Category: Uncategorized

  • Essentials: Understanding & Conquering Depression

    中文
    Tiếng Việt
    AI transcript
    0:00:02 – Welcome to Huberman Lab Essentials,
    0:00:04 where we revisit past episodes
    0:00:07 for the most potent and actionable science-based tools
    0:00:10 for mental health, physical health, and performance.
    0:00:12 I’m Andrew Huberman,
    0:00:15 and I’m a professor of neurobiology and ophthalmology
    0:00:17 at Stanford School of Medicine.
    0:00:19 Today, we’re discussing depression.
    0:00:22 In particular, we’re going to talk about major depression.
    0:00:24 The phrase major depression is used to distinguish
    0:00:26 one form of depression from the other,
    0:00:29 the other one being bipolar depression.
    0:00:34 Major depression impacts 5% of the population.
    0:00:36 That is an enormous number.
    0:00:39 That means if you’re in a class of 100 people,
    0:00:41 five of them are dealing with major depression
    0:00:43 or have at some point.
    0:00:45 Look around you in any environment,
    0:00:49 and you can be sure that a good portion of the people
    0:00:52 that you’re surrounded by is impacted by depression
    0:00:53 or will be at some point.
    0:00:55 So this is something we really have to take seriously
    0:00:57 and that we want to understand.
    0:01:01 It is the number four cause of disability.
    0:01:04 A lot of people miss work, miss school,
    0:01:08 and before then likely perform poorly in work or school
    0:01:10 due to major depression.
    0:01:13 So let’s talk about the things that are present in somebody
    0:01:16 that has major depression.
    0:01:19 First of all, there tends to be a lot of grief.
    0:01:20 There tends to be a lot of sadness.
    0:01:24 There’s also this thing that we call anhedonia,
    0:01:27 a general lack of ability to enjoy things.
    0:01:30 For the time being, we want to frame up anhedonia,
    0:01:33 this lack of ability to achieve or experience pleasure,
    0:01:36 a kind of a flat affect as it’s called.
    0:01:39 Sometimes even delusional thinking,
    0:01:40 negative delusional thinking,
    0:01:44 and in particular, anti-self confabulation.
    0:01:46 What is anti-self confabulation?
    0:01:49 Well, first of all, confabulation is an incredible aspect
    0:01:52 of our mind and our nervous system.
    0:01:55 You sometimes see other forms of confabulation
    0:01:57 in people who have memory deficits,
    0:01:59 either because they have brain damage
    0:02:02 or they have age-related dementia.
    0:02:03 A good example of this would be someone
    0:02:07 with age-related dementia sometimes will find themselves
    0:02:09 in a location in the house
    0:02:11 and not know how they got there.
    0:02:14 And if you ask them, oh, what are you doing here?
    0:02:16 They will create these elaborate stories.
    0:02:18 Oh, you know, I was thinking about going to the shopping today
    0:02:20 and I was, you know, and I was going to take the bus
    0:02:21 and then I was going to do,
    0:02:24 they create these elaborate stories, they confabulate.
    0:02:27 It’s as if a brain circuit that writes stories
    0:02:29 just starts generating content.
    0:02:32 In major depression, there’s often a state
    0:02:35 of delusional anti-self confabulation
    0:02:38 where the confabulations are not directly
    0:02:41 or completely linked to reality,
    0:02:43 but they are ones that make the self,
    0:02:47 the person describing them seem sick
    0:02:49 or in some way, not well.
    0:02:51 A good example would be somebody
    0:02:53 who experiences a physical injury, perhaps.
    0:02:55 Maybe they break their ankle, maybe it’s an athlete,
    0:02:59 and they also happen to become depressed.
    0:03:00 And you’ll talk to them, you say, how are things going?
    0:03:01 How’s your rehab?
    0:03:02 Oh, it’s okay.
    0:03:03 And I don’t know.
    0:03:06 I’m just, I feel like I’m getting weaker and weaker by the day.
    0:03:07 I’m just not performing well.
    0:03:10 And then you’ll talk to the person that they’re working with,
    0:03:14 their kinesiologist or whoever the physical therapist is.
    0:03:15 And they’ll say, no, they’re actually really improving.
    0:03:17 And I tell them they’re improving,
    0:03:19 but somehow they’re not, they’re not seeing that improvement.
    0:03:21 They’re not registering that improvement.
    0:03:23 They are viewing themselves
    0:03:31 and they’re confabulating according to a view that is very self-deprecating to the point where it doesn’t match up with reality.
    0:03:39 The other common symptomology of major depression is what they call vegetative symptoms.
    0:03:47 So vegetative symptoms are symptoms that occur without any thinking, without any doing, or without any confabulation.
    0:03:52 These are things that are related to our core physiology, things like constantly being exhausted.
    0:03:55 The person just feels exhausted.
    0:03:58 They don’t have the energy they once had.
    0:04:00 So it’s not in their heads.
    0:04:04 Something is disrupted in the autonomic or so-called vegetative nervous system.
    0:04:08 And one of the most common symptoms of people with major depression,
    0:04:16 one of the signs of major depression is early waking and not being able to fall back asleep despite being exhausted.
    0:04:22 So waking up at 3:00 AM or 4:00 AM or 5:00 AM just spontaneously and not being able to go back to sleep.
    0:04:28 It’s well-known that the architecture of sleep is disrupted in depression.
    0:04:36 What’s the architecture of sleep early in the night, you tend to have slow wave sleep more than REM sleep or rapid eye movement sleep.
    0:04:39 As the night goes on, you tend to have more rapid eye movement sleep.
    0:04:48 That architecture of slow wave sleep preceding rapid eye movement sleep is radically disrupted in major depression.
    0:04:54 In addition, the pattern of activity in the brain during particular phases of sleep is disrupted.
    0:05:03 And then there are some other things that relate to the autonomic nervous system, but that we normally think of as more voluntary in nature.
    0:05:05 And these are things like decreased appetite.
    0:05:12 So you could imagine that one could have decreased appetite because of the anhedonia, the lack of pleasure from food.
    0:05:17 So you can see that the symptomology of major depression impacts us at multiple levels.
    0:05:21 There’s the conscious level of how excited we are generally.
    0:05:22 Well, that’s reduced.
    0:05:28 There’s grief, there’s guilt, there’s crying, but then there’s also these vegetative things.
    0:05:32 There’s disruptions in sleep, which of course make everything more challenging when we’re awake.
    0:05:34 We know that sleep is so vital for resetting.
    0:05:36 You’re waking up early, you can’t get back to sleep.
    0:05:42 That’s going to re that’s going to adjust your affect, your emotions in negative ways.
    0:05:47 We know this and appetite is off and there are hormones that get disrupted.
    0:05:49 So cortisol levels are increased.
    0:06:02 In particular, there’s a signature pattern of depression whereby cortisol, this stress hormone that normally is released in a healthy way, only in the early part of the day is shifted to late in the day.
    0:06:10 In fact, a 9:00 PM peak in cortisol is one of the physiological signatures of depressive-like states.
    0:06:14 It’s not the only one, but it is an important one.
    0:06:18 I’d like to take a quick break and acknowledge one of our sponsors, BetterHelp.
    0:06:23 BetterHelp offers professional therapy with a licensed therapist carried out entirely online.
    0:06:26 I’ve been doing weekly therapy for well over 30 years.
    0:06:28 Initially, I didn’t have a choice.
    0:06:30 It was a condition of being allowed to stay in school.
    0:06:34 But pretty soon I realized that therapy is an extremely important component to overall health.
    0:06:44 In fact, I consider doing regular therapy just as important as getting regular exercise, including cardiovascular exercise and resistance training, which of course, I also do every week.
    0:06:47 There are essentially three things that great therapy provides.
    0:06:53 First of all, it provides a good rapport with somebody that you can trust and talk to about all issues that you’re concerned about.
    0:06:59 Second of all, it can provide support in the form of emotional support or directed guidance.
    0:07:02 And third, expert therapy can provide useful insights.
    0:07:10 With BetterHelp, they make it very easy to find an expert therapist with whom you resonate with and can provide those benefits that come through effective therapy.
    0:07:14 Also, because BetterHelp allows therapy to be done entirely online, it’s very time efficient.
    0:07:16 It’s easy to fit into a busy schedule.
    0:07:20 There’s no commuting to a therapist’s office or sitting in a waiting room or anything like that.
    0:07:23 You simply go online and hold your appointment.
    0:07:29 If you would like to try BetterHelp, go to betterhelp.com/huberman to get 10% off your first month.
    0:07:32 Again, that’s betterhelp.com/huberman.
    0:07:42 So let’s just take a few minutes and talk about some of the underlying biology that creates this cloud or this constellation of symptomology.
    0:07:54 One of the most important early findings in the search for a biological basis of depression was this finding that there are drugs that relieve some of the symptoms of depression.
    0:07:59 Those drugs generally fall into three major categories.
    0:08:10 But the first set of ones that were discovered were the so-called tricyclic antidepressants and the MAO inhibitors, the monoamine oxidase inhibitors.
    0:08:23 And these tricyclic antidepressants and the MAO inhibitors largely worked by increasing levels of norepinephrine in the brain as well as in the body in some cases.
    0:08:28 They were discovered because of the exploration for drugs that alter blood pressure.
    0:08:37 Norepinephrine impacts blood pressure and drugs that lower blood pressure, reduce levels of norepinephrine,
    0:08:43 and that in many cases was shown to lead to depression or depressive-like symptoms.
    0:08:55 These tricyclic drugs and the MAO inhibitors actually increase norepinephrine, and frankly, they do quite a good job of relieving some, if not all, of the symptoms of major depression.
    0:08:59 However, they carry with them many side effects.
    0:09:03 Some of those side effects are side effects related to blood pressure itself.
    0:09:07 By increasing noradrenaline, norepinephrine as it’s called, you raise blood pressure.
    0:09:08 That can be dangerous.
    0:09:11 But they also have a lot of other side effects.
    0:09:22 The reason they have other side effects is because they impact systems in the brain and in the body that impact things like libido, appetite, digestion, and others.
    0:09:30 They made some people so uncomfortable that they preferred not to take them, even though when they didn’t take them, they had a worsening or a maintenance of their depressive symptoms.
    0:09:35 A decade or so later, there was the discovery of the so-called pleasure pathways in the brain.
    0:09:43 This pleasure pathway, as it’s sometimes called, involves areas like the nucleus accumbens and the ventral tegmental area.
    0:09:47 These are areas of the brain that are rich with neurons that make dopamine.
    0:09:54 And if you think to the symptoms of depression, of anhedonia, lack of pleasure, a lack of ability to experience pleasure,
    0:10:01 well, that was a smoking gun that there’s something wrong with the dopamine pathway in depression.
    0:10:06 So it’s not just norepinephrine, it’s also the dopamine or pleasure pathway is somehow disrupted.
    0:10:10 And then in the 1980s, there was the discovery of the so-called SSRIs.
    0:10:16 Most people are now familiar with the SSRIs, the selective serotonin reuptake inhibitors.
    0:10:23 The SSRIs worked by distinct mechanisms from the tricyclic antidepressants and the MAO inhibitors.
    0:10:28 As their name suggests, SSRIs, selective serotonin reuptake inhibitors,
    0:10:36 prevent serotonin from being wiped up from the synapse after two neurons talk to one another.
    0:10:37 What do I mean by that?
    0:10:39 Well, here’s some very basic neurobiology 101.
    0:10:43 If you don’t know any neurobiology, you’re going to know some in about 15 seconds.
    0:10:50 Neurons communicate with one another by spitting out chemicals into the little gap between them.
    0:10:52 The little gap between them is called the synapse.
    0:11:00 Those chemicals bind to the neuron on the opposite side and cause changes in the electrical activity of that neuron on the other side of the synapse.
    0:11:07 Serotonin is one such neurotransmitter or more specifically, it’s a neuromodulator.
    0:11:11 It can change the activity of large groups of neurons in very meaningful ways.
    0:11:18 selective serotonin reuptake inhibitor means when a person takes this drug, some of those drugs include
    0:11:24 things like Prozac or Zoloft, the more typical names or more generic names are things like fluoxetine.
    0:11:30 When people take those more serotonin hangs out in the synapse and is able to be taken up by the
    0:11:37 neuron on the opposite side because of this selective reuptake inhibition.
    0:11:44 It prevents the clearance of serotonin from the synapse and thereby more serotonin can have an effect.
    0:11:49 So SSRIs don’t increase the total amount of serotonin in the brain.
    0:11:57 They change how effective the serotonin that’s already in the brain is at changing the activity of neurons.
    0:12:03 About a third of people that take SSRIs don’t derive any benefit.
    0:12:05 It doesn’t relieve their symptoms of depression.
    0:12:08 However, for the other two thirds, there’s often a relief of some,
    0:12:11 if not all of the symptoms of major depression.
    0:12:15 The problem is the side effects that accompany those SSRIs.
    0:12:18 And so these days, SSRIs are a complicated topic.
    0:12:23 It’s sort of what I would call a barbed wire topic, but these drugs also have saved a lot of lives.
    0:12:25 They’ve also improved a lot of lives.
    0:12:30 The issue is that they tend to have varying effects on different individuals and sometimes
    0:12:32 varying effects over time.
    0:12:35 So they’ll work for a while, then they won’t work for a while.
    0:12:40 There are also a lot of mysteries about the SSRIs and those mysteries bother people.
    0:12:46 SSRIs increase the amount of serotonin or more specifically, they increase the efficacy of
    0:12:47 serotonin at the synapse.
    0:12:53 That happens immediately or very soon after people start taking SSRIs.
    0:12:57 But people generally don’t start experiencing any relief from their symptoms of depression,
    0:13:03 if they’re going to experience them at all, until about two weeks after they start taking these drugs.
    0:13:08 So it’s very clear that there are at least three major chemical systems in the brain,
    0:13:15 norepinephrine, dopamine, and serotonin that relate to and can adjust the symptoms of depression.
    0:13:18 And those actually can be divided into separate categories.
    0:13:25 So for instance, epinephrine or norepinephrine is thought to relate to the so-called psychomotor
    0:13:26 defects.
    0:13:27 This is the lethargy.
    0:13:28 This is the exhaustion.
    0:13:30 This is the inability to get out of bed in the morning.
    0:13:37 Dopamine is thought to relate to the anhedonia, or I should say lack of dopamine in depressive
    0:13:43 patients is thought to lead to the anhedonia, the lack of ability to experience pleasure.
    0:13:50 And serotonin is thought to relate to the grief, the guilt, some of the more cognitive or more
    0:13:53 emotional aspects of depression.
    0:13:58 So we’ve got the norepinephrine system related to activity and alertness, the dopamine system
    0:14:03 relating to motivation, pleasure, and the ability to seek and experience pleasure.
    0:14:06 And then the serotonin system that’s related to grief.
    0:14:12 And unfortunately, brains and organisms don’t work in a simple mathematical way where you just say,
    0:14:16 oh, well, this person’s experiencing a lot of grief, but they don’t have any problems with,
    0:14:18 you know, lethargy.
    0:14:20 And so let’s just boost up their serotonin.
    0:14:23 On paper, it works, but oftentimes it doesn’t work clinically.
    0:14:28 A really good psychiatrist will work with someone to try and pull and push on these various systems
    0:14:33 to find the combination of drugs that may be or may not be correct for them.
    0:14:36 So next, I’d like to talk about hormones and how they relate to depression.
    0:14:41 And I’d also like to talk about stress and how it relates to depression, as well as talk
    0:14:45 about some of the genetics or the predispositions to depression.
    0:14:50 20% of people that have major depression have low thyroid hormone.
    0:14:55 And that leads to low energy, low metabolism in the brain and body.
    0:15:01 Sometimes a psychiatrist will prescribe thyroid medication to increase thyroid output in people
    0:15:03 that are depressed and that will work to relieve the symptoms.
    0:15:10 So there are certain situations or conditions that can impact the thyroid hormone system and make people
    0:15:13 more susceptible to depression or make a pre-existing depression worse.
    0:15:16 And those are things like childbirth.
    0:15:21 So it’s well known that women who give birth can often undergo what’s called postpartum depression.
    0:15:28 And that’s thought to be hormonally related, either directly to the thyroid system or perhaps to the cortisol system as well.
    0:15:29 We’ll talk about cortisol in a moment.
    0:15:41 As well, certain women during certain phases of their menstrual cycle experience symptoms that are very much like clinical depression and oftentimes are diagnosed with clinical depression appropriately.
    0:15:45 And of course, the menstrual cycle is associated with shifts in hormone levels.
    0:15:51 As well, menopause and postmenopausal women are more susceptible to major depression,
    0:15:54 regardless of whether or not they’ve had that major depression earlier in their life.
    0:16:03 So these are things to be on the lookout for and to definitely talk to a doctor and get a blood panel that hopefully includes measures of thyroid hormone and cortisol hormone.
    0:16:04 Why cortisol hormone?
    0:16:09 Well, more stress is correlated with more bouts of major depression across the lifespan.
    0:16:11 How many bouts?
    0:16:21 Well, it turns out that as you go from having one to two to three, well, when you hit four to five bouts of really intense to stressful episodes in life,
    0:16:26 these tend to be long-term stressful episodes, your risk for major depression goes way up.
    0:16:30 And that’s because the stress system is associated with the release of cortisol.
    0:16:37 The cortisol system can dramatically impact the way that these different neuromodulators, dopamine, norepinephrine and serotonin function.
    0:16:48 One of the more important reasons for learning how to counter stress in order to offset depression is that there is a genetic predisposition that certain people carry to become depressed.
    0:16:49 How do we know?
    0:16:53 Well, in what are called concordant monozygotic twins.
    0:16:58 So these would be identical twins for which one of those twins goes on to have major depression.
    0:17:02 There’s a 50% probability that the other one will have major depression.
    0:17:12 So it’s not a hundred percent, it’s not a hundred percent inherited, it’s not a hundred percent genetic, as you might say, but there’s a much higher predisposition for depression.
    0:17:19 Whereas in fraternal twins, that number drops and in siblings, that number drops to about 25%.
    0:17:22 And in half siblings, it’s about 10%.
    0:17:30 Basically, the more closely related you are to somebody who has major depression, the more likely it is that you will also get major depression.
    0:17:42 And therefore, if you haven’t gotten major depression, the more likely it is that you should take steps to learn to mitigate stress, because stress is the major factor that can trigger one of these depressive episodes.
    0:17:46 I’d like to take a quick break and acknowledge our sponsor, AG1.
    0:17:52 AG1 is a vitamin mineral probiotic drink that also includes prebiotics and adaptogens.
    0:18:02 As somebody who’s been involved in research science for almost three decades and in health and fitness for equally as long, I’m constantly looking for the best tools to improve my mental health, physical health and performance.
    0:18:09 I discovered AG1 back in 2012, long before I ever had a podcast, and I’ve been taking it every day since.
    0:18:15 I find it improves all aspects of my health, my energy, my focus, and I simply feel much better when I take it.
    0:18:22 AG1 uses the highest quality ingredients in the right combinations, and they’re constantly improving their formulas without increasing the cost.
    0:18:25 In fact, AG1 just launched their latest formula upgrade.
    0:18:40 This next-gen formula is based on exciting new research on the effects of probiotics on the gut microbiome, and it now includes several clinically studied probiotic strains shown to support both digestive health and immune system health, as well as to improve bowel regularity and to reduce bloating.
    0:18:46 Whenever I’m asked if I could take just one supplement, what that supplement would be, I always say AG1.
    0:18:51 If you’d like to try AG1, you can go to drinkag1.com slash Huberman.
    0:18:58 For a limited time, AG1 is giving away a free one-month supply of omega-3 fish oil, along with a bottle of vitamin D3 plus K2.
    0:19:09 As I’ve highlighted before on this podcast, omega-3 fish oil and vitamin D3 K2 have been shown to help with everything from mood and brain health, to heart health, to healthy hormone status, and much more.
    0:19:19 Again, that’s drinkag1.com slash Huberman to get a free one-month supply of omega-3 fish oil, plus a bottle of vitamin D3 plus K2 with your subscription.
    0:19:33 So next, I’d like to talk about some of the tools that people who both have depression or who are prone to depression, as well as people who don’t have depression and simply want to maintain a good mood, who want to maintain a positive affect and pursuit of things in life.
    0:19:35 What are the things that you can do?
    0:19:43 Any behavioral tool that adjusts the levels of a particular chemical ought to perhaps provide some relief for some of the symptoms of major depression.
    0:19:54 Let’s take an example that I’ve talked about before on the podcast, which is if you get into a very cold shower, you take an ice bath, you will release norepinephrine and epinephrine in your brain and body.
    0:19:55 There’s no question about that.
    0:20:03 If some aspects of depression are related to low levels of norepinephrine, will taking cold showers relieve your depression?
    0:20:06 Perhaps it might even relieve certain aspects of that depression.
    0:20:08 Will exercise help?
    0:20:12 Well, if you go out for a run, you’re going to increase the amount of norepinephrine in your body.
    0:20:20 If you enjoy that run, it’s likely that you’ll increase the levels of dopamine and probably serotonin in your brain and body as well.
    0:20:22 Will that cure your depression?
    0:20:26 Well, there are a lot of studies exploring how exercise can impact depression.
    0:20:35 And indeed, regular exercise is known to be a protective behavior against depression, but it also can help relieve some of the symptoms of depression.
    0:20:39 So you may ask yourself, why would you need drugs at all?
    0:20:45 Why would there be prescription drugs or the need for supplementation or other things to alleviate the symptoms of depression?
    0:21:04 Ah, well, that’s the diabolical nature of depression, which is if people are far enough along in this thing, this sometimes called disease, sometimes called disorder, but major depression, oftentimes they can’t get the energy to even get up and take a bath or a shower.
    0:21:06 They have no motivation to do it.
    0:21:09 They have no desire to go for a run.
    0:21:26 But it’s very important to highlight the fact that these circuits that are accessible to some of us, the circuits for happiness, for pursuit of pleasure, for exercise, for getting in a cold shower, if that’s your thing, that those circuits are present in all people.
    0:21:39 But for certain people that are experiencing major depression and are really in the depths of their depression, they can’t really access those circuits in the same way that people who are not suffering from depression can.
    0:21:46 But let’s look at depression from the standpoint of a deeper biological phenomenon, which is inflammation and the immune system.
    0:21:55 There’s growing evidence now that many forms of major depression, if not all of them, relate to excessive inflammation.
    0:22:07 Now, inflammation plays an important role in wound healing is that it is a positive aspect of our immune system, our ability to combat wounds, combat illnesses, et cetera.
    0:22:17 But inflammation gone unchecked, inflammation that lasts too long or is of too high amplitude, meaning too many cytokines and things of that sort in the body is bad.
    0:22:34 And there’s decent evidence now that inflammation can lead to or exacerbate depression, and that if we want to control depression or limit or eliminate depression, that focusing on reducing inflammation and its associated pathways is a really good thing to do.
    0:22:40 And I think this is a really good thing for everybody to do, regardless of whether or not you suffer from depression or not.
    0:22:48 So first of all, who are the major players in creating chronic inflammation in the brain and body?
    0:23:00 They are the inflammatory cytokines, things like IL-6, interleukin-6, things like tumor necrosis alpha, TNF alpha, things like C-reactive protein, all right?
    0:23:10 When we are stressed, chronically stressed, we get inflamed, our brain and various locations in the brain become inflamed because certain classes of cells, in particular, those glial cells,
    0:23:20 the cells that are typically thought to just be support cells, those cells and their biochemistry and their dialogue with the neurons of the brain and body starts to become disrupted.
    0:23:27 It turns out there is a set of actions that we can take in order to limit inflammation.
    0:23:34 One of those approaches is to increase our intake of so-called EPAs or essential fatty acids.
    0:23:47 Increasing our intake of these essential fatty acids, in particular, the EPA variety of omega-3s, can lower the effective dose of things like SSRIs.
    0:23:52 The threshold level seems to be about one gram, 1,000 milligrams of EPA.
    0:24:05 So you will sometimes see on a bottle of krill oil or fish oil or any other source, even plant source or other source of EPA, that it’s 1,000 milligrams or 1,200 milligrams.
    0:24:14 But what’s really important to look at is whether or not there’s more than 1,000 milligrams of EPA, because the EPA in particular is what’s important here.
    0:24:16 So how would this work?
    0:24:28 These inflammatory cytokines act in a variety of different ways, but they mainly act to inhibit the release of serotonin, norepinephrine, and dopamine, or the synthesis of serotonin, norepinephrine, and dopamine.
    0:24:35 Dopamine, also called 5-HT, essentially derives from a precursor called tryptophan.
    0:24:39 Tryptophan arrives into our system through our diet.
    0:24:41 Tryptophan is an amino acid.
    0:24:44 Tryptophan is eventually converted into serotonin.
    0:24:55 However, if there’s excessive amounts of inflammation, these inflammatory cytokines cause tryptophan to be diverted down a different pathway.
    0:25:02 The pathway involves something called IDO, indolamine, which converts tryptophan into kynurine.
    0:25:09 Kynurine actually acts as a neurotoxin by way of converting into something called quinolinic acid.
    0:25:12 And quinolinic acid is pro-depressive.
    0:25:24 So if that seems like a complicated biochemical pathway, what’s basically happening here is that the tryptophan that normally would be made into serotonin, under conditions of inflammation, is being diverted into a neurotoxic pathway.
    0:25:41 And ingestion of EPAs, because it limits these inflammatory cytokines, things like IL-6, C-reactive protein, et cetera, can cause more of the tryptophan that one ingests or has in their body to be diverted towards the serotonergic pathway.
    0:25:50 Exercise, it turns out, also has a positive effect on the tryptophan to serotonin conversion pathway.
    0:26:09 The activation of the muscles through rhythmic repeated use, in particular aerobic exercise, but also resistance training has been shown to do this to some extent, tends to sequester or shuttle the kynurine into the muscle so that it isn’t converted into this neurotoxin that is pro-depression.
    0:26:17 From the data that are published in quality peer-reviewed journals, it really appears that this inflammation pathway does function to increase depression through these pathways.
    0:26:33 And so knowing that there are behavioral steps and supplementation-based steps, or if you prefer getting your EPAs from typical food, from nutritional approaches, I find that very reassuring that the mechanisms all converge on a common pathway, serotonin.
    0:26:40 There’s a common biochemical pathway that can explain why these things not just work, but why they should work.
    0:26:48 They should work because they operate in the very same biochemical pathways that antidepressants that are prescribed to people do.
    0:26:52 I’d like to take a quick break and acknowledge our sponsor, Our Place.
    0:26:55 Our Place makes my favorite pots, pans, and other cookware.
    0:27:05 Surprisingly, toxic compounds such as PFASs or forever chemicals are still found in 80% of nonstick pans, as well as utensils, appliances, and countless other kitchen products.
    0:27:18 As I’ve discussed before in this podcast, these PFASs or forever chemicals like Teflon have been linked to major health issues such as hormone disruption, gut microbiome disruption, fertility issues, and many other health problems.
    0:27:20 So it’s really important to try and avoid them.
    0:27:22 This is why I’m a huge fan of Our Place.
    0:27:28 Our Place products are made with the highest quality materials and are all completely PFAS and toxin-free.
    0:27:31 I especially love their Titanium Always Pan Pro.
    0:27:35 It’s the first nonstick pan made with zero chemicals and zero coating.
    0:27:37 Instead, it uses pure titanium.
    0:27:42 This means it has no harmful forever chemicals and does not degrade or lose its nonstick effect over time.
    0:27:44 It’s also beautiful to look at.
    0:27:47 I cook eggs in my Titanium Always Pan Pro almost every morning.
    0:27:51 The design allows for the eggs to cook perfectly without sticking to the pan.
    0:27:55 I also cook burgers and steaks in it, and it puts a really nice sear on the meat.
    0:28:00 But again, nothing sticks to it, so it’s really easy to clean, and it’s even dishwasher safe.
    0:28:02 I love it, and I basically use it constantly.
    0:28:09 Our Place now has a full line of Titanium Pro cookware that uses its first-of-its-kind titanium nonstick technology.
    0:28:17 So if you’re looking for non-toxic, long-lasting pots and pans, go to fromourplace.com slash Huberman and use the code Huberman at checkout.
    0:28:20 Right now, Our Place is having their biggest sale of the season.
    0:28:25 You can get up to 30% off all products now through May 12th, 2025.
    0:28:35 With a 100-day risk-free trial, free shipping, and free returns, you can try Our Place with zero risk and see why more than 1 million people have made the switch to Our Place Kitchenware.
    0:28:40 Again, that’s fromourplace.com slash Huberman to get up to 30% off.
    0:28:50 Now I want to talk about something that, at least for me, was quite surprising when I first learned about it for sake of treatment of mood disorders, and that’s creatine.
    0:28:54 Creatine has a number of very important functions throughout the body.
    0:29:13 For those of you that are into resistance training, and actually for those of you that are into endurance training as well, creatine has achieved a lot of popularity in recent years because supplementation with creatine can draw more water into muscles and can increase power output from muscles.
    0:29:24 However, there’s also a so-called phosphocreatine system in the brain, and that phosphocreatine system has everything to do with the dialogue between neurons and these other cell types called glia.
    0:29:38 But the phosphocreatine system in the forebrain in particular, in the front of our brain, has been shown to be involved in regulation of mood and some of the reward pathways, as well as in depression.
    0:29:57 The American Journal of Psychiatry in 2012 published a study which was a randomized, double-blind, placebo-controlled trial of oral creatine monohydrate, and what it found is that it could augment or enhance the response to a selective serotonin reuptake inhibitor, in particular in women with major depressive disorder.
    0:30:12 So like EPA, creatine supplementation seems to either lower the required dose of SSRI that’s required to treat depression, or can improve the effectiveness of a given dose of SSRI.
    0:30:19 However, there are other studies that have looked directly at creatine supplementation in the absence of SSRIs, and those are interesting as well.
    0:30:24 So let’s talk a little bit more about novel therapeutic compounds for the treatment of major depression.
    0:30:32 One is ketamine, which is getting increasing interest in psychiatric clinics in various experimental and clinical studies.
    0:30:35 They create dissociative anesthetic states.
    0:30:42 So dissociative states where people don’t feel as closely meshed with their emotions and their perceptions.
    0:30:57 And clinically, what’s described in the trials for ketamine and things like it, that people who are depressed will take ketamine, will experience a kind of separateness from their grief and from their emotions.
    0:31:06 And that possibly there’s plasticity, there actually shifts in the neural circuitry such that their emotions don’t weigh on them so heavily.
    0:31:10 It’s not always about just getting people peppy and excited and happy.
    0:31:16 There also seems to be a requirement for getting them distanced from their own grief.
    0:31:26 And this brings us back to something that we talked about way back at the beginning of this episode, which was this particular feature of the anti-self confabulation.
    0:31:33 That everything that happens is a reflection that I should say for the depressed person, that everything that happens is a reflection of how life is bad.
    0:31:38 And their experiences just point to the fact that nothing is going to get better.
    0:31:39 This is the common language of depression.
    0:31:43 If this is very depressing to hear me talk about, it is heavy.
    0:31:46 And that’s what it’s like to hear these things.
    0:31:48 It’s even heavier, of course, for somebody to experience them.
    0:32:08 And those beliefs, those patterns of guilt and grief and anhedonia and delusional anti-self confabulations, those are the things that eventually, if they get severe enough, start to convert into things like self-harm, mutilation, and in the most tragic of cases, of course, suicide.
    0:32:28 And so I think we can look to these treatments such as ketamine and its use in the clinic as ways for people to get distanced from the negative affect that they feel isn’t just inside them or overwhelms them, but that for the very severely depressed person, they feel is them.
    0:32:36 Another category of treatments that’s being actively explored now in laboratories and in the psychiatry realm are the psychedelics.
    0:32:39 And that’s a huge category of compounds.
    0:32:49 However, one in particular, psilocybin is one that’s being most intensely and actively pursued for its capacity to treat major depressive disorder.
    0:32:56 But let’s focus on psilocybin for its capacity to rewire neural circuits and alleviate depression.
    0:33:04 There have been anecdotal data or evidence over the years that psilocybin has this capacity.
    0:33:05 How does psilocybin work?
    0:33:17 Well, psilocybin engages or increases serotonin transmission, meaning it increases the amount of serotonin, mainly by acting at these 5H2A receptors.
    0:33:21 But where in the brain does it happen and what are the major effects?
    0:33:24 First, let’s talk about the major effects, because I think that’s what people are interested in.
    0:33:27 The study that I’d like to highlight is a fairly recent one.
    0:33:37 It was published in May of 2021 in Journal of the American Medical Association Psychiatry, so JAMA Psychiatry.
    0:33:43 And it’s entitled Effects of Psilocybin Assisted Therapy on Major Depressive Disorder, a Randomized Clinical Trial.
    0:33:48 Basically, what they did was they screened for patients to come into the clinic.
    0:33:57 These were people that suffered from major depressive disorder and administered either one or two rounds of psilocybin.
    0:34:02 Typically, it was 20 milligrams per kilogram of body weight, so it depends on body weight.
    0:34:24 What’s really striking about this study is that there was a very significant improvement in mood and affect and relief from depressive symptoms in anywhere from 50% to 70% of the people that were subjects in the study who received the psilocybin treatment.
    0:34:27 These are really enormous and significant effects.
    0:34:53 What’s really interesting is there are some common themes to psilocybin administration and experience that lead to relief from depressive symptoms, but they are subjectively, excuse me, subjectively very varied, meaning that whether or not people feel they had a good experience or a bad experience, whether or not people thought about their parents or thought about the color of the ceiling,
    0:35:02 doesn’t seem to have too much of an impact on whether or not they receive relief during these studies in these clinical studies.
    0:35:08 It seems like different people can have lots of different experiences and still receive benefit.
    0:35:21 It’s somehow rewiring associations between events, emotional events, past events, current events, and future events in ways that allow people to get some sort of relief or distance from these narratives,
    0:35:28 these depressive stories about their past and present, and allow them to see new opportunity and optimism in the future.
    0:35:45 One of the most common questions I get for this podcast is about different diets, different regimes, different nutritional plans, things like keto, ketogenic diet, or vegan diets, or intermittent fasting, or the all-meat diet, the so-called lion diet, et cetera.
    0:35:52 There are actually really interesting data relating nutrition and diet to major depressive disorder.
    0:36:01 There have been some explorations of whether or not a vegan diet can improve symptoms of depression, not a lot of data, not impressive data.
    0:36:06 There have been very few controlled studies looking at the carnivore all-meat diet.
    0:36:20 However, the ketogenic diet has been explored for its ability to relieve certain symptoms of depression, in particular to what’s called maintain euthymia.
    0:36:27 euthymia is the kind of state of equilibrium between a manic episode and a depressive episode in a manic bipolar person.
    0:36:33 Euthymia is that kind of place in the middle where people feel neither too high nor too low.
    0:36:44 And there are some interesting studies looking at the ketogenic diet for maintaining euthymia in manic depressives, but also in people with major depressive disorder.
    0:37:01 The ketogenic diet, by way of increasing ketone metabolism or shifting brain’s metabolism over to ketones, tends to modulate GABA such that GABA is more active and adjusts the so-called GABA glutamate balance.
    0:37:13 This is getting technical, but glutamate is an excitatory neurotransmitter, GABA is inhibitory neurotransmitter, and their balance is vital for neuroplasticity, for maintaining healthy levels of activity in the brain, et cetera.
    0:37:35 And so there is decent evidence that people with major depressive disorders, in particular, the people with major depressive disorders that are refractory, meaning they don’t respond to classical antidepressants can benefit, it seems, from the ketogenic diet.
    0:37:56 It’s really interesting that eating in a particular way lowering carbohydrates to the point where you rely on ketogenic metabolism in the brain increases GABA and can provide some relief for depressive symptoms, and that in particular, that seems to have positive effects in people that are refractory or don’t respond to classic antidepressants.
    0:38:01 So today we’ve covered what at least feels to me like a tremendous amount of material.
    0:38:05 This topic of depression is indeed an enormous topic to try and get our arms around.
    0:38:15 We talked about the symptomology, we talked about some of the underlying neurochemistry and biology, and then we talked about approaches to deal with it that are really grounded in the neurochemistry and biology.
    0:38:20 I just want to recap a few of those tools and what those things are.
    0:38:25 So number one, don’t overwhelm your pleasure centers, either through activities or compounds.
    0:38:31 It might seem counterintuitive, but you’re setting yourself up for anhedonia and depression if you do that.
    0:38:42 Second of all, talked about the norepinephrine system and how the norepinephrine system is really deficient in many forms of major depression and in depression.
    0:38:54 There is now more deliberate pursuit of norepinephrine-inducing activities that are healthy, that aren’t adrenaline-seeking per se, things like exercise that will increase our levels of noradrenaline.
    0:39:02 I’d be remiss if I said that these activities could completely eliminate depressive symptoms in people with major depressive disorder.
    0:39:03 I don’t think that’s the case.
    0:39:12 And again, I want to acknowledge that people with major depressive symptoms often don’t have the energy, the willingness, or the capacity to engage in some of these activities.
    0:39:20 But things like cold showers, deliberate cold showers, things like regular exercise, they aren’t just feel-good activities.
    0:39:28 They actually engage the norepinephrine system and keep that system tuned up and allow us to increase our norepinephrine levels at will on a regular basis.
    0:39:32 And their mood-enhancing effects are real effects at the level of neurochemistry.
    0:39:35 Then we talked about EPAs, these essential fatty acids.
    0:39:49 And it’s clear that for most people, getting above 1,000 milligrams and probably even closer to 2,000 milligrams per day of EPAs can be beneficial for mood, especially in attempts to treat or offset major depressive disorder.
    0:39:55 We also talked about exercise and how EPA and exercise on a regular basis can offset these inflammatory pathways.
    0:40:05 And then we talked about the prescription compounds and the compounds that are being used mainly in the course of studies and of psychiatry and depression, things like ketamine, psilocybin, and related compounds.
    0:40:13 And then lastly, we talked about ketosis, which may not be right for everybody, but might be right for certain individuals out there who are grappling with this.
    0:40:20 I want to thank you for embarking on this journey of trying to understand what is depression, how does it work, and how to treat it.
    0:40:27 And thank you for your interest in science.
    0:40:37 And as mentioned at the beginning of today’s episode, we are now partnered with Momentus supplements because they make single ingredient formulations that are of the absolute highest quality and they ship international.
    0:40:48 If you go to livemomentus.com/huberman, you will find many of the supplements that have been discussed on various episodes of the Huberman Lab Podcast, and you will find various protocols related to those supplements.

    In this Huberman Lab Essentials episode, I explore major depression, including its underlying biology and discuss science-based approaches to alleviate symptoms and improve mood.

    I describe the wide-ranging symptoms of depression and explain how key neurotransmitters, hormones, stress, genetics and inflammation contribute to its development and persistence. I also cover treatment options, from traditional classes of antidepressant medications to emerging therapies such as ketamine and psilocybin. Finally, I highlight lifestyle-based tools, including exercise, supplementation and dietary strategies that can help manage depressive symptoms and promote mental well-being.

    Read the episode show notes at hubermanlab.com.

    Thank you to our sponsors

    AG1: https://drinkag1.com/huberman

    BetterHelp: https://betterhelp.com/huberman

    Our Place: https://fromourplace.com/huberman

    Timestamps

    00:00:00 Major Depression

    00:01:10 Depression Symptoms

    00:06:14 Sponsor: BetterHelp

    00:07:33 Pharmaceuticals for Depression, SSRIs; Norepinephrine, Dopamine & Serotonin

    00:14:33 Thyroid Hormone, Cortisol, Stress & Depression, Menstrual Cycle, Genetics

    00:17:43 Sponsor: AG1

    00:19:20 Increase Norepinephrine, Tools: Deliberate Cold Exposure & Exercise

    00:21:40 Chronic Inflammation & Depression, Tools: Omega-3s (EPA) & Exercise

    00:26:49 Sponsor: Our Place

    00:28:41 Tool: Creatine Monohydrate Supplementation & Improving Depression

    00:30:20 Novel Depression Therapies, Ketamine, Psilocybin

    00:35:29 Ketogenic Diet & Refractory Depression, GABA

    00:37:57 Recap & Key Takeaways

    Disclaimer & Disclosures

    Learn more about your ad choices. Visit megaphone.fm/adchoices

  • The Art of Power, Seduction, and Mastery — with Robert Greene

    Robert Greene, an author who writes about strategy, power, and seduction, joins Scott to discuss how to build power, the roles we all play in daily life, and how to find your life’s task and achieve mastery. 

    Follow Robert, @RobertGreene.

    Learn more about your ad choices. Visit podcastchoices.com/adchoices

  • World Expert on Fatherhood & Love: The Truth About Monogamy, Breakups & The Science of Love! Dr. Anna Machin

    World Renowned Fatherhood Expert Dr Anna Machin reveals the #1 lie about monogamy, how cheating hijacks human brains, and the evolutionary truth behind love, trust, and fatherhood!

    Dr Anna Machin is an evolutionary anthropologist and relationship scientist known for her groundbreaking research on human connection, love, fatherhood, and attachment. She is also the author of books such as, ‘Why We Love: The New Science Behind Our Closest Relationships’.

    She explains:

    • How cheating activates your brain’s reward system like an addiction.

    • Why modern men are in emotional crisis and how society is breaking them.

    • The hormonal reason you fall for the wrong person again and again.

    • How your DNA, oxytocin, and dopamine shape who you love and trust.

      00:00 Intro

      02:31 Why Love Is the Core of Being Human

      07:29 The Forgotten Role of Fathers

      09:26 Individualism and the Current State of Love

      15:00 Women Find Their Right Partner by Smelling Them

      20:37 Testosterone Is Linked to Success in Men

      22:07 How to Increase Your Attractiveness (Backed by Science)

      26:39 Never Say This on a Date

      27:52 Are “Icks” Red Flags We Should Listen To?

      30:14 We’ve Got Too Many Dating Options

      34:01 Monogamy and Polyamory

      40:23 Why People in Polyamorous Relationships Hide It

      42:05 Are We All Pretending to Be Monogamous?

      43:25 Why the First 1000 Days Are Critical for a Baby

      49:10 Rough and Tumble: The Parenting Technique Everyone Should Teach

      52:06 How Your Brain and Body Change When Becoming a Dad

      54:41 Why Some Dads Don’t Instantly Bond With Their Kids

      58:38 Mental Health Issues From Lacking a Father Figure Early On

      1:02:16 Implications of an Absent Mother

      1:11:24 Biological Fathers vs. Father Figures

      1:12:57 Father Figures in Lesbian Couples

      1:15:04 Are Parents Needed in the First Two Years?

      1:21:27 The Optimal Scenario to Raise a Child

      1:26:19 How Dads Can Bond With Their Newborns

      1:30:02 Love Drugs

      1:38:51 Understanding Attachment Styles

      1:43:14 Is Modern Society Pushing Us Toward a Specific Attachment Style?

      1:44:36 Doomscrolling on Dating Apps? This Is Your Attachment Style

      1:47:43 How to Change Your Attachment Style

      1:51:41 How ADHD May Impact Your Love Life

      1:57:48 Do People With ADHD Cheat More Often?

      2:01:59 How to Contain Your Impulses

      2:03:18 Sex Life and Neurodivergence

      2:04:04 Relationships as the Biggest Factor in Health and Longevity

      2:10:20 What Happens to the Brain When It’s in Love

      2:14:23 When Did You Feel Like You’d Made It?

    Follow Dr Anna:

    Instagram – https://bit.ly/45ElU4p

    Website – https://bit.ly/3GcTT9S 

    You can purchase Dr Anna’s book, ‘Why We Love: The New Science Behind Our Closest Relationships’, here: https://bit.ly/3GjfOfo 

    You can purchase Dr Anna’s book ‘The Life of Dad: The Making of a Modern Father’, here: https://bit.ly/4lbtE2A

    Get your hands on the Diary Of A CEO Conversation Cards here: https://bit.ly/conversationcards-mp  

    Get email updates: https://bit.ly/diary-of-a-ceo-yt 

    Follow Steven: https://g2ul0.app.link/gnGqL4IsKKb 

    Sponsors: 

    KetoneIQ – Visit https://ketone.com/STEVEN for 30% off your subscription order

    Shopify – https://shopify.com/bartlett  

    Learn more about your ad choices. Visit megaphone.fm/adchoices

  • Giving Old Batteries New Life

    Megan O’Connor is the co-founder and CEO of Nth Cycle. Megan’s problem is this: How do you create a new system that can both refine the raw metals we need for new batteries and recycle metal from old batteries?

    See omnystudio.com/listener for privacy information.

  • A thought experiment on how to fix the national debt problem

    There’s an economic fantasy you sometimes hear in D.C. It often gets trotted out when politicians are trying to add billions or trillions to the national debt. They claim that all the new spending will be worth it in the end because we will supercharge economic growth.

    This fantasy recurs again and again, because economic growth is a potent force. Over the next few decades, tiny changes in how fast our economy grows could decide the fate of the federal government — whether we can bring the massive national debt under control or whether we spiral into a fiscal crisis.

    Today on the show, we talk to three economists who have been sifting through the latest evidence. They’re trying to figure out what the government could actually do to make the economy grow faster. Could we even grow fast enough to outrun our national debt?

    For a list of citations, check out our episode page.

    This episode of Planet Money was produced by Emma Peaslee with help from Sam Yellowhorse Kesler. It was edited by Jess Jiang. It was fact-checked by Sierra Juarez and engineered by Ko Takasugi-Czernowin. Alex Goldmark is Planet Money’s executive producer.

    Find more Planet Money: Facebook / Instagram / TikTok / Our weekly Newsletter.

    Listen free at these links: Apple Podcasts, Spotify, the NPR app or anywhere you get podcasts.

    Help support Planet Money and hear our bonus episodes by subscribing to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoney.

    Learn more about sponsor message choices: podcastchoices.com/adchoices

    NPR Privacy Policy

  • Alembic and the Future of AI in Marketing – Ep. 263

    Tomás Puig, founder and CEO of Alembic, joins the NVIDIA AI Podcast to discuss the intersection of AI, data, and marketing. He shares how Alembic uses advanced mathematics and AI—particularly spiking neural networks and causal inference—to help brands extract actionable insights from massive, anonymized datasets. The discussion also touches on the evolving role of human creativity in an AI-driven world, and the importance of private data as a competitive advantage. Learn more at ai-podcast.nvidia.com.

  • Marc Andreessen on Startup Timing

    AI transcript
    0:00:05 This is not saying that every startup should be an AI startup or whatever, but there is this incredible new tool that can be used.
    0:00:10 And it’s just sort of general fact that big companies, big incumbents have a very hard time reacting to these platform changes.
    0:00:12 Sometimes they pull it off, but a lot of times they really struggle.
    0:00:17 And so it’s sort of the best possible opportunity for a startup going up against an incumbent is when there’s this kind of shift happening.
    0:00:21 What if right now is the best time in decades to start a company?
    0:00:28 In this episode taken from Speedrun, a three-month accelerator powered by A16Z designed to help founders move fast,
    0:00:35 Marc Andreessen joins Games’ general partner, Jonathan Lai, to make the case that we’re entering a once-in-a-generation window for builders.
    0:00:38 From the explosive rise of AI to shifting global policies,
    0:00:43 Marc breaks down why the next four years presents a rare and urgent opportunity for founders
    0:00:47 and what separates the entrepreneurs who seize the moment from those who miss it.
    0:00:48 Let’s get into it.
    0:00:55 As a reminder, the content here is for informational purposes only.
    0:01:00 Should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security,
    0:01:05 and is not directed at any investors or potential investors in any A16Z fund.
    0:01:10 Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast.
    0:01:17 For more details, including a link to our investments, please see A16Z.com forward slash disclosures.
    0:01:29 How much do you think disagreeability or just the ability to sort of fight and sort of disagree publicly is a necessary trait for founders,
    0:01:30 as exemplified by Steve Jobs?
    0:01:33 Yeah, so start with Steve, who I knew.
    0:01:36 So Steve is one of the most disagreeable people in the history of humankind.
    0:01:40 You know, Steve would disagree with you over the shape of the glass on the table in front of you.
    0:01:41 Like, he was going to argue about everything.
    0:01:46 So it’s where a lot of the genius came from, which is he was just not going to take the status quo for granted under any circumstances.
    0:01:50 Elon uses the term first principles thinking, and Steve had a lot of that as well.
    0:01:51 So there’s a lot of genius in there.
    0:01:54 But if you read the books on Steve or you hear the stories,
    0:01:56 there’s basically two stories about Steve you hear.
    0:01:59 One is that he was a saint and he was perfect in all regards, which is somewhat true.
    0:02:03 But the other story that you hear is basically he was like a screaming lunatic,
    0:02:06 and he would just run around and yell at people in elevators and fire people in meetings.
    0:02:10 And just he was like, you know, people have all these kind of awful, horrible things.
    0:02:12 It’s like angel devil kind of thing.
    0:02:14 And I think on this, I think the reality was somewhere in the middle,
    0:02:17 at least what I saw and what I heard from people who worked with him for a very long time,
    0:02:21 was basically he was just like absolutely intolerant of anything less than first class work.
    0:02:26 If you brought him first class work, and if you were top in your field and super diligent and on top of everything
    0:02:29 and had all the details figured out and knew what you were doing and were really good,
    0:02:33 he was like the best manager you were ever going to work with and the best CEO you were ever going to work with.
    0:02:36 And the thing that comes up when people talk about who worked with him closely is,
    0:02:39 I did the best work of my life working for him, right?
    0:02:42 And part of that is because he really appreciated, understood the quality of great work,
    0:02:47 and he didn’t tolerate anything less than that, which meant that everybody around you also hit that bar.
    0:02:50 That’s sort of his approach to performance management is everybody’s going to be doing top end work.
    0:02:54 They’re not going to be here. As a consequence, the best people in the world are going to love being here
    0:02:56 because they’re surrounded by the best people in the world.
    0:02:59 And by the way, that’s also something, of course, that Elon shares.
    0:03:03 And so the stories that you hear about the screaming or firing people in meetings or whatever,
    0:03:06 it was always a side effect of it’s not first class work.
    0:03:09 And it’s either somebody who really should have been able to do it, who didn’t,
    0:03:12 who didn’t work hard enough, or it’s somebody who was just not capable of doing it, right?
    0:03:14 Who needed to go find something else.
    0:03:18 But the result, the core thing always, and this is why there was so much love for him, right?
    0:03:21 The core thing was I do the best work of my life working for him.
    0:03:24 Having said that, also, Steve himself matured, right?
    0:03:27 And his career kind of got, time dilation kind of happens.
    0:03:30 And so you kind of think, well, Steve built Apple, the company that we all know and love today.
    0:03:32 And it’s like, well, yes, but it took a very long time.
    0:03:34 And there were twists and turns along the way.
    0:03:37 And the big twist and turn, of course, is he got fired, right?
    0:03:39 So he started the company in 76 with Steve Wozniak.
    0:03:41 You know, they built Apple I, Apple II.
    0:03:43 They built Elisa, actually, which failed.
    0:03:47 That was the other thing, by the way, is not every Steve Jobs project succeeded, right?
    0:03:48 And he learned a lot from the failures.
    0:03:51 And now everybody’s forgotten the failures, but you can read about them on Wikipedia.
    0:03:54 Elisa was before the Macintosh and was a complete failure.
    0:03:56 But then the Macintosh started to work.
    0:03:59 But before the Macintosh really took off, he brought in the wrong CEO.
    0:04:01 And then there was a revolt inside the company.
    0:04:02 And he got fired.
    0:04:04 And then he spent 10 years out of the company, right?
    0:04:07 Which is actually when I got to know him, is when he was off doing Next.
    0:04:09 Next was like a complete wipeout.
    0:04:11 Like, it was years of real pain and agony.
    0:04:14 And then he had this little side project nobody understood, which is this little graphics company,
    0:04:15 Pixar, it turned out.
    0:04:19 Anyway, the point is, by the time he came back into Apple in like 97, I think maybe been
    0:04:20 out for like 12 years.
    0:04:24 And again, what people who knew him better than I did said, he learned how to actually be a
    0:04:25 great CEO, not at Apple, but at Next.
    0:04:29 Because he spent 12 years actually doing it the hard way, where he wasn’t
    0:04:30 being showered with praise.
    0:04:31 He didn’t have the magic touch.
    0:04:33 The product fundamentally didn’t take.
    0:04:35 He had to like, as we say now, pivot.
    0:04:37 Because we have this great new term, pivot.
    0:04:39 We used to just say, f*** up.
    0:04:42 You know, pivoted next.
    0:04:47 By the way, when I was in college in 92, 89, when I got 89, I got Illinois in 89, we were
    0:04:48 one of the early adopters of the Next computer.
    0:04:50 NEXT was the name of the company.
    0:04:52 It was called the Next Cube, was the computer.
    0:04:54 And it was sort of the post-Macintosh.
    0:04:57 And so it was like, literally, it was like a $15,000 Macintosh.
    0:05:00 And it was like fully modern, not only graphical, but it was like full Unix at a time when that
    0:05:02 was really unusual for a desktop computer.
    0:05:04 It had this incredible state-of-the-art.
    0:05:05 It had the first CD-ROM drive.
    0:05:08 And then one of the great stories is it was a perfect cube.
    0:05:10 It was a perfect 12-inch cube, 12 by 12 by 12.
    0:05:14 And there’s a famous story of his designers at Next, when they were designing it, they came
    0:05:19 in with a sort of optimal, Pareto optimal hardware design, built for manufacturing, cost optimization,
    0:05:21 which was 12 inches by 12 inches by 13 inches.
    0:05:22 And he said, f*** you.
    0:05:26 Go back and make it a perfect cube.
    0:05:28 And they’re like, Steve, that’s going to double the cost.
    0:05:29 And he’s like, I don’t f***ing care.
    0:05:31 Make it a cube.
    0:05:33 And so it was like a perfect cube.
    0:05:34 It was slowish.
    0:05:36 Like, it took forever.
    0:05:38 It was like walking through molasses to use the thing.
    0:05:40 Completely flopped.
    0:05:41 Nobody wanted it.
    0:05:42 Pivoted the company to software.
    0:05:43 Nobody wanted the software.
    0:05:45 Anyway, the point is, like, that was really hard.
    0:05:47 And he had to make every part of the company work.
    0:05:48 He had to try to figure out how to optimize it the hard way.
    0:05:51 He had to retain a team through 12 years of basically failure.
    0:05:55 What basically people say is he had this incredible growth and innovation skill set from Apple phase
    0:05:58 one, and then he had an incredible management skill set from the sort of wilderness years.
    0:06:01 So by the time he came back to Apple in 97, he was both.
    0:06:06 And he was also at that point a great CEO, but he maybe not would have ever become the Steve Jobs
    0:06:08 that we know had he not gone through the hard period.
    0:06:11 So a big undercurrent to what you’ve been discussing is the concept of, like, market timing, right?
    0:06:13 Like, what’s the right time to sort of enter a market?
    0:06:18 Is the technology truly ready for sort of the consumer or the enterprise version of that technology?
    0:06:24 And so thinking back to, like, the 90s, you wanted to be not Pets.com, but Chewy eventually
    0:06:25 did it wrong, right?
    0:06:27 Like, some of these companies that came 10, 15 years later.
    0:06:32 If you’re a builder right now and you’re selecting, like, markets right now to build in,
    0:06:35 how would you think about what the right time is?
    0:06:37 Is it through early for certain markets and so on and so forth?
    0:06:41 Yeah, so one of my observations, it sounds crazy, but I think might be true, is I think
    0:06:42 actually all the ideas might be good.
    0:06:46 Qualified founders who know what they’re doing, I think, generally are right about the opportunity
    0:06:49 that they’re going after and that it’s just, okay, if you’re, like, a qualified founder doing
    0:06:52 what you’re doing, you should be so deep in the domain that when you think about, okay,
    0:06:55 this technology now makes this use case possible and we can build a product that does that,
    0:06:56 people are going to want that.
    0:06:59 I think the accuracy rate on that is almost 100%.
    0:07:00 The problem is the timing.
    0:07:04 And early is the same as being wrong, right, in practice, right?
    0:07:07 And you see this in the pattern, which is basically, is anytime there’s an overnight success,
    0:07:11 like a technology company that just, like, lights the world on fire, is doing great,
    0:07:14 what you find is basically there were a set of companies that tried to do that same thing
    0:07:17 five years earlier and failed, five years before that and failed, five years before that and
    0:07:18 failed, before that and failed.
    0:07:21 Often goes back, by the way, I mentioned the e-commerce and the phone thing.
    0:07:25 The first actual smartphone came out in 1987, right?
    0:07:29 And so there were literally 20 years of failed attempts to do smartphones until the iPhone,
    0:07:31 you know, 20 years, right?
    0:07:34 And so I knew many of the founders trying to do smartphones before the iPhone and they were
    0:07:35 very, very smart, capable people.
    0:07:39 Many of them very successful and in other domains are very successful later on.
    0:07:40 It was just too early.
    0:07:41 The technology wasn’t ready yet.
    0:07:43 And then why is this hard?
    0:07:45 It’s hard for basically two reasons.
    0:07:48 One is because to be a successful founder, by definition, you have to live in the future,
    0:07:48 right?
    0:07:51 So you have to envision a world that doesn’t exist yet in which the thing that you’re building
    0:07:53 is something that everybody’s going to use.
    0:07:56 And like people around you can’t see that yet because it doesn’t exist yet.
    0:08:00 And so like you see a vision of the world that doesn’t yet exist and that may be right and
    0:08:03 may not be right, or it may happen now and it may not happen now.
    0:08:05 And then the other thing about it is the world gets a vote.
    0:08:10 And, you know, I think one of the really interesting kind of conceptual questions is there’s like
    0:08:13 the push side of you trying to make something happen in the world and trying to get the
    0:08:15 world to understand something and want to do something and buy something.
    0:08:18 But then there’s like some sociological thing on the other side,
    0:08:20 which is, okay, when is the world actually ready for the new idea?
    0:08:22 Here’s another just like really amazing thing.
    0:08:25 Somebody got one of the small versions of Llama to run on Windows 98.
    0:08:30 They booted up a literally a Dell desktop computer from, I think, 1998 with a fresh copy of
    0:08:31 Windows 98 and they got Llama running on it.
    0:08:36 And so like all of those old PCs literally could have been smart this whole time.
    0:08:37 They really could have been.
    0:08:39 And like we had neural networks, right?
    0:08:40 There were lots of people working on AI.
    0:08:44 But like we could have been talking to our computers in English for the last basically
    0:08:45 almost 30 years.
    0:08:46 We now know.
    0:08:47 Crazy alternate history.
    0:08:48 Crazy alternate history.
    0:08:49 And like we didn’t.
    0:08:50 There was an AI startup boom in the 80s.
    0:08:53 There were a lot of really smart people in the 80s who thought this was all going to happen
    0:08:53 then.
    0:08:56 There were people in the 50s who thought it was going to happen then.
    0:08:59 And so this timing thing is just like incredibly difficult.
    0:09:03 And then just practically speaking, as a startup, you only have so long to either prove it right
    0:09:03 or not.
    0:09:06 And basically, you know, give or take five years total, right?
    0:09:09 If you don’t get traction in a startup in the first five years, your odds of success are
    0:09:11 very low just because it’s very hard to hold the team together.
    0:09:12 You’re in a race against time.
    0:09:14 Yeah, you’re in a race against time.
    0:09:17 And then you end up in this frustrating, you know, I have a lot of friends who’ve ended
    0:09:19 up in this frustrating circumstance where you started a company in 2010.
    0:09:22 You thought now was the time your company failed in 2014.
    0:09:25 And then a company started in 2015 that just hit it and went.
    0:09:26 And you’re just, right?
    0:09:29 And so the timing part of it is very hard.
    0:09:33 I don’t think there’s an actual answer to the timing thing other than I think that’s a really
    0:09:35 key part of what they call entrepreneurial judgment.
    0:09:40 Like, I think that’s a big thing that the founder has to really work hard about and think hard
    0:09:40 about.
    0:09:42 And again, it’s this thing of like reconciling.
    0:09:43 I live in the future and I can see it happening.
    0:09:47 But like, can I actually deliver it in the form of a product that actually works the way
    0:09:48 people expect?
    0:09:53 And then is there enough precondition in the world such that they’re going to want to actually
    0:09:54 do this thing?
    0:09:59 And I just like, I mean, these guys, I’ll tell you, like, I don’t, I don’t even, I don’t
    0:10:01 even try to forecast these things myself anymore.
    0:10:05 Like in meetings, I just, I just figured like, let’s just assume the founder is more
    0:10:08 likely to be right than we are just because like, this is the best, the founder’s best
    0:10:11 guess is probably the best guess that exists because the founders have the most information
    0:10:13 kind of synthesize a view on this.
    0:10:17 But having said that, you know, we’re going to back in any, you know, I don’t know what,
    0:10:19 like, I don’t know, like a third of the companies or whatever, and we’re going to back in a given
    0:10:20 year.
    0:10:21 It’s just going to turn out that they were too early.
    0:10:25 By the way, the other corollary to this is if, if, if, if it’s going to work, it almost
    0:10:26 always feels like you’re too late.
    0:10:32 So as a founder, it almost always feels like, I wish I, I, I, I should have started this
    0:10:32 company.
    0:10:36 If I only had started this company two years earlier, right?
    0:10:39 Because, because it’s like, you’re in a situation where you’re like, oh my God, like it’s going
    0:10:41 to happen and the market’s coming and it’s going to happen.
    0:10:42 But like, my product’s not quite ready yet.
    0:10:44 I’m like, oh, like I’m running out of time.
    0:10:45 Right.
    0:10:49 And like, my experience at least is that, that’s a very, that feels terrible in the moment because
    0:10:52 it feels like you’re not rising to the occasion, but that’s, that’s the, that’s actually the
    0:10:53 positive sign.
    0:10:56 What excites you the most when you think about AI and sort of what it can do to create a
    0:10:58 storytelling and just the entertainment industry at large?
    0:11:05 So aspirationally, the, you know, there’s opportunity for like a complete reinvention of the entire
    0:11:08 process of storytelling and games and immersive worlds.
    0:11:09 Uh, right.
    0:11:12 And it’s, you know, this is the sort of thing it’s, instead of, instead of us making them,
    0:11:15 maybe they’re going to get hallucinated there, you know, they’re going to get dreamed, you
    0:11:16 know, you’re playing a game and it’s going to, it’s going to basically, right.
    0:11:19 It’s going to be an AI sort of a symbiosis with you as the player.
    0:11:22 And it’s going to, you know, adapt, it’s going to learn from you, adapt to you and make you
    0:11:27 the best possible experience, um, you know, with the best possible, you know, the trade-off
    0:11:30 between, you know, the ease and difficulty learning curve and, and the most possible
    0:11:31 entertaining scenario for you.
    0:11:35 And, you know, the best games people will play for, you know, many thousands of hours.
    0:11:38 Um, and, uh, and then by the way, the businesses can be really amazing
    0:11:42 underneath this because they don’t, you, you don’t bear all the cost of, of, uh, of, uh,
    0:11:42 manual content creation.
    0:11:46 And so, you know, you, you build an engine like this and it, it runs, you know, it runs
    0:11:46 forever.
    0:11:50 Um, and so like that, that’s super exciting.
    0:11:54 Um, and then, you know, being able to have virtual worlds with like, you know, super smart,
    0:11:57 you know, lots of, you know, populated by, you know, these incredible personalities.
    0:12:01 Um, uh, you know, it’s just a whole new, amazing kind of storytelling.
    0:12:03 So like, I know we’re, and we’re big believers in all this.
    0:12:05 And like, I think that’s all going to happen.
    0:12:06 It’s going to be, it’s going to be, it’s going to be fantastic.
    0:12:09 Um, I will say, I am also seeing this through the eyes of my nine-year-old.
    0:12:14 Um, so I’m re-going through the, uh, you know, the process of learning about gaming and coming
    0:12:15 up to speed as a gamer through my, my nine-year-old.
    0:12:18 And so, um, a couple, a couple of key lessons.
    0:12:21 One is, well, Warcraft apparently is, or not Warcraft, um, Minecraft is immortal.
    0:12:27 Um, so like, like he loves Minecraft more than like life itself.
    0:12:30 And so that, like that, whatever, whatever, whatever those guys did is just, it has worked.
    0:12:34 Um, and by the way, it really interesting thing, like the nine-year-olds, at least the nine-year-olds,
    0:12:37 they don’t care at all about visual fidelity, visual quality.
    0:12:42 Like he could not give a, um, and so Minecraft, Minecraft and Roblox and games that look like
    0:12:43 that are, are fantastic.
    0:12:47 And he just discovered his first, um, I just learned about IO games, um, if people have heard
    0:12:48 of those.
    0:12:52 And so he just discovered, he just discovered his first, uh, first person shooter, um, which
    0:12:54 just thrills, thrills me to no end.
    0:12:56 It’s, it’s, it’s, it’s called, uh, shell shockers.
    0:13:01 Um, and it’s basically, it’s Counter-Strike, but with, uh, uh, uh, uh, anthropomorphic eggs.
    0:13:02 Oh, wow.
    0:13:05 Uh, so it’s like full military hardware.
    0:13:08 And then when you shoot another player, he explodes in a shower of yolk.
    0:13:12 Um, and it’s, it’s a, it’s a completely browser-based game, right?
    0:13:14 It’s multiplayer, but it’s all browser-based.
    0:13:15 And so it punches through all the school firewalls.
    0:13:19 Um, and so the, the, the, and it runs, it runs great on Chromebooks.
    0:13:21 Um, he’s, he’s very frustrated.
    0:13:22 He can’t get it.
    0:13:24 When we take away his laptop, he’s currently on a laptop break.
    0:13:27 Uh, when we take away his laptop, he tries very hard to get it working on the Kindle, on
    0:13:28 the web browser on his Kindle.
    0:13:34 That’s his main form of frustration in his life right now is that, is that, uh, and we tell
    0:13:37 him it’s good, it’s good that shell shockers doesn’t run on the web browser on the Kindle.
    0:13:38 Cause if it did, we’d have to take away the Kindle.
    0:13:44 Um, so, um, but anyway, um, I, I watched him doing this and then, and then, you know,
    0:13:48 and then I had this moment when ChatGPT came out, uh, where I was like, wow, this is amazing.
    0:13:50 And, you know, I can’t wait to show this to my kid.
    0:13:52 And I’m going to, you know, I felt like, that felt like Prometheus bringing fire down from
    0:13:54 the heavens to my, to my kid.
    0:13:57 It’s like, I’m bringing him, you know, AI and it’s going to be this tutor and coach and
    0:13:58 it’s going to be with him forever.
    0:14:00 And it’s going to talk to him and he can ask good questions and it’ll teach him about all
    0:14:01 these things he’s interested in.
    0:14:05 And I, I, I install it on his laptop and show him, you type in a quick question.
    0:14:08 It’ll, it’ll answer the question and, you know, and, and, and I’m like, I’m like, this
    0:14:11 is like the best thing I could ever possibly do for my kid is given this capability.
    0:14:18 And, you know, he looks at me and he’s like, so I was like, no, it’s like, it took 80 years
    0:14:21 with the neural networks and the this and the training data and the whole thing.
    0:14:24 And it like does the thing and it makes it, he’s like, that is a computer.
    0:14:27 Like if it doesn’t answer your questions, like what would it do?
    0:14:31 Well, against this, this backdrop, right?
    0:14:36 Like we’ve got new administration, new policies, new technology, sort of new sort of cultural
    0:14:37 movement potentially.
    0:14:40 It feels like we’re very much at a moment in time.
    0:14:43 I’ve, I’ve heard you describe it before as like we could be in the precipice of literally
    0:14:44 a golden age, right?
    0:14:47 For, for, for America and for the, and for the world.
    0:14:54 What are some ways that startups today, like in 2025 could be thinking about capitalizing just
    0:14:55 on, on this moment, right?
    0:14:56 Yeah.
    0:14:59 So look, I think for at least the next four years, I think it’s, you know, basically blue
    0:14:59 skies.
    0:15:04 And so I think that, you know, now, now’s definitely the time to build, you know, you know, we,
    0:15:08 as I said earlier, like our whole theory of all this is that the prime time for startups
    0:15:09 is when there’s a platform change.
    0:15:13 And I’m not, by the way, this is not saying that every startup should be an AI startup or
    0:15:17 whatever, but like there is this incredible new tool, you know, that can be used.
    0:15:21 And it’s just, again, it’s just sort of general fact that big, big companies, big incumbents
    0:15:24 have a very hard time reacting to these platform changes.
    0:15:26 Sometimes they, they, they pull it off, but a lot of times they really struggle.
    0:15:31 And so it’s sort of the best possible opportunity for a startup is going up against an incumbent
    0:15:33 is when there’s this, this kind of shift happening.
    0:15:34 So I think that’s happening.
    0:15:35 Yeah.
    0:15:40 There’s going to be four years of, of, of, of, of clear, clear sailing, I think in the
    0:15:43 U S you know, the rest of the world’s in a funny state.
    0:15:47 Um, uh, you know, the EU has all but made AI illegal at this point.
    0:15:52 Um, uh, they, they literally, this is the amazing stuff.
    0:15:55 Um, they literally say publicly, their senior officials literally said publicly a year ago,
    0:15:59 they’re like, well, we’ve realized that you cannot be the world’s leader in AI innovation.
    0:16:01 And so therefore we will be the world’s leader in AI regulation.
    0:16:06 Um, which is one of those things that I think you only say if you’re an unelected bureaucrat,
    0:16:08 completely lost in your own thoughts.
    0:16:13 Um, but you know, they, they passed this very draconian AI law, um, that as a consequence,
    0:16:18 even the big AI labs now are not launching new AI products in the EU, uh, cause they can’t
    0:16:18 figure out how to do it legally.
    0:16:21 Um, the UK actually backslid on this.
    0:16:25 They, they, they should, UK should be a haven for, for openness and instead they, they basically
    0:16:29 have matched the EU, um, on, on, on bad regulations and seem like they’re going sideways on that.
    0:16:34 So, so, and this is important cause like the, the main U S trading partners are actually our
    0:16:37 main, our main trading partners at China, our main trading partners, Europe, like the, the,
    0:16:40 the, the, the, the, the globalization is sort of based fundamentally, you know, in the West
    0:16:43 is based on the economic relationship between the U S and Europe.
    0:16:47 Um, and then, yeah, I mean, look, you know, the entire world is, is, is, is opening up.
    0:16:49 I mean, you know, kids everywhere are now online.
    0:16:50 They have access to all this.
    0:16:51 They, they want to use all this technology.
    0:16:52 They want to build it.
    0:16:54 You know, they want to be part of these companies.
    0:16:57 Um, some of that obviously happens through, you know, migration, but a lot of that happens
    0:16:59 through just like everybody’s online now.
    0:17:01 Um, and so there’s, you know, talent all over the world.
    0:17:06 Um, and you know, hopefully the, the, the internet itself, you know, and general economic
    0:17:09 arrangements stay free enough where people all over the world can come together and build
    0:17:09 things.
    0:17:10 Oh, sure.
    0:17:10 That’s very exciting.
    0:17:13 Definitely feels like what a unique moment in time to be building.
    0:17:16 So, um, I think it’s great note that to wrap it on.
    0:17:18 Sarah, thank you, Mike and Jason.
    0:17:18 Let’s give him a hand.
    0:17:19 Good, good, good.
    0:17:20 Thanks, everybody.
    0:17:29 Like, it just drives you nuts.
    0:17:29 Right.
    0:17:31 Um, and by the way, is it okay?
    0:17:33 Is this an adult audience?
    0:17:35 Is it, can I, can I swear?
    0:17:36 Is this everybody, is everybody over the age of 18?
    0:17:37 It’s hard to tell.
    0:17:40 If you’re below the age of 15, it’s just whatever the new thing is.
    0:17:41 It’s just the way the world has always worked.
    0:17:42 It’s totally normal.
    0:17:46 Um, if you’re between the ages of 15 to 35, you know, the new thing is very exciting
    0:17:48 and you might be able to make a career out of it.
    0:17:52 Um, if you’re above the age of 35, the new thing is unholy, um, and against the social
    0:17:54 order and it’s going to destroy civilization.
    0:17:59 Thanks for listening to the A16Z podcast.
    0:18:04 If you enjoyed the episode, let us know by leaving a review at ratethispodcast.com slash
    0:18:05 A16Z.
    0:18:07 We’ve got more great conversations coming your way.
    0:18:08 See you next time.

    What if now is the best time in decades to start a company?

    In this episode, taken from Speedrun, a16z’s accelerator for early-stage founders, Marc Andreessen joins games General Partner Jonathan Lai to make the case that we’re entering a once-in-a-generation window for innovation. From the rise of AI to the cultural and policy shifts reshaping the global economy, Marc explains why the next four years present a rare opportunity for builders to seize the moment.

    Along the way, they discuss market timing, platform shifts, and what sets successful founders apart – including lessons from Steve Jobs, insights into AI’s impact on storytelling and games, and why being “too early” can feel just like being wrong.

    Timecodes

    0:00 Lessons from Steve Jobs on Leadership & Innovation

    2:27 The AI Boom: How It’s Changing Everything

    5:52 Market Timing: The #1 Factor in Startup Success

    8:13 Why the Next 4 Years Are Critical for Tech

    11:30 AI & The Future of Gaming, Storytelling & Virtual Worlds

    14:28  Why Some Startups Fail While Others Explode

    17:11  The Role of Founders in the AI Era

    Resources: 

    Find Marc on X: https://x.com/pmarca

    Find Jonathan on X: https://x.com/Tocelot

    Stay Updated: 

    Let us know what you think: https://ratethispodcast.com/a16z

    Find a16z on Twitter: https://twitter.com/a16z

    Find a16z on LinkedIn: https://www.linkedin.com/company/a16z

    Subscribe on your favorite podcast app: https://a16z.simplecast.com/

    Follow our host: https://x.com/eriktorenberg

    Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.

  • Who Defends Your Digital Rights? Meet EFF’s Cindy Cohn

    AI transcript
    0:00:03 If the police showed up at your front door and said, Guy, you know, we’re really worried
    0:00:06 there’s a lot of break-ins in the neighborhood. So what we want you to do is to leave your back
    0:00:11 door open so that if the burglars break in, we can catch them easily because we don’t want to
    0:00:15 have to bound down your front door in order to do it. Like you’d look at them and tell them they
    0:00:20 were crazy. But when that’s happening in the context of digital devices, where it’s a little
    0:00:26 more abstract and they use language to obscure what they’re doing, like this gets put forward
    0:00:31 as if it’s, oh, law enforcement absolutely needs this. It’s crazy. And it’s bad for all of us.
    0:00:41 Good morning, everyone. It’s Guy Kawasaki. This is the Remarkable People podcast. And we’re on this
    0:00:46 mission to make you remarkable. So we go all over the world looking for remarkable people. And we
    0:00:52 found one really close to us in San Francisco, California. Her name is Cindy Cohn, and she’s
    0:01:00 the executive director of the Electronic Frontier Foundation. Wow. And in my humble opinion, that’s
    0:01:08 probably the leading defender of civil liberties in the digital world. She has led this great case of
    0:01:15 Bernstein versus Department of Justice, which established that software programming is protected
    0:01:22 speech under the First Amendment. And the National Law Journal named her one of 100 most influential
    0:01:29 lawyers in America. And I love this quote about Cindy, man. I hope somebody says something like this about
    0:01:38 me someday. The quote is, if Big Brother is watching, he better watch out for Cindy Cohn. Oh, my God.
    0:01:44 I got to go back in your history. I noticed something doing research about you. So you got
    0:01:53 your law degree in 1989 or 1990, right? Yes. And then in a mere four years, you were lead counsel for
    0:02:00 Bernstein versus Department of Justice. How did you get to that position in a mere four years?
    0:02:07 Well, you know, I kind of fell into it, to be honest. You got to remember, 1989, 1990 to 1994,
    0:02:14 there was no World Wide Web. Technology was being done mainly by people who had high technical skills
    0:02:20 out of universities and research institutions. And I happened to meet some of them. And one of them was
    0:02:26 EFF’s founder, John Gilmore. And I literally met him at a party in Haight-Ashbury. And we became
    0:02:32 friends. And for a while, I dated one of his friends. And he was putting EFF together, the
    0:02:38 Electronic Frontier Foundation. A couple years later, he called me up. And he said, do you know
    0:02:44 how to do a lawsuit? And I just a couple years out of law school, really not the right person for this
    0:02:49 said, sure, I know how to do a lawsuit. He said, good, because we’ve got this guy and he wrote a
    0:02:55 computer program. And he wants to publish it on the internet. And he’s been told that if he does,
    0:03:00 he could go to jail as an arms dealer. And I said, what does it do? Does it blow things up?
    0:03:06 And he said, no, it keeps things secret. And I said, that sounds like a problem and a First Amendment
    0:03:12 problem at that. And he said, I think so too. Will you take the case? And I said, yes. I had never been
    0:03:17 online. I didn’t really know very much about what these guys were doing. They were my friends. But
    0:03:23 I wasn’t even, as you pointed out, I’m kind of a baby lawyer, right? I’d never done a constitutional case
    0:03:31 of that magnitude. But I got lucky. And between John and some of the other early internet people,
    0:03:37 and then very kind people like cryptographers, computer science professors, Hal Abelson at MIT,
    0:03:44 and a bunch of others, they’ve actually taught me enough about how the internet works, how coding works,
    0:03:50 and how cryptography works, that we were able to mount this challenge and do so successfully. But to me,
    0:03:55 I just was in the right place at the right time and had the good fortune to think my friends would
    0:04:00 think I was cool if I did this lawsuit. And then the patience and support of a lot of people to be
    0:04:05 able to sit at the, I always call it driving the big truck, right? To be able to sit in the driver’s
    0:04:09 seat of this big truck that we drove through the government’s cryptography regulations.
    0:04:17 So Cindy, are you basically saying to me that in one of the most pivotal cases in intellectual
    0:04:20 property, you are faking it until you make it?
    0:04:26 Totally. Absolutely. Now, I had the good sense and the luck to have a lot of people around me and to be
    0:04:31 able to pull in people. By the time we got deep enough in the case, we had a guy named Bob Corden
    0:04:37 Revere join our case. He’d already argued a First Amendment case in the Supreme Court. And he saw what
    0:04:42 we were doing and came in and was like, let me help ground you in this kind of long history of the
    0:04:48 Constitution. It’s more like we were kind of this rolling tumbleweed that started with just me. But
    0:04:54 as we went along, we picked up people with expertise and support so that by the time I was standing in
    0:04:59 front of the Ninth Circuit Court of Appeal arguing this case, I was standing on the shoulders of lots
    0:05:04 and lots of giants who had thrown in to help us. But yeah, the very start of it was quite literally,
    0:05:07 I thought my friend John would think I was cool if I said yes.
    0:05:13 Wow. Listen, when I saw that four years after your law degree, you were leading this case,
    0:05:20 I did a search on ChatGPT and I asked for examples of lawyers who had huge cases early in their careers.
    0:05:29 Wow. And it came up with this list of Neil Katyal, Gloria Allred, Sherilyn Eiffel, Preet Bharara,
    0:05:35 whatever. Yeah, very famous lawyer, very good lawyer.
    0:05:41 Yeah. And I looked at that list and you were faster than all of them. So I said, oh my God,
    0:05:45 Cindy is the Caitlin Clark of civil liberties. My God.
    0:05:52 Oh, as an Iowan, you could give me no higher compliment than comparing me to Caitlin Clark.
    0:05:53 Yeah. She’s from my home state.
    0:06:01 And Cindy, I will confess to you that I checked to see if you related to Roy Cohn to see if there
    0:06:07 was any nepotism involved, but there is not. No, no, no. I don’t want to be related to him,
    0:06:12 but yeah, my family doesn’t come from that. Neither of my parents went to college and I was lucky enough
    0:06:16 to get to go. I would not brag about being related to Roy Cohn.
    0:06:21 No, I do not want to be related to him, but I did not come from highly educated, lawyered up family.
    0:06:26 While we’re on the subject of Bernstein versus Department of Justice, if the Department of
    0:06:30 Justice had prevailed, what would be different today?
    0:06:35 I think that what would be different today is that we’d have even less security online than we do
    0:06:41 now. Now we still have a lot to do. I don’t claim that this is an ongoing fight and the attacks on
    0:06:47 encryption keep coming. The UK is horrible right now. Australia passed a bad law, but we have signal.
    0:06:54 We have HTTPS, right? The ability to go from your browser to a website without that information being
    0:07:01 in the clear so you can access information without it being immediately tracked. We have basic security,
    0:07:05 right? When you turn off your phone, it’s encrypted. So if you lose your phone, you don’t lose all your
    0:07:11 data or access to all your data. That’s because Apple put encryption into the actual device so that
    0:07:16 your data is encrypted. When you turn the device off, the same thing’s true for most computers and
    0:07:24 phones now. Encryption is really baked into so many things we do. And I think it would be not baked
    0:07:28 into nearly as many. I think the government would have ultimately had to let us have some security
    0:07:35 online, but it wouldn’t have been nearly as pervasive and we wouldn’t be able to continue to
    0:07:41 deploy it without government approval. And parts of governments really understand the need for strong
    0:07:46 security. I would say NIST and some of the other parts of government. But when you get over on the
    0:07:52 law enforcement side, they’re really, really hostile to it. And we’ve had an upper hand in that fight since
    0:07:59 the 90s because it got taken off the munitions list and it wasn’t regulated. So we could go ahead and
    0:08:05 innovate first and not have to go to the government on bended knee and beg for permission. And I think
    0:08:10 that’s benefited all of us in terms of even having the security we have now online.
    0:08:17 Now, when you refer to the United Kingdom just now, is that the request they’re making of Apple so that
    0:08:21 there’s a backdoor to the encrypted iCloud files?
    0:08:27 Yes. It’s hard because the UK has even more secrecy around these things than we have in the US. So we
    0:08:33 don’t know exactly what’s going on. What we know is that Apple offered something, I think it’s called ADP,
    0:08:38 Advanced Data Protection, or it might be APT. I might have that wrong. But basically, you could turn on a
    0:08:43 switch and have advanced protection. And that would mean that your iCloud backups were encrypted. Now,
    0:08:48 we think that should be the default and not a switch you have to turn on. But that’s okay. At least they
    0:08:52 offered it. And that’s really important for human rights defenders, for journalists, for people who find
    0:09:01 themselves targeted for espionage as well as by governments. And we know that the UK government has
    0:09:07 demanded that anybody who provides you with a service or a device have access to the plain text of
    0:09:12 everything you do on your device. And this is the way they talk about they don’t say we’re going to ban
    0:09:15 encryption. They always say, Oh, we love encryption. We’re not banning it. But we’re just going to make
    0:09:20 sure that the people who provide you with services and devices always have access to the plain text. And
    0:09:24 there’s no way to read that as anything other than denying you encryption, right? Real encryption.
    0:09:30 So we know that the UK government provided something to Apple, we think it’s that they had to provide
    0:09:36 access to the plain text, and that Apple reengineer the device so that they could always have access to
    0:09:40 the plain text. And we know that what Apple did in response is say, Well, we’re just not going to let
    0:09:46 anybody turn on this extra protection in the UK, because I think they didn’t want to have to downgrade
    0:09:52 it. It’s pretty hard to downgrade it just for UK people. And of course, if they downgrade it for
    0:09:57 people in the UK, that’s anybody who’s talking to anybody in the UK. So that affects all of us,
    0:10:03 or most of us. So we think that’s what’s going on. We haven’t seen the actual documents yet. But I
    0:10:08 think it’s a safe bet. That’s what’s going on with Apple. And I really appreciate Apple because
    0:10:12 they’ve been pretty public about it as public as they can be. We don’t know what kind of orders have
    0:10:17 been issued to the other companies who have been very quiet. But I think it’s highly unlikely that
    0:10:23 the UK government just picked Apple. They’re not even the biggest operating system. The Android is
    0:10:28 bigger when you go global. So I suspect that something similar could be going on to Android
    0:10:34 and other devices that would that is not as visible to us. Again, I don’t know. It’s all secret. But I
    0:10:37 think in time, we’re going to figure it out. And it’s problematic. People should be rising up like
    0:10:43 we need strong security and privacy. And it’s not just because of law enforcement access. If the police
    0:10:47 showed up at your front door and said, guy, you know, we’re really worried. There’s a lot of break-ins
    0:10:51 in the neighborhood. So what we want you to do is to leave your back door open so that if the burglars
    0:10:55 break in, we can catch them easily because we don’t want to have to bound down your front door in order
    0:11:01 to do it. Like you’d look at them and tell them they were crazy. But when that’s happening in the context
    0:11:06 of digital devices, where it’s a little more abstract, and they use language to obscure what
    0:11:12 they’re doing, like this gets put forward as if it’s, oh, law enforcement absolutely needs this. It’s
    0:11:21 crazy. And it’s bad for all of us. Wow. So if Apple were to agree with the UK, then logically,
    0:11:26 the FBI in America would say, well, you did it for the UK, you should do it for us. And then
    0:11:31 none of us have encryption anymore. That’s correct. And even if you think the UK,
    0:11:36 they’re a Western democracy, they have rule of law, and they have due process. It’s not just the US
    0:11:41 that’s going to be following. It’s all the countries of the world, right? You’re going to have Nigeria,
    0:11:46 which has a tremendous problem with corruption in their government and attacking political opponents.
    0:11:51 All of the countries in the world are going to say, well, you did it for the UK, you should do it for
    0:11:56 us. And I think it’s terrible in the United States. It gets even scarier as you go around the world.
    0:12:00 Okay. So can we back up for a second? Sorry, I scared the pants off you, didn’t I?
    0:12:07 No, no, no. I mean, it is a time to be scared. So could you, we just back up a little bit and could
    0:12:10 you explain for us what the EFF actually does?
    0:12:16 Yep. The Electronic Frontier Foundation is the oldest and the biggest online digital rights
    0:12:22 organization. We’re based in San Francisco. We’re now 125 people strong. And essentially,
    0:12:27 we work to make sure that when you go online, your rights go with you. So we are civil liberties
    0:12:35 organization. We’re focused on law and rights as they relate to digital technologies. And we really
    0:12:40 center ourselves on the users of technology. So making sure that the users of technologies have a
    0:12:46 voice and are protected as we’re moving forward. Now, our tools are, we’re a lot of lawyers. I think
    0:12:50 that’s still my biggest team. We do impact litigation. So we take cases like my Bernstein
    0:12:56 case to try to set the law, especially constitutional law, because that’s the province of the courts in
    0:13:02 the right place to protect users. But we also have an activism team. And we have a tech team. We call
    0:13:08 them the pit crew, the public interest technology team. And we build some technologies. So we build a
    0:13:14 Firefox, we build a plugin for Firefox and Chrome called Privacy Badger that blocks tracking cookies,
    0:13:19 those cookies that follow you all around the web and blocks other kinds of tracking. We build a thing
    0:13:25 called Certbot, which is part of the process for certificate authorities for making sure that when
    0:13:32 you go to visit a website, your traffic to that website is not trackable because it’s encrypted.
    0:13:39 So we build technologies, we bring lawsuits, we do activism, all of these kind of towards this goal
    0:13:43 of trying to make sure that your rights are respected when you’re using technologies.
    0:13:46 Steve McLaughlin: And how do you pay for all of this?
    0:13:52 Speaker 1: We are member supported. We get no government money. We get a little bit of foundation
    0:13:56 money. We get a little bit of corporate money, but not from the big guys. That often comes with too
    0:14:03 many strings about our advocacy. So companies that are a little smaller and that might be running a VPN
    0:14:08 service or a privacy service, we get some support from them, but mainly it’s individuals. Over half
    0:14:14 of our money comes from individuals. And a huge chunk of that come from people who are ordinary members,
    0:14:20 who give us 60 bucks or a hundred bucks or a thousand bucks and get t-shirts and hats and stuff. I think
    0:14:26 EFF has been a marker for people that they love tech, but they also love rights that they’re trying
    0:14:31 not to use tech to crunch on people. And we have a pretty good membership inside the big tech companies,
    0:14:36 the Facebooks and the Googles and Alphabets and other companies, even inside the government,
    0:14:41 we have a lot of members because I think it’s a way for people to show that they’re trying to be in
    0:14:46 this for the right reasons and that they really want to build and support tools that support people
    0:14:50 rather than oppress people. We’re member supported and always have been.
    0:14:57 So member supported is like NPR where you’re a member of KQED or something like that.
    0:15:03 Correct. Only we have much cooler t-shirts, hats and stickers, but yeah, it’s a lot like that. I kind
    0:15:07 of joke sometimes at EFF, we work for tips, right? We’re going to go out there and do what we’re going
    0:15:11 to do. And if people think that what we’re doing is important and it’s important to have kind of a
    0:15:16 foothold and a voice out there to counterbalance the governmental voices or the corporate voices that
    0:15:22 might, you know, be in shittifying your tools or not really on your side. We’re one of those people
    0:15:26 who show up and try to fight for it. And there’s a lot of digital rights groups now. And I really
    0:15:31 love when I got into this, there was just us. And now there is a whole constellation of people doing
    0:15:37 really good work. I think what makes us different is that we do have this tech team. We’re really grounded
    0:15:44 in how the tech actually works. We don’t fly off and pretend or tell the scary stories about how tech’s
    0:15:50 going to eat your children or any of those things. We’re really trying to stay very grounded in how
    0:15:55 things actually work. And we’ve developed a reputation in the courts and in Congress and in various
    0:15:59 administrations going all the way back to the nineties as the people who show up and will tell
    0:16:04 you the truth about how technology works and how it doesn’t work.
    0:16:11 So this is a dumb question. And I know the answer already, but I got to ask it just to make sure.
    0:16:19 So theoretically, if Elon or Mark calls you up and says, we want to give you a $10 million donation,
    0:16:25 the answer is it’s probably no, it’s probably no. And this has actually happened. Some of those people,
    0:16:31 not ones you’ve made, but some of those companies have offered us a lot of money. And historically,
    0:16:35 in the past, there was a time when we were more aligned with them, especially the early days with
    0:16:40 Google. We were pretty aligned with them because they were trying to free things up, especially in
    0:16:45 some of the copyright fights that we’ve done and IP fights where they were really trying to give users
    0:16:50 access to information and stuff. Those days are kind of gone. There is a different leadership and
    0:16:55 they’re much bigger and they have a different viewpoint. Right now, if one of those companies showed up and
    0:17:00 said, let us shower you with money, I would take the call. But if there were any strings attached,
    0:17:04 if there was anything that made it look like it, and honestly, for some of them, I think at this point,
    0:17:09 I probably would just say no, because there’s no way it wouldn’t be perceived that way.
    0:17:14 The answer is no. I really want our support to be who the people we are, who we’re standing up for.
    0:17:19 And I’m not in this to stand up for Jeff Bezos. I’m not in this to stand up for Mark Zuckerberg.
    0:17:23 I’m in this to stand up for all the people who are, you know, in some ways feel like they’re
    0:17:28 hostages to these people. And you can’t really do both, right? You can’t stand up for the people who
    0:17:33 are locking you in with a surveillance business model that tracks everything you do and ranks you,
    0:17:38 and the people who are being tracked. You kind of have to be on one side or the other. At this point in
    0:17:44 time. I’m sad about that. Those companies used to side with their users a lot more. And one of the
    0:17:51 sad things that I’ve seen in the 35 years that the organization has been in existence is the sliding
    0:17:59 away from those kind of tech and user roots towards a more adversarial position towards their users.
    0:18:05 I would use a stronger verb than sliding away. But yeah, we agree.
    0:18:10 I’m trying to be a little kind, but yeah, no. And I think it’s problematic, right? Because I worry.
    0:18:15 It used to be people came to Silicon Valley because they had a cool idea that they really wanted to
    0:18:19 make happen. I know he was a difficult guy, but even Steve Jobs, like he was a problem solver,
    0:18:23 right? He was trying to solve interesting problems that would help people. And again,
    0:18:27 didn’t know the man. I don’t claim to know everything. Now it just seems like it’s like,
    0:18:32 how do we exploit people’s data to make as much money as possible? And that’s a very different
    0:18:37 framing than what I lived through in the 90s and the 2000s.
    0:18:42 From the outside looking in, because I’m not inside the tech bro community,
    0:18:46 I think that all they care about is long-term capital gains and crypto.
    0:18:52 Yeah. And it’s about money for them and power for them. And it’s not really about giving us
    0:18:56 anything better anymore. It’s more about exploiting us so that they can maintain their positions.
    0:19:02 And it’s so disheartening, right? Because again, I was in the Silicon Valley in the 90s and the 2000s,
    0:19:08 and I know there was another vision. I know that there was another thing that a lot of people were
    0:19:14 doing. And the good news is, there are people doing that now. We’re seeing with decentralization,
    0:19:20 with signal exists, it’s strong, it’s powerful. It’s so powerful that the people in the federal
    0:19:24 government use it when they shouldn’t. There is, it’s just the rest of the internet is still there.
    0:19:31 It’s just been completely overshadowed and underfunded because of the rise of these tech giants and their
    0:19:38 surveillance capitalism business model. But if you peel it back, you can still find people with those
    0:19:43 ideals and those visions. And if you look in Macedon in the decentralization space or Wikipedia
    0:19:50 is still here, it still exists. It’s under threat right now. But those places still exist. Just all the
    0:19:55 air gets sucked out of the room by the tech giants. And some of what we try to do is to point out that the
    0:20:00 the internet isn’t Facebook, there’s a whole set of other things that aren’t in the tech giants. And if
    0:20:06 we turn our attention towards them, there are people there who could use a little support and coding and
    0:20:09 lifting up to build a better version of our world.
    0:20:30 Of all these things that are going on right now, what scares you the most?
    0:20:36 : I think it’s hard to be alive in America right now and not be worried about authoritarianism. I
    0:20:43 think that’s the scariest thing. The scariest thing is we’re seeing the takeover of both our business
    0:20:50 side and our civil liberties side by an idea that one guy gets to make all the rules for all of us and
    0:20:55 that there’s no questioning that, this kind of king-like mentality. I think unless we fix that,
    0:21:01 we can’t even get at most of the other problems. And we’re seeing it in kind of rule by executive
    0:21:05 order. Executive orders have always existed, but they weren’t the law of the land. And they shouldn’t
    0:21:11 be, right? We’re supposed to have checks and balances and due process. And for me, as a civil liberties
    0:21:17 lawyer, these are our tools, right? Like we need tools to go into court or to have a Congress that’s
    0:21:23 actually willing to pass a law that protects us as opposed to just doing the bidding of one guy.
    0:21:28 I think until we get past the rule of King’s mentality, it’s hard to deal with any of the
    0:21:33 other problems. And that to me is the scariest thing that’s going on right now is watching these
    0:21:39 institutions that we need in order to protect us not step up to the moment and do it.
    0:21:45 : You mentioned Signal several times now, so obviously you must use Signal. But
    0:21:51 I have some really tactical questions to ask you about Signal from someone who is in the middle of
    0:21:51 this, okay?
    0:21:52 : Yeah.
    0:21:59 : So first of all, what time period is your default disappearing messages set to?
    0:22:04 : It depends on the conversation. I try to set it for a week, but if it’s something where we’re
    0:22:09 planning something over a longer time, I will sometimes keep it longer than that. But I have
    0:22:14 occasionally used Signal to develop an expert witness in a case or something like that. And then I keep them
    0:22:19 longer because I want to be able to go back and make sure that my memory isn’t so great. And different
    0:22:20 things have different needs.
    0:22:29 : So what happens if a Department of Justice lawyer says to you that you have signals set to automatic
    0:22:35 disappearing messages and that’s spoilage, you are destroying evidence?
    0:22:42 : It depends on the situation. If something isn’t privileged and is evidence in a case, then you have to turn it off,
    0:22:48 just like anything else. If you’ve got auto deletion of your email or anything else. The law requires that if
    0:22:54 something is at issue in a case, then you can’t get rid of it. But I don’t think you should live your life as
    0:22:59 if you’re always under a litigation hold because I think that can end up being its own problem on its own side.
    0:23:04 : So certainly if something is looking like it’s going to be evidence in a case that’s actually
    0:23:09 pending or threatened, then yes, you should put a litigation hold in place and you should not get
    0:23:14 rid of it. But I think that it’s still better in the rest of your life, which shouldn’t be all your life,
    0:23:20 to only keep things for as long as you need them and get rid of them. And this is our advice to companies
    0:23:25 too, right? People shouldn’t be just gathering up data and keeping it in case it might be helpful
    0:23:31 someday. That way lies a lot of problems. I used to joke at that EFF that we had become an anti-logging
    0:23:36 society, not in terms of trees, but in terms of your logs, that you should really think hard about
    0:23:40 what you’re logging and why, because it can end up being a vector. And as people who’ve been through
    0:23:46 litigation know, it’s really, really expensive if you’ve kept everything all the time and you have
    0:23:51 to turn it over in litigation, whether it’s even remotely useful or not, because sorting through
    0:23:57 what might be relevant to a litigation hold and what isn’t is its own huge burden. So you may not
    0:24:02 be saving yourself money or hassle or time in the long run by defaulting to keeping everything.
    0:24:08 : I don’t want you to think I’m obsessed with the topic of spoilage, but I have one more
    0:24:10 spoilage question. : Did something happen to you Guy? What happened?
    0:24:20 : If you set your default for every new chat to disappear after a week, can you not make a case
    0:24:27 that as a course of routine use of signal, I make everything disappear. I didn’t do it to destroy
    0:24:33 evidence in anticipation of litigation. : So this is not legal advice. I am not your lawyer,
    0:24:39 but once you have a clear indication that litigation is coming, whether that’s because you’ve gotten a
    0:24:45 demand letter or you’re in negotiations with someone, somebody showed up, or you reasonably
    0:24:49 know it’s coming. And that can be a little vague at times, but the courts will generally think very
    0:24:53 specifically. If you’re going back and forth saying, we know we’re going to get sued for this,
    0:24:57 but I think we can defend it. That’s the time you ought to turn your little light on. And certainly,
    0:25:03 once you get a demand letter, then a good lawyer will send out what’s called a litigation hold
    0:25:08 letter to you, your entire organization, and say anything that’s about this dispute,
    0:25:15 we need to stop getting rid of it and we need to start keeping it. So yes, putting in an automatic
    0:25:20 thing that gets rid of communications and stuff that you don’t need is useful and it can help protect
    0:25:27 you that it is your automatic thing. But you can’t then pretend like you don’t know litigation is
    0:25:31 coming. Once you know litigation is coming, you need to change course for stuff that’s related to that.
    0:25:35 : Okay. Two more tactical questions. : Okay.
    0:25:42 : Because, you know, this is a rare opportunity to speak to an expert like this. I know that you must
    0:25:49 probably not use biometric authentication for your phone, not your fingerprint or your face, right?
    0:25:51 : No, I do. I do. : You do?
    0:25:59 : Yeah. : Okay. So explain that to me because it seems to me that, not that I am a lawyer, but it seems
    0:26:06 to me that under the fifth amendment, if they cannot compel you to give them their passcode, but they can
    0:26:14 compel your fingerprint or face. So isn’t it better to use a passcode instead of your face or fingerprint?
    0:26:19 : I think if you’re at risk of being arrested, then that’s important. I think if you’re going
    0:26:24 through a border, if you may be going to a protest, if you’re engaged in something where you think law
    0:26:29 enforcement is likely to stop you, then you’re right. You should turn off the biometrics and you’re exactly
    0:26:35 right. The fifth amendment for what I think are some pretty dumb reasons, actually, distinguishes between
    0:26:40 putting in a password or showing your face for purposes of the fifth amendment. And honestly,
    0:26:45 I think that whole case law is pretty stupid, right? I think that the constitution should reflect how
    0:26:51 people live and not have this, you know, did it require the contents of your mind or not analysis,
    0:26:56 but whatever, that’s where we are with the fifth amendment right now. So yes, if you think something’s
    0:27:01 coming, then that’s a really good idea. But you know, the rest of your life, people can’t follow
    0:27:06 ridiculous instructions. I want technology that makes my life better, that makes it easier.
    0:27:11 And so does everybody else. So what security people call this is threat modeling, right? You need to
    0:27:15 figure out who you are, what are you doing in the world and what’s your threat model and make your
    0:27:23 security based on that. EFF has something called surveillance self-defense, ssd.eff.org or
    0:27:28 So look for surveillance self-defense. And we have playlists based on who you are and what you’re
    0:27:33 thinking about. So if you’re a journalist or you’re a human rights defender, you’re attending a protest,
    0:27:39 you’re helping people who might be seeking abortions in America today, you have to worry about that,
    0:27:44 then you might have a different set of things you do to protect yourself than people who aren’t at risk.
    0:27:50 And so I think everybody has to do their own analysis. For me, most of the time walking
    0:27:57 around, I’m pretty unlikely to be picked up by the cops in the street and asked to have my phone
    0:28:01 seized. If you’re really worried, you can do that. And there are times and places where I make sure my
    0:28:06 phone is off or that I’ve turned those biometrics off. There are other times and places in my life where
    0:28:12 I just want to be able to open it up and look at maps and make sure I’m not lost. And I really don’t
    0:28:16 want to have to fumble with putting in a password. So everybody has to make those decisions for
    0:28:20 themselves. And we have tools to help people make them intelligently.
    0:28:31 But Cindy, okay, so what I find almost incredulous is you are the executive director of EFF and you’re
    0:28:38 saying that you feel pretty comfortable walking around with your face or fingerprint opening up your phone.
    0:28:43 As the executive director of the EFF, you’re saying that I am astounded.
    0:28:49 I think that everybody has to make these decisions for themselves. I love technology,
    0:28:53 right? I mean, look, if I was the most paranoid person, I wouldn’t be carrying around a smartphone.
    0:28:57 If you’re going to take this to the end of what makes you absolutely the safest
    0:29:02 in every situation, I don’t know why you would carry around a beacon that’s tracking you all the
    0:29:06 time in the first place. But we all have to make these trade-offs. And I would not say that my trade-offs
    0:29:11 are the ones that other people should make. I have this interesting position where, you know,
    0:29:16 right now we’re suing Doge. EFF is suing Doge under the Privacy Act for access to the Office of Personnel
    0:29:22 Management records. Now, in some ways that may make me worried that at some point the Trump administration
    0:29:27 doesn’t think lawyers are off limits for purposes of targeting them. On the other hand, there’s a
    0:29:33 federal judge who knows that I’m counsel in the case. It’s not a good look for the government to be
    0:29:40 attacking, harassing, and tossing in jail the people who are suing over the Privacy Act in the thing.
    0:29:47 And I have always felt, and this is just my threat model, that being high profile and being somebody
    0:29:53 who’s laboring in the courts to try to bring justice makes me probably not the first people
    0:29:57 they’re going to go after if they go after. Now, things are changing fast in this country,
    0:30:04 and that might not be the right threat model today as it was 10 years ago or even 20 when we were doing
    0:30:08 the Bernstein case. And believe me, the NSA and the national security people were not very psyched
    0:30:12 about us attacking cryptography. I did not for a minute think that they were going to come after
    0:30:17 me personally. That was a different time and it was off limits. And I think that it would have
    0:30:22 completely backfired on them in the courts. I still think it would backfire on them in the courts
    0:30:28 if they did this kind of direct attack. Now, other people should make their own evaluations. And again,
    0:30:34 I wouldn’t say that this is my position everywhere all the time, but it is my position when I’m walking
    0:30:39 out my front door and going to the grocery store or all the other things that I do. The other piece
    0:30:43 of this, and I think it’s really important because you’re asking me personal questions about my own
    0:30:49 decision-making, about my own security, and I think that’s useful for people. But we have to fix these
    0:30:55 systems. This isn’t a set of individual decisions that anyone should have to make. We need to have a
    0:31:00 comprehensive privacy law. We need to have strong encryption built into our tools so that we don’t
    0:31:04 have to mess with settings or turn things off in order to have strong encryption. We need to have
    0:31:10 laws that protect our ability to have security and privacy and make it something that the government
    0:31:16 just can’t do to do these kinds of things. So I think on the one hand, individual choices are really
    0:31:21 important. And on the other hand, sometimes in privacy specifically, people get caught up in their
    0:31:26 individual decisions as if it’s their responsibility to make sure that they’re as protected as possible.
    0:31:30 And I think that makes no more sense than, you know, if you buy a car, you expect it to have
    0:31:36 brakes and that those brakes work. And nobody expects you to go out and search for, find and install your
    0:31:42 own brakes. I think basic security and privacy is like brakes on a car and all of our devices and tools
    0:31:49 and laws need to have them baked in to protect us rather than the responsibility being foisted on us
    0:31:56 to find all these tools, pick the right ones and use them in the right way. That’s broken. And a lot
    0:32:01 of what we do at EFF is try to give you individual advice about how to do what you’re doing. But the vast
    0:32:07 majority of what we do is to try to set the laws and the policies and pressure the companies to make this
    0:32:15 not your responsibility anymore. Cindy, knock me over with a feather. If you want to use the brake analogy,
    0:32:24 yes, a Porsche may break from 60 to zero in 125 feet and a Ford 150 may take 250 feet. You need to know that
    0:32:30 not all brakes are created equal and you still put on a seat belt, right? Yeah, absolutely. All of those
    0:32:35 things are important. You don’t have zero responsibility. We have a regulatory system
    0:32:40 that says brakes must be within these normal tolerances, right? Same thing. We need a privacy
    0:32:45 act. The privacy act isn’t going to say, it’s not going to be a one size fits all thing. It shouldn’t
    0:32:49 be. That would hurt innovation, but it should set the boundaries. You can’t put something out on the
    0:32:56 marketplace that spies so dramatically on your customers that they can’t possibly turn it off.
    0:33:02 They can’t possibly control it. They have no agency about that. And I think of it again, like the way
    0:33:08 a good regulation will set the tolerances of what can go out there. So yeah, you might have much
    0:33:15 better brakes on a car that has a much bigger engine, but there is an outer boundary, right? You can’t have
    0:33:22 no brakes on a car and regulation does some of that. Consumers do some of that by the consumer reports or
    0:33:26 other things telling people, watch out, this car doesn’t have very good brakes. You got to have a
    0:33:33 mix of markets and smart regulation. I’m not a big fan of regulation. I think it can be very bad and it
    0:33:40 can help prop up oligarchies and monopolies. But smart regulation, my classic example of this is when
    0:33:45 you know, there’s a decision by the FCC that the phone companies were saying you could only plug their
    0:33:51 phones into the wall. And the FCC said, no, you have to let people plug modems into the wall. And
    0:33:56 that’s how we got the home internet revolution. That’s smart regulation, right? That’s regulation
    0:34:03 that is not only creating the outer tolerances of what we can accept, but also making sure that there’s
    0:34:06 a competitive and other options for people within that space.
    0:34:14 Are you trying to convince your friends and family to use Signal instead of WhatsApp or you think it’s
    0:34:16 irrelevant for most people?
    0:34:23 I think WhatsApp uses the same security, it’s the same encryption under the hood as Signal. So I don’t
    0:34:28 think WhatsApp is a bad choice in terms of end-to-end encryption. What I don’t like about WhatsApp is
    0:34:33 because it’s a Facebook property, they know who you’re talking to, even if they don’t know what you’re
    0:34:38 saying. And so on that measure, Signal is better because Signal is designed not to know who you’re
    0:34:44 talking to at the level that WhatsApp is and is trying to monetize. But as a matter of encryption,
    0:34:50 WhatsApp is not a bad choice. But Facebook Messenger, for instance, is not end-to-end encrypted. I think
    0:34:54 they’re fixing that, but it was not end-to-end encrypted. And let me tell you the consequences of
    0:35:01 that. So there’s a woman and her daughter in Nebraska who are both in jail right now. And they’re in jail
    0:35:06 because they use Facebook Messenger to talk to each other about the daughter needing an abortion.
    0:35:13 And that’s illegal in Nebraska. And as a result of Facebook having the plain text of that communication,
    0:35:18 because it was not end-to-end encrypted, and Facebook got a warrant that required them to turn
    0:35:23 over the copy of the communications that it has because it’s a centralized system. So Facebook has a copy of
    0:35:27 all those communications. Both the mother and the daughter went to jail.
    0:35:33 If that same communication had happened over Signal or probably even over WhatsApp,
    0:35:38 the mother and daughter wouldn’t be in jail right now because the plain text of that conversation
    0:35:43 wouldn’t have been available to law enforcement. Many more people are having to pay attention to that
    0:35:48 fact, which might not seem at all when you’re just using these technologies. You’re just using whatever’s
    0:35:54 easiest for you. But now that we have a world in which some communications are illegal at a level
    0:35:59 that I think was not true before, say, the Dobbs decision and all of these states started passing
    0:36:04 things, there’s a whole new community of people who need to understand the difference between the
    0:36:09 securities and the securities of their communication techniques than did before. Now, this was always
    0:36:14 true for people who are human rights defenders, people who are working with immigrants, people around the
    0:36:19 world who come from marginalized backgrounds have known this for a while, and now there’s a whole new
    0:36:25 community of people who are starting to wake up to these differences. So, yeah, it’s important that people
    0:36:31 move to end-to-end encrypted services, and it’s important to more people now than ever before.
    0:36:39 Cindy, I would make the case that WhatsApp, which is end-to-end encrypted, but it doesn’t encrypt the
    0:36:45 metadata. And there’s a lot you can figure out from metadata that the mother and the daughter
    0:36:50 communicated. At this point, they contacted this abortion service and all that. You don’t know what they
    0:36:54 said, but it’s little markers on the trail, right?
    0:36:59 Yeah, no, you’re right. And EFF fought the NSA over metadata. One of the things that we learned
    0:37:05 is that the Patriot Act had a section in it called 215 that let the government demand everybody’s
    0:37:11 telephone records from the telephone companies. And one of the things that we learned and that we learned
    0:37:16 in 2006, but then everybody learned in 2013 with Mr. Snowden, is that this was actually happening,
    0:37:20 that the phone companies were handing over the metadata of our phone records. And you’re
    0:37:25 exactly right, that you can glean a lot from those. The reason I’m a little soft on WhatsApp,
    0:37:29 but I think it’s a perfectly reasonable choice not to use them, is that it is
    0:37:35 how people around the world really use it at a level. And I’d rather not shame them for the
    0:37:40 differences between the two of it, but really kind of encourage them to come away from the things that
    0:37:48 are entirely unencrypted or that are fake encrypted. Telegram, as we’ve learned, while it sells itself as
    0:37:53 being encrypted, it really isn’t at the level that gives people protection. In the world of secure
    0:37:59 messaging, I agree with you that Signal is more secure and a better option. I just want people
    0:38:04 to pick something that’s a little more secure, even if they don’t go to the maximum secure. And on that
    0:38:10 scale, especially, again, around the world, Signal is still so small compared to the reach of something
    0:38:15 like WhatsApp. I don’t want to shame people who are using the one, even as we encourage them to
    0:38:21 come to a little more. So that’s more strategy than it is like hardcore security advice. But
    0:38:27 it’s certainly better to use Signal, but it’s better to use WhatsApp and stick them with the metadata than
    0:38:34 it is to use something that’s completely in the clear. You brought up the Nebraska case, and I am
    0:38:42 familiar with the Nebraska case, and it opens up a whole nother can of worms that I never figured, which
    0:38:49 is the narrative seems to be that if it wasn’t for Facebook and them using Messenger, they wouldn’t be in
    0:38:57 jail. On the other hand, the facts show that she did have an abortion after the period permitted in
    0:39:04 Nebraska, and they did try to burn the fetus and all that. So in a sense, they did do what they were charged
    0:39:12 with. So it’s not like they were falsely imprisoned, or did I get this wrong? Well, it depends on your view of
    0:39:19 the law. I think that this is a law in Nebraska that most people think is tremendously unfair and wrong.
    0:39:27 And disconnected from the reality of people in America and women in America. I think that
    0:39:32 in a world in which every law is perfect and wonderful and should be celebrated and supported,
    0:39:36 you might be able to take the position that they broke the law, so therefore they got what they
    0:39:42 deserved and how they got found is irrelevant. I don’t think we live in that world. And I think that
    0:39:48 when the law is unjust, making sure that people can still live their lives and have protection and have
    0:39:55 security is tremendously important. And we live in a world with a lot of laws that are not just right
    0:40:00 now and a lot of things like executive orders and other sorts of things that are just ignoring the
    0:40:05 law. They’re just snatching people off the street and sending them to El Salvador. This is one of the
    0:40:11 reasons that we need privacy and security is because not all governments are just and not all laws are
    0:40:17 just. The other reasons we might need it is just basic human dignity and having the space to be able to live
    0:40:23 your life without being tracked all the time. But I would maintain that there’s a lot of people in
    0:40:28 America who are very uncomfortable and unhappy with some of these laws. They were not passed
    0:40:34 in ways that I think people feel very good about. And I think that giving people the ability to have the
    0:40:40 level of privacy and security they need to live their lives and not making a world of perfect enforcement
    0:40:46 of every single law regard is how the law has generally been. And that’s to stop things that
    0:40:50 I think shock the conscience. And I think in this particular instance, this was a mother and daughter
    0:40:55 who I believe were having conversation inside their own home. Traditionally, the Fourth Amendment would
    0:41:00 say that what happens inside your home is completely not available to law enforcement, right? That’s why they
    0:41:07 need a probable cause warrant to come into your house. But because technology meant that this third party
    0:41:14 company had the plain text of the communication, suddenly what happens inside the home between a mother and
    0:41:19 daughter is available to law enforcement. So you have to look at how is technology changing
    0:41:26 everything? And this is a situation in which the founders of America would never thought that the
    0:41:31 government would be able to prosecute you even if you were violating the law based on a mother-daughter
    0:41:35 conversation and beside the home. And because of the way technology has happened here, that actually
    0:41:42 was able to occur. You have to balance all of these things. It’s not just one thing that changes. And
    0:41:48 technology has made changes to the way that we communicate in ways that the Constitution needs to catch up.
    0:41:56 Up next on Remarkable People. But we’re going to start to see weaponized takedowns at a level that I
    0:42:00 think we haven’t seen before because this law facilitates it. And it creates the incentives for the
    0:42:07 companies to take things down if they get a complaint. And again, I don’t think that those complaints are
    0:42:11 going to be about non-consensual sexual imagery. They’re going to be about people saying things they don’t like.
    0:42:21 Do you want to be more remarkable? One way to do it is to spend three days with the boldest
    0:42:27 builders in business. I’m Jeff Berman, host of Masters of Scale, inviting you to join us at this
    0:42:33 year’s Masters of Scale Summit, October 7th to 9th in San Francisco. You’ll hear from visionaries like
    0:42:40 Waymo’s Takidra Mawakana, Chobani’s Hamdi Ulukaya, celebrity chef David Chang, Patagonia’s Ryan Gellert,
    0:42:49 Promises’ Phaedra Ellis Lampkins, and many, many more. Apply to attend at mastersofscale.com/remarkable.
    0:42:55 That’s mastersofscale.com/remarkable. And Guy Kawasaki will be there too.
    0:43:01 Become a little more remarkable with each episode of Remarkable People.
    0:43:05 It’s found on Apple Podcasts or wherever you listen to your favorite shows.
    0:43:10 Welcome back to Remarkable People with Guy Kawasaki.
    0:43:20 So it’s obviously 2025 and now we have someone in charge of homeland security who
    0:43:27 cannot even define the writ of habeas corpus. So I’m asking you like if somebody says to you or
    0:43:35 your family or friends says to you, “I’m not worried. I have nothing to hide.” Is the “nothing to hide”
    0:43:41 statement true these days or does everybody have something to hide at this point?
    0:43:45 I haven’t done a demographic survey, but I would suggest that most people,
    0:43:48 even if they don’t have something to hide, talk to somebody who does.
    0:43:55 Do you have somebody in your life whose papers have expired, who’ve overstayed their visa?
    0:44:00 Do you have someone in your life who’s a person of color, who’s trans, who’s LGBTQ of any kind,
    0:44:06 not just trans? Do you have somebody in your life who’s a person of color who may think that diversity
    0:44:11 and equity are important values and have said something about that? The line over who has
    0:44:15 something to hide is really changing. And I would argue that by the time you go through all the lists,
    0:44:22 just of the things we know, there aren’t very many people who wouldn’t be impacted by this. And again,
    0:44:28 this is why security and privacy are so important. I also think they’re important regardless of whether you
    0:44:33 individually need them. I think that one of the problems that we have in privacy is people think
    0:44:38 about it in individual personal terms. And so they can come to the, “Well, I have nothing to hide”
    0:44:44 kind of position. But privacy isn’t just important for each of us. It’s important for all of us.
    0:44:48 And that’s an important distinction. Like most people don’t want to stand on a street corner
    0:44:53 and shout out what they think ought to happen in this country. But I think all of us understand that
    0:44:56 the First Amendment protects us all, even if we don’t want to speak.
    0:45:03 The Fourth Amendment and privacy do work the same way. Giving everybody the shelter of privacy means
    0:45:06 that even if you don’t personally need it, somebody who you love, somebody who you know,
    0:45:12 or somebody who’s going to help change the world for the better does. And I’m going to give you an
    0:45:19 example. In my lifetime, being gay in this country was very, very dangerous. Saying that gay people
    0:45:24 ought to have the right to marry, they ought to have the equal right to love who they want to love,
    0:45:28 that could get you killed. And in fact, it’s still pretty dangerous, right? We’re moving backwards.
    0:45:34 But there was a time in which those conversations had to happen in private. This idea that maybe
    0:45:38 loving who you want to love as opposed to the traditional heterosexual thing isn’t such a bad
    0:45:43 thing. Maybe we should normalize that and make that okay. That was a very dangerous conversation.
    0:45:48 Those conversations had to happen in private and in secret. And in my lifetime,
    0:45:52 those have gone from conversations that had to happen in private and secret to something where
    0:45:59 we’ve really changed the law. We’ve changed a lot of people’s minds about it. We’ve changed attitudes.
    0:46:04 And that public part of the conversation couldn’t have happened unless there was a private part of
    0:46:08 the conversation. And I think the same is true if you look at most social movements. If you look at
    0:46:14 the anti-slavery movement in the United States, like way back, if you look at some of the anti-immigration
    0:46:19 sentiments in this country, where we had the Chinese Exclusion Act and other kinds of things,
    0:46:24 and we shifted into a world where we thought differently about differences in America,
    0:46:28 the public part of those conversations couldn’t have happened without the private part. So it may
    0:46:34 not be you. It may not even be the people you love, but it may be the people who are going to help us
    0:46:39 make change for the better. And I think we need to stand up for the rights of all of us because this
    0:46:44 is what a human right is. This is what a human value is. It’s not something that’s just dependent on you
    0:46:48 and your everyday life, although I think most of us have an increasing need in our everyday life for
    0:46:54 privacy and security. But these are values that we should stand up for, even if it’s not
    0:47:01 right now visible individually to us, that we need them because this is how society self-governs.
    0:47:07 This is how we make changes. This is how we have the space to decide that we don’t like the guy
    0:47:11 who’s the president right now and we want to vote for someone else. Increasingly in this country,
    0:47:16 those conversations can be pretty dangerous for people to start talking. We’re not all the way to
    0:47:21 the kind of repression of other systems where they put the opposition candidate and anybody who’s friends
    0:47:27 with them in jail. You can see that on our horizon right now. We need to stand up for privacy and
    0:47:35 security even if we don’t need it right now because we may need it pretty soon. One of the big activities
    0:47:42 of the EFF right now is involved with the Take It Down Act. And I would like if you would please
    0:47:49 explain what is that act supposed to do. Yeah, we spend a lot of time with this particular problem
    0:47:54 where there’s a harm online that people agree is a harm. In the instance of the Take It Down Act,
    0:48:01 it’s non-consensual sexual images. Your ex posts your sex tape online or other kinds of situations in
    0:48:08 which sexual imagery of people is posted online without their consent. It’s a real problem. So people will
    0:48:15 take a real problem and then they’ll propose a legal solution that is not good. So the Take It Down Act
    0:48:21 says that if somebody tells you that you as a platform or a host of a site that you have to
    0:48:26 take something down, you have to take it down immediately or you’re liable. And it is not limited
    0:48:33 to non-consensual sexual imagery. Even if we could agree what the definition of that is and that can get a
    0:48:38 little fuzzy. It just means that people have to take it down if they get a complaint. And the worry
    0:48:44 is that those complaints get weaponized. President Trump, his big speech that he gave in January or early
    0:48:49 February said he can’t wait to use this law, that we should pass it. He can’t wait to use it. I don’t
    0:48:54 think that what President Trump is worried about is non-consensual sexual imagery. I don’t think that’s
    0:49:00 what he meant. But there’s a classic example of how a law that is passed for one narrow purpose can be
    0:49:07 used to create a censorship regime for far broader speech than just that. This is why we really
    0:49:12 oppose it. This law, I don’t think it’s going to help for non-consensual sexual imagery. The problem
    0:49:16 for most of that imagery isn’t that the platforms don’t take it down. They take it down pretty fast
    0:49:22 all the time. It’s that they can’t keep up because there’s so much of it. So it’s not even responsive to
    0:49:27 the problem because I don’t think the problem is that platforms don’t care about this. I mean,
    0:49:31 some might, and that’s important, but we didn’t need a federal law for that piece of the problem.
    0:49:37 But instead, it opens it up so that there could be a censorship machine from anybody with power
    0:49:42 to take down anything they don’t like, or at least a wide, wide range of what they don’t like. And
    0:49:45 again, when you’ve got the President of the United States saying he can’t wait to use this power,
    0:49:51 it ought to be a pretty good sign that maybe this law is doing something different than the people who
    0:49:55 proposed it do. And to the point where at the very end of it, some of the people who
    0:50:00 originally proposed the law flipped and said, “This is a bad idea. This isn’t the right thing.” We had
    0:50:05 been opposed to it all along because we worried that it could be misused. But by the end, some of the
    0:50:09 very people who started proposing, a couple of law professors who were big fans of this and who proposed
    0:50:15 it issued blog posts saying, “Don’t support this. This is not what we meant. And this is a bad thing.”
    0:50:21 Nonetheless, it passed and it got signed into law. It’s about a year or two before it really gets
    0:50:27 implemented. So we won’t see right away, but we’re going to start to see weaponized takedowns at a
    0:50:32 level that I think we haven’t seen before because this law facilitates it. And it creates the incentives
    0:50:38 for the companies to take things down if they get a complaint. And again, I don’t think that those
    0:50:42 complaints are going to be about non-consensual sexual imagery. They’re going to be about people
    0:50:49 saying things they don’t like. Cindy, I don’t know if you realize this, but I think you just said one of
    0:50:58 the funniest things I’ve heard in five years of podcasting, which is I don’t think Trump is concerned
    0:51:07 about non-consensual images. I would say that if that was said at the white house correspondence dinner,
    0:51:19 it would be in the words of Barack Obama, a mic drop moment. But anyway, I’m still recovering from that.
    0:51:28 And when you see something like that in a bill and the possible perversions of how the bill is used,
    0:51:36 is that something that Mike Johnson snuck in and with that intent or is this unintended consequence?
    0:51:41 Am I being paranoid? They’re putting shit like that in purposely or it’s unintended?
    0:51:47 I think that it’s a mix. I think for some of the people, it might be unintended. This is a bill that
    0:51:54 was sponsored by Amy Klobuchar of Minnesota. And I suspect that she’s a very smart person. And it’s not
    0:51:58 like people haven’t tried to tell her. I don’t want to give her too much credit, but I think that
    0:52:02 people come in with a pretty honest intent to try to address the harms. They’re just more interested
    0:52:08 in the harms than they are in the actual impact of how things are going to work in the real world once
    0:52:13 they get passed. So some people are dishonest. I don’t think that Mr. Trump is honest in his support of
    0:52:19 this, that he really wants to make a stand about non-consensual sexual imagery. Other people are cynical and
    0:52:24 some people are well-meaning. There’s another law coming along that I want to flag that has a similar
    0:52:31 problem. It’s a law called COSA. It’s the Kids Online Safety Act. And again, this is trying to get at an online
    0:52:37 harm, which is kids online and them having access to information that could be dangerous for them.
    0:52:43 But what it’s going to do is it’s going to create a requirement that you provide credentials to get
    0:52:51 access to most information online. It’s going to require you to show your ID at some level in order
    0:52:56 to get access to things online. This is going to age gate everything online. It’s going to make it harder
    0:53:01 for people online who don’t have credentials. And that’s a lot of people in this country to actually
    0:53:07 get access to the internet in any meaningful way. It’s not going to stop kids from having access to
    0:53:12 stuff that they don’t want to have, but it is going to age gate everything on the internet. It’s going to
    0:53:16 require a lot of things. And then it’s going to create these huge companies that have everybody’s
    0:53:22 identity information that are going to be sitting ducks for data breaches. It’s going to be the mother
    0:53:27 load for people who want to do spying, who want to do identity theft or other sorts of things,
    0:53:33 because they’re going to create this. And so I think COSA is another one where there is a real harm
    0:53:39 of kids having access to stuff that they shouldn’t have online and that the solution that is being
    0:53:44 proposed in this law is not going to solve the problem and is going to cause a whole other set of
    0:53:49 problems. We know the things that work for kids online and having them not have access to harms,
    0:53:55 but they’re a lot more expensive and require a lot more thought than simply just requiring companies
    0:54:01 to put in an age gating thing, either on your device or otherwise. And this is something where we live a
    0:54:08 lot, especially on the legislative side, which is good intention, bad idea. And it’s hard because I think
    0:54:14 a lot of lawmakers really want to respond to this problem and they just don’t pay as much attention to
    0:54:18 whether the thing that they’re championing is actually going to solve the problem and what the
    0:54:19 collateral impacts are.
    0:54:27 So you mean to say that the Speaker of the House and his son cannot maintain control of each
    0:54:30 other and take care of this problem. We need other ways to do this.
    0:54:36 I think there are other ways to do it. I was a kid. You were a kid. Is the idea that you had to show an
    0:54:42 ID, was that a thing that actually kept you out of anything that you really wanted to have access to?
    0:54:48 No. So why do we think that’s going to work online where it’s even harder, right? It’s not like fake
    0:54:52 credentials were just made up yesterday, right? I just don’t think that’s really going to be the way
    0:54:59 to do it. Again, if it caused no collateral problems at all, then okay, whatever, let’s give it a try. But
    0:55:03 it’s going to cause a lot of collateral problems and those problems are going to fall on the people who
    0:55:05 otherwise don’t have resources.
    0:55:09 Isn’t Australia already doing this? Is it causing problems there?
    0:55:13 Yeah. You know, I haven’t seen the research yet. Australia is doing a version of it. They’re also
    0:55:19 doing a version of blocking encryption. And I haven’t seen the research yet, but I would be shocked if it
    0:55:26 was actually having a significant impact. We know that it’s a mix for kids online, right? We know that
    0:55:32 there’s a certain percentage of kids who have a hard time online and react badly. There’s another
    0:55:36 percentage of kids, and I want to be clear about this. This is LGBTQ kids. It’s kids from marginalized
    0:55:41 backgrounds, kids who don’t fit in where they’re growing up, for whom having access to information
    0:55:48 on the internet is literally a lifeline. EFF did a survey and it’s convenience data who filled out our
    0:55:53 survey, but we asked kids to tell us, you know, what’s their experience online and how has it helped
    0:55:58 them? And we had so many, you should read these, they’re on the website, heartwarming and terrible
    0:56:03 testimonials from kids who said, if it weren’t for my online community, I would have killed myself
    0:56:10 by now. Because nobody in my house or in my community understands what it’s like to be LGBTQ, gender
    0:56:17 queer. And it’s the online world that saved my life. And there are a lot of those kids. And I think that
    0:56:24 people who are thinking only about one kind of harm and legislating based upon one kind of harm that
    0:56:30 definitely impacts a segment of kids online, especially a certain segment of young girls online.
    0:56:36 But only legislating based on that and not seeing the other people that they’re going to harm with
    0:56:41 it, which includes a lot of gender queer kids and other kids who don’t fit in, whether that’s religiously
    0:56:47 or otherwise in the place that they grow up. Like, that’s just bad legislation. We have to save all the
    0:56:48 kids, not just some of them.
    0:56:52 But maybe they want to harm those kids.
    0:56:56 Well, this is one of the things that the Republicans have been pretty clear about. Marshall Blackburn has
    0:57:02 been very clear about. Like, when they talk about online harms for kids in a segment of the conservative
    0:57:06 side, they mean kids shouldn’t have access to information about this. They’re talking about
    0:57:14 their view of harms is if kids have access to information that isn’t the very narrow Christian
    0:57:20 infused version of things, that’s the harm is getting access to DEI information or other kinds
    0:57:25 of information like that. And so when we talk about online harms, if we don’t specify which harms we’re
    0:57:31 talking about, we’re talking about people who really just want to censor what other people’s children can
    0:57:37 see. And I think it’s very vulnerable to that. That again, Marsha Blackburn, who is, you know,
    0:57:43 or the Heritage Foundation have both said that’s what they want to pass COSA to do. And for the Democrats
    0:57:49 and the other people who are really focused on this one area of online harms that I think we could all
    0:57:54 agree are not great. To empower those people as well, like it’s wrong and it’s scary.
    0:58:03 I have to ask you tactical questions because who better to ask tactical questions? So this is a
    0:58:11 very tactical thread we’re going to go into now, which is, let’s say that you are a US citizen,
    0:58:17 born and bred, you have no criminal record, you return to the United States from overseas,
    0:58:26 and border patrol asks for your phone. Do you give it? Is it your regular phone or do you take
    0:58:34 another phone overseas because you knew this might happen? Is it locked? Do you unlock it for them?
    0:58:41 Or do you hand it to them and you say, have added boys, try to decrypt this phone. What’s your
    0:58:42 attitude at the border?
    0:58:48 Sadly, our border is largely a constitutional rights free zone. EFF did a case a few years ago
    0:58:53 where we tried to get the Fourth Amendment to apply to the border and we were not successful. We’re not
    0:58:59 done. We’re going to keep trying. But you’re pointing out something really true, which is you have many
    0:59:05 fewer rights to protect your phone at the border than you do otherwise. You still have to do some
    0:59:10 threat modeling and figure out your situation. If you’re an American citizen and you’re coming back
    0:59:15 into the country, they can detain you for a while, but they can’t kick you out. You have a right to
    0:59:20 come back, but they can make you sit in detention for four or five hours while they try to open your
    0:59:25 phone if you don’t open it for them. And you have to decide for yourself, is that something I want to
    0:59:30 do that can be very uncomfortable? Other people are like, sure, that’s fine. But I think, do you have
    0:59:34 another plane to catch? You’re going to miss another, you’re going to miss your connection. What is
    0:59:39 your life like? Are you trying to make it to your daughter’s wedding? Even as an American citizen,
    0:59:42 you still have to think about your threat model as you’re coming into the country. And that should
    0:59:49 inform what you decide to do. I do recommend that if you’ve got stuff on your phone or accessible
    0:59:54 through your phone that you really do need to keep private. Think about taking a second phone. Think about
    1:00:00 getting a burner phone that you use for that or a device like an empty Chromebook so that when you get
    1:00:07 overseas, you can use a lot of your services that are cloud-based so you can log back in. You don’t need all that
    1:00:13 information on the computer you carry. And same for coming back into the country. Wipe this stuff off
    1:00:18 of it and then just sign back on again once you get back safely home. And the cloud computing revolution
    1:00:23 has made that a lot more accessible to a lot more people than it used to be. The other thing I recommend
    1:00:30 is if you are going to carry your own device through the border, turn it off. Turn it off. Because all the
    1:00:36 devices require when you turn it back on again, that you put in a password, that you turn off the biometrics,
    1:00:41 that you put in a password to open it up again. And it’s encrypted at the time. They can break into most
    1:00:47 phones, but it takes a lot more effort and a lot more money. And so you put them in a position where they
    1:00:52 have to decide how much work they want to put into entering into your phone. And I sometimes say,
    1:00:57 make them fish with a line and a pole. Don’t let them drift net fish through everything. And I think
    1:01:02 for a lot of people, unless you’re really the target, that will mean that it’s not worth it to them.
    1:01:07 They’ll troll through what’s easy, but they’re not going to deploy the thing that they have to buy from
    1:01:11 in order to actually collect information from your phone. Again, it depends on what kind of target you
    1:01:15 think you are and how important it is. But I always maintain you should make it a little harder on them.
    1:01:19 Make them have to go through every step, even if at the end they might be able to have access.
    1:01:24 Make them go through every step because a lot of people just wash out of the process through then.
    1:01:27 And I think that’s important to put them through it.
    1:01:32 But what about the logic that if you refuse to unlock your phone,
    1:01:34 that’s an admission that there’s something you’re hiding?
    1:01:38 I don’t think it is an admission. I mean, at the end of the day,
    1:01:42 they got to convince a jury or a judge. And I think as long as enough of us do it,
    1:01:47 and it’s not just the guilty, then we need to combat that. Like privacy is a human right.
    1:01:51 It’s your right. It’s your right not to have the law enforcement go
    1:01:56 rifling through your stuff, unless they’ve demonstrated that you’ve done something wrong.
    1:02:01 Where do we lawyers call a probable cause finding in front of a judge, right? That’s why we have the
    1:02:04 Fourth Amendment the way we have it, which is they have to go to a judge. They have to say there’s
    1:02:09 probable cause that you’ve violated the law. And then the judge has to agree with them. That’s what a
    1:02:15 warrant is. If they haven’t done all those steps, then it’s your right to say, no, I’m not going to
    1:02:21 voluntarily let you do this. That’s why I have a doormat that one of my interns gave me a long time
    1:02:25 ago that says, come back with a warrant. And the EFF has them actually stickers for your phone.
    1:02:32 That due process protection is important. And if you just decide that you don’t want that protection
    1:02:36 anymore, of course, that’s your right. But that doesn’t mean that you’re doing something wrong if
    1:02:41 you avail yourselves of the protection of the law. And I think we all need to stand up for that. This
    1:02:47 idea that by not letting police just blow past all the protections that people fought and died for us to
    1:02:54 have is somehow standing up for our rights as a citizen in order to do what we’ve done. To me,
    1:03:00 that’s a patriotic thing to do. That’s why we did a war against a king to have our own country was so
    1:03:06 that we could set our own rules. And when we could have a government that abided by them, holding the
    1:03:10 government by the rules to me is the more patriotic thing to do, not less.
    1:03:19 A few seconds ago, you used the phrase stuff that you might want to hide. But what is the definition
    1:03:25 of that? I would think that on almost anybody’s phone, you could find a place where you said,
    1:03:31 these tariffs are stupid. It’s going to ruin our economy. Are we at a point where, oh my God,
    1:03:37 what if the border patrol saw me say that on social media because they opened up my phone? Am I going
    1:03:42 to be deported or something? Yeah. Where are we on that? Well, I think it’s getting more and more
    1:03:47 scary. And the Trump administration is trying to require people who want to come to the United States
    1:03:52 and get visas to open up their social media to turn everything to public that used to be private. It’s
    1:03:57 horrible. And we need to fight this proposal as best we can. I don’t think it’s constitutional,
    1:04:02 but yeah, I think one of the things about the time we’re living in, which is really, really scary,
    1:04:07 is that the needle is moving so fast and so unpredictably that I think when you ask me,
    1:04:14 what if I have nothing to hide? I don’t think anybody can feel safe right now that their presumption
    1:04:19 of what that means for them personally, much less for all the people they talk to. Remember,
    1:04:23 what’s on your phone isn’t just what you say. It’s what other people say to you that you have.
    1:04:28 Even if you might not implicate yourself, you might implicate your friends who got pissed off and wrote
    1:04:34 a text about being angry about something that now law enforcement is looking at to try to decide
    1:04:40 whether they get to stay in the country or whether they get detained. We often say privacy is a team
    1:04:44 sport. The other thing people have to remember is it’s not just them. They have information about all
    1:04:50 the people who they communicate with, who they love, who they follow. And so I do think it’s a time where
    1:04:58 that story ought to be going away pretty fast. Everybody has reason to want to avail themselves
    1:05:04 of their constitutional rights to privacy, to avail themselves of due process. Even if you can’t think
    1:05:09 of what you have that might be at risk, that story is changing so fast that I don’t think anybody can give
    1:05:16 you an accurate, up-to-date risk profile for yourself. And you ought to take that into consideration.
    1:05:24 What does it mean if you are threatened, you or Wikipedia or NPR is threatened with the loss
    1:05:28 of a not-for-profit status? What would it mean to you if you lost that?
    1:05:35 Oh, it would be terrible. Again, EFF gets support from individuals and many of those individuals get
    1:05:40 a tax deduction for supporting us. Now, lots of people don’t. And I think that there is a community
    1:05:45 of support that ought not be dependent on nonprofits. And we ought to think about that a little hard,
    1:05:51 but we’ve built up this system for civil society, for nonprofits like NPR and otherwise,
    1:05:58 that is really based on the idea that there is a tax protected status for our donations. That if that
    1:06:03 goes away, people are going to have to get funding in a way that isn’t tax protected. And that’s okay
    1:06:08 for individual donations, as again, there are wealthy individuals who itemize for whom this is an important
    1:06:14 thing. And that’s a big source of funding. But there’s a lot of poor people who support charities even if they
    1:06:20 don’t get a tax deduction. So we need to think about that. But when it comes to foundations and
    1:06:26 other kinds of money, many of those foundations can only give to organizations that have C3 status.
    1:06:30 So if the MacArthur Foundation or the Ford Foundation, or even the foundations on the right
    1:06:36 wanted to give money that wasn’t tax-free, they can’t. They have to change their whole charters and
    1:06:42 ways of being in order to do that. So it’s a huge drain of money and support from these organizations
    1:06:48 that do everything from soup kitchens and being in the court to religious organizations. They’re all C3,
    1:06:55 those kinds of things, as well as people like me who do civil liberties and civil society protections to
    1:07:00 people like NPR and other things who provide us information. It’s a huge blow and a huge risk to
    1:07:06 this entire sector. Again, because we built up a system that is all interlocking and is all based
    1:07:12 on the idea that the IRS C3 protection means that something is in the nonprofit side.
    1:07:20 So how do you think this all plays out? There’s like some possibilities, like we all wake up,
    1:07:27 there’s a midterm slaughter, we all go, phew, we duck that bullet. That’s one possibility. Another
    1:07:34 possibility is Margaret Atwood come to find out wasn’t a novelist. She was a historian. She got it all right.
    1:07:41 Another possibility is we have this performative democracy with a constitution and separation of
    1:07:47 powers and balance of power, but none of that is really true. What’s your prediction for what’s
    1:07:52 going to happen? I’m so bad at predicting. I’m really not good at it. We’re going to work really
    1:07:57 hard to make sure that we end up in a position where we are still a self-governing, constitutionally
    1:08:02 protected society. We’re going to pull all the levers we can. I would say, look, I was a person who
    1:08:09 told the founders of Wired Magazine that the country didn’t need another tech magazine. I am so bad at
    1:08:14 predicting the future, but I can say that we won’t get to a better future unless people lean in and try.
    1:08:19 We’re not going to be able to just sit back and have this magically fix itself. We didn’t get into this
    1:08:24 problem overnight. I don’t think we’re going to get out of it overnight. And we need people to vote,
    1:08:30 to lean in, to support the organizations that are working to do this. Of course, EFF is one of them,
    1:08:35 but we’re not the only one. Whatever speaks to your heart. We need people to show up. We don’t have an
    1:08:43 armchair democracy anymore. We need people to show up to make their voices heard because without that,
    1:08:48 we will definitely lose. Sometimes people ask me, are we just going to lose no matter what? And I’m
    1:08:54 like, we could lose today or we could fight and lose in the future. And those are the only two choices,
    1:08:58 because if you just sit back, it’s not going to get better magically. So I think people need to lean
    1:09:03 in. They need to engage. They need to find what speaks to their heart and really show up for it.
    1:09:08 I hope for some people that’s EFF because I think we do show up and we have done it. We know how to push
    1:09:14 right now. But if that’s not the thing, find the thing that works for you because we’re not going to get
    1:09:19 out of this by just sitting back and magically thinking things are going to get better. Tech’s
    1:09:25 not going to solve this all on its own. Tech needs people who are willing to step in and make sure that
    1:09:29 our tech and our world support us rather than suppress us.
    1:09:36 Wow, Cindy. So listen, I want to thank you. I want to thank you in two senses. The first sense is,
    1:09:42 of course, for the simple act of coming on my podcast, because it’s been a very remarkable
    1:09:49 podcast. But even bigger, I want to thank you and the EFF for the work that you’re doing to preserve
    1:09:56 democracy. The work you’re doing is so important. And as soon as I hang up, I’m going to send you money.
    1:10:00 Thank you so much. Oh, guy, that’s wonderful.
    1:10:05 Thank you very much, Cindy. And just let me thank the Remarkable People team. That would,
    1:10:13 of course, be Madison Nismer, who is our producer. Jeff C is our co-producer. And we have a sound
    1:10:19 design engineer named Shannon Hernandez and a researcher named Tessa Nismer. So, Cindy,
    1:10:24 that’s all the people on the Remarkable People team. And we’re trying to make this a remarkable,
    1:10:25 long-lasting democracy.
    1:10:32 This is Remarkable People.

    Four years out of law school, and she’s taking on the entire U.S. Department of Justice? Meet Cindy Cohn, the attorney who turned a Haight-Ashbury party connection into one of the most pivotal legal victories in internet history. As Executive Director of the Electronic Frontier Foundation—the world’s leading digital rights organization—Cindy commands a team of 125 lawyers, technologists, and activists fighting the surveillance state daily. She spills the brutal truth about encryption backdoors threatening global security, why the “nothing to hide” argument crumbles in 2025’s political reality, and how well-intentioned laws become authoritarian weapons. From tactical Signal advice to border crossing strategies, Cindy shares the security practices she actually uses while exposing how the UK’s encryption demands could destroy privacy worldwide. This conversation will shatter your assumptions about online privacy and arm you with the knowledge to fight back against the surveillance state while revealing EFF’s urgent mission to reclaim our digital democracy.

    Guy Kawasaki is on a mission to make you remarkable. His Remarkable People podcast features interviews with remarkable people such as Jane Goodall, Marc Benioff, Woz, Kristi Yamaguchi, and Bob Cialdini. Every episode will make you more remarkable.

    With his decades of experience in Silicon Valley as a Venture Capitalist and advisor to the top entrepreneurs in the world, Guy’s questions come from a place of curiosity and passion for technology, start-ups, entrepreneurship, and marketing. If you love society and culture, documentaries, and business podcasts, take a second to follow Remarkable People.

    Listeners of the Remarkable People podcast will learn from some of the most successful people in the world with practical tips and inspiring stories that will help you be more remarkable.

    Episodes of Remarkable People organized by topic: https://bit.ly/rptopology

    Listen to Remarkable People here: **https://podcasts.apple.com/us/podcast/guy-kawasakis-remarkable-people/id1483081827**

    Like this show? Please leave us a review — even one sentence helps! Consider including your Twitter handle so we can thank you personally!

    Thank you for your support; it helps the show!

    See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

  • Raging Moderates: The GOP’s Unpopular and Harmful Bill (ft. Galen Druke)

    With JD Vance casting a tiebreaking vote, the Senate voted Tuesday to advance the GOP budget bill. To process this news, Jessica is joined by Galen Druke — the former host of the FiveThirtyEight Politics Podcast, and current host of GD Politics. They discuss the bill that no one seems to like, what lessons the Democrats should (and shouldn’t) learn from Zohran Mamdani’s win in the NYC mayoral primary, and last week’s surprising Supreme Court opinions.

    Follow Jessica Tarlov, @JessicaTarlov

    Follow Prof G, @profgalloway.

    Follow Raging Moderates, @RagingModeratesPod.

    Learn more about your ad choices. Visit podcastchoices.com/adchoices

  • #818: John Arnold with Dr. Peter Attia — The Greatest Energy Trader of All Time on Lessons Learned, Walking Away from Wall Street, and Reinventing Philanthropy

    AI transcript
    0:00:05 Hello, hello, hello, Nelly. This is Tim Ferriss. I figured I’d mix up the intro. Welcome to another
    0:00:09 episode of the Tim Ferriss Show, where it is my job, each episode typically, to sit down with
    0:00:13 world-class performers of all different types, from all different industries, from all different
    0:00:19 fields, to tease out the habits, routines, favorite books, influences, and so on, that you can, in some
    0:00:24 fashion, emulate or test and apply in your own life. This time around in this episode, we have
    0:00:30 a slightly different format, which I’m super excited about. I will not be the one doing the
    0:00:37 deconstructing. Instead, we have my good friend, Peter Attia, taking my place. In this episode,
    0:00:42 we have Peter interviewing the legendary John Arnold. As many listeners know, and many probably
    0:00:49 don’t know, Dr. Peter Attia, on Twitter and Instagram, at Peter Attia, A-T-T-I-A-M-D, is a
    0:00:55 former ultra-endurance athlete, so he’s done swimming races of 25 miles, etc., a compulsive
    0:00:59 self-experimenter, so we get along well, and one of the most fascinating human beings I know.
    0:01:07 He is also one of my go-to doctors for anything related to performance and longevity, because
    0:01:13 blending the two is quite a sophisticated and subtle business. Peter also hosts The Drive,
    0:01:18 a weekly ultra-deep-dive podcast focusing on maximizing health, longevity, critical thinking,
    0:01:24 and a few other things. He really gets into the weeds with specialists on his show. Topics include
    0:01:28 fasting, ketosis, Alzheimer’s disease, cancer, mental health, and much more. You can subscribe
    0:01:33 to The Drive on Apple Podcasts, Spotify, or wherever you listen to podcasts, and you can find links to
    0:01:38 all of this in the show notes for this episode at tim.blog forward slash podcast, and just search
    0:01:44 atia, A-T-T-I-A. I will let Peter take it from here to give John’s full bio and introduce the episode.
    0:01:50 This is one not to miss. I really enjoyed it, and hope you do as well. Thanks for listening.
    0:01:56 But first, just a few quick words from our sponsors who make this show possible.
    0:02:02 I don’t know about you guys, but I have seen a lot of crazy stuff in the last few weeks. I saw an AI
    0:02:09 generated video. It looks like a video of an otter on a flight, tapping away on a keyboard,
    0:02:14 having a stewardess ask him if he would like a drink, and it goes on from there. And this was generated
    0:02:22 with AI, and it looks photorealistic, basically. I mean, it would have cost hundreds of thousands,
    0:02:27 millions of dollars to do in the past, taken forever, and now it’s, boom, snap of the fingers.
    0:02:32 It’s crazy. So AI is changing everything. We know that. It is also changing the way startups and small
    0:02:37 businesses operate. Things are going to get crazier. The rate of change is only going to get faster.
    0:02:43 And while a lot of good is going to come of that, it also means security and compliance headaches,
    0:02:48 for one thing. And that is where today’s sponsor, Vanta, comes in. I’d already heard a lot about
    0:02:54 them before they ever became a sponsor. Just like 10,000 plus other companies that rely on Vanta,
    0:02:59 my friends at Duolingo, shout out Duolingo, and Ramp, shout out Ramp, one of this podcast sponsors,
    0:03:04 and an ultra-fast-growing company, use Vanta to handle security compliance. Why would they do that?
    0:03:12 Well, Vanta automates compliance for frameworks like SOC 2, ISO 27001, and HIPAA, making it simple
    0:03:17 and fast to get enterprise-grade compliant. But what does that mean? It adds up to impressive
    0:03:24 results. Companies can save up to 85% of costs, get compliant in weeks instead of months, and complete
    0:03:32 security questionnaires up to five times faster. So check it out. Vanta.com slash Tim. That’s V-A-N-T-A,
    0:03:38 like Santa with a V. Vanta.com slash Tim to see how Vanta can help you level up your security program.
    0:03:45 My listeners, that’s you, can get $1,000 off. So check it out. Vanta.com slash Tim.
    0:03:52 Sleep is the key to it all. It is the foundation. Many of you heard me talk about how today’s sponsor,
    0:03:56 Eight Sleep, has improved my sleep with its pod cover. Well, they just launched their latest product,
    0:04:02 the Pod 5. I cannot wait to try it out. And here’s why. The Pod 5 introduces Eight Sleep’s latest product,
    0:04:07 the blanket, which uses the same technology as the pod’s cover to extend temperature regulation across
    0:04:12 the entire body. So if you’re too hot, too cold, you can fix it. If you’re a couple and one of you is hot,
    0:04:17 one of you is cold, you can fix it as well. It all fits right over your existing mattress like a fitted
    0:04:24 sheet. On average, members report the pod has helped them fall asleep 44% faster, 34% deeper sleep,
    0:04:29 and given them up to one added hour of sleep each night. Also, the pod’s snoring detection,
    0:04:34 my friend Albert might be interested in this, and automatic elevating platform have reduced user
    0:04:38 snoring by 45%. So it does a lot. You’ll also get a personalized report each morning,
    0:04:43 allowing you to track your sleep stages, heart rate variability, respiratory rate, and more,
    0:04:49 all without having any devices strapped onto you. So head over to eightsleep.com slash Tim and use
    0:04:56 code Tim to get $350 off of your very own Pod 5 Ultra. You can try it at home for 30 days and return it if
    0:05:02 you don’t like it. So why not give it a shot? Sleep is everything. Again, that’s eightsleep.com slash Tim.
    0:05:08 You can spell it out, eightsleep.com slash Tim for $350 off. Shipping is available to many
    0:05:12 countries worldwide. One more time, eightsleep.com slash Tim.
    0:05:13 Optimal minimal.
    0:05:18 At this altitude, I can run flat out for a half mile before my hands start shaking.
    0:05:20 Can I ask you a personal question?
    0:05:23 Now would it seem to be a perfect time?
    0:05:24 What if I did the opposite?
    0:05:28 I’m a cybernetic organism living tissue over a metal endoskeleton.
    0:05:44 I guess this week is John Arnold. John is probably the guy that’ll go down in history as the most
    0:05:51 successful natural gas trader of all time. And we spend the first part of this episode explaining
    0:05:54 that story. And you might think, well, what does that have to do with anything? Well,
    0:06:03 it’s only by understanding how John came to amass a fortune of billions of dollars trading natural
    0:06:09 gas. Can you understand the second part of this discussion, which is how at the age of about 37 or
    0:06:17 38, he shut it all down and turned all of his attention to the full-time craft slash business slash art
    0:06:25 philanthropy. John’s philanthropy is as serious as his natural gas trading. And his foundation,
    0:06:31 Arnold Ventures, which he is the co-chair of along with his wife, Laura, focuses on really the hardest
    0:06:37 social problems imaginable. And in this episode, John discusses at great length where philanthropy
    0:06:43 fits into the broader picture of the nonprofit sector, differentiating it from charity and how that
    0:06:47 fits into even the broader umbrella of public or government spending and even private spending.
    0:06:52 And it’s only by understanding that lens that you can really understand how someone like John
    0:06:59 thinks about deploying the types of resources they do, which are legion to be clear. The foundation
    0:07:08 currently spends about $400 million a year in grants. And John’s goal is to basically spend their entire
    0:07:14 fortune in their lifetime solving very hard problems, problems like criminal justice reform, health policy
    0:07:21 reform, K through 12 reform, public finance, things like that. We obviously don’t go nearly as deep as
    0:07:27 I would love to go into all of these topics. And yet somehow this podcast managed to be probably two
    0:07:32 and a half hours, if not slightly more, which certainly leaves ample room for a part two of this at some
    0:07:38 point in time. I guess one thing I would say about this is I’m obviously fascinated by this topic and
    0:07:42 could sit here and talk about natural gas trading forever. If that subject matter, isn’t that
    0:07:46 interesting to you? What I would suggest is paying close attention to the timestamps in your podcast
    0:07:51 player. You’ll probably want to listen to the first part of this because it’s, I think John’s
    0:07:56 background and growing up and his card trading business, his baseball card trading business. I think that
    0:08:01 stuff is really important to kind of understand John’s mentality. You may actually want to skip his
    0:08:06 career where he goes from college to work at Enron and don’t worry, he’s one of the good guys at Enron.
    0:08:12 And then you may want to sort of skip to the part where he decides to shut his own hedge fund down
    0:08:16 and instead focus on philanthropy. Again, I’ll leave it up to you, but I guess the point I want to make
    0:08:20 is I wouldn’t be put off by the fact that if you’re not interested in natural gas, you won’t find this
    0:08:25 episode interesting. I think this episode is interesting start to finish, but there may be some people who only
    0:08:30 find one part in string or another. So, so just pay attention to where that is. So without further delay,
    0:08:32 please enjoy my conversation with John Arnold.
    0:08:43 Hey John, awesome to sit down with you. I’m bummed we are not able to do this in person because anytime
    0:08:49 we sit down in person, it is a long and fruitful discussion where I just feel like I’m learning at
    0:08:55 a geometric rate. But nevertheless, I’m excited that we’re finally getting to sit down and talk because
    0:09:00 there’s so many things on my mind. Now, a lot of people listening to this podcast will not really
    0:09:07 know who you are. And I’ve struggled to think about the best way to introduce you. So I thought one of
    0:09:12 the funniest ways to introduce you is to do so through the tweet that you have pinned at the top of your
    0:09:16 page. So remind me your handle on Twitter is, is it John Arnold Foundation?
    0:09:18 John Arnold Foundation. Yeah.
    0:09:22 Okay. And what is it that you have pinned at the very top of that?
    0:09:30 So it’s essentially that I’ve been called the next Koch brother by the far left. And I’ve been labeled
    0:09:36 the next George Soros for by the far right. And I think I write that I’m an equal opportunity,
    0:09:43 special interest pot stirrer. And I think it does label me a couple of ways versus our actions at the
    0:09:51 foundation, which has been kind of in its current form for about 10 years, have led to getting into
    0:09:56 a lot of squabbles with both the left and the right. And at times it’s been frustrating, at times it’s
    0:10:02 been liberating, but it has brought a lot of conflict, which one doesn’t normally think about when you think
    0:10:08 about philanthropy and a philanthropist about having conflict and fights and battles with a lot of these
    0:10:14 issues. And that’s generally been a component of our work, not by design, but by necessity.
    0:10:22 And then I think the second part of it that I like is that we don’t approach all problems with the same
    0:10:29 ideology. I think problems are different. Problems are complex and the type of solution for each problem
    0:10:34 is different. So we don’t say that the free market is the right answer for everything. Don’t say government
    0:10:40 is the right answer for everything, but it depends on the makeup of the problem, the actors, the market
    0:10:45 failures, et cetera, as to what the right solution is. And therefore over the years have managed to
    0:10:49 make mad both the left and the right, and sometimes simultaneously.
    0:10:54 And by extension, I think there are many times that the right and the left also think you were doing the
    0:10:59 greatest work on earth. I mean, I think that’s the corollary of that, which is there are times when
    0:11:02 you were in lockstep agreement with both sides as well, correct?
    0:11:04 Yes. Although whenever-
    0:11:05 Not simultaneously.
    0:11:10 They tend to be louder whenever you’re in conflict with them than when they’re showing appreciation.
    0:11:11 Yeah.
    0:11:18 I think part of how we’ve chosen issues to work on is we’re looking for these system problems that have a
    0:11:25 lot of impact in people’s lives, where the two sides, the left and the right, have historically
    0:11:31 been divided for some reason and that they’re starting to come together. Like there’s a reason
    0:11:37 why there can be a solution that’s viable today that wasn’t viable five years ago or 10 years ago.
    0:11:42 And that ends up being a component of almost every issue we work on is that the left and the right
    0:11:49 are coming together. And so we need to be able to work with both sides. And so we’ve tried to tamp
    0:11:56 down the politics, both personally and professionally over the years and try to see in the Venn diagram of
    0:11:59 things that the left will support and the things the right will support, even if it’s for different
    0:12:04 reasons or different motivations. Let’s explore those territories and see what can be done.
    0:12:09 And I think we’re going to explore one of those in greater detail, perhaps than others,
    0:12:13 which will be criminal justice. But currently the foundation I know focuses very heavily on health
    0:12:18 policy, public finance platforms and criminal justice. And I think at least one of those,
    0:12:22 and I don’t know why I just personally find criminal justice to be such an important one,
    0:12:27 maybe we’ll come back to it because it is one where I think maybe the left and right have a different
    0:12:32 ultimate motivation for establishing it, but the solutions can certainly benefit society and both
    0:12:37 sides. Let’s take a step back because to put the magnitude of your philanthropy and scale,
    0:12:43 the foundation is deploying what type of assets per year? Can you put some numbers to this
    0:12:48 for people? We give about 400 million a year. The assets in the foundation are a little over
    0:12:54 2 billion. And then we have a couple other giving vehicles, specifically a DAF. We contribute money
    0:13:01 every year as well. So we have a high spend rate, but one of our philanthropic intent is to give away
    0:13:06 the vast majority of our money during our lifetimes. Yeah. And you’re very young, John, you’re in your
    0:13:12 mid forties. You and your wife, Laura have been at this, as you said, since you’re in your thirties and yeah,
    0:13:17 you’re sort of on a mission to spend this enormous sum of money during your lifetime. That’s something
    0:13:22 I want to come back to because it’s also not a typical path to philanthropy. Many people are
    0:13:27 thinking about serious philanthropy at a slightly later stage of their life. Let’s start with the
    0:13:30 first half of the story, which is where did this money come from? You didn’t have a trust fund to
    0:13:36 my recollection, right? I did not. I did not. So where did you grow up? I grew up in Dallas
    0:13:43 and a very boring, great upper middle-class lifestyle in Dallas. Went to Dallas public schools,
    0:13:49 ended up going to Vanderbilt. Well, let’s go before Vanderbilt. What was your first business?
    0:13:55 First business. So probably mowing lawns. I was sitting around one summer and said,
    0:14:03 I want to make some money. So what can a 12 year old do to try to make a dollar? Not much. And so
    0:14:09 went knocking on every neighbor’s door and tried to find a lawn to mow and realized that everybody
    0:14:14 either cut it themselves or had a lawn service already set up. And so that wasn’t going to be
    0:14:22 my path to riches. And then kind of around age 14, I ended up getting into the baseball card business
    0:14:31 pretty actively. So this was right around 1988, 89, 90, when the sports card business was taking off.
    0:14:37 And I had a small collection at the time, but I always thought of it more as an asset rather than
    0:14:43 a collectible that I wanted to put on my desk and look at every day. And so the first experience was
    0:14:50 just renting a table at a local trade show for $30 and going and putting a lot of the collection on the
    0:14:57 table and trying to sell it. And again, the sports card business was booming. And so came home with maybe
    0:15:04 $100 from the $30 investment. Now, of course, the cost of goods sold was, it didn’t really factor that in.
    0:15:10 Maybe that was a sunk cost at the time, but it started getting me interested in this as a potential business.
    0:15:17 And I kind of quickly figured out, I didn’t want to be spending my weekends sitting at the local trade
    0:15:22 fair and couldn’t, I played highly competitive soccer. So I had things to do on the weekend,
    0:15:28 but there was a wholesale market that didn’t require as much time. And so this is really kind of the,
    0:15:33 again, during the start of the bulletin boards of ways where people would transact.
    0:15:41 And there was a small bulletin board of baseball card dealers where they would do the wholesale trading.
    0:15:47 And the market was so volatile at the time. If a particular player went on a good streak for two
    0:15:55 weeks, that card would get hot, especially in the region he played. And you’d start seeing number one,
    0:16:02 volatility in prices and second kind of geographic differentiation in prices. So the market for hockey
    0:16:08 cards was very strong in the Northeast and in Canada, a little in Michigan, they would sell them
    0:16:13 across the nation. Now the guys that bought them in Texas, there wasn’t much of a local market.
    0:16:21 So I could go buy the hockey cards there, ship them up to a dealer in New York and make a few dollars.
    0:16:27 And that few dollars, I would then reinvest and do it more than the sports card business was going
    0:16:33 parabolic at the time. And so kind of one thing led to another, and I ended up spending a couple summers,
    0:16:39 just kind of full time on this baseball card, really geographic arbitrage and information arbitrage
    0:16:47 that I would have a sense of who the best buyer was for every product, wherever they were in the
    0:16:55 United States, or even into Canada, and would go around and try to find any bargains I could in the
    0:17:02 Texas, Oklahoma, Louisiana, tri-state area, kind of do day trips down to Houston and go to the big
    0:17:07 fairs down here, would go canvas all the dealers. And that was really my first business.
    0:17:14 And how were you able to drive around so young? This was pretty unusual for a kid your age to be
    0:17:21 able to track that circle of geography, right? It was. I got my driver’s license at a young age.
    0:17:27 I think it was at 14. My father at the time was going through an illness. He had Crohn’s disease
    0:17:34 through his life and kind of a chronic condition that, especially in my teen years, became a bit
    0:17:40 debilitating for him. And so I was able to get, I forget what the name of that particular license
    0:17:48 was, but because there was a kind of family hurdle, family handicap that I was able to start driving
    0:17:53 when I was 14. Did you know what the word arbitrage actually meant when you were conducting it?
    0:17:57 Great question. And I don’t remember.
    0:18:01 Can you explain to people, I mean, you’ve effectively explained it in concept because
    0:18:06 it’s such a big part of your ultimate business. Can you explain it more formally and technically to
    0:18:06 people?
    0:18:14 I would describe arbitrage as taking advantage of price differences with little to no risk.
    0:18:19 They think true arbitrage is no risk where you bought it for one and you’ve sold it at two
    0:18:24 and you’ve taken no risk in doing so. In reality, there’s always a little bit of risk.
    0:18:32 And so by knowing that the market in New York valued something at $20 and it was trading in Texas at $15,
    0:18:39 I could take advantage of what I call geographic arbitrage there, that the market in Texas was
    0:18:43 different from the market in New York. Now, of course, today with the internet, a lot of those
    0:18:49 arbitrages and inefficiencies, pricing inefficiencies have gone away or have been, what we call in the trade,
    0:18:56 arbed out. And so now you see the high-frequency traders trying to make a hundredth of a penny on a
    0:19:02 share of stock and have huge incentive to do so and do so at massive volume. But it’s like buying and
    0:19:05 selling same item with little to no risk.
    0:19:12 Which is a theme we’ll obviously come back to at length. So you go to Vanderbilt. You studied, if I recall,
    0:19:12 economics, yes?
    0:19:14 Econ and math.
    0:19:17 Do you have a sense of what you wanted to do when you were finished college?
    0:19:24 I remember reading Liar’s Poker and I think Barbarians at the Gate, both classic books about
    0:19:32 Wall Street. And although growing up in Dallas with my mom as an accountant, my dad as a corporate lawyer,
    0:19:38 I didn’t have a sense as to what Wall Street was except through these books, except by reading Wall Street
    0:19:46 Journal every day. And it seemed like that was the biggest game around. I got drawn to that game or the
    0:19:53 desire to enter that game. And so my goal throughout college was to get the job and the classic post-college
    0:19:56 analyst job at a big Wall Street bank.
    0:20:02 So then how did that pan out? And I also recall from our discussions that you blazed through college.
    0:20:06 I think you got your degree in three years by taking summer classes and just being kind of
    0:20:08 maniacally focused on your degree. Is that right?
    0:20:16 Yeah, I’d take 18 hours every semester, did summer school one summer, came in with some credits, and I was the guy
    0:20:22 that was trying to get out of there and into the game as quickly as possible. Every day I was at college,
    0:20:29 it was one less day that I had to be in the game. And I think my grades probably reflected that. I was not
    0:20:35 academically focused, either in high school or in college. I think academics came relatively easy to me.
    0:20:41 So it didn’t instill a great work ethic at school, but I just wanted to move on. It was a task to
    0:20:43 complete to get me to the next stage.
    0:20:47 So do you start interviewing for a bunch of Wall Street firms when you’re in your senior year or junior
    0:20:47 year, I guess?
    0:20:55 I did. So at the time, Vanderbilt was probably a tier lower than it’s considered today as a school. And
    0:21:01 the investment banks didn’t do much recruiting there. So there was maybe one or two in some of the
    0:21:06 regional banks. And then I was able to talk my way into a couple of interviews, but I didn’t get
    0:21:13 those jobs. So I was a bit crushed. Here’s what I want to do. And I got things that were close to that
    0:21:20 working at the regional investment bank. And then one of the jobs I got, which I thought was closest to
    0:21:26 what I wanted to do to being in that game, was at the company Enron. And Enron at the time was in
    0:21:32 this transformation, trying to become essentially an investment bank to the energy industry and
    0:21:34 specifically the natural gas and electricity industry.
    0:21:36 What year was that?
    0:21:40 So I started at that job in 95, 1995.
    0:21:44 So at 95, nobody knows Enron. They’re a pretty unsexy company, right?
    0:21:45 Correct.
    0:21:51 They’re basically doing disintermediation, like their market making on energy. And that’s about it.
    0:21:55 They’re not this darling of Wall Street that they would become before their fall. Is that,
    0:21:56 do I have my era right?
    0:22:03 Right. It was historically a pipeline company. And over the decades, natural gas, which went from a
    0:22:08 highly regulated business and all the troubles associated with trying to regulate a commodity,
    0:22:14 right? That you end up having these huge booms and busts, way too much supply or way too little
    0:22:23 supply was deregulated. And that deregulation ended in 1992. And that was really the emergence of
    0:22:29 Enron, as it became the late stage company, was that previous to then you had the pipeline was
    0:22:35 responsible for providing the merchant services to the buyer and seller. So the producer of gas would
    0:22:41 sell to the pipeline and then the pipeline would transport the gas and sell it to the customer.
    0:22:46 It was viewed that this was negative because pipelines are natural monopolies frequently.
    0:22:54 And so the services and the costs of those services were too high. And so 92, they deregulate and here’s
    0:22:56 Enron as the gas merchant.
    0:23:02 Only because they become relevant later in this story. So was Ken Lay the CEO at that time of
    0:23:06 deregulation? And when you came on board, or was Jeff Skilling there at that point in time? Not that you
    0:23:10 would have had any interaction with those guys as a lowly first year guy.
    0:23:19 So Ken Lay was chairman CEO. Shortly after I joined, I joined, I think, May of 95, there had been two
    0:23:23 aspects of the company. It had the historical pipeline business, and then it had this new,
    0:23:32 it’s called investment bank side. And there was what I later came to realize was the great decision
    0:23:37 point for the company was who was going to be the number two at Enron. Was it going to be the head of
    0:23:43 the pipeline business? Or was it going to be Jeff Skilling, who is the head of the energy bank? And so
    0:23:50 shortly after I joined, Jeff was promoted up and Rich Kinder ended up leaving and starting Kinder Morgan.
    0:23:56 And obviously, that promotion was based just as much on perhaps who they were as the direction that the
    0:23:57 company was going to go in.
    0:24:06 Right. I think this was a trend in corporate America then was go asset light. So get rid of your big assets.
    0:24:12 Coca-Cola spins off as bottling business. They just become the seller of the syrup because that’s
    0:24:18 lighter on assets. But your return on equity is higher if you have fewer assets. And so that was
    0:24:21 the direction of corporate America generally and the one that Enron took.
    0:24:26 So I love that you show up in May of 95, not even taking a month off like any other kid would.
    0:24:29 And what is your first job at Enron? Where do they stick you?
    0:24:36 It’s very rare for someone at Enron and even someone at an investment bank to be put on the
    0:24:43 trading floor. Mistakes are expensive on the trading floor. And so they don’t want the kid
    0:24:47 that’s a few days out of college. That would be the equivalent of we’re going to take kids out of
    0:24:53 medical school and you’re going to get to start operating even simple operations without supervision.
    0:24:54 That would be catastrophic.
    0:24:56 Organ transplant is your first thing, right?
    0:24:56 Right.
    0:25:01 But I had expressed interest on the trading side when I went through the interview process
    0:25:07 and they called me in April and said, a couple of people recently left our oil trading group.
    0:25:14 If you can start immediately, you can start in trading. And I said, well, I graduate in 10 days.
    0:25:21 How about 12 days from now? I’ll be there. And so I literally graduated, drove from Nashville to Houston
    0:25:25 that weekend. And that Monday show up at work in the oil trading group at Enron.
    0:25:32 So what did that mean? What did an oil trader do without as much supervision or experience as maybe
    0:25:34 you would ideally want of a trader?
    0:25:38 Right. So I certainly was not trading. I was kind of an assistant on the desk,
    0:25:44 which meant doing a lot of spreadsheets of running analytical studies and correlation studies,
    0:25:51 building models, getting lunch, doing all the things that first years do, right? Trying to learn
    0:25:51 the business.
    0:25:59 And at what point did your bosses there start to realize that this kid that just came out of
    0:26:03 Vanderbilt a year younger than everybody else has a knack for this game?
    0:26:08 Or maybe asked another way, when did you first realize you had a knack for it?
    0:26:14 Quickly. I look back at all the good timings and kind of good decisions that went into my career.
    0:26:22 And one of them was, I found the perfect job for my skillset as my first job. And I think that’s
    0:26:29 pretty rare. And it happened by accident. Could have very easily ended up a mergers and acquisition
    0:26:33 investment banker at Merrill Lynch. But I ended up trading commodities.
    0:26:38 At a relative upstart of a company. That was just the perfect spot for my skillset.
    0:26:46 So tell me a little bit more about that. So oil is a very complicated thing. Gas, perhaps less so,
    0:26:52 at least at the time. Were those two viewed as the same trading desk at Enron? Or did you shuttle
    0:26:54 back and forth between them and find yourself eventually at gas?
    0:27:02 Enron, by its nature, was always a gas company. It was gas focused. The oil group was small. It was
    0:27:08 kind of the redheaded stepchild. It didn’t make much money. It was necessary because some customers wanted
    0:27:12 to transact on oil with the same company that they were doing their gas transactions with. But it was
    0:27:18 always a small group. So then how did you work up the ranks in natural gas trading? And when did you
    0:27:26 actually start to go from modeling to actually making some trades and by extension, then earning Enron some
    0:27:35 money? So early 1996, I was supposed to be on a formal rotation, six months on one desk, six months on a
    0:27:40 different business within Enron and kind of rotate for rotations over the two years and then go back to
    0:27:46 business school. And after six months, I think the team there liked me and I liked being there and kind
    0:27:53 of got made to be an exception. So I didn’t have to rotate. But kind of shortly thereafter, one of the
    0:27:59 traders, I was speaking earlier about mistakes are costly in the trading side. And there was an older
    0:28:04 gentleman who kind of made a mistake, kind of did a trade that ended up going bad. And they
    0:28:10 reorganized the whole group. And the new boss came up and I worked for him for a couple months.
    0:28:16 And one day he pulls me aside and says, I have to blow up this group. I like you. It’s not going to
    0:28:20 be good for your career to be here. You need to find a different group. And he gave me two options. One
    0:28:28 was go to London and work in the oil group there or go downstairs and work in the natural gas trading
    0:28:34 group. And as a 21-year-old getting offered an expat package to go to UK, it was
    0:28:38 extraordinarily tempting because I’m thinking I’m going back to business school anyway.
    0:28:44 It was a hard decision, but I realized the core of this company is natural gas. That’s where I need
    0:28:49 to be. I need to learn that. And so I went downstairs and started natural gas. And that was on its own,
    0:28:55 just very fortuitous timing. I spoke about in 1992 was when the full deregulation happened.
    0:29:05 The winter of 96 was the first time that natural gas prices really blew out. It was extremely cold
    0:29:15 winter. And all the historical relationships that gas had just completely changed. And so going down
    0:29:21 there, I knew nothing about gas, but people who had spent their career in gas wasn’t sure if they knew
    0:29:25 anything about gas either. They knew the fundamentals about the physical molecules,
    0:29:31 but what the historical pricing relationships were, it was a whole new game. So I went down
    0:29:36 there knowing nothing, but it felt like the whole industry was trying to figure out what does the
    0:29:39 world of natural gas look like today going forward, given everything’s changed.
    0:29:44 How did you rise through those ranks there? Because that’s a pretty interesting situation where
    0:29:47 it’s not necessarily the person with the most historical knowledge that’s going to bring the
    0:29:51 most value. It’s probably the person who can learn the quickest spot patterns, the quickest,
    0:29:54 and basically morph to a new environment.
    0:30:02 Right. So my first job in the Nat gas division was they put me as an assistant trader with a gentleman
    0:30:07 who had expertise on the physical side of the business. Didn’t know anything about trading,
    0:30:12 but he knew natural gas. And I knew nothing about natural gas, but knew something about trading
    0:30:17 and was good with numbers. And they essentially put the two of us together and said, you guys were
    0:30:24 go figure this out, work together and run this book. And so that was my first real trading job
    0:30:29 where, although I was an assistant trader on the book, but where I was involved in the trading.
    0:30:36 At this time, Enron started to become a darling. And it was certainly within the energy side and within
    0:30:42 the pipeline business had become this darling. Its stock was higher than all other stocks. So every
    0:30:47 other company was trying to figure out how do I be more like Enron. So what’s the easy way to be more
    0:30:55 like Enron is go hire Enron people, go hire someone kind of mid-level, give them a promotion and a raise
    0:31:01 and have them come over to your company. And so that was happening all the time, which was great for the
    0:31:09 young guy at Enron because the guy above you was leaving to go get a better job. And so it was an
    0:31:18 environment where if you could prove that you were responsible and that you were smart, you could rise
    0:31:25 much faster than you could at a mature company or in a mature industry. And so that next four years for me
    0:31:32 was really the roller coaster where every nine months or so I would get a promotion again, like much faster
    0:31:41 than I would have gotten had I been at a more mature company and ended up by the time I was 25, I was the
    0:31:47 head natural gas trader at the largest natural gas trading company in the industry.
    0:31:52 It’s hard. It’s almost hard to believe that that’s possible, especially now when I look at what I was doing when I was
    0:31:59 25. Right, right. It is almost hard to believe it was a company that was very merit focused. I think
    0:32:07 by giving out that responsibility, it was fantastic to work at a place like that. I think it ended up being
    0:32:12 the downfall of the company as well as there just wasn’t the controls on people who were given too much
    0:32:20 responsibility, too much of the company’s balance sheet to use without their adequate controls on it.
    0:32:26 Just a quick thanks to one of our sponsors and we’ll be right back to the show.
    0:32:34 This episode is brought to you by Wealthfront. It’s a mess out there. The hyper complexities of the US
    0:32:39 economy, global economy can be very confusing and there’s a lot of conflicting advice, but saving and
    0:32:46 investing doesn’t have to be complicated. Here’s something refreshingly simple to use and that’s
    0:32:50 Wealthfront. Wealthfront is an app that helps you save and invest your money. Right now you can earn
    0:32:56 4% APY, that’s annual percentage yield, on your cash from partner banks with the Wealthfront cash
    0:33:04 account. That’s nearly 10 times the national average according to FDIC.gov. So don’t wait. Earn 4% APY
    0:33:09 on your cash today. Plus, it’s eligible for up to $8 million in FDIC insurance through partner banks.
    0:33:14 And when you open an account today, you’ll get an extra $50 bonus with a deposit of $500 or more.
    0:33:20 There are already more than 1 million people using Wealthfront to save more, earn more, and build
    0:33:27 long-term wealth. So check it out. Visit Wealthfront.com slash Tim to get started. One more time, that’s
    0:33:32 Wealthfront.com slash Tim. This is a paid endorsement of Wealthfront. Wealthfront brokerage
    0:33:36 isn’t a bank. The APY is subject to change. For more information, see the episode description.
    0:33:45 What was the stress like that you felt just in a self-imposed manner? I mean, were you,
    0:33:50 if you’re 25 years old, and just give me a sense of, as a head trader at Enron,
    0:33:56 we’re the largest gas trading company. We’re talking in the billions of dollars worth of potential profits
    0:33:57 and losses here, correct?
    0:34:05 In a given day, I was trading billions of dollars of notional value of gas. So a lot of it was trying
    0:34:13 to buy it at $2, trying to sell it at $2.5 penny for enormous volumes. And so Enron was the largest
    0:34:18 market maker. It was the largest speculative trader of gas. It had the most customer business coming
    0:34:24 through it. And so being at the center of that, being the head trader there, it was just from the
    0:34:32 moment you sat down in the morning until about 3, 4 o’clock. It was just nonstop trading. Someone would
    0:34:38 bring food and put it in front of me, run to the bathroom and run back. Internet trading was starting
    0:34:45 to take off then. So there was still the trading in the pit on the trading floor, like trading places
    0:34:50 style. So there was that. There was trading that was happening on the internet. There was trading that
    0:34:55 was happening with other people within the company that they had customers or somebody needed to put
    0:35:00 a hedge on because of another deal that they did. And so it was just nonstop action. And the stress
    0:35:08 level was intense. I think I’m very good at handling stress. The stress level was intense to a point of
    0:35:14 not being healthy. And I think this is true of many trading floors, especially back in those days.
    0:35:21 I think it’s why traders generally have short lives, trading lives, trading careers. It’s hard for
    0:35:26 the body to handle that level of stress for decades and decades.
    0:35:32 Were you seeing this creep out into other areas of your life? Did you have difficulty sleeping? Were you
    0:35:37 able to exercise in the periods of time, like presumably in the evenings would be your only windowed
    0:35:42 exercise? Were you eating like crap? I mean, you’re a very fit, healthy guy today. Is this what
    0:35:45 John Arnold looked like when he was the head of trading?
    0:35:51 No, I didn’t realize it. Kind of looking back probably after, after I eventually lost the weight
    0:35:56 that I gained during those years and cut down on some of the drinking, started exercising a lot more.
    0:36:03 Looking back at the health of my life was a bit telling, even like going and putting on some of the
    0:36:09 clothes that I used to wear, seeing how I’m so differently built today than I was back then.
    0:36:12 You had to find some method to relieve stress.
    0:36:17 And unfortunately for a lot of traders, that’s pretty negative behaviors, right? It’s more drinking,
    0:36:19 more partying, more gambling or whatever.
    0:36:25 Exactly. Exactly. It is not a healthy lifestyle. As I grew up, I was able, I learned how to handle
    0:36:31 the stress better. I got tired of the drinking and partying and gambling and especially kind of
    0:36:37 as I got into my 30s, as I got married, as I had kids, that all starts changing. But it also can be a
    0:36:44 reason why people start to get repulsed by that career. It’s the lifestyle that doesn’t necessarily
    0:36:47 go along with it, but oftentimes does.
    0:36:51 I want to go back to just something before we leave this topic, which is, did you get a sense of
    0:36:57 an addiction to trading? Because I’ve spoken with many friends of mine who are, have at some point in
    0:37:04 their life been in that field. And for some of them, the addiction, the high, the physiologic response
    0:37:12 that they get to a good trade is easily on par with what the most indebted gambler feels when they’re
    0:37:18 sitting at a blackjack table or with the drive that someone has to drink who is so disproportionately
    0:37:25 dysregulated by alcohol. I mean, did you personally get that? Or was it more of an intellectual exercise
    0:37:33 for you? How much of this was just purely limbic system, dopamine surging versus more of a calculus?
    0:37:40 So I definitely seen traders where they had that dopamine aspect to their trading personality.
    0:37:47 I’ve gotten the question many times, why were you a good trader? Why were you considered one of the
    0:37:53 best traders in the market? And it’s always been hard for me to answer. I think part of it is I had
    0:38:00 this emotional detachment from the business. So if I was having one of my best days or having one of my
    0:38:08 worst days, if you walked by me, you couldn’t tell. It was just 100% focus on executing the process.
    0:38:16 And so my views would change, but the process of how you look at the market can easily get swayed by
    0:38:24 whenever, and there’s the phrase fear and greed that drives a lot of price trends in financial
    0:38:31 assets. You’re either greedy or you’re fearful and that’s driving your behavior. And to the extent I
    0:38:37 think that you can eliminate those two emotions from the trading and from the process, you get better.
    0:38:42 And you know me well enough, you wouldn’t describe me as an emotional guy.
    0:38:48 So does that mean it was natural for you, John, that this superpower, because that is probably a
    0:38:54 trading superpower. Is that something you had to cultivate or spend any energy training in yourself?
    0:39:01 Was it the product or byproduct of something in your childhood? Or was it simply as innate to you as
    0:39:02 your hair color and height?
    0:39:07 I think it was just innate. I think this is how I was born. I have that detachment from the emotions
    0:39:14 that doesn’t affect my decision-making process. And so I think that’s one of the two superpowers
    0:39:23 that I had. I think I also fell perfectly on the confidence spectrum. And I say that it takes a
    0:39:28 certain amount of arrogance to be a trader because the market’s usually right. And to be a trader,
    0:39:33 you have to say, I think I’m smarter than the market here. I think the market is wrong. I think
    0:39:40 I am right. So it takes that arrogance in order to be willing to put on a trade. And I’ve seen people
    0:39:45 just get paralyzed where they just say they’re so concerned about the downside and of being wrong
    0:39:51 that they can’t do anything. So you have to be arrogant, but you can be too arrogant. And that’s been
    0:39:59 the destroyer of many trading careers is if you stick with it, I am right. The market is wrong,
    0:40:05 then you’re going to blow up. And so it’s, how do you have the right level where it’s like,
    0:40:09 I’m confident in my view on this, but I know I might be wrong.
    0:40:14 That’s amazing. When we get to talking about the second half of your career professionally,
    0:40:20 which is now your full-time work in philanthropy, especially the type of bets that you make and the
    0:40:27 scope and magnitude of problems that you go after. I think those two traits that made you,
    0:40:32 I think most people would argue the greatest natural gas trader of all time, probably serve
    0:40:35 you just as well in your philanthropy. Would you agree?
    0:40:41 I think you said that well. The notion of going in saying, I think we’re right about this,
    0:40:48 but it might not work, or we might be wrong. Let’s kind of write down our theory and test it along
    0:40:55 the way and see if it’s playing out the way it should and not get wedded to this theory that
    0:41:02 everything we’re doing in the foundation is evidence-based, but the evidence is never perfect.
    0:41:08 So we’re taking the best available information and saying, how much risk should society be willing
    0:41:10 to take to test a different idea?
    0:41:17 So bringing the Enron chapter of your career to a close, help me understand how you and your
    0:41:27 colleagues under your direction are making so much money. And yet by 2001, Enron is going bankrupt.
    0:41:29 How are those things happening simultaneously?
    0:41:35 I don’t have the right answer for that. I knew things in the company and other divisions. I had
    0:41:39 friends that worked in other divisions. We would go have a beer after work. I would hear their stories
    0:41:47 about some crazy deal that their division was doing that they thought was stupid. I would hear stories
    0:41:53 about this, but our day-to-day in the trading group was just so focused on the one activity
    0:41:58 that we didn’t have firsthand knowledge of any of that. It was always kind of the hearsay,
    0:42:06 but the trading group was making so much money that there was a thought, I think, that we could actually
    0:42:13 see this whenever earnings would get released, that the trading group could support the other divisions
    0:42:18 until they stopped making the dumb mistakes and became profitable on their own. I can’t speak
    0:42:21 exactly about why the trading group was making so much money.
    0:42:25 There were some really dumb ideas. In retrospect, when you look at the documentaries, I mean,
    0:42:30 I remember reading the book, The Smartest Guys in the Room in 2006 or whenever it came out and being
    0:42:36 like completely fixated on this thing. But the whole broadband water idea, the Indian power plant that
    0:42:41 didn’t seem to make any sense. I mean, there were a lot of ideas that, and again, I’m not saying this
    0:42:46 like I would have known at the time these were dumb ideas. I’m sure I wouldn’t have. So hindsight,
    0:42:52 of course, offers that luxury. But I mean, these were really, really half-baked at best, right?
    0:42:59 It’s always easy in retrospect. Yeah. I think the disintermediation, which not only Enron was doing,
    0:43:07 but was a broad theme in the business world at the time, was real. And the investment community
    0:43:13 was valuing companies who were disintermediating, right? The same way that they do today in the
    0:43:19 tech sector. There’s a lot of value to be created if you can disintermediate a business chain.
    0:43:25 I think Enron, trying to approach it from the commodity side and trying to do it with water,
    0:43:33 trying to do it with electricity, doing it globally in places where the quality of law and of
    0:43:39 intellectual protections isn’t what it was in America, and then having the culture of never
    0:43:46 being able to admit failure that existed not only in Enron, but again, in many other companies at the
    0:43:53 time as well, meant that whenever mistakes were made, there wasn’t the admittance to Wall Street
    0:43:58 that this was a mistake and we’re going to change. It was swept under the rug.
    0:44:06 And Enron, the process of bankruptcy kind of happened so quickly because all these financial
    0:44:11 businesses, which at the time Enron had morphed into a financial business, is completely contingent
    0:44:17 upon having the faith of your creditors, having the faith of Wall Street. And once Wall Street
    0:44:23 loses faith in you and refuses to fund you on a day, the business is toast. And that’s what happened.
    0:44:28 And it happened, as you said, precipitously. I mean, I could certainly sit here for another four
    0:44:33 hours and talk to you about mark-to-market and all of that, but I think we’ll let the listeners who are
    0:44:38 really interested in that go back and either read the books, watch the documentaries, or go deeper on
    0:44:43 that. Let’s bring it back to you, which is at what point do you realize your career at Enron is going to
    0:44:49 be cut short? So despite the fact that you’ve had your head down, you’ve been, I think you could make the
    0:44:55 case the single most profitable human at that company. If the company goes under, you’re out of a job.
    0:45:00 When was that apparent to you? And then what were your next moves? And how did you consider the decisions
    0:45:01 you had to make?
    0:45:09 It happened so quickly that there was damage control that I could see from my perspective in the company.
    0:45:13 Again, my perspective was sitting at a desk with two phones in my ear for most of the day.
    0:45:19 Didn’t get a much of a sense of what was going on outside of what natural gas prices were ticking up.
    0:45:26 So it happened so quickly that there wasn’t much to be done from the trading side perspective. This was
    0:45:32 all kind of, all those decisions end up in the finance side, the CFO’s office of how do we raise
    0:45:42 money? And so when it finally kind of November of 2001 was kind of shortly after 9-11 and that caused
    0:45:47 some havoc in the financial markets. And then that’s when Wall Street was not going to give you a second
    0:45:54 chance in that environment. And Enron arguably didn’t deserve one. And so it all happened so fast that
    0:45:59 whenever Enron lost credit worthiness in the business, then it just, it was over. Business over.
    0:46:06 There was some time spent trying to find a credit worthy JV partner to come in and Enron would
    0:46:10 contribute the intellectual assets and someone would contribute new money and keep the trading
    0:46:17 operation going because it had been so profitable. If it was just swept away in bankruptcy, it was a loss
    0:46:23 of a lot of potential value to what was then the estate of Enron, the creditors of Enron. And so there
    0:46:27 was a lot of focus on trying to cut that deal and a deal was eventually cut with the New York bank.
    0:46:32 And I looked around and I looked at the deal and kind of for the first time stepped back and
    0:46:36 started thinking like, what do I want to do with my life? And that’s where the decision was.
    0:46:42 I don’t want to go with this entity. I have different views on how this business should proceed in the
    0:46:50 future. And I want to go try it somewhere else. So you take your bonus check, you take some money
    0:46:54 from a few other folks and you set up your own hedge fund in early 2002, right?
    0:46:57 Yeah. Mid, mid, mid 2002.
    0:47:02 Again, you’re the perfect guy to do it because you’re not too stressed about it. You’ve got a
    0:47:07 proven track record. I guess you’re somewhat toxic because even though you come from the part of Enron
    0:47:13 that is fully legitimate, you still have that name on your back. Did that hurt you when you were,
    0:47:16 I mean, were you trying to raise capital? How did that factor into your hedge fund?
    0:47:22 So it was an interesting time to say the least. So right after Enron declared kind of the first
    0:47:29 quarter of 2002, I was getting calls by a lot of people, people I didn’t know saying,
    0:47:36 if you are going to do your own thing, I have interest in investing with you. And my intent was
    0:47:42 to try to raise $50 million of day one capital and just start there and let it grow organically and
    0:47:48 increase over time. And I thought I’d be cutting people back. I thought fundraising would be very
    0:47:53 easy. There was going to be $200 million of interest and I was going to cut everybody. You can
    0:47:59 invest 25% of what you want to. Second quarter, 2002, dramatic change. This is when a lot of the
    0:48:06 investigations into Enron start to bear fruit, if you will, and the headlines come out. And the
    0:48:13 headlines are, they’d say every week there’s a new scandal that’s coming out. And now the people who
    0:48:20 had called me, one, they don’t know if the profits that were posted in the New York Times, whether those
    0:48:28 are real or not, whether I was going to jail or not, all these questions. And so everybody who was
    0:48:33 banging on my door to invest pulls back. But meanwhile, I’ve rented office space, I’ve hired
    0:48:40 employees, I’ve bought computers and telecom systems, and I got to move forward. I have almost no money to do
    0:48:48 this now. I ended up starting in August of 2002 with $8 million of capital, some of which was mine, and I had
    0:48:49 two outside investors.
    0:48:56 So talk about pressure. $8 million of assets under management is not exactly what you had in mind.
    0:49:00 As far as you know, basically the only way you’re going to grow your fund at this point is by
    0:49:05 organic returns. You’re going to have to return your way into more money. You’re not going to be out
    0:49:05 there fundraising.
    0:49:10 Right. So one of the things after Enron went bankrupt is Wall Street started looking at
    0:49:17 all the copycat Enrons. So all the other pipeline companies and electric utilities who had started
    0:49:23 out these merchant businesses or trading businesses. And Wall Street essentially says, we’re not funding
    0:49:29 those businesses anymore. There’s too much risk. And so what happened was that there is great need
    0:49:36 for risk intermediation and for risk warehousing in the business. And half of the largest players
    0:49:45 are out of that business over the first six months of 2002. And so the market became incredibly
    0:49:54 inefficient and was willing to pay for the task of intermediation at a very high rate. And so just by
    0:50:01 setting up the computer, there was, going back to the arbitrage, it was very low risk or arbitrage type
    0:50:09 trades that shouldn’t exist in a normal functioning market that existed for that next year, just because
    0:50:17 the market players had been so decimated. So the first month, I was up 36%. On a percentage basis is
    0:50:23 high on an actual dollar basis and made $3 million. But also to put a point on what you just said a
    0:50:29 second ago, you’re up 36% in a month at a very low risk. So it’s not just the value, it’s the value at
    0:50:33 risk here that matters. Exactly. Value at risk, I like the term.
    0:50:38 Well, I was a McKinsey guy, remember. Risk practice, right? So we think a lot about VAR as well.
    0:50:45 Yeah. So then second month, I’m up 33%. Third month, I’m up 38%. And I’m sending the notes out,
    0:50:50 the investor notes out to everybody that was in my Rolodex that expressed interest. And now all of a
    0:50:56 sudden, three months in, I’m up, what’s the compound rate? Probably 150% in three months. And so some of the
    0:51:02 people will start calling me back and saying, hey, maybe I’ll send you some money. And so those
    0:51:09 first few years, it was doing a lot of the low risk trading to create the base and this upward trend in
    0:51:17 profitability, and then layering on some speculative trading on top of that. And I was able to play
    0:51:24 bigger than my asset size because I had this upward trend in profitability. If I was wrong on my market
    0:51:29 call, I wouldn’t be decimated because I was still making money on the market making arbitrage
    0:51:30 side of the business.
    0:51:36 Your spec market initially was actually quite small. You switched those 10 years later. We’re
    0:51:41 basically doing the opposite. But at the beginning, it was an amazing, you described it to me in the past
    0:51:44 as I think the perfect time to be a natural gas.
    0:51:45 Yes.
    0:51:47 Based on that inefficiency.
    0:51:53 Yeah. It was just risk reward. It was don’t even bother about taking risk. Yeah. There’s so much
    0:51:58 free money in the market by providing that service. Just do that. You can think about the business as
    0:52:04 a bundled product. One was the market making, providing liquidity and getting paid for that
    0:52:10 service, warehousing some risk. And the second was trying to make a call on where natural gas prices
    0:52:15 were going next. There’s some synergy of having those together. There’s a lot of synergy in having
    0:52:18 those together, but that’s the two strands of the business.
    0:52:24 And most people, myself included, when they think about gas trading are only thinking about the
    0:52:31 speculative business, which is my former countryman, Brian Hunter, very, very famously blew up in fall of
    0:52:36 2006. A hedge fund called Amaranth at the time was probably one of the biggest blowups in all of
    0:52:38 energy. We’ll come to that because you were on the other side of that trade, if I recall.
    0:52:44 But it’s those stories that get most people thinking about that’s how you make or lose money
    0:52:49 in natural gas trading. But you were doing something, you know, I always talk about risk to people. I sort
    0:52:53 of explain it as a two by two. Are you picking up bitcoins? Are you picking up pennies? And are you
    0:52:58 doing it in front of a bulldozer? Are you doing it in front of a tricycle? You want to think through
    0:53:02 that two by two very clearly. It might be worth picking up a Bitcoin in front of a bulldozer,
    0:53:07 but it is not worth picking up a penny in front of a bulldozer or a bullet train or something like
    0:53:13 that. And so you sort of have to understand that’s this idea of risk and return. So at what point,
    0:53:20 I mean, I just want to kind of go back to John, the guy who’s on this ride that seems hard to believe,
    0:53:27 but anybody who’s made the type of money you’ve made in life goes from being, I mean, I guess I’m
    0:53:32 asking this question in a weird way. Is there a moment at which you realize you’re not going to have
    0:53:35 to worry about money anymore? I don’t know what that dollar amount is. And I’m guessing for different
    0:53:40 people, it’s a different amount. I’ve had people tell me that this is going to sound ridiculous too,
    0:53:46 but I’ve had people explain to me that until you have $600 million in your bank, you will never feel
    0:53:51 totally secure, which I find that ridiculous. And I disagree with that idea though. I will never have
    0:53:56 $600 million in my bank, but there must be some number at which you realize, Oh, my life and the
    0:54:01 life of my family is going to be very different. Do you remember that occurring for you?
    0:54:08 Yeah. So that first year was remarkable and for many reasons, but one of the things that happened was
    0:54:16 that the gas market ended up being very tight. That demand was high and supply wasn’t keeping up.
    0:54:24 And so the outright level of inventories was okay, but the trend was that we were drawing inventories
    0:54:30 or not putting gas in the ground like we should have been doing. And again, had the market been more
    0:54:35 efficient than I think other traders, other traders did notice this and others put it on,
    0:54:40 but there were some trades that were, I thought were very misvalued from a risk reward perspective.
    0:54:48 And that was that if we were to have a cold winter, that first one, 2002, 2003, if that winter was cold,
    0:54:55 the gas market could experience some significant shortages and the price spikes that would correspond
    0:55:02 to those shortages. Now the weather event was maybe a one out of five probability, but I think the
    0:55:11 bets were pricing them at, that it was one out of 50. And so as I’m making money on market making and
    0:55:15 providing liquidity, I was putting on some of these trades, just putting a little bit of money into
    0:55:20 this trade at various points. And that winter ended up being the one in five weather event.
    0:55:24 And there was a two day stretch in late February.
    0:55:25 February 2003, right?
    0:55:26 February 2003.
    0:55:27 Yeah.
    0:55:30 One of the three highest gas prices we’ve had in the last 20 years, right?
    0:55:36 I think so. Yeah. It all starts to blur together now, but you had this massive spike in price of
    0:55:44 gas, I think approximately doubled in if two days. And that was the day the fund also kind of more than
    0:55:51 doubled in those two days in terms of, of assets. And that was the day when it was like, I feel rich
    0:55:54 for the first time. I am set for life today.
    0:55:57 Did you call anybody?
    0:56:02 I remember calling my mom, pretty much saying those words that we’re set. We have financial
    0:56:05 security now forever, regardless of what happens.
    0:56:13 So doing the math, you’re in your late twenties at this point. Did you have any sense at that moment
    0:56:20 that you were going to be out of the game in 10 years and full-time working as a philanthropist,
    0:56:23 or was that not a clear part of your vision yet?
    0:56:30 I always recognized the limited social value of trading. I think there is a need for someone to
    0:56:38 provide risk warehousing and liquidity to markets, but they trying to tell the story about how I was
    0:56:45 adding value or contributing to society was hard. And that always bothered me. So when I first started
    0:56:52 getting my first hundred thousand dollar bonus back when I was at Enron, I shortly thereafter was at a
    0:57:00 supermarket and I see a magazine that says top 50 nonprofits in America. And I pick it up and throw
    0:57:07 it into my, my grocery basket and take it home and immediately turn to the education section. I think
    0:57:13 a lot of younger philanthropists, a lot of people from the finance industry get drawn to K-12 education.
    0:57:18 One of the organizations was based in Houston. It was KIP, KIP charter schools. And so I called them up
    0:57:26 and got scheduled to go do a tour, went, did a tour. They had no idea who I was at the time. I wasn’t a
    0:57:32 rich guy back then, but I came home and, and wrote them a check, a five figure check. And I get a call
    0:57:37 from the founder who I had not met on the, on that original tour a couple of days later. And this was back
    0:57:44 kind of five figures was really significant to the organization. And he said, thank you. And who are
    0:57:50 you? And I need to cultivate this relationship. And that was the start of my very long journey thinking
    0:57:58 about K-12 education in the country. And so in this time, 2002, 2003, I was getting more interested
    0:58:03 in it and my check size was going up, but it was something I thought about 1% of the time.
    0:58:13 So as your hedge fund is growing and growing and growing, at what point are you now getting the
    0:58:20 attention of basically everybody who wants to come in and you’re doing the opposite? You’re probably
    0:58:22 starting to force distributions at some point.
    0:58:30 There was a trading magazine that came up with a list of highest paid traders. And that was from
    0:58:37 specifically from the hedge fund world where most of the highest paid traders existed. And it was not
    0:58:43 only what was the return on your investment in the fund, but what was your incentive fees and kind of
    0:58:49 trying to estimate that. And they would create these lists of top 100 for the year. And I don’t remember
    0:58:57 what year it was, but somehow they got ahold of my returns and started doing the math on it and figured
    0:59:05 out that I was not only one of the top 100, but I think top five that year. And that was the first time
    0:59:14 in a broadcast to the world that I was making big money, but also was a broadcast to the rest of the
    0:59:22 industry that something’s going on in natural gas and all the other hedge funds should, it was a signal
    0:59:27 to them, go figure out what’s going on over there. How’s he making this much money and see if there’s
    0:59:32 something for us to do. So during that time, as will happen in any market, whenever there’s kind of
    0:59:38 above market returns going on in a field, new entrants come in. And that’s certainly what happened
    0:59:46 during that time. I made a very deliberate decision that I was going to keep the focus of the business
    0:59:54 narrow, which I wanted to be the best in the world at North American natural gas and power trading.
    1:00:00 That was the business. Didn’t want to trade oil. Didn’t want to trade natural gas stocks or natural
    1:00:07 gas bonds. Didn’t want to trade agriculture. Stick to our expertise. Don’t try to build an empire here.
    1:00:15 Just do this one thing. And I think by doing so, I think it, by keeping focus and it allowed us to
    1:00:22 achieve that mission of being the best in the field. I think it also started, it put a natural limit as to
    1:00:28 the amount of assets that we could manage. So we just couldn’t be too big relative to the market.
    1:00:33 And the amount of money that we were making was significant. And so we started sending back money
    1:00:40 to investors. What was the greatest you allowed your AUM to swell to, to allow yourself to stay so
    1:00:46 narrowly focused? At the peak, it got to about $6 billion. That’s a staggering sum of money. There
    1:00:51 are lots of hedge funds that have ballooned to $20 and $30 billion in assets under management. And your
    1:00:56 point is, yeah, that sounds great. And you’re going to collect a lot of fees on that if you’re the fund
    1:01:02 manager, but you may be spreading yourself too thin into areas that you don’t have the deepest,
    1:01:07 deepest domain expertise. Right. From very shortly after I started, I was the largest investor in the
    1:01:14 fund. And I was in it for the return on my money. That’s how I managed the fund. And that’s how we would
    1:01:23 pitch it to central investors was, I think this is a great investment opportunity. This is where I want
    1:01:31 my money. This is the risk, where I am on the risk spectrum for my money. And if you want to join on
    1:01:38 that journey, I’d be happy to have you, but I’m going to run a risky business. And you have to be
    1:01:45 prepared for that going on because I wasn’t in it to make the management fees. That’s not how I wanted
    1:01:50 to, that wasn’t my business. Right, right. If you’re more than 50% of the AUM, you can’t make money on
    1:01:55 yourself. You can’t make fees on your own money. Right, right. So it was, it was always driven by
    1:02:01 how do I want my money managed? What do I think is a good investment for me? And then if other people
    1:02:07 want to put money alongside, that’s great. So by the way, I want to go back to one thing. Talk to me
    1:02:11 about the 06 Amaranth trade. Explain for people that given the historical significance of that was
    1:02:15 pretty significant and the fallout of that has reverberated for many years as far as the amount
    1:02:21 of money that was lost and things. Who is Brian Hunter? What did he do so well in 2005? How did that
    1:02:28 speculation sort of go the other way in 06? 2005, I hope I get all these facts right. My memory gets a
    1:02:35 bit cloudy from those days, but 2005 was Hurricane Katrina. It came in and caused significant damage
    1:02:41 on the offshore natural gas production as well as the processing, natural gas processing facilities that
    1:02:48 were onshore Louisiana. And because of that, the price of gas spiked significantly. People were short
    1:02:54 supplies. I looked this up yesterday, John. That is both unadjusted and adjusted for inflation,
    1:03:01 the greatest peak in natural gas pricing of the last, I think, 30 years. That’s September 05,
    1:03:07 right after Katrina. Yeah. And after that time, I think two things happened. First was as ocean
    1:03:12 temperatures were rising, there started to be a belief, the number of hurricanes and the intensity
    1:03:18 of hurricanes, and thus the damage from hurricanes to the energy sector and natural gas sector was
    1:03:27 structurally increasing. And second, that there’d be a great fear amongst any trader to be short during
    1:03:36 that time period, the hurricane season and August and September peak hurricane season. So he had done
    1:03:42 very well in 2005. This is Brian Hunter. Brian Hunter. In 2005, he was long during that time and made a lot of
    1:03:48 money for his fund. And at the time, he worked for a fund, Amaranth Advisors, which was a macro hedge fund,
    1:03:54 meaning they do everything. They trade stocks, they trade bonds. Brian Hunter was the natural gas trader for
    1:04:01 them. Now in 2005, as I understand it, he was by far the most profitable trading desk and trader at
    1:04:08 a large hedge fund. And so he was given a lot more position size or capital to trade with. And I think
    1:04:15 he had the belief that something similar would happen or at least a big scare would happen next year and
    1:04:20 would cause the same type of move. The difference was partially in reaction to the spike in prices that
    1:04:28 we saw in 2005. It sent the signal to every producer to increase supplies. So every producer
    1:04:33 gets that price signal. Every producer puts more money into drilling for gas. You start to see that
    1:04:41 in 2006, that supplies are ramping up. And talked about earlier that the supply demand was tight in 2002.
    1:04:48 Supply demand got very loose in 2006. And so the market was just oversupplied. It was a very bearish
    1:04:55 market. But Brian Hunter kept this trade on, this very bullish trade on, and kept the prices supported
    1:05:01 even though the fundamental picture was deteriorating by continuing to buy more and more and more of this
    1:05:09 one product. And to put a long story short, he distorted the relative values in that market so much.
    1:05:16 It gets told now that the trade was me versus him. And that’s very not much the case. It was the whole
    1:05:23 market versus him because he was such a large position in this as it started to get into the
    1:05:28 first, the very early part of hurricane season and there was no hurricane and then prices were starting
    1:05:34 to collapse and he couldn’t hold it anymore. So he kind of single-handedly, that position bankrupted
    1:05:42 this macro hedge fund. And I did well during that trade. I think I may have had on 25% of the
    1:05:48 opposing position. I was very cognizant that it is possible that a hurricane comes and has a short-term
    1:05:54 price spike. And I don’t want to blow up if and when that happens. So I need to size this appropriately.
    1:05:58 And I don’t think he had sized it appropriately given the alternative scenario.
    1:06:03 And that’s an interesting thing because it wasn’t just that you guys were betting against each
    1:06:08 other in terms of climate or weather, for which I would say three months out, that becomes an
    1:06:14 unwinnable bet. Nobody can have more or better information on that. It’s the second order bet
    1:06:21 that’s interesting to me, which is, okay, he’s taking a position on climate or weather, but it’s really,
    1:06:26 you’re taking a position on the more important question, which is supply. And you’re saying,
    1:06:32 even if we are hit with a demand shock, I believe the market is better able to bear this now than it
    1:06:38 was in 2005. And ultimately, that’s really what the bet comes down to. It’s true, a hurricane didn’t hit
    1:06:44 that year and the price collapsed. But it’s also possible that if a more mild hurricane than Katrina
    1:06:47 had come, we probably wouldn’t have seen the price shock we saw in 2005.
    1:06:54 Right, right. The market was so scared. And so people were hesitant. People were only going to
    1:07:00 put on that short trade if they thought the market had already priced that in. And I used to think
    1:07:07 about it as you have this unknown weather event. How cold is the winter going to be? What’s the hurricane
    1:07:11 situation going to be? And you can think about it, you have this probability distribution function
    1:07:18 of the possible outcomes. And then think about, okay, under each outcome, how would I think about
    1:07:23 what fair value is of the commodity at that time? And then did your simple math and come to expected
    1:07:31 value? And that really simplifies the process down much too simplistically. But that was the type of
    1:07:37 thought process that would go in is, okay, if it’s 80th percentile hurricane damage, what is that? If
    1:07:43 it’s 90th percentile, it’s 99th percentile. What if it’s 10th percentile, right? And think about all
    1:07:48 these and then how’s the market price today? Certainly at that time, there were people who
    1:07:53 weren’t allowed to be short. There were people who were only going to be short if it was way mispriced
    1:08:00 relative to expected value. And I think that’s what got him was that it was already so mispriced to
    1:08:07 expected value that even had you had this supply shock happen, what’s the upside now? We’re already
    1:08:13 priced for that. Yep. When you explain it that way, it’s a much sadder story than just two guys
    1:08:18 betting against weather and one guy’s got to be right and one guy’s got to be wrong. You realize
    1:08:23 that it was probably a bit more of an error and hubris as well, which goes back to your point about
    1:08:27 maybe being a little too confident in your ability to predict what’s going to happen.
    1:08:33 You spent a lot of your time doing research. I mean, again, we’ve already talked about you having
    1:08:38 two superpowers, but having known you for a while, I would add to that list, maybe a third superpower,
    1:08:45 which I believe also has come to serve you very well in your philanthropy, which is you have an
    1:08:52 insatiable bordering on pathological obsession for knowing everything. And I say that in the kindest way
    1:08:57 as someone who shares part of that affliction. And I remember once you explaining to me some of the
    1:09:01 details you would study about natural gas pipelines. It’s like, look, if I’m going to be
    1:09:07 the best trader in this commodity, I have to know everything. I have to know exactly what this
    1:09:12 pipeline looks like. How does it cross this type of part of the country? What type of bolt are they
    1:09:16 using in it here? And what happens to it during this type of weather? I mean, how much of your time went
    1:09:24 into understanding every piece of the minutia of how the system worked that you were basically going to
    1:09:27 dominate in terms of arbitrage and speculation?
    1:09:34 So by being a hedge fund structure and not being in the physical business, not dealing with customers
    1:09:40 and dealing with pipelines, we were at an information disadvantage going in. When we were thinking,
    1:09:48 think about whenever I trade against a counterparty and they’re putting on the opposite trade I am,
    1:09:56 what are they thinking? What do they know? Can I replicate as best I can the knowledge that they have
    1:10:01 so that I can make an educated and confident decision? Do I want to be on the other side
    1:10:10 of this bet? And to do so, we were at an information handicap just in terms of BP had more information that
    1:10:17 would come through their shop than we did. So we had to make it up by having better analysis and
    1:10:24 knowing where to get third-party information and how to analyze that information, how to craft better
    1:10:32 models that described what the past was and thus what the future is going to be, and then try to overlay
    1:10:40 some good smart trading and structuring of trades on top of that to get the above average returns.
    1:10:45 But I think we were always fundamentally focused. And this came from the days at Enron, which was the
    1:10:53 largest physical mover, shipper of gas, was count the molecules. Try to count as many molecules as you
    1:10:59 can. Where did it come from? Where did it travel? How was it consumed? And so you can build a molecule
    1:11:05 about, if you know how every molecule behaved yesterday, you can model how those molecules are going to
    1:11:10 behave tomorrow and how those molecules can behave in six months. Now, your confidence level is not as
    1:11:15 good in the six-month model, but you can start doing that. And then you can start doing the speculative
    1:11:22 trading on top of it. And so I think we probably had the biggest fundamental research department of any
    1:11:29 competitor in this space at Centaurus. And that was really what I thought our advantage was, was that
    1:11:35 we’re going to invest in the fundamentals more than anybody else is, and then overlay that with some
    1:11:40 good trading. You just alluded to something which I guess I hadn’t picked up on before, or at least it
    1:11:46 just occurred to me now when you said that. Earlier, you said natural gas was easier than oil. When you just
    1:11:53 gave that explanation, you talked about being able to count every molecule of gas. I suspect that that’s what
    1:11:59 allows an island like North America to be easier to trade gas than oil, because we have more insight
    1:12:06 into where gas is coming from. LNG was not a big part of gas. So gas was being locally produced and
    1:12:12 consumed. It’s not like with oil where, my God, it’s coming from everywhere and it’s going everywhere,
    1:12:16 right? Is that a fundamental difference between natural gas and oil trading, at least at that time?
    1:12:21 I mean, I know natural gas is more complicated now with shale, with liquefied natural gas that can go
    1:12:26 offshore, but is that part of why you made that statement earlier? Yeah, I think there’s three main
    1:12:32 differences that made natural gas a great product to trade. One was, it was this closed system that you
    1:12:37 described, that the molecules for the most part were just stayed in North America. There was a little bit
    1:12:43 of LNG business, it was mostly baseload, so it was easy to predict what those flows were going to be in the
    1:12:50 future. That wasn’t a big variable that was going to cause price moves in the future. And because it was this
    1:12:57 closed system, you can model it with much better accuracy. Second was that the deregulation that got
    1:13:03 the pipelines out of the business and the pipelines had to be third parties that couldn’t take ownership
    1:13:09 of the gas. The only service that they could provide was transportation. And by doing so, they didn’t have
    1:13:15 the pipelines, which had the most fundamental information about where the gas came from and where it was
    1:13:22 going. They had to publish all this information in a way that was publicly accessible, and they couldn’t
    1:13:27 trade on it. So there had to be the Chinese wall between the trading group. And when you compare that
    1:13:35 versus oil, Exxon can own the oil platform in the Gulf of Mexico, stick it in on an Exxon ship, take it to an
    1:13:42 Exxon-owned refinery and put it in Exxon gas stations. And so as an outsider trying to figure out and track
    1:13:49 those molecules, it’s impossible. And that’s why the best and most profitable oil traders have to be in the
    1:13:55 physical business, have to be moving molecules. And the third is that natural gas, because it was a
    1:14:03 seasonal product, you store it during the summer, getting ready for the peak winter demand, that there
    1:14:10 was a window of storage that the industry almost required when you go into the winter. And there was
    1:14:18 a window of what it should be when you exit the winter. And so twice a year, there was a mechanism
    1:14:26 to get you back close to fair value. And if you compare that to a tech stock today, I have all these
    1:14:31 debates about some stock, there’s nothing that necessarily has to get that tech stock back to
    1:14:38 one’s belief of fair value. There’s not that forcing mechanism. And if you’re talking about gold,
    1:14:43 there’s no forcing mechanism in gold. If you have a surplus of gold, you’re going to stick it in a safe
    1:14:50 place. But with limited storage in natural gas, and the need to have a certain amount of storage when
    1:14:55 you enter the winter, it caused that forcing mechanism, which got you back to fair value. So
    1:15:03 while price could deviate from fundamental value for parts of the time of the year, twice a year,
    1:15:08 it kind of had to go back to that, which was great as a fundamental trader. There’s a lot of commodities
    1:15:12 where they don’t necessarily have to go back to that fair value.
    1:15:21 So the country is entering a recession, 2008, 2009. You are still staggeringly profitable.
    1:15:27 Where at this point in time is your head with respect to philanthropy? So we’ve established the
    1:15:33 fact that when you were making $100,000 bonus as an early trader at Enron, even before you became head
    1:15:39 trader, you’re already spending 1% of your energy thinking about how you want to utilize your wealth
    1:15:47 down the line. But now let’s talk 2009, 2010. You’re almost a decade into running your own fund,
    1:15:51 which will probably go down in time as one of the most profitable hedge funds of all time,
    1:15:56 certainly in this space. Are you, what are you, 10% now thinking about philanthropy? I mean,
    1:16:00 how are you now thinking about chapter two of your career?
    1:16:09 Yeah. So I met my wife in early 2006 and she had moved to Houston. She was a mergers and acquisitions
    1:16:17 lawyer and had moved to Houston to help start an energy company and spent, I forget exactly how long,
    1:16:22 but call it 18 months on that job. She and I had started in the meantime, we’d gotten married
    1:16:29 and we’re starting to think about what should we do with our lives now. We had this momentous event of
    1:16:33 marriage. What does she want to be doing? What do I want to be doing? We have the financial resources
    1:16:40 to do what we want with our time. And so she answered that question by saying, I don’t want to work at the
    1:16:46 energy company anymore. I want to focus on our philanthropic activities, which we had both been
    1:16:54 doing a little bit on the side. At this point, call it 2006, I was spending maybe 3% of my energy on
    1:17:04 philanthropy and she the same. And by 2008, she had gone full-time with our nascent foundation and we
    1:17:12 started hiring a few people. And I was starting to spend more of my energy, call it 10%, 15% of my energy
    1:17:21 energy on the foundation, which became troubling a little bit because it’s obviously markets are
    1:17:27 efficient in the longterm. The markets are smart. The competitors are smart. Competitors entered,
    1:17:34 had to keep finding new ways to stay above the competition. And one of those was you have to be
    1:17:42 100% focused on this job. It’s too competitive to not be 100% focused. And when I went 90%, then it got
    1:17:49 harder. As the preceding years happened and I started thinking more about giving the money away than
    1:17:54 making more of it. That was really the signal to me that I want to be spending my time on the other
    1:18:02 side of the table. And I’m physically and mentally, emotionally exhausted with trading natural gas. It’s
    1:18:08 the only thing I had done as a professional, again, from a few days after graduating college. And here I am
    1:18:14 17 years later, I’m still doing pretty much the same thing. And I want to do something else with my life.
    1:18:19 And so that was 2012. And that’s when I decided it’s time to shut this down.
    1:18:24 I’m guessing that, I mean, I’ve spoken with some of the greatest scientists in the world and
    1:18:30 not everybody says this, but there are some that do, that they say they can’t stop thinking about what it
    1:18:37 is they’re working on. Anytime they get to a stoplight, that’s where their mind wanders. When
    1:18:41 they’re in the shower, that’s where their mind wanders as to the problem, as to the questions that
    1:18:46 they’re trying to ask, as the problem they’re trying to solve. Is it safe to say that you probably felt
    1:18:53 the same way until you hit that inflection point? Absolutely. And this was spent more than a decade
    1:18:58 living, breathing. I would, after work, go out with other people in the industry and talk about
    1:19:03 natural gas, dream about natural gas. I would wake up in the morning. First thing you do is
    1:19:08 check the prices, get in the shower, think about it. What could go wrong? What do I want to do today?
    1:19:13 What’s the plan? And it was just all encompassing in life. I think to be successful in these competitive
    1:19:20 fields, whether it’s in health research or in trading, you have to give it that a hundred percent
    1:19:25 focus. And if you don’t, you’re going to see it in the results. It’s just too competitive.
    1:19:32 So was it a hard decision for you then to shut your fund down, return the capital to people and
    1:19:38 become a full-time philanthropist? Or was it actually quite easy once you accepted, I’m no longer giving
    1:19:46 a hundred percent of my brain power to this other thing? It was hard. That’s who I was as certainly a
    1:19:54 professional and who I was largely defined as a person as well, was as a natural gas trader.
    1:19:59 Had been the place where I’d had the most success of anything I had tried to do in my life. And so
    1:20:06 starting in about 2010, I knew this was the decision I needed to make. It was hard. It was a hard decision
    1:20:14 to make. It got easier because things had changed in the market. So if you look at the graph of natural
    1:20:22 gas prices, you see them peaking about July of 2008, maybe late June, 2008, and just being on a steady
    1:20:28 decline and the volatility starts to change as well. The shale revolution took the market from one that
    1:20:34 was ever increasing demand and harder and harder to get the next molecule of gas out of the ground.
    1:20:40 So having to try to balance that through price, which becomes very volatile and needs to booms and
    1:20:46 bus to one that was in perpetual oversupply and kind of bouncing around marginal costs to produce.
    1:20:51 And so the opportunity had changed. And so I’d given back at $3 billion back to investors.
    1:20:58 And I was at the point where by 2012, I was at, I need to give back another 50% down to a billion and a
    1:21:03 half, just the market opportunity is not there. And it’s hard when you’ve been playing in Vegas with,
    1:21:08 at the $25 table to go back down to the $5 table. It’s just like not as emotionally
    1:21:16 interesting. And so that happened. I’d gotten married. We had kids. The regulation in the business
    1:21:22 partially, in fact, maybe largely due to the Brian Hunter episodes that had, when the price distortions
    1:21:29 that wasn’t good for the market had just become harder. And I had just lost the focus of my interest
    1:21:33 in the foundation side. And so all these things came together and it still took me two years to
    1:21:40 really figure out to try to make that call that it’s time. It’s time to close us up and go find
    1:21:46 happiness somewhere else. And I think part of that struggle was I had seen many other people in the
    1:21:52 industry who had, who had had similar thoughts along the years that they want to go do something else.
    1:22:00 And a lot of times those people left and couldn’t find what to do or couldn’t find satisfaction at
    1:22:05 their lives doing something else. And so even though that they were unhappy in the trading business,
    1:22:11 they ended up back in the trading business because they were even more unhappy what the other thing
    1:22:16 that they had tried to go do. And so that was my fear. It was that a year from when I close up,
    1:22:21 I’m going to miss it and I’m not going to find satisfaction in this other thing.
    1:22:27 And then what, what do I do then? Do I, am I really going to go start it up again? And like,
    1:22:33 that took me those 24 months to really get the confidence to say, I can’t find happiness here.
    1:22:36 I can find other things to do and to close it down.
    1:22:43 So talk me through some of those early days. Then Laura has obviously been well up and running.
    1:22:50 She’s been on this full time for several years now. You both have a great number of interests at the
    1:22:56 time. How do you begin to make that transformation? We’ve already talked a little bit about what the
    1:23:02 skills are that you brought to bear. And again, I’d reiterate them as kind of an emotional temperament
    1:23:08 for it to not let your feelings get in the way of what you’re doing. The second one being kind of the
    1:23:12 right amount of confidence to say, yeah, this is a huge and hard problem, but we should go after it,
    1:23:17 but maybe not too much confidence to say we’re going to solve this problem no matter what. And
    1:23:23 then I think the third one being probably one that gets overlooked a bit, but basically an ability to
    1:23:27 become an expert in something in a relatively short period of time. I mean, I think people who are
    1:23:32 familiar with Bill Gates just watched the documentary about him and not read much about him. You’ll realize
    1:23:37 he’s not just a guy that revolutionized the computer industry, but when you look at the voracious
    1:23:43 appetite with which he has explored other topics, I mean, I’ve only met Bill in person once and I’ll
    1:23:48 share that the subject matter that we were speaking on, which was something in my wheelhouse and not
    1:23:55 his, it only took me about 10 minutes to realize I was talking to someone who knew as much about this
    1:24:00 topic as almost anyone I had spoken with. And that’s saying something, because this is not something you
    1:24:05 would assume that a person would know a lot about. I mean, this was at the beginning of the discussion,
    1:24:10 I’m using terms that I would use with a lay person. And he’s like, yep, yep, yep, yep, yep. He’s like,
    1:24:15 no, no, no. You just go straight to shorthand for me. And I was like, but he wasn’t doing it from a
    1:24:20 place that was anything other than totally genuine. You knew that this is a guy who really knew the
    1:24:27 subject matter. Again, you share that trait, which is, I don’t know, that’s, that allows people,
    1:24:28 I think, to have a bigger impact in their philanthropy.
    1:24:35 Well, I appreciate the comparison, but it’s not close. I agree with, I’ve gotten to know
    1:24:43 Bill over the years and agree with your assessment of him, that his breadth and depth of knowledge is
    1:24:49 something that I have never seen in somebody else. And it incredibly impressive in that he knows the
    1:24:56 background and knows the issues of almost anything that you can think of in a way that is scary.
    1:24:59 And I am certainly not that way.
    1:25:06 Well, I will agree to disagree on that, John. So talk to me about the first problem that you
    1:25:11 decided to turn your attention to once you became a full-time philanthropist.
    1:25:19 As I said, I’d gotten my start in giving with K-12 education and kind of over the years,
    1:25:25 I’ve just gotten deeper and deeper into those questions of why does one school have different
    1:25:31 results from a school down the street serving a very similar population of kids? And what’s the
    1:25:37 theory of change in K-12? It is such a massive system that’s broken down at the school level.
    1:25:45 And how can we as a country try to get results that we’re happier with? Knowing all the hurdles that go
    1:25:54 into that and all the factors that go into education and behavior. So how does that scale? How does those
    1:26:02 small gems that you see? How can you scale that? And this is a question I think the education reform
    1:26:10 movement’s been struggling with for decades. And I watched that journey and was on the journey along
    1:26:16 with many other philanthropists of, is it small schools? Is it better principals? Is it better
    1:26:22 teachers? Is it the curriculum? Is it technology? All these things kind of bouncing from one idea to the
    1:26:29 next, trying to find what’s the idea that scales and creates structural change. And so we’re still
    1:26:37 involved in K-12. I think it’s just the most fundamental issue facing long-term health and viability
    1:26:46 of this country. And when you talk to almost any social service provider, they always refer back to
    1:26:53 education. And so I think it’s one that we’ve spent a lot of time thinking about and happy to get into
    1:26:57 that if you want. But it was the first and it continues to be a major effort of the foundation.
    1:27:05 And I know that you’ve worked with, as you said, others. I think City Fund has sort of largely,
    1:27:07 a lot of your efforts have morphed into that, correct?
    1:27:14 Right. So I guess I’ll give you the theory of change that drives our work of late in K-12.
    1:27:22 And that’s that strong and robust systems of any kind have the attributes of biological evolution,
    1:27:28 right? And so in living organisms, that’s the phenotypic variation. Do you have variance amongst
    1:27:35 the organisms, the differential fitness? Is there a different rate of survival and reproduction? And then
    1:27:41 the heritability of fitness? And I think this is true of any organization. It’s true of businesses.
    1:27:46 It’s true of any system. And it’s true of the healthcare system, the criminal justice system.
    1:27:52 It’s true of the school system. So you need to have a strong, robust system that’s getting better over
    1:27:58 time. You need those three traits. And the traditional public school system does not have them. So if you
    1:28:07 think of a school district that is a monopoly in its area, it doesn’t have much variance. It might have
    1:28:12 a school that’s Spanish emerging. It might have a school that’s for the talented and gifted. It might
    1:28:18 have another school that’s a magnet of something. But generally, it’s the same curriculum, the same
    1:28:25 process, the same way of hiring, of training, of trying to develop teachers, how your principal
    1:28:30 development is, right? You don’t have that variation. The differential fitness of do things that are
    1:28:36 working, do they grow or do they go away? Yeah, there’s no pressure. The good stuff in public
    1:28:42 education, there’s no natural mechanism for that to grow. And there’s no mechanism that really works in
    1:28:49 the public school system for it to go away, for the things that aren’t working to stop. And then
    1:28:57 the readability of traits, you need the learning organization aspect of it, which I will tell you
    1:29:05 is a school system is not good at, and any government monopoly is not good at quality control. It’s not
    1:29:12 good at innovation to provide that variance. And so the theory with CitiFund and the theory of our K-12
    1:29:17 work is that the school system needs to become a system of schools, that the natural role for
    1:29:24 government is not to be the service provider. The natural role should be the regulator. And right now,
    1:29:32 those two functions are bundled together into one, and no system can regulate itself. And too often
    1:29:36 today, I think those systems are structured to regulate themselves. And so you don’t get that
    1:29:42 innovation. You don’t get the quality control. And so the vision is, and what we saw in New Orleans
    1:29:49 after Katrina was this change of going from the school system to the system of third-party
    1:29:56 nonprofit operators that are given the chance to have the resources and responsibility to educate
    1:30:04 kids, K-12 kids. And the theory, again, if it works well, that the parents, the kids have real choice,
    1:30:10 get to choose what type of model they want, whether it is a immersion program, whether they want high
    1:30:17 discipline or regular discipline, whether they want an art school, et cetera. That demand, if you’re
    1:30:22 given real choice to the kids, to the parents, that that’s the best quality control that can happen.
    1:30:28 And then the government as the regulator needs to make sure that all kids are served, because we need
    1:30:34 to make sure that ideal, that every kid is properly served, but is largely out of the business of providing
    1:30:40 the service of education. So let’s put some numbers to this, John, more broadly. So maybe think of it in
    1:30:46 terms of GDP. How much is private? How much is public slash government? How much is nonprofit? What’s the
    1:30:53 approximate breakdown of the dollars that get allocated in the world, or in the country, I’m sorry, along those
    1:30:54 three divisions?
    1:31:01 Of the total economy, the private sector is approximately 60%. Government’s approximately 40%.
    1:31:09 The philanthropic sector is about 2%. Now, when you take out giving to museums, to religious
    1:31:14 organizations, to the arts in general, and religious organizations, you get down to about 1% of the
    1:31:18 economy is philanthropy for social services or social goods.
    1:31:23 Okay. So you’re stripping out basically what I used to call maybe erroneously brick and mortar
    1:31:29 philanthropy. And you’re saying sort of 50% of it, the 50% that remains is this type of philanthropy
    1:31:34 that people like you work on, people like Bill Gates works on. No, it’s not just the brick and mortar.
    1:31:39 No, no. So I’m including like gifts to food banks, gifts to the hospital system to build a building.
    1:31:40 Oh, okay. Okay.
    1:31:46 This is about 1% of the economy, right? So one of the things we’ve thought about is what’s the role
    1:31:54 of philanthropy? Because the government is giving a benefit to people who give money to nonprofits.
    1:32:02 There’s a tax deduction. And so there is a stake, there is some type of tie that I think exists
    1:32:09 between the donor and what that money should be going for. And so we’ve thought about how should that
    1:32:16 1% of philanthropic funds, what’s the best use of that? And you can think about, or we think about,
    1:32:24 it can either supplement government services. So by providing more money to the homeless shelter,
    1:32:28 a service that the government already provides, but you can supplement that with more resources.
    1:32:34 And that’s typically described as charity, trying to solve today’s problems. And then there’s the,
    1:32:39 what some would describe as strategic philanthropy of trying to get at the core roots of issues to
    1:32:45 prevent those problems from developing tomorrow. Both are really important. There’s not a priority
    1:32:52 or hierarchy between those two. We give some charitable dollars. You give money to the food bank. We give
    1:32:58 money to the homeless shelter in town. You do have to meet those needs, but there is a rule for how does
    1:33:04 the philanthropic money compliment government services to make them better? What is the market failure as to
    1:33:12 why government is not working as well as many people believe it should? How can the school system be better
    1:33:18 while the school system now is so focused on, is already budget constrained, is so focused on just
    1:33:25 providing the day-to-day activities? And the same of all these nonprofit social providers is that they’re so
    1:33:33 focused on the day-to-day job that they don’t get to experiment like they should.
    1:33:39 And so there is this rule for strategic philanthropy to come in and say, how can these actors and these
    1:33:45 systems perform better? And I think that’s where we’ve largely focused on our giving is looking at
    1:33:52 systems change. It’s structural and it’s scalable to a way that just providing another dollar for a
    1:33:58 program largely is not. There’s different roles for different types of givers. Anybody can write the
    1:34:01 check to the food bank. And again, we write the check to the food bank, but the smallest giver can also
    1:34:09 write the check to the food bank. Looking at the strategic side, which requires a lot of manpower
    1:34:15 and expertise and hiring experts and getting access to experts and thinking about, here are the ideas
    1:34:19 that have been tried in the past, what’s worked, what hasn’t, here are the current ideas, what’s the
    1:34:24 theoretical framework for those ideas and why they could work? What are the potential second order
    1:34:31 effects of those? And making those decisions, it’s really, it’s hard for the small donor to do that.
    1:34:35 It’s really geared towards the large national foundations. And so that’s really where we see
    1:34:42 our role. Were you humbled by how difficult that is, how difficult it is to, someone could easily listen
    1:34:46 to this and say, how hard is it to give away $400 million a year? You’re just, you’re writing big
    1:34:51 checks. But the way you just described that, actually, it sounds very difficult to give away a lot of money
    1:34:57 if it’s trying to mostly be philanthropic and not charity driven. Because as you said, the philanthropic
    1:35:03 one is the one that’s strategic. It’s the one that you’re trying to scale and be maximally leveraged in
    1:35:09 the silo of another agent, for example, in the case of what the government’s already doing or what the
    1:35:13 private sector is already doing. I mean, it just strikes me as very difficult. How long did it take,
    1:35:17 A, do you agree with that? And then B, how long did it take you to come to that realization that your
    1:35:23 second career is probably harder than your first? We have about 120 employees at the foundation today.
    1:35:33 We had no desire or interest to have 120 employees 10 years ago. That was not by design. We thought
    1:35:41 giving would be easy. I remember very specifically thinking our giving was going to be find the five
    1:35:49 highest social return projects or organizations and just write those five big checks every year. Make it easy.
    1:35:55 Make it fairly passive. We started down this route and I started pulling the research. I had kind of metrics
    1:36:01 background in college. I was smart enough to read the papers. I could figure out what they were saying. And so
    1:36:07 start with a topic like preschool. You see three papers that say preschool is amazing. It generates all these
    1:36:13 outcomes later in life. And then you see one evaluation of the Head Start program that shows it doesn’t really
    1:36:21 have an effect. And then as you dig deeper in, start seeing there’s huge battles within this research
    1:36:29 sector about what the evidence really shows, what it demonstrates, and the quality of the evidence that’s
    1:36:36 going into all these claims about success. And I think in every area that we thought of, look at
    1:36:44 work training programs. The first scan through, everything works. It’s all great. Writing checks
    1:36:50 there is a great way to invest money. And then you dig deeper and start getting into, okay, the problems
    1:36:55 with those research that organizations are holding up saying, here’s our evidence that we’re successful.
    1:36:59 And it got very frustrating because the more we would study, the less we knew
    1:37:09 about what worked, what didn’t. One of the learnings was very few programs worked or new programs. So
    1:37:16 the things that work are generally already part of the fabric of society, like K-12 education. We know
    1:37:23 that works, what works. These programs that have clear evidence of success are generally already funded
    1:37:27 by government, already part of fabric of society. So what’s our role? Are we just going to supplement
    1:37:33 with a few extra dollars on the side? And I didn’t want to do that. So where could our dollars go the
    1:37:40 best? And that really led us down this issue of how do you change and improve the system and the
    1:37:46 incentives and the rules of a system rather than what’s the next program we can fund? Because the
    1:37:49 frustration of trying to find that program just became immense.
    1:37:54 So speaking of a system that I think almost anybody who spent any length of time thinking
    1:37:59 about it will pretty quickly come to the conclusion is broken, is the criminal justice system.
    1:38:04 When did that system come to your and Laura’s radar?
    1:38:11 Laura really drove us entering this field. She was a lawyer by training, although on the corporate side,
    1:38:16 I think she was just from having the legal background, you could see the world in a different way.
    1:38:21 And one of the first organizations that we started sending some checks to was the Innocence Project.
    1:38:26 And we had met the head of the Innocence Project, Barry Schecht, at some event and start hearing the
    1:38:34 stories that will just tear your heart. Someone who’s been wrongfully convicted and was going to die
    1:38:38 except for the actions of the Innocence Project.
    1:38:45 And we started funding that just because it was the right thing to do. It was a way to help save a life
    1:38:51 that was going to be terminated without that. I have great respect for the Innocence Project because
    1:38:59 as they started building up dozens and into hundreds of examples of people that they got off death row or
    1:39:04 out of prison for wrongful convictions, they started looking at the policy angle as well. So it wasn’t just
    1:39:10 about the one person or the hundred people that they were saving, although they’re massively important.
    1:39:15 They started thinking more strategically about how do we change the system so that the wrongful
    1:39:18 convictions don’t happen in the first place.
    1:39:25 Right. Because you have to believe that for the amount of effort it takes to take one person off death
    1:39:31 row, one wrongly convicted person off death row, having followed a few of these cases,
    1:39:39 it can take decades. And I mean, it can consume the effort of tens of people, tens of thousands of hours.
    1:39:47 And you would say, well, it’s wonderful that we’ve saved that life. What if we put an equal amount of
    1:39:51 resources on the other side of the equation, which is getting few of these people into the system?
    1:39:58 In other words, you start to think about where’s the asymmetry on this one? And it seems a lot of it’s
    1:40:03 on the front end, right? I mean, you could have a hundred innocence projects, you will still never
    1:40:07 fully be able to rectify the situation, notwithstanding the fact that you can’t undo
    1:40:13 retroactively all the harm that is done by the time the person is set free.
    1:40:19 Exactly. A couple of examples like that really led us again to like, okay, the systems change,
    1:40:25 the policy focus is where we want to spend the time, that there’s higher potential reward.
    1:40:35 It is harder work. The chance of success is lower, but the impact, if successful, is so much higher
    1:40:41 if you can improve how the system works. And so we started looking at kind of a number of areas of
    1:40:47 the criminal justice system. First, we spent a year and hired someone to lead that work. We spent a year
    1:40:54 just thinking about all the ways, the inefficiencies in the system that lead to bad outcomes that don’t
    1:41:00 promote public safety, that destroy neighborhoods that aren’t fair and equitable for those that are
    1:41:06 charged or convicted of a crime, et cetera. And where could we as a foundation, where could we be effective?
    1:41:11 Let’s pause on that for a moment. Because again, I think that’s just a very interesting approach that
    1:41:16 is a bit counterintuitive. You decide this is something you’re passionate about, but you don’t
    1:41:22 go right into it, both guns blazing. There’s a humility that says, why don’t we bring an internal
    1:41:29 team in that we’ll hire that’ll spend a year helping us get up to speed on this and identify
    1:41:37 the specific targets that we can focus on. Do you find that to be a period of impatience for you?
    1:41:43 Or do you find that to be a period of great enjoyment as you are on the upswing of another
    1:41:50 learning curve? It’s certainly impatience. We have all this money sitting in the account.
    1:41:57 The goal is to do good with it. And we’d rather figure out how to do the most good today rather
    1:42:01 than waiting until tomorrow. So there was this natural impatience. But I think we’ve been smart
    1:42:09 enough to realize that it’s smarter to invest wisely tomorrow than do something that’s unlikely to have
    1:42:16 impact today. And so that’s just kind of a necessary function of it is bring in some experts, but really
    1:42:21 study where is the leverage that a foundation can have on the problem. It’s very different from the
    1:42:25 other actors that are already in the system. It’s different from what politicians can do or government
    1:42:35 policy makers or judges or police or everybody has a role. And the question is, how can a philanthropy
    1:42:42 or foundation that is not a natural actor in the system, but has a checkbook, how can that create
    1:42:48 some leverage to try to steer the system and improve it? Now, in your first version of the foundation,
    1:42:53 there were two versions, right? There was a C3 and a C4. And I believe currently the entire
    1:43:01 foundation is a C3. Is that correct? We’ve always realized that the goal is not to just do research
    1:43:09 or just do idea generation. The goal is to have real positive policy change and policy change requires
    1:43:16 some advocacy, political action. It just does. And so we used to have those, the C4, which is the
    1:43:23 advocacy arm as a separate tax vehicle. And there had to be a Chinese wall between the C3 and C4,
    1:43:30 with the C3 being the traditional philanthropic vehicle. And what we realized was that having that
    1:43:38 Chinese wall really was harming our ability to have positive impact. And so we combined the two entities
    1:43:46 into an LLC so that the same employee who was the expert in fines and fees and the options on how to
    1:43:51 change fines and fees to make them more equitable and just could also go sit there and talk to a
    1:43:58 legislator about why the problem existed and what the optimal solutions were.
    1:44:03 So what were some of the things that you and the team learned when it came to understanding how the
    1:44:08 criminal justice system could be so broken? And I say that, again, not knowing much about it, but
    1:44:15 knowing a little bit about it, right? Which is, there seems to be an enormous racial disparity that
    1:44:23 exists. There also, certainly by state, certainly seems to be great difficulties in appealing, even in the
    1:44:29 presence of evidence that the first trial may not have been a great trial. The amount of coercion that
    1:44:34 goes into convictions that turn out to be, I mean, there’s so, you could just rattle off, you don’t have to
    1:44:41 know anything, as clearly I don’t, to still rattle off five or six structural problems. How did you decide
    1:44:46 which ones were the most important and or which were the ones that you could have the greatest impact in?
    1:44:53 I think it was important to figure out how we got to the current system. And in this world of real
    1:45:03 partisanship was a bipartisan response to the growing violent crime that was happening starting post-World
    1:45:11 War II and then really peaked late 80s, early 90s, that got everybody, all politicians, concerned and
    1:45:18 scared. And they felt they were being elected based upon crime rates, based upon the amount of violent
    1:45:24 crime and trying to get a handle on that. So the violent crime was also destroying communities.
    1:45:31 And so you had Democrats, Republicans, whites, blacks, Hispanics, all come together and start this
    1:45:38 tough on crime mantra, which was, we’re going to jack up our number of police. We’re going to jack up
    1:45:46 the penalties for any criminal act, have it severely intensify the war on drugs. And then all the
    1:45:52 second and third order effects that came with it happened. Now, crime ended up peaking in the early
    1:45:58 90s. And some of it was because of some of the policies passed, but a lot of it wasn’t. So you can
    1:46:05 see different areas that adopted policies at different times. And it seems like the drop in crime was
    1:46:13 relatively independent of when communities, both across America as well as globally, adopted some of
    1:46:20 these policies. So why did crime go down over the past 30 years is still a mystery to some.
    1:46:24 Some great researchers have looked at this and tried to figure it out. And it’s a lot of like,
    1:46:29 okay, a small piece of it’s this, small piece of it’s this, et cetera. But the times have changed.
    1:46:36 So we still had on the books, the reaction from an environment that was very different. And the
    1:46:43 question is we’ve seen what those policies did to neighborhoods and we’ve seen the financial costs
    1:46:49 of those policies and the trade-offs associated with some of those policies. And I think you saw
    1:46:54 both Republicans and Democrats come together trying to rethink what’s the right way to structure the
    1:47:01 criminal justice system, all aspects from policing and courts and prisons and re-entry. What’s the right
    1:47:04 way that we should do given the environment that we’re in right now?
    1:47:11 Now, thinking back to those late eighties, early nineties, when everybody came together and said,
    1:47:14 we just can’t handle this amount of violent crime. We’re going to get tough on crime.
    1:47:18 We’re going to create more prison beds. We’re going to put more police officers on the street,
    1:47:23 et cetera, et cetera. Was it sort of a combination of things that led to where we are now? Was it basically
    1:47:30 more police, more arrests, stiffer sentences, less leniency around parole, lower tolerance on parole
    1:47:36 violations? Was there any one thing or even three things that stood out as the most damning factors
    1:47:42 that led to mass incarceration? What is your assessment of that? And I would be curious to hear
    1:47:47 your thoughts because I think your thoughts would be more informed than mine or just the average person
    1:47:54 on what other factors could have accounted for the reduction in crime, if not the increase in
    1:48:00 incarceration. Yeah. I’ll take the latter question first. The best report I’ve seen on this is from
    1:48:04 the Brennan Center that really looked at, spent a significant amount of time trying to piece
    1:48:11 together what were different responses and how much of it was just kind of demographic trends,
    1:48:17 how much of it was economic growth and drop in better education, better skilled police tactics,
    1:48:23 all these different avenues. And I’m doing a short shift on all the things that they’ve assigned
    1:48:33 some causation to. I think the summary is it’s hard to see any one of them being really causal in the
    1:48:40 shift in crime. It was most tellingly, you saw this same trends happening globally. Different countries
    1:48:48 had different reactions to this and they all had that move up in crime over time into the nineties and then
    1:48:54 this downward trend. And so people were scratching their head trying to say, well, what caused it?
    1:48:58 And part of it, I’m not sure we’ll ever know. And then to the first question about, which I’ll
    1:49:04 reiterate just in case you forgot, is basically of all the mechanisms or tactics that would lead to an
    1:49:11 increase in incarceration, do you have a sense of which of those were perhaps most responsible?
    1:49:17 I don’t want to get too far over my ski tips on this and misrepresent the research. I think part of it
    1:49:23 has been longer sentences. Part of it has been the conviction rate. So once you’re arrested, we can
    1:49:31 get convicted. What percent of the people are done so? And it leads into the system is built to demand
    1:49:37 a plea bargain. We just don’t have the court resources, the defense attorneys, the prosecutors,
    1:49:44 the judges, the court systems to hear a vast majority of cases. And so it ends up being less
    1:49:51 than 5% of cases actually go in front of a judge. Most of them just get pled out. And for a long time,
    1:49:56 because those resources don’t exist, there’s been incentives that have been built into the system
    1:50:03 that almost coerce people to plead guilty to crimes that they may not have committed. Because just from a
    1:50:11 risk reward, it is, I didn’t commit this crime, but there’s a 20% chance I get found guilty,
    1:50:18 I get a 20-year sentence, or I can serve, I can plead down to a lesser charge and get six months,
    1:50:23 of which I’ve already been here for three months. So three more months and I’m out, or my life’s over.
    1:50:27 Going back to your days of trading, that’s a no-brainer calculation.
    1:50:35 Yeah. And it’s really hard to see how you solve that problem without a massive infusion of resources
    1:50:40 into the courts and into prosecutors and defense attorneys, which is not where we want to be spending
    1:50:47 money. We’d rather spend money on preventing crime on social services to not have that problem to begin
    1:50:55 with. And so how do you get rid of this culture where the system can’t handle everybody going to trial?
    1:50:58 One of the biggest challenges that nobody has a great answer for.
    1:51:03 Now, I don’t know if this has been a focus at all of your foundation within criminal justice work,
    1:51:08 but obviously in the last few months, it’s quite topical with respect to
    1:51:14 the relationship between the police and race and the role of systemic racism within law enforcement.
    1:51:23 How much does that factor into the economics of it beyond the obvious, which is disproportionately
    1:51:30 arresting, presumably disproportionately convicting, just based on what you just said, the stats you
    1:51:36 just laid out. I mean, I would have never guessed that 95% of cases would be pled. And if that’s the
    1:51:40 case, then yeah, I just answered my own question, which is if you’re going to arrest disproportionately
    1:51:45 minorities, then you’re going to convict or at least put in prison disproportionately
    1:51:50 minorities. And certainly the few times I have visited prison, it’s disproportionately
    1:51:56 minorities. Take all of that and try to package it into a question. What is the role for philanthropy,
    1:52:03 if there is one, to try to address the questions of racism within law enforcement? Does that factor
    1:52:09 into a tool for criminal justice reform? There’s obviously been a lot of debate or discussion
    1:52:16 this year on that very topic. And there’s no doubt the disproportionate nature of the criminal justice
    1:52:23 system on minorities and particularly on the black community. For so long, the political incentive and
    1:52:31 so much of the focus has been just on crime rates with no regard for the secondary effects that the
    1:52:36 criminal justice system causes on these communities and on families. And I think that’s one of the
    1:52:41 things that we as a society are trying to grapple with now, not for the first time, but for the first
    1:52:46 time, this has gone into a mainstream discussion.
    1:52:50 Sorry, just to make sure, you’re saying we all acknowledge and have acknowledged historically
    1:52:58 that it’s disproportionately black men that go to prison, but we’re now taking a more broad look at
    1:53:03 the implication on, for example, children that are now left without a father. Is that what you mean,
    1:53:05 as an example of the impact on the family?
    1:53:12 Right. And the psychological effects of being a black man in America, especially in a low income
    1:53:18 neighborhood that has, and especially if it’s an aggressive police force there. I think one of the
    1:53:25 dilemmas has been that minority communities have felt both over-policed and under-policed at the same
    1:53:31 time. They feel over-policed with the techniques that the police are using in their neighborhoods. So
    1:53:39 the random stops, certainly back in the era, stop and frisk, and a presumption of guilt and that people,
    1:53:48 especially young black men, are likely to be up to something bad. However, there is still a crime
    1:53:56 problem. Most crime is committed in one’s own community. We’re in the very near geographic area around the
    1:54:03 community. And there is a huge cost to society of violent crime. So nobody wants the police to leave
    1:54:11 entirely. There still has to be that function of deterrence and trying to clear cases that have been committed.
    1:54:20 So how do you create a policing system that tries to address both of those, that treats people more
    1:54:28 equitably, more justly, recognizes their constitutional rights while protecting those communities? Because
    1:54:34 the cost of policing on communities is high. The cost of violent crime on communities is high as well.
    1:54:39 That’s the struggle with the policing reforms. And there’s things that we absolutely should do. A lot
    1:54:45 of those are getting enacted now, or at least being discussed now. But it’s not just, problem doesn’t
    1:54:52 get solved just by passing one new policy. These problems got created over decades, over centuries,
    1:54:58 over decades of policing techniques, over centuries of disinvestment in these communities. And the question is,
    1:55:05 kind of how do you both provide the public safety while not causing the damage that some policing
    1:55:06 techniques cause today?
    1:55:11 So then shifting gears a little bit within the criminal justice system, how much of your effort
    1:55:18 has focused on the other side, which is recidivism? I mean, one of the things that I was most struck
    1:55:28 with when I visited prison was the lack of what appeared to be logic around why somebody was in prison.
    1:55:35 So again, maybe I’m being overly simplistic, but the way I would view it is there are sort
    1:55:41 of not that many reasons to put someone in prison. One reason to put somebody in prison is to protect
    1:55:47 the public from them. Another reason to put someone in prison is to punish them for something they have
    1:55:54 done. And yet a final reason to put somebody into prison that would factor into the first two,
    1:56:00 should they be released again, is to provide them with a set of skills to reintegrate into society
    1:56:06 in a better way. So you’ve got these, call it two pillars and then a foundation.
    1:56:12 And I was very surprised. Admittedly, I was in a maximum security prison, but nevertheless,
    1:56:17 at least half the men that were there were going to be out of jail in their lifetime.
    1:56:24 I was very surprised at how there was virtually no effort into the rehabilitative part. So even if
    1:56:32 you took a long view on protection and punishment, the lack of rehabilitation almost guaranteed recidivism.
    1:56:40 Again, going to your point, if 95% of people are pleading out of something, many of which are things
    1:56:46 they didn’t do. What they don’t realize in that VAR calculation is, yeah, I’m going to be out of jail
    1:56:53 in three months, but I’m going to have a very difficult path to getting a job. I’ve now moved
    1:57:01 off the track of non-felon to I am a felon, and that’s a very different path. So is there an opportunity
    1:57:07 for strategic philanthropy to play a role in the rehabilitative side of incarceration?
    1:57:15 Yes. I agree with everything you said. It’s very hard to design effective recidivism programs
    1:57:23 after someone’s come out. They just, we’ve tried this as a society in many different forms and shapes
    1:57:31 for a long time. And the evidence is very poor that they have. You study it in a diligent way
    1:57:38 that these programs work. It’s a very tough problem. And so there’s a theory, which I believe,
    1:57:45 and kind of going on what you said, that the nature of prisons has to change. That if you wait until the
    1:57:50 day someone’s released, that’s way too late. It’s like if you wait until someone drops out of school
    1:57:59 to step in with some more social services, it’s too late. And so we have a couple projects trying to
    1:58:07 reimagine prisons, think about exactly what you said about what’s the role of prisons? What do we want
    1:58:16 society to do? The struggle is that states and cities, states and counties that fund this are often
    1:58:23 constrained financially. And so they’re trying to figure out how do I meet today’s problem, which is
    1:58:31 I got a lot of people in prison versus how can I make investments to improve outcomes over the long
    1:58:36 term? And how much of the budget can go to improving outcomes over the long term while we have to meet
    1:58:43 today’s needs? And anytime that there’s a financial shock, you stop investing in the investments
    1:58:50 because you try to meet today’s needs. And so I think so much of the public money has gone to
    1:58:57 the day-to-day work of it, that not enough is trying to step back and think, how could a system be
    1:59:03 redesigned? What should people who are stuck behind the bars, what should they be doing with their day?
    1:59:09 How can we try to maximize the percent chance that they don’t come back here when they’re released?
    1:59:16 Because the recidivism rate is incredibly high. And again, we just haven’t found ways to lower that
    1:59:19 through programs that reach people when they are released.
    1:59:26 So part of the problem with that, I think, is you could certainly make an ROI case that if you invest
    1:59:31 more now, you’ll save much more tomorrow. But so in other words, if you have a hundred people in prison
    1:59:38 that are going to get out every year and ordinarily, 80 of them are going to be back within five years and
    1:59:43 you can make it, 20 of them are going to be back within five years. Oh my God, the cost saving,
    1:59:48 you could almost invest anything you wanted to make that happen and it would pay itself off. The problem
    1:59:51 is it won’t pay itself off for five years. Is that a fair statement?
    1:59:57 Right. So in the private sector, they would make that investment every day. But in the public sector,
    2:00:03 it’s on a cash accounting. You have to balance the books this year and you have a fixed amount of
    2:00:09 money. We can raise taxes and raise revenues, but it’s hard. Nobody likes to raise taxes. And so you
    2:00:15 have a fixed amount of money. So how much money goes to the investment, even if it has a strong ROI?
    2:00:23 And I think that’s where the philanthropic sector can be an active player or actor in this system is by
    2:00:30 providing the funds to experiment with different ideas, different programs in prison, and then funding
    2:00:38 the high quality evaluation to see what is the ROI. Can we get good data so that we can go to the state and
    2:00:44 say, look, this program has a very positive ROI. I know it’s hard in the short term to deviate
    2:00:48 money away from just the way we’re doing it now. And it’s going to be hard to find the funds
    2:00:54 today to make that investment. But there’s great evidence if you can find those funds that
    2:00:58 five years from now, everybody’s going to be better off. The state’s going to be better off. Society’s
    2:01:03 going to be better off. The person entering society is going to be better off. And so you’ve got to make
    2:01:08 that argument, but you have to be able to provide that high quality evidence of effectiveness because
    2:01:13 everybody shows up saying, my program works. My program works.
    2:01:18 Is that exactly the type of work you guys are doing in this space, which is basically
    2:01:25 trying to design the best quote unquote trials or experiments that could at least allow for
    2:01:29 an evidence-based decision with respect to how to handle these things?
    2:01:37 that’s certainly a line of the work. Some of it is more about values. And it’s, should we keep
    2:01:46 someone detained in jail before they’ve gone to their court date because they don’t have the money
    2:01:53 to pay bail? I think that’s just a value. So the criminal justice is, has this mix of things that
    2:02:00 you can talk to ROIs on some things? Other things, it’s just, is this how our society should be
    2:02:06 functioning? Is that a right thing? Is that balance the interests of the system? I think a lot of times
    2:02:12 when you sit down with people and you’re like, is this an American value? Is this an American ideal
    2:02:19 that the system works this way? They will say no. Okay. Then how do we fix it more closely represents
    2:02:25 American values without, while minimizing any potential second order effects, negative second
    2:02:30 order effects? So let’s pivot to another area that is enormous for the foundation, which is health
    2:02:36 policy. This might be, I don’t know, this is easily one of the most complicated systems in this
    2:02:42 country. How are you thinking about it and where are you trying to apply yourself? Because it’s
    2:02:47 just too big. This strikes me as sort of the hedge fund problem you alluded to earlier.
    2:02:54 You could potentially try to spread yourself too thin, try to play in every area of it and get nothing
    2:03:00 done. So knowing you, though, I don’t know where you’ve chosen to invest your time lately. I’m guessing
    2:03:04 you have some clarity about the precision with which you want to think about that.
    2:03:11 Yeah. And you’re right. It’s just such a big issue, complex, the number of things that
    2:03:18 one could work on and health policy is immense. And so I did the same thing. We’re thinking about
    2:03:25 where in health policy should we be focused? We started working in this area about eight years ago.
    2:03:31 And after doing that same type of canvassing that we did in criminal justice work, we realized that our
    2:03:37 first area should be on drug prices. Kind of identified that as an area where kind of very
    2:03:44 obvious flaws in the existing system, that there were ideas that were one could conceive of being
    2:03:52 enacted on how to fix it. And that the political window might open in the future such that there was
    2:04:00 demand by the public and thus by politicians to actually adopt some of this stuff. And so using those
    2:04:08 three criteria, we ended up with how do we create a more rational system to price pharmaceuticals that
    2:04:13 balances interest, balances incentives that are necessary for the private sector to do the
    2:04:19 innovation that they’re doing. It balances the financial interests of the state and the federal
    2:04:25 government that’s largely paying for a lot of this stuff and that maximizes access for the patient.
    2:04:31 So if I understood you correctly, you’re basically saying, look, let’s look at what solutions could
    2:04:37 look like, even though if today the political will to make changes isn’t there, this is going to take
    2:04:42 us a while to figure out what to do. And maybe in 10 years, the water has gotten hot enough that the
    2:04:46 frog is willing to jump out. We’ll at least have something in place. Is that kind of how you went
    2:04:48 about thinking about thinking about it? Was taking a long-term view?
    2:04:55 Yes. It was that the political window wasn’t open eight years ago when we started the work.
    2:05:01 We could see cracks in it. We could see cracks in that window. And I think that’s one thing that we’ve
    2:05:07 been good at at a foundation is trying to identify where’s the political window going to open up in the
    2:05:14 future, whether it’s in changing the bill system, whether that’s in doing pension reform or in
    2:05:20 pharmaceutical prices. We’ve gone to these areas and we were early. And so when the window opened,
    2:05:28 we had evidence-based ideas that we could present to policymakers and could properly document the
    2:05:36 problem. There was a whole effort on communications to both individuals, to society, about what the abuses in
    2:05:43 the system are in any of these areas and including in drug pricing, but then also had ideas that you
    2:05:49 could go to them and say, here are the three things you need to do. Now, the pharmaceutical industry is
    2:05:56 perhaps the most complex industry of any. And so there aren’t the three things that should be done.
    2:06:02 There’s the 20 things that should be done because it is just such a broad and complex system with so
    2:06:08 many loopholes and bad incentives that’s driving bad behavior. That to get at it is not,
    2:06:13 here’s the one thing, it’s here’s the 20 things. The downside is you start to lose policymakers when
    2:06:17 you hit number four because they only want to speak in lists of three.
    2:06:23 So how optimistic are you? Because this is an area where I know a little bit. I’ve had Marty
    2:06:27 Macri on the podcast before. I know you know Marty and we’ve spoken about this. We have an entire episode
    2:06:32 on this topic. I’ve had Catherine Eben on before to talk about a different angle here, which is
    2:06:36 basically just the difference between the, basically the corruption within the generic drug industry,
    2:06:40 which is a totally different problem from the one you’re addressing. For as much as I know about
    2:06:45 this, I feel like I still don’t understand it, which I think speaks to exactly what you just said.
    2:06:52 If a problem has 21 bullet points to fix it, it’s a complicated problem. What is your level of
    2:06:57 optimism? I mean, to be blunt, do you feel like you are spinning your wheels for eight years and this is
    2:07:02 a problem that will only get fixed when we are on the verge of bankruptcy in this country? Because as you
    2:07:07 said, this is largely a government spend problem. This is my view, by the way, this is my little rant on
    2:07:15 the United States. So we basically carry two enormous burdens for the world. There are two
    2:07:22 things we disproportionately pay, but our taxes disproportionately go to on some level subsidize
    2:07:27 things in the world. And one is military spend and the other is healthcare spend. And you might say,
    2:07:30 well, gosh, why would healthcare spend in the United States be a subsidy for the world? But it’s
    2:07:37 effectively that we pay so much more for drugs here than our neighbors do that we in effect
    2:07:43 subsidize the cost of R&D to the point where the incentives are to make the drugs here,
    2:07:47 to distribute them here and elsewhere, but we disproportionately pay. Do you agree with that
    2:07:51 assessment or is it overly simplistic? Right. We’re 3% of the world’s population. United States,
    2:08:02 3% of the world’s population. We pay 50% of the pharmaceutical revenues of the world. So there’s no doubt
    2:08:10 that. The prices that we’re paying is helping and creating incentive for more medicines that others
    2:08:17 then get to benefit from. But one of the talking points I have in this is the NIH spends so much
    2:08:24 money on the basic science that’s required to get these drugs started. And in return, the pharmaceutical
    2:08:30 companies charge us 2x, 3x the prices of other countries. We shouldn’t be getting a discount
    2:08:37 because the United States taxpayer is funding some of the basic science, much of the basic science,
    2:08:42 but some of the total cost of developing these drugs. But rather than we don’t get the discount,
    2:08:46 we don’t even get the same prices. We get the highest prices in the world by a large measure.
    2:08:51 So it comes back to this notion of you’ll hear people say things all the time like this is not
    2:08:54 sustainable. Our cost of healthcare is not sustainable, blah, blah, blah. And I remember hearing
    2:08:58 somebody say something once and I don’t remember who it was, but I really agreed with the point he made,
    2:09:03 which was nonsense. It’s totally sustainable because we’re still doing it. I mean, it’s going
    2:09:10 to be sustainable until it’s no longer sustainable. Until we default on our debt as the largest sovereign
    2:09:17 default, this ridiculous system is totally sustainable. So then my question is, what will
    2:09:24 it take to change this? Given the complexity of it, given all of the bad incentives, given everything that
    2:09:31 you and I just said, what would it take for us to not be spending 15, 16, 17% of our GDP on healthcare
    2:09:36 at a clip that’s probably increasing at 5% per year in relative growth?
    2:09:43 Right. We spoke earlier about the downsides of the state having to balance the budget, and that’s that
    2:09:50 it can’t make the high ROI investments that it should. The upside is that it forces the states to
    2:09:57 consider trade-offs. They can spend a dollar on healthcare or a dollar on roads or a dollar on
    2:10:03 education or a dollar on social services, and they have to decide where’s the highest value and they
    2:10:10 look to save money. The federal government, without that constraint, at least in today’s environment,
    2:10:17 doesn’t have to make that trade-off. So any proposed legislation where somebody gets harmed,
    2:10:26 unless it’s only or concentrated mostly in the other party’s constituency, that will not pass
    2:10:34 because no hard decisions want to get made. And so the ramification of that is enormous budget
    2:10:42 deficits today and an enormous debt that has had a lot of people sounding alarms for decades.
    2:10:49 Now, those alarms and those concerns about the debt and what it’s going to lead to have not come true
    2:10:56 today. It doesn’t mean they’re not going to come true in the future. And I think that’s the greatest
    2:11:00 concern is that the United States is not going to default on the debt. We can just print the money.
    2:11:06 But what can happen is high inflation. And again, people have been talking about this for years,
    2:11:12 and I don’t know if it ever comes true or not. But we in this country now have a fiscal or monetary
    2:11:21 response to every problem. And the one problem you can’t solve from fiscal and monetary tools is
    2:11:27 inflation. And in fact, you have to go the other way. And that’s when things get really bad is when
    2:11:33 you have to be cutting fiscal spending, when you have to be increasing interest rates to try to
    2:11:37 combat inflation. And so I don’t know if the inflation comes, I don’t know if it ever comes.
    2:11:44 As someone who thought a lot about risk in their career, I’m very concerned about the downside,
    2:11:51 should it come? We just don’t have a political environment now where tough decisions can get made.
    2:11:56 And so what happens if we start seeing high inflation then forces up interest rates that
    2:12:02 causes all the repercussions, negative repercussions of that? Because we have the system now so levered
    2:12:08 with debt at the household level, at the business level, at cities and states, at the federal level.
    2:12:13 So what would we do, John? Help me understand that. So right now we can get away with printing money
    2:12:19 because the interest rate that the government pays is very low. If inflation hits and the interest
    2:12:24 rate goes up, I mean, as it stands now, the United States government’s debt service is a staggering
    2:12:29 number. You probably know it. I certainly don’t. I try to block numbers I really, really hate out of
    2:12:34 my mind, by the way. So I think at one point I knew how much the United States paid per day in debt,
    2:12:39 and I quickly buried it somewhere in, I don’t know, somewhere in my spinal cord. It’s not even in my
    2:12:43 brain anymore. But at some point, as you said, if inflation hits and interest rates rise,
    2:12:49 that debt service could overwhelm our GDP, yes? Yeah, it could. The debt, people argue we should
    2:12:55 do more deficit spending today because interest rates are low. We can borrow for 10 years at very
    2:13:01 low rates. The reality is we borrow generally short term, but even if we put all the borrowing at 10
    2:13:07 years or 30 years, we never actually pay off the debt. It’s just accumulating. So as long as GDP is
    2:13:14 growing faster than real inflation, it’s okay. Because on a real basis, it declines. But that’s
    2:13:19 not what happens. Debt’s increasing much faster than real GDP. And so the real debt is increasing,
    2:13:24 and we never pay it off. And we’re not sure whether the low interest rates are going to be around forever
    2:13:31 or not. It was 2007 when interest rates were close to 5%. Just imagine that now if interest rates went
    2:13:37 back to 5%, what it would do to stock prices, to businesses who are so levered, to cities and
    2:13:44 states, to everybody, to households, if you raise the cost of borrowing. Historically, 5% is not
    2:13:49 astronomical either. No. And we’ve certainly seen double digits. And you’ve got to go back 40 years
    2:13:54 now. But we’ve seen double digit interest rates before in this country. And the decimation that would
    2:14:02 take place, if that happened again, is immense. And so I always think about, I want to help the
    2:14:09 world. I want to solve problems. But if the answer is just shovel more money at it, that’s not a
    2:14:15 sustainable answer in my mind. So everything becomes, how do we improve the system without spending more
    2:14:20 money? Or how do we improve the allocation of resources today? And that gets us back to pharma,
    2:14:26 is that a dollar spent on pharma, which some portion of that goes to innovation and creates
    2:14:32 incentive for innovation. Well, innovation is great. In a world of no trade-offs, there’s no problem
    2:14:38 with that. And if you believe that there are no trade-offs with how we spend our resources, then
    2:14:43 pharma prices are fine. In fact, double them, triple them. There’ll be more incentive for innovation
    2:14:48 in that world. But that’s not the world that I believe we live in. I believe there is a trade-off in
    2:14:54 that a dollar put into pharma innovation is a dollar less for everything else. It could be other
    2:14:58 healthcare innovation or healthcare services that aren’t getting provided today. Or it could be in
    2:15:04 education. It could be in making our prisons better so that there’s less recidivism. All these ways in
    2:15:10 that somehow the pharma industry has been able to create this island. Every other industry has to fight
    2:15:16 for the dollars and try to convince the state and federal government, give me an extra dollar. Here’s why.
    2:15:19 And the pharma system has just been able to create this island where they don’t have to compete with
    2:15:25 anybody. They got their own rules. And it’s a messed up set of rules that incentivizes the wrong thing.
    2:15:30 So even within that, we’re not getting the drugs that we should be getting. We get a lot of
    2:15:36 marginal oncology drugs that probably don’t provide any real benefit versus the current drugs.
    2:15:41 And we’re not investing in the antibiotics. We’re not investing in vaccines because the financial
    2:15:46 incentive isn’t there for lows. So we’re spending tons of money as a society and not even getting
    2:15:48 good returns for it. Sorry, that’s my rant.
    2:15:56 It’s very disheartening to see just how low that ROI is. I mean, I think, again, it comes back to this
    2:16:03 question of where does the crack finally have to occur? I love this expression. I don’t know who
    2:16:09 it’s attributed to, and I’m probably paraphrasing it, but it’s like change happens very slowly and then it
    2:16:15 happens very quickly. It’s like the stonemason that is banging, banging, banging away on the stone
    2:16:20 for hours and hours and hours. And to the outside world, nothing is happening. And then with one more
    2:16:29 strike, it splits. And I feel like a lot of your philanthropy is like that. It is years of banging
    2:16:35 away at something that seems unchangeable. And there’s a belief, there has to be a belief that
    2:16:43 at some point that nth strike is going to split that rock. Is this a skill that you, because that seems
    2:16:48 like the opposite of trading in some ways. Trading was in a relatively short period of time, you’re
    2:16:53 going to find out if you were right or wrong. Again, you always had the advantage of being able
    2:16:59 to adjust your positions in the presence of new information, but at least you had a feedback loop
    2:17:05 that was relatively short. Here, your feedback loop is much longer. Does that pose a challenge for you
    2:17:12 emotionally? Absolutely. And you’re right that the trading world has that instantaneous feedback about
    2:17:20 whether you’re right or not. And you used to have the P&L marker up in the corner of the computer screen
    2:17:27 that would tell you at every moment in time what the market was telling you about your position.
    2:17:33 And a lot of these efforts that were involved in on policy change, number one, it’d take a long time.
    2:17:40 And second, as you described, you don’t know if you’re making progress often, because it feels like
    2:17:45 you’re just have the hammer against the wall, have the hammer against the wall, driving yourself crazy
    2:17:52 and wasting money. And then all of a sudden, it happens. There’s a great book I read, it was written by
    2:17:56 an advocate who was trying to get rid of the don’t ask, don’t tell policy in the military and allow
    2:18:03 gays to openly serve. And this turned out to be close to a 20-year campaign for him. The first
    2:18:11 decade, his wins were so small. His advances in it, it was like he was trying to get invited to give a
    2:18:19 talk at a class at the military academy, was a step forward. And you could see at any given time,
    2:18:25 he could have spent five years with very little visible progress and just stopped and said,
    2:18:30 I’m pushing this rock. I’ve been hitting the wall. I’m not making any progress. This is a waste of my
    2:18:35 time. I should be doing something else. And gone and done something else and not achieve success.
    2:18:40 But he stuck with it. And the second decade, he ended up getting the policy reversed. And it led the
    2:18:47 effort. And I think about that story a lot of, it’s hard to know, but during that time, like five years
    2:18:53 in, are we wasting our time and this is never going to pass? Or is the wall going to crack tomorrow?
    2:18:58 And you just don’t have that feedback mechanism in this work that you had in the market and the
    2:19:00 complete opposites end of the spectrum.
    2:19:07 And I guess that’s why the research that you do, the time that you take, the amount of deliberation that
    2:19:13 goes into your philanthropy at least gives you a greater foundation of confidence. Interviewed someone by the
    2:19:19 name of Rick Doblin, who’s been singularly focused on the legalization of MDMA since about 1986.
    2:19:24 Again, it’s staggering to me to think 34 years he has worked on the exact same problem. And
    2:19:30 I just had a call with Rick yesterday. And I guess I don’t know if I’m going to be careful what I am
    2:19:35 allowed to say or not say. But I think I can say with some confidence that he is probably closer than
    2:19:41 ever to achieving that goal through his organization, MAPS, the Multidisciplinary Association for
    2:19:47 Psychedelic Studies. And again, I just think that people who can do what you can do, who can do what
    2:19:52 Rick Doblin can do, who can do what a lot of great philanthropists can do, it’s not just writing the
    2:19:58 check. That’s amazing. That is unbelievable to be able to write the check. It’s equally amazing to
    2:20:03 be able to stick on a problem. Speaking of problems, there’s one problem you and I have never discussed,
    2:20:09 but it seems so up your alley. I wonder if you have evaluated it and decided it’s not worth,
    2:20:14 you don’t have the assets, you don’t have sort of the problem-solving asset to go after it,
    2:20:18 or you think enough people are on it. But I’m very curious as to what thought you guys have given to
    2:20:23 climate change. Again, given your understanding of energy, which is, you know, at least a third of
    2:20:31 the problem, tell me how that’s come across your radar. Yeah, we do a little bit on climate change.
    2:20:38 I think as a trader, and again, someone who thinks about risk, it’s a problem where the downside
    2:20:46 possibilities are so enormous that it makes sense as a society for us to make the investments today to
    2:20:53 try to decrease the probability of those downside scenarios. I don’t know what probability it is of
    2:21:00 those downside scenarios that are truly catastrophic from an economic standpoint, from a life standpoint
    2:21:06 that change how humans really live, but it’s greater than zero. It’s less than a hundred percent. It’s
    2:21:12 somewhere in there, but the downside is so great that society needs to make that investment. So we typically
    2:21:18 get drawn to the areas where I’d call them orphan areas where there’s not much focus, especially
    2:21:25 philanthropic focus. Things like public pension reform or changing how elections are conducted or
    2:21:32 the pharmaceutical pricing or surprise billing. Things where the day we enter it, we probably have
    2:21:39 committed the most money of any other philanthropic actor in the system already. What strikes me about
    2:21:46 the climate field is that there are remarkable people, there’s brilliant people who are working on this
    2:21:55 today or very thoughtful philanthropists who are working on this today, who oftentimes either make
    2:22:02 this their single issue or one of two or three issues that they’ll be working on. So I always think about
    2:22:10 what’s our additionality into the problem. And one of them is that I think because we work with both the
    2:22:16 left and the right, and we’re not a political organization, and many of those who are both the
    2:22:22 researchers, the advocates, the funders in the climate space do come from the left, that I think we can try to
    2:22:29 support those efforts, those organizations and politicians that are on the right, who want to start taking the
    2:22:39 steps. Because this has to be a bipartisan effort to solve. It’s hard to imagine today how that happens.
    2:22:47 But Republican Party is moving slowly, very slowly, but you start to see some people with real credibility
    2:22:52 within the Republican Party, and there are thought highly of, start to think about there’s acknowledgement
    2:23:01 that there’s a problem. There is dispute about what level of investment is merited to deal with it.
    2:23:07 And I think that Democrats don’t help Republicans get there. When you put the whole Democratic platform
    2:23:16 into a climate change bill, I don’t think it helps Republicans talk about the issue and be a productive
    2:23:22 partner. And I think it’s going to have to be, again, it has to be bipartisan for it to be sustainable.
    2:23:29 sustainable. Perhaps Democrats win the White House to perhaps Democrats win the Senate for 2021. It might
    2:23:35 take down the filibuster. But what happens when that changes? And do those rules and laws stay enacted or
    2:23:41 do they get repealed? And so that’s why I think all these things that we work on need to be done in a
    2:23:46 bipartisan way, including the pharma. We got a bill passed in the Senate Finance Committee, Republicans,
    2:23:52 Democrats come together, get this close, and we just can’t get it onto the floor. That’s where we are.
    2:24:01 So, John, your kids are, I’m guessing, they probably don’t, even your oldest probably doesn’t remember
    2:24:08 you being a traitor. So your kids are going to grow up and they’re going to think of mom and dad’s job is
    2:24:17 philanthropy. What’s the impact that that has on them? I mean, I suspect it’s pretty profound. They see how
    2:24:21 seriously their parents think about this stuff. Do they come to you with questions about the work
    2:24:27 that you have? Do they have their own interests? They’re obviously not that young anymore and they’re
    2:24:31 obviously very smart kids. They must be thinking about, hey, mom and dad, why aren’t you guys working
    2:24:35 on this problem? Or what do you think about this problem? I mean, how does your curiosity for the
    2:24:40 world trickle down to them? And how deliberate a part of that, of raising your kids is that?
    2:24:46 They certainly understand kind of high principles about what we do. We’re philanthropists. They know
    2:24:50 what that means. They know that we give money, trying to make the world a better place. But we do have
    2:24:58 those conversations when we walk past a homeless individual who’s asking for a dollar. And my daughter
    2:25:03 says, we need to give him a dollar, right? And having those conversations about, okay, do we give
    2:25:10 this dollar here or do we give it to someone trying to be in a more philanthropic or more strategic way
    2:25:12 to try to get at the root of the problem, right?
    2:25:17 Do we give the dollar here or do we give it to the food bank down the street that hopefully he can
    2:25:20 go to and get the same meal that we would want him to get or something like that?
    2:25:29 Right. And it ends up being both. I think you need to teach kids about humanity, about the love of the
    2:25:37 individual. So we can’t say no every time, but also have to teach him about not going to give all the
    2:25:44 money away dollar by dollar to somebody on the street. We’ve thought a lot about what’s the kid’s
    2:25:50 role in this going forward. And Laura and I are very much on the same page here. We don’t want their
    2:25:58 lives to be defined by their parents. So we don’t want them working at the foundation. We don’t want
    2:26:02 them at least when they’re in their twenties and probably in their thirties to be working at the
    2:26:08 foundation. If it’s still open then we want them to go have their own life experiences, define their
    2:26:14 own, create their own life. And then after they’ve done that, if they want to come join the work here,
    2:26:19 that’s great. But it’s really important that they’re not part of the foundation.
    2:26:26 at a young age, because there’s a downside and, and it’s whenever you have that checkbook, people
    2:26:34 look at you differently and treat you differently. Your jokes are funnier and people have a sense of
    2:26:42 their own best behavior around you because there’s always something that they want funded or that
    2:26:47 they’re involved in and are going to come with an ask at some point. And we minimize this largely
    2:26:52 because of the types of things we fund and we’ve made it very clear about what we do fund.
    2:26:59 But if somebody is growing up in their teens and their twenties and is looked at by the rest of the
    2:27:05 world as a checkbook first, I think that’s a very damaging way to grow up. It’s not reality. Like the
    2:27:11 twenties is the time when you need to be kissing somebody else’s butt. You need to be going to get the
    2:27:17 lunches for everybody else, not vice versa. You need to be trying to climb up to the organization,
    2:27:21 not be gifted the checkbook on day one.
    2:27:29 So what advice would you give to people who were where you were 25 years ago, which is they’re going
    2:27:35 to be writing three figure checks or maybe a four figure or five figure check to an organization.
    2:27:40 They’re not going to be able to set up their own foundation. They have the same tug that you have,
    2:27:46 which is, Hey, whatever stage of my life I’m at, whatever my means are at, I know that giving away
    2:27:51 some of my money makes the world a better place. I just want to make sure I do it as intelligently
    2:27:51 as possible.
    2:27:59 Yeah. In many ways, what we’re doing is not remarkable. So many people in this world or
    2:28:05 especially in the United States are very generous with time, with resources relative to what they
    2:28:09 have, relative to the time that they have, relative to the money that they have. So it can just be done
    2:28:14 at a different scale. But I think there are some people who are much more altruistic than we are.
    2:28:18 There’s people who give away 10% of their money when they’re making a hundred thousand dollars or
    2:28:24 fifty thousand dollars that changes their quality of life. There’s a sacrifice, a trade-off by doing
    2:28:29 that. And they still do it. And there’s a small movement called further pledge where you pledge to
    2:28:36 give everything above a relatively small salary, like 30,000, maybe up to 50,000 to charity. And knowing
    2:28:43 that that dollar you’re giving is creating more total good than you spending it. And that’s huge.
    2:28:50 And I think we, as a society, benefit when our community around us is stronger. And that’s why
    2:28:55 people do it. Whenever we have the needs of our family, whenever our family is secure,
    2:29:02 then I think it’s natural, it’s human nature to start thinking about your community and however you
    2:29:09 define your community, whether it’s your group of friends, your city, your country, might be shared
    2:29:15 experiences. But everybody kind of goes through that process of defining his or her own community and then
    2:29:21 uses the resources of time and money to try to help that community to the best extent they have.
    2:29:27 There’s no right answer in how you define your community. There’s no right answer as to how you
    2:29:33 improve your community. But it is remarkable, just this culture of giving and philanthropy that exists in
    2:29:37 this nation. I think largely because we are a wealthy nation, right? More people are more secure
    2:29:46 here. People have more likely to have the needs of their family set aside or in line of sight. And so
    2:29:51 they’re able to do these things. And that’s one of the reasons that make this country so great. I don’t
    2:29:52 know if I answered your question.
    2:29:57 No, you really did actually. I mean, certainly what I took away from that was you pointed out
    2:30:00 something that I think doesn’t get enough appreciation, which is you’re absolutely right
    2:30:05 for you to give away $400 million a year is less. I mean, I’m not minimizing that at all,
    2:30:11 but you’re right. It’s less of a sacrifice than someone who makes $50,000 a year giving away $5,000.
    2:30:16 The incremental $5,000 to someone making $50,000 is staggering if you’re trying to raise a family or do
    2:30:22 anything else. And the other thing I took away was this idea of giving locally. I think the way you
    2:30:28 define locally is very important. It doesn’t mean necessarily if I live in this city, I only give to
    2:30:34 this city. I can broaden my definition of local. Local could mean I’m a veteran and therefore my
    2:30:41 giving back to veterans affairs or other vets is what I define my community as. I think that’s an
    2:30:43 elegant way to think about it. I think the other thing that comes with that is frankly,
    2:30:48 giving to your community means you can probably make a more informed gift. You have a better sense
    2:30:51 of potentially what the needs are of your own community. Absolutely.
    2:30:56 John, I’m going to be honest with you, man. We’ve been talking here for like over two and a half
    2:31:00 hours. I took a bunch of notes before we spoke. We haven’t got through half what I want to talk about,
    2:31:06 but I also can’t keep one of the world’s busiest philanthropists wasting any more of his time
    2:31:11 talking with me. So I’m going to honor my commitment to you to keep this relatively short,
    2:31:16 not make it a seven hour discussion. I’m going to let you go. We might have to do a part two at some
    2:31:21 point, but I want to thank you very much for first and foremost, just set aside the time today,
    2:31:27 but more importantly, just for the work that you do. I know personally how seriously you take this work
    2:31:33 and the world is definitely a better place for having the best natural gas trader of all time,
    2:31:34 no longer trading natural gas.
    2:31:38 Well, thank you. It’s been a fun experience. Looking forward to part two.
    2:32:07 Hey guys, this is Tim again. Just one more thing before you take off. And that is five bullet Friday. Would you enjoy getting a short email from me every Friday that provides a little fun before the weekend? Between one and a half and two million people subscribe to my free newsletter, my super short newsletter called five bullet Friday, easy to sign up, easy to cancel. It is basically a half page that I send out every Friday to share the coolest things I’ve found or discovered.
    2:32:37 Or have started exploring over that week. It’s kind of like my diary of cool things. It often includes articles I’m reading, books I’m reading, albums, perhaps gadgets, gizmos, all sorts of tech tricks and so on that get sent to me by my friends, including a lot of podcast guests. And these strange esoteric things end up in my field. And then I test them and then I share them with you. So if that sounds fun, again, it’s very short, a little tiny bite of goodness before you head off for the weekend.
    2:32:49 Something to think about. If you’d like to try it out, just go to Tim dot blog slash Friday, type that into your browser, Tim dot blog slash Friday, drop in your email and you’ll get the very next one. Thanks for listening.
    2:33:19 Sleep is the key to it all. It is the foundation. Many of you heard me talk about how today’s sponsor eight sleep has improved my sleep with its pod cover. Well, they just launched their latest product, the pod five. I cannot wait to try it out. And here’s why the pod five introduces eight sleep latest product, the blanket, which uses the same technology as the pods cover to extend temperature regulation across the entire body. So if you’re too hot, too cold, you can fix it. If you’re a couple and one of you is hot, one of you is cold. You can fix it as well. It all fits right over your existing.
    2:33:33 Mattress like a fitted sheet. On average, members report the pod has helped them fall asleep 44% faster, 34% deeper sleep and given them up to one added hour of sleep each night. Also, the pod snoring detection.
    2:33:49 My friend Albert might be interested in this and automatic elevating platform have reduced user snoring by 45%. So it does a lot. You’ll also get a personalized report each morning, allowing you to track your sleep stages, heart rate variability, respiratory rate, and more all without having any devices strapped onto you.
    2:34:16 So head over to eight sleep.com slash Tim and use code Tim to get $350 off of your very own pod five ultra. You can try it at home for 30 days and return it if you don’t like it. So why not give it a shot? Sleep is everything. Again, that’s eight sleep.com slash Tim. You can spell it out eight sleep.com slash Tim for $350 off shipping is available to many countries worldwide. One more time, eight sleep.com slash Tim.
    2:34:47 I don’t know about you guys, but I have seen a lot of crazy stuff in the last few weeks. I saw an AI generated video. It looks like a video of an otter on a flight, tapping away on a keyboard, having a stewardess ask him if you would like a drink. And it goes on from there. And this was generated with AI and it looks photorealistic, basically. I mean, it would have cost hundreds of thousands, millions of dollars to do in the past, taken forever. And now it’s boom, snap of the fingers. It’s crazy.
    2:35:03 So AI is changing everything. We know that it is also changing the way startups and small businesses operate. Things are going to get crazier. The rate of change is only going to get faster. And while a lot of good is going to come of that, it also means security and compliance headaches for one thing.
    2:35:23 And that is where today’s sponsor Vanta comes in. I’d already heard a lot about them before they ever became a sponsor. Just like 10,000 plus other companies that rely on Vanta, my friends at Duolingo, shout out Duolingo and Ramp, shout out Ramp, one of this podcast sponsors and an ultra fast growing company use Vanta to handle security compliance.
    2:35:34 So why would they do that? Well, Vanta automates compliance for frameworks like SOC 2, ISO 27001, and HIPAA, making it simple and fast to get enterprise grade compliant.
    2:35:46 But what does that mean? It adds up to impressive results. Companies can save up to 85% of costs, get compliant in weeks instead of months, and complete security questionnaires up to five times faster.
    2:35:58 So check it out. Vanta.com slash Tim. That’s V-A-N-T-A, like Santa with a V. Vanta.com slash Tim to see how Vanta can help you level up your security program.
    2:36:05 My listeners, that’s you, can get $1,000 off. So check it out. Vanta.com slash Tim.

    In this special episode, my friend—and fan-favorite guest—Dr. Peter Attia takes the mic as guest host. Peter sits down with legendary trader John Arnold, widely considered the greatest energy trader of all time. Today, through his foundation Arnold Ventures, John applies the same rigorous thinking to some of America’s toughest social challenges—criminal justice reform, healthcare policy, and K–12 education, to name just a few. This interview originally aired on Peter’s excellent podcast The Drive. You can check it out at PeterAttiaMD.com, or subscribe to The Drive wherever you get your podcasts.

    This episode is brought to you by:

    Vanta trusted compliance and security platform: https://vanta.com/tim ($1000 off)

    Eight Sleep Pod Cover 5 sleeping solution for dynamic cooling and heating: EightSleep.com/Tim (use code TIM to get $350 off your very own Pod 5 Ultra.)

    Wealthfront high-yield cash account: https://Wealthfront.com/Tim (Start earning 4.00% APY on your short-term cash until you’re ready to invest. And when new clients open an account today, you can get an extra fifty-dollar bonus with a deposit of five hundred dollars or more.) Terms apply. Tim Ferriss receives cash compensation from Wealthfront Brokerage, LLC for advertising and holds a non-controlling equity interest in the corporate parent of Wealthfront Brokerage. See full disclosures here.

    Timestamps:

    [00:00:00] Start.

    [00:05:37] Peter Attia’s intro: who is John Arnold?

    [00:08:38] John’s background, upbringing, and early entrepreneurial tendencies.

    [00:21:16] John’s time and rise at Enron.

    [00:33:40] Characteristics that made John an exceptional natural gas trader and how they translate to his philanthropic work.

    [00:41:10] The collapse of Enron.

    [00:46:46] The success of John’s hedge fund, and his early interest in philanthropy.

    [01:02:03] The infamous 2006 trade that brought down Amaranth Advisors.

    [01:08:28] John’s analytical prowess and emphasis on fundamentals.

    [01:15:13] The decision to become a full-time philanthropist and the founding of Arnold Ventures.

    [01:25:03] Education — John’s quest to fundamentally change K-12 education.

    [01:30:36] Strategic philanthropy — preventing problems by attacking root causes and creating structural change.

    [01:37:50] The criminal justice system — structural changes needed to address mass incarceration, policing practices, and recidivism.

    [01:55:07] Re-imagining prisons to reduce recidivism.

    [02:02:27] US health care policy — John’s focus on drug prices, and the severe consequences of not making system changes.

    [02:20:00] Climate change — the bipartisan role of John’s foundation.

    [02:23:52] Advice for young adults interested in philanthropy.

    [02:30:52] Parting thoughts.

    *

    For show notes and past guests on The Tim Ferriss Show, please visit tim.blog/podcast.

    For deals from sponsors of The Tim Ferriss Showplease visit tim.blog/podcast-sponsors

    Sign up for Tim’s email newsletter (5-Bullet Friday) at tim.blog/friday.

    For transcripts of episodes, go to tim.blog/transcripts.

    Discover Tim’s books: tim.blog/books.

    Follow Tim:

    Twittertwitter.com/tferriss 

    Instagraminstagram.com/timferriss

    YouTubeyoutube.com/timferriss

    Facebookfacebook.com/timferriss 

    LinkedIn: linkedin.com/in/timferriss

    Past guests on The Tim Ferriss Show include Jerry SeinfeldHugh JackmanDr. Jane GoodallLeBron JamesKevin HartDoris Kearns GoodwinJamie FoxxMatthew McConaugheyEsther PerelElizabeth GilbertTerry CrewsSiaYuval Noah HarariMalcolm GladwellMadeleine AlbrightCheryl StrayedJim CollinsMary Karr, Maria PopovaSam HarrisMichael PhelpsBob IgerEdward NortonArnold SchwarzeneggerNeil StraussKen BurnsMaria SharapovaMarc AndreessenNeil GaimanNeil de Grasse TysonJocko WillinkDaniel EkKelly SlaterDr. Peter AttiaSeth GodinHoward MarksDr. Brené BrownEric SchmidtMichael LewisJoe GebbiaMichael PollanDr. Jordan PetersonVince VaughnBrian KoppelmanRamit SethiDax ShepardTony RobbinsJim DethmerDan HarrisRay DalioNaval RavikantVitalik ButerinElizabeth LesserAmanda PalmerKatie HaunSir Richard BransonChuck PalahniukArianna HuffingtonReid HoffmanBill BurrWhitney CummingsRick RubinDr. Vivek MurthyDarren AronofskyMargaret AtwoodMark ZuckerbergPeter ThielDr. Gabor MatéAnne LamottSarah SilvermanDr. Andrew Huberman, and many more.

    See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.