Guest: David Senra, host of Founders podcast
Host: Patrick O’Shaughnessy
Lifelong love of reading, visiting bookstores
Family has a hard history – parents didn’t graduate high school, first male in family not to go to prison in many generations
Married for 15 years
“Great biography is like a movie for your mind”
Warren Buffett – “pick the right heroes”
Charlie Munger also read hundreds of biographies
Most of the heroes he studies are imperfect human beings
But if he had one as a blueprint, it would be Ed Thorp (math prof, blackjack)
James Dyson – 14 year struggle to build the Dyson vacuum, went through 5K prototypes to finally succeed
Sam Zemurray, Fish that ate the whale – banana company founder – poor teenage Russian immigrant in the US, succeeded through his incremental obsession; funded a coup to protect his business
Vanderbilt – at death controlled 1 in 20 dollars in the economy; tried to kill someone who wanted to seize a part of his business
Francis Coppola – dad was a failed musician; fanatical obsession to learn and make films
Sam Walton – long before he started Walmart, landowner screwed him over and copied his first retail business; but he didn’t quit, he went to more towns and replicated the success
Largest predictor of business success is the market you’re in, more than the idea – yet the great Founders all have to relentlessly execute for decades
All Founders had deep historical knowledge of their industry, influences
Steve Jobs – recruiting talent is most important job as a founder
-Steve said “I wanna make insanely great products” not “I wanna build a billion dollar company” – focused on the right things
-“Made and re-made Apple in his own image”
-At NEXT (after he left Apple), it’s like he was Bizarro Steve Jobs and did all the wrong things
Michael Jordan – “I believe in practice”, realized that he practices on different level than others
Richard Branson – business is a product or service that makes someone’s life better
Ed Thorp – every hour in fitness is one less in hospital
Larry Miller – owned Utah Jazz, wrote book on his death bed, regretted his overwork and how unhappy he was through it all
Masters of Doom – John Carmack: “Romero wants an empire, I just wanna make great games”
In N Out founder – only 17 stores when he died, but was obsessed with quality the whole time
“Who are your entrepreneurial heroes? Everyone copies someone”
Tony Xu – Doordash founder – “culture is 80-90% personality of the founder”
Walt Disney – both he and Ferrari’s first companies went bankrupt; most proud of Disneyland; worked til day he died
“Their mediocrity is my opportunity”
Warren Buffett said David Ogilvy is a genius – no business is boring, only boring advertising
David ends up reading each book 5 times through research, recording, editing, and promoting it – also uses Readwise to refresh highlights
“Find your obsession, and make your exit strategy death”
Most highlighted book of his is Ed Catmull’s biography (Pixar)
“Excellence is the capacity to take pain” – Four Seasons founder
“Podcasting is printing press for spoken word”
-Completely permissionless
-His fave podcaster is Dan Carlin (Hardcore History)
-Also likes Bill Burr’s Monday Morning podcast
-Podcast is like choosing a friend
—
Below is “podcaster reading famous biography books, pixar style, photorealistic” from Simple Diffusion:
Went to India for 6th time, read 100s of books, but traveling there is a deeper and different kind of knowledge
Prefer traveling over reading
What is Conquest’s law (note to self)
Doesn’t see left v right (eg, left wing, leftist politics) as consistent and historical categories
Doesn’t buy that famous / successful people in the past were more abused or had harder childhoods – lots of selection bias, historical bias
Disappointed at how geographically clustered “talent” is – today it’s places like London, NYC, etc
These talent clusters have been such for a long time – seems like an enduring effect
Talent comes from many different areas, but always migrates to these clusters – how good are these clusters at producing talent, versus attracting them?
Problem for SF – may be a more temporary cluster, not much historical persistence
Why did Renaissance blossom in Florence and Venice but not Milan? Hard to understand
High status thing to do is feign humility
Well-dressed 20 year olds (eg, suit / business) are too conformist for what he’s looking for
Nootropics – don’t personally like it, but does seem to work for some people
Doesn’t drink coffee
Believes 15-17 year olds among most neglected talented people – high schools should invite real local experts to talk to them
The best moral instruction (in classrooms) are teachers being good people
“Context is that which is scarce” Kids learn a lot of context in school – even if they can’t memorize as many explicit facts – it’s the residual, it’s what matters
“Super talented are best at spotting other super talented individuals”
There are exceptions, not a science, but there’s some art / intuition to it
Will sometimes chew out certain people, try to light a fire under them
Not an EA (effective altruism) person, but like libertarianism it will continue for quite a long time Need more religions – in the meantime EA will do
Emergent Ventures – applicants are remarkably bi-modal distribution – pretty clear who makes it vs doesn’t make it
Believes a lot of foundations give out too many big grants, not enough small grants – small grants are under-rated
Believes mental stamina / energy can increase significantly (eg, 30%) – but some people are gifted super stamina
Lots of geniuses can’t get out of bed in the morning – they’re stuck and you should write them off
Top level athletic performance is very cognitively intense – this is under-rated – you have to be really smart to practice, lead a team, outsmart competition, “very g-loaded”
“Whoever is the top gardener [in the world] – I suspect I would be super impressed by”
Should be more bullish on immigrants from Africa – hard to get out, so it’s a positive sign
US not into demographic decline yet – maybe so in Japan
Doesn’t worry as much about woke ideology – “if that keeps you down…I’m not so impressed by you”
“Europe isn’t woke enough in a lot of eyes… chauvinist, old fashioned”
Europe is less egalitarian (than America) – Paris is the extreme by status; too few dimensions of status competition
YC more like scalable business school now – could be stale in good sense like Harvard is stale
Novelists can blossom much later, very discrete act – won’t really know until you do it – makes it harder to predict talent
Existential risk matters more than almost anyone thinks – but the things we do to eliminate them are more typical than most EA believers think – also over worry about certain types of risks, “not epistemically modest enough”, eg, AGI alignment
After a modern nuclear war – humanity permanently set back, medieval living standards, feudalism, more violence – no reason to assume you just bounce back, more problems will appear after – crop failures, climate change, disease
“Existence of sex is most pessimistic thing there is” – can’t just stand still or you will die / be defeated – thus sex as requirement to force genetic diversity
Growing up, read a lot of sports and chess biographies
Has blogged for 20 years – importance of constancy – like a public biography
If only had 5 years to live, would focus more on Emergent Ventures – institution building and talent spotting
Most talented people have unique philosophies / worldviews – eg, Peter Thiel (on Gerard, one heretic belief) – need unique way of looking at the world, protects you from other peoples’ idiocy
Doesn’t bet as much on single ideas unlike, eg, Jordan Peterson – rationale is he wants to stay as broadly relevant for as long as possible
Leading by example is number one way we teach – specifically referring to his students at GMU (?)
Bloggers – as people who write publicly on regular basis – have been around for centuries – will survive a long time
Substack encourages posts that are too long, too whiny, too focused on a few topics
The more that progress advances, the easier it is to destroy things, easier to destroy than create – to square his short-term optimism with his long-term pessimism
Fukuyama has changed views often – one of his views is that rest of history is how we’ll manipulate biology “Are you long the market or short the market?” – one of Tyler’s favorite forcing questions
—
And this is what Stable Diffusion thinks is a “lunar society, podcast interview, two people”:
Start with peak of British Empire
Late 1800s, British start series of wars with Germany (the rising power)
Shooting of archduke Franz Ferdinand —> WW1
After WW1, power vacuum, collapse of Ottoman Empire, the bloodiest global war in history (20M deaths)
Treaty of Versailles – UK, US, Germany, and France – negotiated peace terms
Demand large war repatriation payment from Germany – half a trillion in today’s USD
Germany tries to pay in the 1920s, fail, decide to debase currency —> hyperinflation —> German collapse —> rise of Hitler
Then WW2 happens 70M people die – 3.5x more than WW1
Leads to largest baby boom in history – global population grew by 30%
Transition from British to American dominance
UN, Nato, EU – super infrastructure, centralization of power – all built around America / Pax Americana
New Deal – financial repression + large fiscal stimulus – created 1950s and 1960s boom (golden age, rising real wages, rising living standards)
1960s-70s – baby boomers enter workforce; Massive increase in workforce
Consumption and prices explode
It’s a demographic phenomena, not a monetary one
In 1970s, Nixon move away from gold standard Wages stopped rising in real terms – since 1975, have only risen 0.3% / year
Asset prices and GDP rise, but real wages and living standards don’t —> Poor / lower classes gets angry —> Populism
In 1980s, Reagan + Thatcher
Thatcher – council houses (cheap / free housing for low income) – genius political move
But turned all of poor into debtors – now they’re slaves
Reagan does same, but for credit
Massive de-regulation for credit, financialization explodes: 401k, housing
Process accelerates, more retail borrowing, more asset price growth, but real wages still not growing
Leads to liberalization of Wall Street, power of free market
Politicians don’t think explicitly about currency debasement – they kinda delude themselves – it’s about incentives
1987 – Alan Greenspan cut rates to stabilize economy, becomes tool for Central Bankers, believe they can control business cycle
1990 – Berlin Wall falls, Communism falls, China opens and begins to reform
1996 – change from GATT to WTO – globalize and liberalize markets, reduce tariffs Now American worker is competing against global worker
Baby boomers now facing debt burden, rise of tech, global labor competition
1998 – lots of leverage in emerging markets, first Thailand, Asian currencies crash against USD; too much USD lent to these countries
Good for American influence
Late 90s – growing financial speculation especially in housing and stocks
Banks making record margins, then LTCM blows up
Greenspan cuts rates, world stabilizes – now people think “Central Banks have got your back”
Start of largest stock market bubble in recorded history (2000s crash)
Rates cut again
Housing begins to boom
Leads to 2008 crash
Labor force participation rate begins to fall in 2000s – exactly maps velocity of money; similar to birth-death rate
When you retire, you spend less
When your population is growing less, there’s less economy activity
Hyper-financialized system
Weakest balance sheets are households, backstopped by banks
QE starts – it’s printing money but “magic sleight of hand”
In debt crisis, collateral can’t go to zero
Didn’t think it would debase currency, most people didn’t notice Fed is papering in cracks of demographics – all trying to offset an aging population
Debasement is making us poorer – eg, S&P 500 prices aren’t rising when divided by money supply
It’s an “everything bubble” – everything follows the Central Bank balance sheet – same with many developed countries
Only 2 asset classes have outperformed (money supply growth) since 2008 – bitcoin, and Nasdaq (tech) – when incorporating this money printing / QE
Rise of the Internet
People are angry – “people realize they weren’t going anywhere”
Facebook is perfect place to divide everybody
Rising education costs, healthcare costs
2010s – 4th turning
Transition of power from one demographic (the boomers) to another (the millennials and younger)
After 2008 housing bubble, new bubble is corporate debt bubble – especially since rates are low
Could have fixed things as late as late 90s, Asian financial crisis – last unforced error – but now it’s too late
2020 – Pandemic
Fed + government = fiscal stimulus, no defaults
Fed even buys corporate bonds “Horror story but it worked” – world saved (for now)
Asset prices go up, but not when accounting for money printing
Now they’re (Central Banks + govs) incentivized to do even more
China’s GDP will collapse with shrinking population
Japan has same
Financial repression = inflation > bond yields
Bonds = GDP growth + inflation
“No one knows who the hell owns what in an overly levered financial system”
At the top (eg, the DTCC) – assets aren’t segregated (between government / Central Banks and private holdings) – thus a collapse means everyone’s assets are at risk
2008 – Satoshi whitepaper – function of all the money printing, financialization, debasement
Debasement hides reality
Bitcoin changes the equation – ubiquitous global scarcity – the migration begins to a parallel financial system
People don’t trust financial intermediaries anymore
What you’ll see
-Ongoing gradual debasement (of fiat)
-Ongoing gradual migration (to bitcoin and crypto)
Corporate cash
What can you do with it: share buybacks, M&A, real estate
But only earn 3% on that cash while assets rising 15% / year
So next year you can buy ~12% less
Population is reducing everywhere – self balancing mechanism of humanity, can’t afford to have kids Peak around 9.5-10B people globally
Robots will replace humans
Where this is going
-Bitcoin
-Online nation states
-Metaverse – everyone will live in different worlds
RB: Real world is becoming a video game
Next 15-20 years will be very hard transition – currency debasement, gov debt, demographic shift, rise of crypto
CBDCs – will let governments fiscally stimulate in more targeted ways
Programmable money – all govs will do it How do you stop people revolting – you have to give them money
Redirect from capital to wages
86M millennials are pissed at what’s happening – and are more progressive – will force progressive policies Big 4th turning – everyone shifts Left
If deflationary world – what happens?
You’ll stop spending as much – velocity of money could go to zero if you’re not careful
In long run, crypto price growth could settle around eg, demographics / GDP growth – but what happens from here to there?
Could in theory stop allocating capital to everything else (eg, real estate, stocks, bonds)
Digital ID will become important – right now we’re being exploited (eg, Facebook, Google, Twitter) – that revenue should go to you, could become basis for UBI
Everything digital goes to 0 in costs of production – electricity costs will go to zero
Positive shock – what happens?
Lower population, more robots, energy costs trending to zero – everyone is rich?
Where does the power go? Who owns the AI & robots? If world run by AI, can it be distributed?
Note: I tried my best to objectively capture what Do Kwon said / meant, but I do think he’s an unremorseful criminal who should be in jail. So clearly I am biased.
Guest: Do Kwon (DK) – Terra / Luna founder Host: Laura Shin – Unchained
Since last year, hasn’t been living in South Korea (SK)
Doesn’t understand how Red Notice works very well, has asked for clarification but hasn’t heard back
Disappointed that SK prosecutors are attempting to create new regulations through enforcement actions
DK hasn’t seen copy of the arrest warrant; Laura mentions the PDF is posted online, but DK says he hasn’t seen that PDF
“We are cooperating” with all the document requests (from SK govt)
Laura: Are you in Singapore now?
Doesn’t want to talk about his location for personal security – people broke into his apartment building in Seoul (both reporters and private citizens), personal threats
Laura: What about claims that Korean authorities froze $67M in his funds
“Too many things that are not true”
Went through proper procedures to pay residual taxes, hasn’t used KuCoin or OkEx “as far as I can remember”
“LFG only holds 313 bitcoin”
Hired onchain analysis company, will provide report shortly to give more clarity – should be “in next couple weeks”
Laura: Do you feel any remorse?
“Got carried away”, should have held to stricter standards In personal life “quite a bit of introvert”
Community pull for him to be more frank, transparent
Over time Twitter became his medium to do this “Largely for entertainment value”
“It is quite cringe” – worthwhile to keep up for record keeping and posterity
Laura: many people lost life savings, Taiwanese man who committed suicide, what do you want to say to them?
“My responsibility alone”
Hundreds of thousands if not millions who used Terra – “I own up to that responsibility fully”
“It’s not easy to live with”
In the process of people dealing with this grief, there were lots of accusations of fraud / theft — “important for them to have correct representation of what happened”
Crypto founder for last 5 years “Even to this day, I’m proud of work we did…values we tried to defend”
Laura: SBS News reported Do Kwon moved Singapore profits to Virgin Islands; family used proceeds to purchase apartment “I do own an apartment in Seoul”
Moved TFL corporate structure from Singapore to BVI, no funds were transferred
People who came on Korean shows that claimed to be Terra developers “were literally just interns”
Launched UST early 2021, at that time 20% was not extremely high yield, lots of 3-4 digit Defi yields
Internally, there were questions during launch that the yield wasn’t attractive enough!
Terra’s whitepaper doesn’t describe tokenomics – intentionally written in high level academic way – why decentralized algo important for industry
Didn’t initially consider need to have a stablecoin reserve
All-time high for UST/USD was $1.09
Would use SDT reserves to bring down UST price
Also made SDT stable coins available to ecosystem apps for initial / bootstrap liquidity
Initially used market operations to maintain peg – but gradually became “negligible % of overall volume”
UST became one of largest liquid stable coins, Luna was one of largest PoS networks
Eventual goal was UST would be backed by every large and promising crypto (eg, BTC)
Laura: there’s onchain evidence of cashing out $2.7B into USDT (via MIM), sent to Binance, Huobi, others
“Definitely did sell UST and Luna to fund operations” “$2.7B or anything to that effect…was not used to cash out or anything like that”
Laura: why continue to claim Chai brought millions of users to Terra, when that arrangement had ended
2020 – Daniel Shin (ex cofounder) left TFL to focus on Chai full-time, while Do left Chai which he also co-founded to focus on TFL “Consider myself the more active cofounder in building both of those companies”
In terms of Chai, limited visibility into its user data, “I should have been more consistent in how I fact checked numbers”, “definitely shortfalls on my part there”
Laura: Sam Kessler claims that Terra unilaterally re-awarded coins to an investor who lost private key (Translink capital) without discussion “Terra can’t unilaterally decide to do an upgrade”
“Validator driven process”
Laura: Basis Cash failed, why so confident about Terra still?
Saw TFL as accelerator to create lots of different apps – Pylon (yield), Anchor, Mirror
Initial Anchor team (5-6 people) spent a lot of time yield farming DeFi – Yam, Yearn – DK first got into DeFi through this
These early devs wanted to do implementation of Basis protocol and launch it anonymously
They assumed Rick & Morty pseudonyms – asked him to be “Rick” “Terra pre-dates Basis Cash”
“Currency failure of developing nation isn’t because monetary policy, it’s because underlying economy is weak”
“Don’t think there’s any underlying problem mechanism wise, it’s because no solid economy built on top” In terms of Basis Cash, “essentially all I did was join Telegram rooms and shitpost”
“I had no involvement in those things”
“It was an educational experience…why pseudonymous founders makes sense in crypto” “Basis Cash isn’t something he designed or operated…it’s something he encouraged”
Laura: Have you ever anonymously founded other projects?
“No”
Do’s description of de-pegging event
May 7, Singapore time – UST had de-pegged 2.5%, large trades against Curve LP, depleted pool
Didn’t think it was a serious problem
Over time the disparity got worse and worse
Patterns of large sells against UST
Sentiment was catching on, rumors, runaway situation
Deployed a few hundred $M to market maker, bought a bunch of UST – re-pegged briefly, “then the sells just got worse”
Luna falling, people dumping
War room of OGs, tried to raise fresh capital to buy more UST
Midnight fundraising round – got leaked – even more shorts piled up Once Luna market cap fell below certain level, the rescue fundraise became untenable
Laura: 5 months later, why no accounting or trading logs of those market makers / peg defense?
“Bound to some confidentiality” “Lot of transactions… finally in closing phases [on this report to be released]”
“I haven’t personally taken any tokens from TFL from May 2020”
Laura: Monthly unlock tokens (3M+, up to $300M USD value per month) were going to employees / operating expenses?
“Contract obligations and things to that effect”
Laura: After South Korea passport invalidated, what will you do? “I’m not using it anyway”
“I don’t feel comfortable talking about location”
Laura: When will USDT / USDC disbursements occur?
“Until litigation resolved, not able to distribute tokens”
“Don’t have a lot of clarity on how long process will take” “Not a refund…more of a goodwill effort” [to re-distribute the 313 BTC they’re still holding]
Laura: How do you feel about direction your life has taken? “Never about money or fame or success…I like making toys, simply tinkering with things”
“I enjoy building furniture…sometimes cook” “What happened with Terra wasn’t a scam, it was a massive market failure”
“Believe in need for decentralized stable coins more than anyone else”
“I’m 31 and I would still love to contribute”
“I get to do a lot more engineering”
Laura: Anything you’d do differently?
“Maybe building onchain BTC reserves earlier, more significant” “Being less aggressive less joking on Twitter”
“Next attempts at decentralized money will look a lot different”
“Without [decentralized money], what are we even doing here?”
“Deeply regretful of how things panned out with UST” but developers need to keep building
Laura: Anything else?
“Working on lots of different things…highly experimental”
“Not working on Luna Classic at all”
Contains # of psychoactive compounds, main one is THC, also CBD (cannabidiol), also CBN (cannabinol)
THC = largely responsible for psychoactive fx of cannabis
CBD / CBN = profound effects, but not same altered perceptions / moods
“High” = number of changes in brain and body, some of which are actually result of CBD but this is not widely known
Cannabis plant has 400+ biologically active compounds
1 Sativa
2 Indica
3 Ruderalis – not often consumed; not widely known
4 hybrids of all three
Sativa taller longer plant, Indica is shorter stouter, different morphologies
Sativa = more stimulant, invigorated and alert, not as sedative, reported heightened focus / creativity, less susceptible to pain / noxious stimuli, “head biased effect”
Indica = more full body effect, full body relaxation, sedative effect, state of sleep, relieve anxiety, less stimulant **Indica = “in the couch”
Many hybrid strains
Growers are growing strains with very nuanced effects on brain and body
**Now there’s type 1, type 2, type 3 for any given eg indica, sativa, hybrid – differing THC/CBD ratios
Type 1 = THC>CBD
Type 2 = more balanced THC:CBD
Type 3 = CBD>THC
Why is there any effect (of weed) at all?
**Top 3 most used drugs – #1 alcohol, #2 nicotine (1-2B users), #3 cannabis Caffeine would be above all 3 if it were considered a drug
**From early conception (still in womb), you have cannabinoid receptors – because body has endogenous cannabinoids (EC) which you make from conception to death
Cannabis has compounds that bind to those same cannabinoid receptors —> biological fx
**THC / CBD bind to those receptors with greater affinity, have greater fx than our endogenous (naturally made) chemicals – 1000x greater potency – your endogenous cannabinoids are out-competed
This is why dependence starts to emerge
This is also why you can experience worse mood, anxiety, etc when not consuming – because your own body’s compounds stop working as well
Similar to how our body makes its own testosterone, but you can take synthetic (artificial) testosterone that gives “super physiological effects” – much stronger than our own body-made testosterone
Same with nicotine + nicotinic receptors
Just because it’s from a plant / naturally occurring does not mean it’s safe or healthy for the human body – depends highly on the plant, compound, person, genetics, etc
Two main kinds of EC (endo cannabinoids)
Released from neurons (nerve cells) – pre-synaptic > post-synaptic – excitation and inhibition
ECs are post-synaptic – they’re a brake on system, adjusting levels
**While marijuana can disrupt short-term memory, these natural ECs can actually strengthen the neuronal connections
ECs work in number of ways, not straight-forward fx
Two kinds of EC receptors – CB1 is highly enriched in brain (found everywhere) / nervous system, CB2 is immune system / liver / genitals
ECs interact with both CB1 and CB2
Cannabis has THC / CBD that potently bind CB1 receptor – 1000x stronger than ECs – “essentially leave ECs dysfunctional”
**Cannabis is fast entering bloodstream = 30 seconds Faster than alcohol and nicotine
After 30-60 min will have peak concentrations and biological fx
**Effects last 3-4 hours – can depend on familiarity / frequency of use
Lypophilic – affinity for fatty cells, can remain in those cells for long time
**After consumption, typically stay in those cells and can be detected for 80 days (!)
CB1 receptors present in many nerve cells / brain
Sativa acts on those receptors in pre-frontal cortex (PFC)
PFC = brake on amygdala (which detects threats)
**Sativa compounds eg, calm down the amygdala, and ramp up the PFC – seesaw effect – enables states of flow / focus / creativity / elevated mood
Except in some individuals – fx are opposite and can experience intense anxiety / paranoia THC / CBD simply increase fx (“potentiate”) of your existing systems – thus likely to experience similar effect every time
**No good predictors of how an individual will respond to a given strain – lots of street lore but no scientific proof
**Indica also suppresses amygdala, but also shuts down hippocampus (memory) – indica can harm short and even long-term memory
Brain / body areas impacted
-deficits in memory (reductions in hippocampus activity)
-PFC – activated by sativa, indica turns off (=relaxation, promoting sleep)
-suppression of basal ganglia and cerebellum (action planning, balancing, motor planning and sequencing) – less physically mobile, reddening of eyes, drier mouth, etc
-increase in appetite – high density of CB1 receptors in hypothalamus – narrow focus to food, hypothalamus signaling to gut that regulate blood sugar leading to increases in appetite
-CB1 receptors in spinal cord – can provide some pain relief – big component of this is a perceptive shift of pain (qualitative)
Most studies detail THC amount, but don’t distinguish sativa vs indica strains
Does cannabis increase creativity?
“Depends”
Convergent (synthesis, analysis) vs divergent (brainstorming, exploration) thinking
**When dopamine is high, divergent thinking more likely = throw out lots of disconnected ideas
From review of scientific literature: in professions where creativity is required, find more manic depression (manic = elevated dopamine) and schizophrenia (also elevated dopamine)
**Creativity involves both – first divergent (high dopamine), then convergent (lower dopamine)
Creativity = process, not an event
Note: only 1/2 finished – will add more notes if I finish the rest
