Podcast notes – Maxine Clark (Build A Bear founder) on EconTalk with Russ Roberts

Maxine Clark – founded Build A Bear workshops – 25 year anniversary, started in 1997
Have other animals too – dogs, cats, fish, etc

Was in retail for 20+ years before BAB (former President of PayLess)
Started BAB in St Louis

Wanted to do something for children, engage their imaginations, but no one was doing it
Even in a zoo – trainers can touch animals but you’re not supposed to

Studying Beanie Babies – her friend Katie declared it was easy enough to make on their own
Maxine had lightbulb moment – why not let kids build their own? – started looking to buy a pet toy factory
Thought about naming the animals, but Katie suggested not naming them because each owner would want their own name

Customer experience
Disney-like experience, more like theme park than a typical retail store
Hardest choice is picking animal you wanna make
You can add sounds and scents (one of most popular scents is birthday cake)
Stuff bear, fluff it up, then it’s machine stitched for you (originally they were all hand stitched)
Then you name it, prints out a certificate of ownership
It’s a family experience
Popular birthday gift

Why are bears cuddly? Not true in real life
Teddy bear comes from 1902, president Teddy Roosevelt – hunting trip, saw 2 bears, would not shoot them, brought out kindness & empathy
A toy company proposed the idea of a toy “teddy bear” and the president endorsed it
In Germany at same time, similar concept was popularized

Bought patent for their unique fast sewing system

Have sold 200M+ bears

Birthday parties in-store were very popular

Lots of partnerships eg Girl Scout bears, Hello Kitty, etc

400 worldwide stores
Regular store is ~2500sf

Bears are neutral – no race, no political opinion
Everywhere in world, try to localize costumes and accessories

Hired a lot of teachers who worked part-time – great source of ideas and culture

Profitable in first few months of operation

One customer wanted to stuff their dog’s ashes into the bear
Another customer wanted to incorporate their child’s pacifier as a keepsake
Always try to accommodate special requests
“Yes” is our philosophy
Hire “huggable” people – employees who love children
Group interviews – watch them make bears, watch their enthusiasm and facial expressions

Store primary color is yellow – it’s the international color of the happy face

McDonalds – focus on process that ensures reliable quality no matter the employee, instead of on outstanding individual employees

stopped listening at 2/3 of episode

Podcast notes – How the internet happened – Chris Dixon (a16z) and Brian McCullough (author)

Host: Chris Dixon, a16z partner
Guest: Brian McCullough, author and podcaster

Just published the book “How the Internet Happened, From Netscape to the iPhone” (Amazon)
covers Netscape (1993-ish) to announcement of first iPhone (~2007)
2007-today is the smartphone era

Technology infiltrated every facet of our lives

Bad idea cards – “internet grocery delivery”, “pet foods” – almost every bad idea later became a huge company

Dot com bust was like the meteor hit, the dinosaurs died, but then it all came roaring back

In early 2000s, general sentiment was that internet was cool, useful, but you couldn’t really make money – until the Google IPO, which shocked everyone how profitable they were

In early days, there was a centralized version of the internet called the “Information Superhighway” being pushed by large companies like Disney, Microsoft, etc
The decentralized / distributed network was the underdog
The centralized version / participants thought they had more time, but they lost. What’s the lesson?
“Just good enough technology IS good enough”
Need to excite enough people, reach critical mass
Lots of them were developers who could build
HTML was simple enough, lowered barriers to entry – launch of Mosaic browser
Bill Gates had the vision, but bet on the wrong horse (the centralized version)

eBay – they were one of the most influential early products, even though they aren’t as massive today
1. trained normies to trust strangers online
2. power of self organizing masses to build reputation and relationships
Omidyar didn’t want to settle the disputes between users, so built a reputation and ratings system to let users self organize
“Our business model is whatever our users are doing on our platform”

Napster – today media world is unlimited selection + instant gratification – Napster built that in 1999, but picked fight with wrong industry (music industry literally had mob ties)
turns out key value prop was the convenience, not the price
can’t convince an industry at height of its success to change

Google’s business model was 2 miracles
1. The search engine
2. Overture’s ad model (which Google acquired)
As advertiser, you pay LESS per click the better (more relevant) your ad!
Users actually PREFER having ads
Before that it was all banner ads
Larry & Sergey stuck to principles, were betting that a biz model would come
Initially tried to sell a box for Google Enterprise Search

Turns out on-demand delivery needed smartphones – which came later
Smartphone is perfect for both creation and consumption

We’re in a lull today
No new “wow factor”
Lot of low hanging fruit has been picked by mobile + social
To become the new IG, need to create a qualitatively better experience
Can’t just show up and acquire 1B users

Tech is interplay of infrastructure + applications
iPhone + App Store was infra unlock, which lead to explosion of apps
what’s next infra wave? or are we at end of history?

Founders doing same playbook as 2004
Maybe need new builders to have cultural shift / strategic shift

Is it dangerous because the top companies today have become too big, and just buy the small innovative cos?
Alex Rampell – startups try to find distribution faster than incumbents try to find innovation
Snapchat is great example – invented new media type (vertical short video, ephemeral messaging) – but growth was limited by FB / IG copying
Etsy – Amazon copies them
Tivo – great idea, but Comcast eventually copied it (took 5 years)

PC industry was literally created by hobbyists
Find the spaces where people do it for fun
Most businesses operate on a quarterly or yearly cycle
No one invests in 10 year cycle except maybe academics and hobbyists – which is why often the breakthru innovations comes from these sources

So much of it is just feeling around in dark, fake it til you make it
Even Bezos, Amazon was a test to prove it to himself – once he proved it, then he went all in
Even FB, Zuckerberg thought Wirehog would be bigger, took others to tell him to believe in FB and double down on it

Podcast notes – The Disney movie Encanto with its directors and writers

Host: Q&A with Jeff Goldsmith
Guests:
Writer director Jared Bush
Director Byron Howard
Writer co-director Charise Castro Smith

Jared and Byron worked on Zootopia together
Zootopia started as animal spy movie on an exotic island
Jared learned to take chances and experiment early
Byron – “be wrong as early as you can”

Charise started as playwright and actor, wrote for TV, wrote for Exorcist, Haunting of Hill House
Jared and Byron were looking for a writer for the “first LatinX Disney musical”
Later asked her to become co-director

During Zootopia, J & B both wanted to do something musical next
Lin Manuel wanted to do something LatinX
Combined the two

Tell story about family but wanting to be unique among Disney films
Exploring notion that family sees us differently from how we see ourselves
Families are fantastic but also complicated
Magical realism
Bunch of magical kids, but one kid was ordinary – this was the hook
Everyone’s felt that sense of lack of self worth
Charise brought concept of Abuela (grandmother) as core, of magical realism

Magical realism is tradition that is rooted in pain, beauty and magic and pain

Started in fall 2016 with Lin Manuel and breaking story with him
Spent a lot of time on theme and family before going to plot
Research trip to Colombia w/ Lin, went all over the country, inspired look of Madrigal Valley, the tall palm trees

Hyper collaborative process
Disney Animation is “aggressively collaborative”
It was Disney’s 60th animated film
Oscar nominated

How they created rules and origin of the magic
Encanto = charmed place, place w/ amazing spiritual energy
Charise’s idea for moment of tragedy, and magic springing from it
Charise’s own family left Cuba and started new life in America – concept of internal displacement, leaving home and starting again
It was Abuela’s love and protective energy that came from this moment of pain

Movies work better with strong antagonism
Tried a railroad baron enemy, a mean family in town, etc
Generally this is external, but it didn’t feel as real for this movie as having the antagonism come internally (from within family)
Family all love each other – but have their own baggage
They have 12 main characters – already a lot, don’t have time for external enemies

Ensemble writing is tricky
Spent a lot of time with each character
Writing so many drafts, process of getting to know the characters deeply
Opening song sets up the personalities and exposition right from the get go
Thru screenings, see which characters pop, give them more time

Bruno
Idea of outcast / black sheep
Idea of kid who could see the future
People don’t really wanna know what’s going to happen in future, what a burden to have this power
Bruno’s role evolved to being more of cautionary tale, in background of story (initially)
Walking away was great act of love, to help / protect his family

“We don’t talk about Bruno”
Song is a big hit
Came late in the process
Lin wrote the song, was excited to tell a spooky ghost story, initiated idea / chords over Zoom very early, everyone else got excited

Charise:
Abuela was one of hardest characters to nail, finding balance in her antagonism
Had internal group of LatinX employees giving feedback, they were very divided in their opinions about Abuela
Once they cast the voice actor, she really helped them make the character work

Editing process
Hard to do everything over Zoom
Needed moment for audience to empathize with Abuela – the pain she was hiding, the sacrifices she made
Editor was completely bought in and committed to the story – made the remote work easier given how much is done concurrently

The ending
One team member pushed for long time for the ending (building house together w/o their magical powers)
House was always metaphor for the family’s health

Toughest scene
Charise – Mirabel and Abuela’s big argument before the house fell down, how to navigate culturally while telling the truth
Jared – Mirabel discovering Bruno in his room (the reveal, and his relationship w/ Mirabel)
Byron – Mirabel’s song (“Waiting on a miracle”), Lin also struggled with this one the most, did a lot of versions / demos, Mirabel’s layered old soul but still a 15yo girl

Podcast notes – Sam Bankman Fried (FTX founder) with Tyler Cowen

Guest: SBF – FTX and Alameda Research founder, crypto billionaire
Host: Tyler Cowen

What is his production function?
World is messy, huge power in getting quantitative / numerical when it’s hard to do so

Worked at Jane Street before crypto
Lot of interview questions are game questions
You’re always making probabilistic decisions, focus on the factors that matter and ignore the rest

Trading is grinding to do a good job
Goal is making money
Constantly think of solutions and try them out

Parents are famous Stanford law professors

Utilitarian perspective – turn things into numbers, and decide which number is the biggest, even in a messy system

Crypto today is enormous fraction of discourse in politics and regulation
Understand the nuances, possible directions
200 countries – each one is trying to figure out how to regulate crypto

Thought he was a good manager until he started Alameda
Seems easy when things are going well
What to do when two employees vehemently disagree?
First, think of the object level truth / answer
Find the right answer
Company culture should focus on that right answer, being ruthless about it
Need agreed upon process to make hard decisions

Some sports teams outperform every year
eg, Belichick + Patriots
They’re known for doing the right thing – what play optimizes our winning – it’s not about conventions or what’s popular
In sports, a lot of fruit is low hanging, focus on that

Supporter of effective altruism
Lot more funding for it now than before
Still need more innovation in how to properly spend money
Also need more good people – to start and lead projects and take responsibility for their success
A leader who can get everyone to take leap together, putting flagpole down

Next $million, where do you give it?
Two things
1. Pandemic preparedness (covid response screwed up, haven’t improved for next one, we got lucky all things considered). We just shut everything down. Vaccine was fast by vaccine standards but not by “people are dying” standards. Lobbying Washington for more spending on pandemic preparedness. Funding vaccine capacity / vaccine stockpiles / early detection systems
2. ?

He’s a pure Bentham-ite utilitarian
Tyler: Why spend money on life extension? Easier to grow utils than save them
SBF: Not compelled by life extension research, not necessary for world flourishing

SBF is vegan
No problem with eating meat if you’re net happy
When he switched to vegetarian / vegan, took 6 months to make real progress
Easier to go cold turkey than steadily wean off it
Doesn’t like cognitive load of deciding whether to eat meat

Everything gets weird at infinity when you think about expected values
Infinity matters, but no one has good account of it

Crypto
Can you coherently regulate stablecoins?
All stablecoins backed by dollars, in regulated accounts – solves most of current problems
But lots of gray area, like what’s difference between PayPal and USDC?
Banks can re-hypothecate, but what about stablecoins?
How do you regulate a coin that doesn’t call itself stable, but in reality has a very stable price?
A stablecoin is stable in both directions (asymmetric for consumer)

DeFi
Tyler: where is implicit (hidden) leverage?
In 2008, lots of bespoke OTC swaps that weren’t properly accounted – these exist in crypto too
Everything’s on-chain, but it’s inconsistently tracked
Dai – algo stablecoin, backed by crypto assets, not perfectly stable – but can also be used itself as collateral for other loans / leverage

Do we have rational theory for crypto prices?
Dogecoin – does away with pretense – can’t do DCF – bizarre and wacky but powerful – it’s just supply and demand (memes and anti memes)
Elon’s greatest product is TSLA (the stock, not the car)
Are there other asset classes aside from crypto that have price models that are similarly artificial / unreliable?
Meme stocks show this

Bitcoin’s price comp with gold is useful
Currently trading ~10% of gold
Swiss franc or bitcoin – which has more impact on world? Now the answer is obvious, but it wasn’t 2-3 years ago

What does it take for global scale blockchain?
take NYSE, Nasdaq, Google, Facebook
if billion users, 10 clicks per day, 1M TPS (transactions per second) – need something of that scale
most blockchains can’t support that today
ETH can support 10 – off by 6 orders of magnitude
ETH2 will support thousands of TPS per shard, but the shards don’t talk to each other

Growing up, McDonalds fries were his favorite
hard to find good fries in Asia
Tyler’s favorite fries are in Patagonia (also Belgium)

likes Beyond Burger – huge fraction of all veggie burgers sold, taste a lot better than most veggie burgers

currently in Bahamas – somewhat bullish on it, great place for some types of businesses
investing in schools, health infrastructure
nimble small state, robustly democratic
people are very nice
close to Miami
how would he give away $10M in Bahamas?
Health and hospitals
cash transfers are always a reliable answer

Podcast notes – Kyle Samani (Multicoin) on what’s next for NFTs (w/ Frank Chaparro)

Host Frank Chaparro – The Block
Guest Kyle Samani – Multicoin Capital

Hedge fund founded in 2017
Funded Solana, FTX, Helium

How he survived through 17-18 bear
Founders worked hard, he supports them
Parents were immigrants – taught him persistence & grit

NFTs don’t have pieces of state with relationships with each other (yet)
eg, Bored Apes are individually isolated
Designing relationships between NFTs, and letting them evolve over time

Beeple’s 5000 Days should be 5000 separate NFTs that are related to each other, have games to collect and combine them

Recombining NFTs into social games

Fan clubs – Bieber’s new song, letting first 1000 listen to it early

Where they’re investing?
3 layers to NFT stack:
1. Primitive / infrastructure – eg, Arweave (storage), Render (distributed graphics rendering), Metaplex (Uniswap of NFTs on Solana)
2. Exchanges – Hakku (NFT exchange on Polygon), invested in at least 3 now
3. Buying NFTs directly – invested in Loot, but will be small (less than 1% of assets), hard to do this at scale

NFT exchanges will segment – doesn’t make sense that apes are traded in same way as .eth names as metaverse land, there will be many exchanges, they’ll vertical-ize

How are valuations justified?
Just assume every musician will issue a 10K NFT collection – why can’t that be sustained? Most of them have several Ks of fans and some have much more
People underestimate scale the internet brings, TAMs have gotten way way way bigger

Web3 will be less disruptive to society than web2
Web3 = Permissionless flow of value (web2 = permissionless flow of information)
Who will win? Majority will be net new protocols and businesses (not web2 / traditional industries)

NFTs = let superfans self identify and spend
Patronage models for creativity will evolve

Power law distribution happens everywhere, will also happen in NFTs / web3

Multicoin’s alpha is identifying new theses, what new tech enables

Growth in users, revenues, have really accelerated
Why? They all have smartphones, they all have internet, they’re all comfortable (now) spending money online

New inventions will be made regardless of what happens in global macro

Is there froth in venture?
It does feel frothy, easier to be crypto VC bc time to liquidity is shorter
Absolute $ in crypto VC is still much smaller than trad VC
Valuations won’t come down for high quality teams

Once product market fit established, rate of growth / adoption will be faster than ever – viral and reflexive nature in crypto is extraordinary and still deeply under appreciated

How many investments so far in 2022?
5-10 investments
Deploying capital as fast as ever

Doesn’t know or care bitcoin price, really avoids checking crypto prices

Park City, Utah is now his home base
Loves snowboarding

Public pension funds are buying top layer 1s – that’s the bid – not just btc / eth

Most investors no longer have regulatory risk as the main reason not to invest

Many investors in 2010, 2011 were skeptical of internet / software, now everyone sees that power and transformation. What’s next? A lot are looking at crypto as one of the future’s big platforms

What investments is he looking for?
Metaverse (infrastructure, defi broadly, Graph, Render, Fluid) – prefers those that are working on credibly neutral
Social media – soon something social will break out that will be crypto native

True crypto natives today – closer to 1M than 10M
Large enough to bootstrap meaningful social network
In 24 months, these users will move off Twitter onto something crypto native