:07:14.404 real shortcomings here. I mean the VCS in particular, I think, 0:07:14.444 --> 0:07:18.724 are they claim to want people who have overcome, who 0:07:18.764 --> 0:07:21.644 have grit, who have overcome odds, and who are high variants, 0:07:21.644 --> 0:07:24.124 who are different than the consensus, and yet they have 0:07:24.204 --> 0:07:26.724 this prototype of like the on the spectrum, you know, 0:07:26.844 --> 0:07:29.924 white or Asian twenty something nerd who dropped out of 0:07:30.044 --> 0:07:33.404 Harvard or MIT as a sophomore, and Sam mcminfreed played 0:07:33.404 --> 0:07:36.564 into that stereotype, and they're not actually, I think, trying 0:07:36.564 --> 0:07:38.724 to diversify their portfolio, and it just in a purely 0:07:39.204 --> 0:07:41.644 not moral but even like financial sense of wanting like 0:07:41.724 --> 0:07:43.284 high variance founders. 0:07:44.884 --> 0:07:48.084 Yeah. No, I think one of the things that I 0:07:48.164 --> 0:07:50.404 enjoyed about the book is that it's about how to 0:07:50.404 --> 0:07:52.404 take risk well. But you also talk about some of 0:07:52.404 --> 0:07:55.924 the shortcomings of the of the people on the River 0:07:56.404 --> 0:07:59.004 and how they think about risk. But first let's talk 0:07:59.084 --> 0:08:02.044 about kind of the good elements. So what does the 0:08:02.164 --> 0:08:05.884 River have in common when it comes to evaluating risk? 0:08:06.044 --> 0:08:09.084 What can we take away from them when we're thinking 0:08:09.084 --> 0:08:14.924 about Okay, I am you know, Maria everyday person? How 0:08:14.924 --> 0:08:17.564 do I kind of think about risk in my life? 0:08:17.764 --> 0:08:20.804 What do I take from these people who take risks 0:08:20.844 --> 0:08:25.444 professionally so that I can just make better decisions and 0:08:25.644 --> 0:08:27.244 better risk assessments myself. 0:08:27.524 --> 0:08:29.684 So let me take the two axioms that you hear 0:08:29.724 --> 0:08:31.684 over and over and over again in Silicon Valley and 0:08:31.724 --> 0:08:35.964 make it very successful financially despite having all these flaws. 0:08:36.044 --> 0:08:38.724 I mean, some of these guys are difficult people. It 0:08:38.764 --> 0:08:40.764 is mostly guys. It's not very diverse. There are some 0:08:40.844 --> 0:08:43.884 big flaws, right, I think their political instincts are often poor. 0:08:44.964 --> 0:08:46.964 But they do two things, one of which is they 0:08:47.084 --> 0:08:49.564 understand expected value, which is kind of the theme of 0:08:49.564 --> 0:08:52.164 this show. They understand that if you can make a 0:08:52.244 --> 0:08:54.524 bet that has a ten percent chance of one hundred 0:08:54.884 --> 0:08:58.084 x payout, that's an extraordinarily good bet. And if you 0:08:58.124 --> 0:09:00.164 can make a lot of those bets by aggregating different 0:09:00.204 --> 0:09:04.004 companies into a fund, then you're kind of guaranteed to 0:09:04.084 --> 0:09:05.084 make money. 0:09:04.804 --> 0:09:06.004 And maybe make a lot of money. 0:09:06.804 --> 0:09:09.324 And it also applies to things like evaluating nuclear war 0:09:09.524 --> 0:09:11.844 risk or AI risk, things that might be you know, 0:09:11.884 --> 0:09:14.724 a two percent chance in over some time frame or 0:09:14.764 --> 0:09:17.604 five percent chance whatever else, but have like very bad 0:09:17.644 --> 0:09:22.764 to infinitely bad negative payouts. The second thing that Silicon 0:09:22.844 --> 0:09:27.444 Valley knows is that having a longer time horizon is 0:09:27.484 --> 0:09:30.124 really worth it. We're a country that likes to make money, 0:09:30.164 --> 0:09:33.004 but we're a get rich quick country and not a 0:09:33.004 --> 0:09:36.084 get rich slowly country. When you're investing in startups, early 0:09:36.124 --> 0:09:38.524 stage startups, they often have a time horizon. You know, 0:09:38.604 --> 0:09:41.524 SpaceX took thirteen years I think to make a first 0:09:41.524 --> 0:09:44.284 profit nine years would actually even launched a rocket successfully 0:09:44.404 --> 0:09:47.724 or something like that. So I think you almost always 0:09:47.764 --> 0:09:50.764 benefit from having like a longer time horizon than other people. 0:09:50.804 --> 0:09:55.244 People just discount the long term future way too much, 0:09:55.284 --> 0:09:58.364 even in their personal lives, I think, And so therefore 0:09:58.444 --> 0:10:00.364 those I think are kind of the two foremost lessons 0:10:00.364 --> 0:10:03.084 and why the book is you know, kind of ambivalently 0:10:03.364 --> 0:10:05.524 to positive on that Silicon Valley ethos, even though the 0:10:05.524 --> 0:10:07.964 individual characters there are are complex. 0:10:09.644 --> 0:10:13.644 So one of the things that you stress over and 0:10:13.684 --> 0:10:18.564 over is that people who evaluate risk correctly and make 0:10:19.204 --> 0:10:21.644 risks that tend to pay out over the long term, 0:10:22.044 --> 0:10:26.604 they not only can understand the upside, but they can 0:10:26.724 --> 0:10:29.804 also protect against the risk of ruin. Right the risk 0:10:29.924 --> 0:10:33.844 of not being able to take these risks going forward. 0:10:34.124 --> 0:10:36.404 So first I'd love for you to talk a little 0:10:36.404 --> 0:10:38.884 bit about this idea of risk of ruin because you 0:10:38.924 --> 0:10:41.084 talk about people who do it correctly and then people 0:10:41.084 --> 0:10:45.684 who might not, and also like, how do you balance 0:10:45.724 --> 0:10:48.324 that and how might that be different from person to person. 0:10:49.244 --> 0:10:52.244 Yeah, I mean, we have this abstract concept in poker 0:10:52.524 --> 0:10:56.124 of a bank roll, which is and that is, how 0:10:56.244 --> 0:10:59.164 much money can you spend on poker before your kind 0:10:59.164 --> 0:11:02.084 of poker broke or at least you're severely limited in 0:11:02.164 --> 0:11:03.764 the size of the games you might play and you 0:11:03.844 --> 0:11:07.444 might have to pass up positive ev opportunities. So to 0:11:07.444 --> 0:11:10.004 some extent, this is related to the idea of opportunit cost. 0:11:11.044 --> 0:11:14.604 There's a famous formula from sports betting called the Kelly criterion, 0:11:14.644 --> 0:11:16.484 which tells you how much can you bet to maximize 0:11:16.484 --> 0:11:22.164 your expected value without enduring a very high risk of ruin. 0:11:22.684 --> 0:11:24.924 Now I can get into the technicalities of why that 0:11:24.964 --> 0:11:27.364 formula might make you a little bit more aggressive than 0:11:27.404 --> 0:11:31.284 you should be. In general, though, like ninety percent of 0:11:31.284 --> 0:11:34.404 people in the world are I think to risk averse 0:11:34.444 --> 0:11:37.444 about this kind of thing. This goes back to, as 0:11:37.484 --> 0:11:40.044 you'll know, like some of the connoment and diversity work 0:11:40.044 --> 0:11:43.204 on prospect theory. It may have also an evolutionary base 0:11:43.204 --> 0:11:45.204 where we weren't living in the time of abundance that 0:11:45.244 --> 0:11:49.084 we are now and so and so, you know, you 0:11:49.204 --> 0:11:51.924 only got one shot before it made sense to protect 0:11:51.964 --> 0:11:54.524 your household. It made sense to be very cautious about 0:11:54.804 --> 0:11:57.044 if you get an infection, you might die. And I 0:11:57.044 --> 0:12:01.044 think people have not adapted to this world of abundant 0:12:01.164 --> 0:12:04.804 but confusing opportunity that we have very much. Annie Duke 0:12:04.924 --> 0:12:06.964 wrote a book called Quit, and she's in the book too, 0:12:06.964 --> 0:12:10.284 also a former poker player. Of course, she site studies 0:12:10.324 --> 0:12:12.244 like by Steve Levitt fre Economics that when they have 0:12:12.244 --> 0:12:14.804 people flip a coin to make a decision, and a 0:12:14.804 --> 0:12:17.204 major decision, not like am I getting Thai food or 0:12:17.204 --> 0:12:18.804 Indian for dinner tonight, which I do flip a coin 0:12:18.844 --> 0:12:21.324 about sometimes, by the way, but things like should I 0:12:21.404 --> 0:12:23.724 leave my partner, or should I quit my job, or 0:12:23.764 --> 0:12:26.084 should I move across the country to a different part 0:12:26.124 --> 0:12:28.684 of the world. People are happier on average when they 0:12:28.684 --> 0:12:31.804 make a change, and so you know, the ninety percent 0:12:31.844 --> 0:12:34.244 of people who are risk averse maybe could take some 0:12:34.244 --> 0:12:36.284 messages from that book then, but you also meet the 0:12:36.324 --> 0:12:38.044 sbfs and the Elon Musks of the world. 0:12:39.964 --> 0:12:44.164 And let's actually unwrap that last bit a little bit. 0:12:44.244 --> 0:12:48.604 The Sbfs and the Elon Musks because you write about 0:12:49.324 --> 0:12:53.604 the fact that you know, obviously they are people. Wouldn't 0:12:54.404 --> 0:12:57.564 people don't necessarily lump them together, right, because Elon Musk 0:12:57.644 --> 0:13:00.844 is someone who is richest man in the world, and 0:13:00.884 --> 0:13:04.044 then SBF is going to jail. However, they do have 0:13:04.084 --> 0:13:07.444 this one characteristic in common, so I would I would 0:13:07.444 --> 0:13:08.764 love for you to expand on that alone. 0:13:08.804 --> 0:13:10.804 Yeah, and I should be I mean, I don't mean 0:13:10.844 --> 0:13:13.884 to I am very and the book is very. 0:13:13.804 --> 0:13:15.844 Unsympathetic to SBF. 0:13:16.644 --> 0:13:18.724 I'm not saying I'm sympathetic to Elon, but Elon has 0:13:18.764 --> 0:13:20.804 accomplished a lot of things, and I think Elon's a 0:13:21.604 --> 0:13:24.724 real person whose career wasn't based on I mean, I 0:13:24.724 --> 0:13:27.004 don't think Sam'shull career was based on fraud, but he didn't, 0:13:27.004 --> 0:13:30.004 you know, Elon has not committed ten billion dollars worth 0:13:30.044 --> 0:13:34.084 of stealing people's crypto deposits. Basically, Yeah, they are the 0:13:34.164 --> 0:13:38.604 two people that really, really, really go balls to the wall. 0:13:38.684 --> 0:13:40.324 I think we can use that phrase in terms of risk. 0:13:40.444 --> 0:13:40.924 Absolutely. 0:13:41.804 --> 0:13:44.244 If you read the Walter Isaacson book on Elon Musk, 0:13:44.524 --> 0:13:47.804 his poker strategy is literally going all in every hand 0:13:47.884 --> 0:13:49.884 until he runs out of money or wins it all. 0:13:49.924 --> 0:13:51.884 I didn't know that that was crazy to me. 0:13:52.764 --> 0:13:56.244 It makes sense, so I've I've played in the all 0:13:56.284 --> 0:13:58.764 in podcast poker game a couple of times with some 0:13:58.844 --> 0:14:02.764 of Elon's buddies, and that's a very aggressive game, shall 0:14:02.804 --> 0:14:05.444 we say. I'm forbidden to reveal details, but there's a 0:14:05.444 --> 0:14:11.084 lot of blind, naked aggression there. You knowf is even 0:14:11.684 --> 0:14:15.964 more unambiguously I think irrational in taking a very literal 0:14:16.524 --> 0:14:19.844 approach of utilitarianism, where you know, he has said repeatedly 0:14:19.924 --> 0:14:23.644 he told his co founder Carolyn Ellison this. He told 0:14:24.364 --> 0:14:26.964 the economist Tyler Cowan this that if he could flip 0:14:27.004 --> 0:14:29.404 a coin to determine the fate of the world, and 0:14:29.524 --> 0:14:34.964 either half the time the world is destroyed, but the 0:14:35.004 --> 0:14:36.404 other half the time in the world is like two 0:14:36.444 --> 0:14:39.804 point oh one x as good, then he's calculating the 0:14:39.844 --> 0:14:42.724 expected value. He's so committed to that that, hey, you know, 0:14:42.804 --> 0:14:47.084 one point five is greater than one. Therefore you take 0:14:47.244 --> 0:14:49.244 the coin flip, even though you might destroy the world, 0:14:49.284 --> 0:14:51.644 and in fact, you take that coin flip repeatedly, over 0:14:51.684 --> 0:14:53.924 and over again. This is called the Saint Petersburg paradox, 0:14:53.964 --> 0:14:57.004 where it's a bet that has infinite expected value, but 0:14:57.044 --> 0:14:58.644 it is infinitely likely to leave you ruins. 0:14:58.684 --> 0:15:00.724 So what should you do? Probably not take the bet. 0:15:00.724 --> 0:15:03.844 It's not that hard a dilemma, actually, but to SBF 0:15:03.884 --> 0:15:04.284 it was. 0:15:04.444 --> 0:15:08.124 And in my interviews with him, you kind of find 0:15:08.164 --> 0:15:09.964 a pattern of him saying, I mean, the first thing 0:15:09.964 --> 0:15:12.164 that I did with him, when he's riding high January 0:15:12.204 --> 0:15:14.724 twenty twenty two, Bitcoin still near its all time peaks, 0:15:15.084 --> 0:15:15.684 He's like, if. 0:15:15.604 --> 0:15:18.844 You're not really literally willing to ruin. 0:15:18.604 --> 0:15:21.444 Yourself, not the fake ruined, Like if Elon Musk has 0:15:21.484 --> 0:15:23.964 to sell Twitter and he's only worth one hundred and 0:15:23.964 --> 0:15:26.724 seventy billion dollars instead of two hundred and twenty billion dollars, 0:15:27.604 --> 0:15:31.364 that's not what it would describe as being ruined. And 0:15:31.444 --> 0:15:33.484 Sam was very clear that I don't think you should 0:15:33.484 --> 0:15:36.084 protect your downside. You have to be so risk loving 0:15:36.444 --> 0:15:38.764 that you should literally be willing to like destroy your 0:15:38.844 --> 0:15:42.364 life and your reputation if it's positive expected value, which 0:15:42.484 --> 0:15:45.484 I think is insane. I think reflects I mean not 0:15:45.564 --> 0:15:49.604 a clinical diagnosis, but I think literally some I think 0:15:49.644 --> 0:15:55.124 he's a somewhat defective person emotionally in other ways. And 0:15:56.684 --> 0:15:58.644 you know, the fact that he was enabled by so 0:15:58.724 --> 0:16:02.324 many supposedly smart actors is a core question that's asked 0:16:02.364 --> 0:16:05.404 by the book. I mean, you know, the New York 0:16:05.444 --> 0:16:08.604 Times review understood this, which is that it's like the 0:16:08.604 --> 0:16:12.844 book is actually pretty unsparing to some of these characters 0:16:12.884 --> 0:16:15.084 in the River, even though like it's not a boo 0:16:15.164 --> 0:16:17.204 where I'm gonna be like Peter Teal is evil and 0:16:17.244 --> 0:16:19.284 Elon Musk is evil and a fascist, Like that's not 0:16:19.644 --> 0:16:21.404 my style of writing. And I think I think they're 0:16:21.444 --> 0:16:24.284 interesting people who deserve to have their stories told by 0:16:24.284 --> 0:16:27.804 someone who kind of understands the personality type. But SBF 0:16:27.884 --> 0:16:31.204 was a really dangerous figure and on top of everything else, 0:16:31.244 --> 0:16:34.724 like also a fairly bad calculator of risk. His decision 0:16:34.804 --> 0:16:37.404 to go take the witness stand at his trial after 0:16:37.444 --> 0:16:42.564 the government's testimony was just incredibly devastating, and they had 0:16:42.644 --> 0:16:46.124 him dead to rights and contradicting everything he told people publicly, 0:16:46.124 --> 0:16:48.684 everything he told me in interviews that were on the record, 0:16:48.724 --> 0:16:50.444 although with an embario, I mean, they couldn't be used 0:16:50.484 --> 0:16:54.044 until the book was released. You know, the willingness to lie, 0:16:54.204 --> 0:16:57.564 plus the constant miscalculations he made where he probably could 0:16:57.604 --> 0:17:00.524 have avoided jail time by conceding defeat and not taking 0:17:00.524 --> 0:17:02.564 the witness stand. Not awitted all the jail time, but 0:17:03.124 --> 0:17:06.964 ten years or five years and not twenty You know, 0:17:07.724 --> 0:17:10.284 why did so many people vouch for him? 0:17:10.284 --> 0:17:11.964 As a question that I think has to be has 0:17:12.004 --> 0:17:12.684 to be pondered. 0:17:14.524 --> 0:17:26.404 We'll be back after a quick break. You actually touched 0:17:27.084 --> 0:17:30.324 on something there which I think is important to unwrap 0:17:30.364 --> 0:17:33.244 a little bit more, which is that if you're taking 0:17:33.244 --> 0:17:36.484 these huge gambles, you better be pretty damn sure your 0:17:36.524 --> 0:17:40.284 calculations are accurate, that your percentages are accurate. But we're 0:17:40.284 --> 0:17:41.964 living in a world where you can't do that, and 0:17:42.244 --> 0:17:45.524 so I'm curious. You know, you build models, right that 0:17:47.004 --> 0:17:50.004 try to kind of model things that are uncertain, that 0:17:50.044 --> 0:17:53.404 are unknowable, that have this margin of error, And so 0:17:53.924 --> 0:17:57.564 I think you understand more than most people that you know, 0:17:57.604 --> 0:18:00.724 if you say sixty percent certain or like sixty percent 0:18:00.804 --> 0:18:03.884 chance of this, like you're not actually like that. There 0:18:03.964 --> 0:18:06.124 is a margin of error there, right, Like if you 0:18:06.524 --> 0:18:09.804 fifty one percent likely that you're going to have a 0:18:09.804 --> 0:18:12.804 plus EV and forty nine What if you're wrong, right, Like, 0:18:12.844 --> 0:18:16.484 what if it's forty nine that you're that you're actually 0:18:16.484 --> 0:18:19.964 negative TV and fifty one that you're going to destroy civilization? 0:18:20.364 --> 0:18:23.284 So I'd love you to walk us through that thinking 0:18:23.444 --> 0:18:26.404 and through kind of the hubris that you both need 0:18:26.444 --> 0:18:28.724 to succeed in some ways in this area. But also 0:18:28.804 --> 0:18:31.364 that might make you over confident of these sorts of 0:18:31.364 --> 0:18:33.644 percentages where you really really can't afford to be. 0:18:34.484 --> 0:18:38.924 Yeah, look, we've seen bad election models. We saw models 0:18:38.924 --> 0:18:42.164 I gave Yeah, saw models I gave Trump a one 0:18:42.204 --> 0:18:44.564 percent chance or zero point one percent chance of winning 0:18:44.564 --> 0:18:47.324 in twenty sixteen. We saw models earlier this year that 0:18:47.404 --> 0:18:49.764 gave Biden, even after he had tanked in the debate, 0:18:50.204 --> 0:18:52.044 a fifty to fifty chance of winning, which didn't make 0:18:52.044 --> 0:18:55.484 any sense. Even building models for these kind of close 0:18:55.644 --> 0:19:01.364 problems like elections or sports forecasting is pretty tough. You 0:19:01.444 --> 0:19:03.164 have a lot of choices to make as a modeler, 0:19:03.524 --> 0:19:08.884 your biases might creep in and other things. So to 0:19:08.964 --> 0:19:12.004 then kind of take these very back of the envelope 0:19:12.484 --> 0:19:16.284 informal models and try to apply them to every problem 0:19:16.364 --> 0:19:19.444 in the world is you know, obviously prone to going 0:19:19.484 --> 0:19:22.644 wrong to some extent, and like in effective altruism, they're 0:19:22.764 --> 0:19:27.044 very literal about this. I talked to to Will mccaskell, 0:19:27.124 --> 0:19:28.564 who was kind of one of the founders or at 0:19:28.644 --> 0:19:30.764 least the brand name of EA, and wrote a book 0:19:30.764 --> 0:19:33.084 called What We Owe the Future. He calls himself a 0:19:33.604 --> 0:19:35.964 long term mispaning. He's concerned about the very very very 0:19:35.964 --> 0:19:38.604 far future. The first time to talk to him, he 0:19:38.724 --> 0:19:41.164 was like, okay, so how do we weigh like a 0:19:41.244 --> 0:19:43.844 human's life against an animal's life? And he's like, well, 0:19:43.844 --> 0:19:46.924 it should be based on the number of neurons in 0:19:46.964 --> 0:19:49.764 the animal's brain, or maybe the number of neurons to 0:19:49.844 --> 0:19:52.204 the one third power or something like that. It's a 0:19:52.204 --> 0:19:55.324 good approximation, but that leads to weird things like an 0:19:55.364 --> 0:19:56.724 elephant elephants. 0:19:56.844 --> 0:19:58.124 Elephants are actually. 0:19:57.804 --> 0:20:00.964 With more than human beings by that calculation, it turns out, 0:20:01.684 --> 0:20:04.084 but you also face some comfortable decisions. The book uses 0:20:04.124 --> 0:20:06.964 a story of a time when a dog named I 0:20:06.964 --> 0:20:07.924 don't I. 0:20:07.804 --> 0:20:10.564 Didn't know, Yeah I did it realize that the poodle 0:20:10.684 --> 0:20:12.804 like I didn't know this story, so please, yeah, please. 0:20:13.244 --> 0:20:16.564 There's a poodle that name named Dakota that gets loose 0:20:16.604 --> 0:20:19.604 in Prospect Park or some park in North Brooklyn from 0:20:19.644 --> 0:20:22.524 its owner and dashes into the subways at the first 0:20:22.524 --> 0:20:27.404 stop inbound on the F train from Manhattan to Brooklyn. So, 0:20:27.404 --> 0:20:29.724 and this is happening at like three point thirty on 0:20:29.804 --> 0:20:32.444 a weekday, so you're starting to get the rush hour commute. 0:20:32.444 --> 0:20:35.044 And the question is should we shut down the entire 0:20:35.244 --> 0:20:39.764 F line in order to search for and rescue Dakota, 0:20:39.804 --> 0:20:42.204 which they did, and Dakota popped up at some other 0:20:42.284 --> 0:20:45.644 subway station an hour or so later. But that's a 0:20:45.724 --> 0:20:47.644 case where I'll put it this this out, put it 0:20:47.644 --> 0:20:50.844 in the book. If you had, like a human baby 0:20:51.324 --> 0:20:53.884 who had fallen onto the tracks, like, no one would 0:20:53.924 --> 0:20:58.044 dispute that we should halt every train till that baby 0:20:58.124 --> 0:21:01.284 is found. If it was a squirrel, then we would 0:21:01.284 --> 0:21:03.524 just run on the squirrel, right, no questions asked. 0:21:03.844 --> 0:21:05.884