0:00:06 Today’s episode is sponsored in part by Airbnb, OpenPhone, Shopify, Mercury, Built, Indeed,
0:00:07 and Microsoft Teams.
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0:00:25 Hey, Yap fam.
0:00:30 I hope you enjoyed my interview with the father of biohacking, Dave Asprey, earlier
0:00:30 this week.
0:00:35 Dave had some great tips on how to get smarter about your workout and self-care routine and
0:00:38 how you can save time while getting even better results.
0:00:42 So be sure to listen to that episode if you haven’t already.
0:00:44 But why stop there?
0:00:49 If you want more biohacking strategies from the master himself, then stay right where you
0:00:55 are because in this Yap Classic episode, we are revisiting Dave Asprey’s first time on
0:01:00 the show back in 2022 in episode 149.
0:01:06 In this conversation, Dave told me how he became one of the world’s most famous biohackers and
0:01:10 how he went from hacking the internet to hacking his body.
0:01:16 He also shared some great diet and energy biohacks, as well as his thoughts on spontaneous meal
0:01:22 skipping, why women and men fast differently, and why he thinks humans will start to live
0:01:24 well into their hundreds in the future.
0:01:28 Dave also turned up to the interview with a blue tongue.
0:01:33 And of course, it turned out there was a pretty good reason for that, too.
0:01:34 All right, folks.
0:01:39 It’s time once again to push the limits of human capability with Dave Asprey.
0:01:47 We’d like to start off with backgrounds and childhoods and things like that.
0:01:51 So in your own words, you were a fat kid growing up.
0:01:54 At one point, you were almost 300 pounds.
0:01:57 And it turns out you were sick and you didn’t even know it.
0:02:03 So talk to us about your health journey and how you ended up starting this path on biohacking.
0:02:10 When I was a kid, I had all the behavioral problems that are common in entrepreneurs, what
0:02:11 we would now call ADHD.
0:02:17 But I also had Asperger’s syndrome, which is a neurological condition.
0:02:19 And it’s on the autism spectrum.
0:02:23 I don’t present as someone with Asperger’s anymore.
0:02:26 And I, in fact, don’t likely have it because it is a curable condition.
0:02:28 It’s related to autoimmunity.
0:02:30 I was also overweight.
0:02:34 I had chronic fatigue syndrome, which was diagnosed by a couple of people.
0:02:41 Fibromyalgia, thyroid problems, lower testosterone than my mom in my 20s in labs.
0:02:43 High risk of stroke and heart attack before I was 30.
0:02:46 Arthritis when I was 14.
0:02:52 So I think I was pretty much, you could say, biologically a shit show as a kid.
0:02:53 I don’t know if I can say that on here.
0:02:54 You can beat me out or something.
0:02:56 But not in a good place.
0:02:58 That said, I did.
0:02:59 Let’s see.
0:03:03 I was at the top of my class in high school, but I was such a jerk that they wouldn’t let
0:03:04 me be a valedictorian.
0:03:05 Oh, my God.
0:03:09 That’s not to say that I was doing that well in high school.
0:03:11 I was just at a school that wasn’t that competitive.
0:03:13 Well, that’s really cool.
0:03:17 I mean, everybody knows you as Bulletproof, Dave Asprey.
0:03:18 That’s what we know you as.
0:03:22 But it turns out you had a whole super successful career before all of this.
0:03:25 You made six million dollars by the time you were 26.
0:03:27 You had a very successful career.
0:03:31 And I actually did a bunch of research and found out that you were the first person to
0:03:34 ever sell anything on the Internet.
0:03:40 So talk to us about your whole background before being the father of biohacking.
0:03:47 Yeah, in fact, it seems to make people mad when I talk about that in the early days of
0:03:48 the Internet.
0:03:54 I mean, early days before web browsers were created, it was entirely possible to know everything
0:03:59 on the Internet because it was something called Usenet was where most people communicated and
0:04:00 you could follow all of the groups.
0:04:03 And these were kind of like Reddit forums today.
0:04:05 But imagine if Reddit only had 100 forums.
0:04:09 OK, you could follow all those if you wanted to spend a good amount of time doing it.
0:04:12 So I did go out there.
0:04:19 I had a that was a nine times increase in my tuition at the University of California.
0:04:24 When I was on Joe Rogan show, I said it was 15 times I had made a math error.
0:04:26 That was the only error that I had on that show.
0:04:30 So anyway, I couldn’t pay for it.
0:04:32 So I’m going to start a business here.
0:04:33 What can I do?
0:04:34 Well, I like caffeine.
0:04:39 So I emailed a caffeine scientist and said, tell me about the caffeine molecule.
0:04:41 And I’m whatever, 19 or something.
0:04:44 And he tells me a bunch of stuff.
0:04:47 So I made a T-shirt that said, caffeine, my drug of choice with a picture of the caffeine
0:04:47 molecule.
0:04:51 And I posted to the discussion group where we talked about coffee and said, you guys should
0:04:52 buy this.
0:04:56 And then, oh, two weeks later, and I did really well.
0:04:58 I sold shirts in my first month to 16 countries.
0:05:00 Okay.
0:05:04 I’m living in a shared one bedroom apartment that I can barely afford.
0:05:11 Like not, not the, the, you know, college experience that someone who was having their
0:05:13 college paid for would have.
0:05:17 And I’m thinking, okay, now I can maybe make ends meet.
0:05:18 This is really good.
0:05:22 And then a Rutgers professor of marketing says no one’s ever going to make money on
0:05:22 the internet.
0:05:28 So with a chip on my shoulders and angry mold exposed kid, I wrote back, said, well, you may
0:05:31 be at an Ivy league school, but I’m already making money on the internet.
0:05:32 So you’re wrong.
0:05:32 Ha ha.
0:05:38 And the next day, the Miami Herald called and they wrote about my little business and
0:05:42 pretty soon I’m an entrepreneur magazine with a picture of me in a double extra large t-shirt
0:05:45 talking about how you can make money on this inner something or another.
0:05:53 Two weeks after that, the first spam came out and I apologize because the people who did
0:05:54 that read the article about me.
0:05:58 And in the article, I warned against marketing on the internet if you weren’t a part of the
0:05:58 community.
0:06:01 And so the first spammers on earth were attorneys.
0:06:02 Their names were Cantor and Siegel.
0:06:05 And if you look back on the history of the internet, that’s how it was.
0:06:06 So yeah, I was there.
0:06:07 I did it.
0:06:10 And I did it one day before the guys who currently run wine.com did it.
0:06:16 But at the time it was literally checks in the mail, t-shirts sent back, trying to make
0:06:18 ends meet and also scooping ice cream at Baskin Robbins.
0:06:20 I was just being scrappy.
0:06:22 It seemed obvious to me.
0:06:27 And this is why young entrepreneurs totally kick ass because you don’t even know how cool
0:06:28 what you’re doing is until you look back on it.
0:06:32 Because you don’t have the life experience to go, oh my God, it’s totally transformative.
0:06:35 By the time you can tell it’s transformative, you’re probably too late.
0:06:36 Yeah.
0:06:37 Oh my gosh.
0:06:38 What a cool story.
0:06:43 And so probably so many people tuning in had no idea that you were the first one to sell
0:06:44 anything on the internet.
0:06:49 So you had this computer science background and you also had a love of coffee pretty early,
0:06:53 which is kind of funny looking at your career now and the fact that you’ve created
0:06:58 bulletproof coffee so many years later and it’s all started with caffeine t-shirts.
0:07:04 It’s kind of, do you ever look back at that and think like, wow, like I was onto it already
0:07:05 like since back then?
0:07:09 Well, they always like to say, follow your passion.
0:07:13 And it’s kind of true, but here’s the thing.
0:07:17 My passion really was, I want to change the world to make it better.
0:07:19 And coffee is a way to do that.
0:07:25 Your day is measurably better if you have coffee in the morning, if you’re like 90% of people.
0:07:29 So if you’re the other 10%, I’m sorry, you have bad genetics and you shouldn’t reproduce.
0:07:30 Okay.
0:07:30 Just kidding.
0:07:34 But there are 10% of people who don’t tolerate coffee, but okay.
0:07:37 That’s one way eating quality food makes the world a better place.
0:07:42 But at the time, having a digital nervous system for the planet, so we could have the conversation
0:07:42 we’re having right now.
0:07:46 I worked on the network engineering and protocols that do this.
0:07:52 When Google was two guys and two computers, the company that I helped to co-found a part
0:07:55 of this company that held their servers and designed architecture for many of the biggest
0:07:56 brands out there.
0:08:01 when it was the Facebook, that mattered because we were building a way for all of us to connect
0:08:03 so that you and I could have this conversation.
0:08:08 Because if you go back 25 years, there was no way for us to know about each other, much
0:08:09 less to meet each other and have a conversation.
0:08:12 So the world has become much better because of that.
0:08:17 And in the last two years, now that we’ve turned on government censorship, it’s become
0:08:19 actually maybe worse because of it.
0:08:21 So we’ve got to fix that, but that’s a short-term blip.
0:08:22 Yeah.
0:08:25 So let’s go back to, you said you got into Entrepreneur Magazine.
0:08:31 I think I read that you were 297 pounds when you were in that magazine.
0:08:35 So what made you decide like, you know what, I’ve had it with computer science.
0:08:40 I want to kind of take what I learned with computer science and apply it to my body now
0:08:42 because I’m almost 300 pounds.
0:08:45 Well, I’m going to make a bunch of people mad now too.
0:08:49 I got tired of studying computer science because here I was, I had a webpage.
0:08:55 I had started a business online and all of computer science was how do you do esoteric math
0:08:56 on large computers?
0:09:00 Like this isn’t how, this doesn’t match my view of where the world’s going.
0:09:04 So I dropped out and I got a degree instead in something called information systems, which
0:09:06 is how do you solve problems?
0:09:09 And my concentration was in a form of artificial intelligence there.
0:09:11 How do I make a business work better?
0:09:17 How do I solve a problem using computers instead of how do I do science stuff in a lab somewhere?
0:09:22 And a lot of computer science still to this day is very esoteric and theory-based versus
0:09:23 let’s go out there and change something.
0:09:29 And as an entrepreneur-minded person, it hurts to not make things better.
0:09:32 And so that was why I went out.
0:09:37 But then I got to Silicon Valley and by the time I was 26, I did make 6 million bucks.
0:09:38 I lost it when I was 28.
0:09:40 It’s an important part of the journey.
0:09:44 This is about having a good mentorship, good advice and being willing to take it.
0:09:49 But that whole path, I said, okay, I’m going to lose the weight.
0:09:54 I’ll just work out hour and a half a day, six days a week, go on a low fat, low calorie diet.
0:09:55 I will use my willpower.
0:10:01 And after 18 months of that, what I found was I could max out all but two of the machines
0:10:01 at the gym.
0:10:03 I still had a 46 inch waist.
0:10:05 I still weighed 300 pounds and now I was tired.
0:10:09 So it didn’t work.
0:10:15 And it was sitting down at Carl’s Jr. with some friends.
0:10:19 And I thought to myself, wait a minute, I’m having the chicken salad with no dressing and
0:10:21 no chicken, right?
0:10:23 Because I’m the lowest calorie, low fat thing.
0:10:25 My friends are eating double Western bacon cheeseburgers.
0:10:28 I work out more than all my friends combined and I’m the fat one.
0:10:33 And I thought, it isn’t that I’m doing something wrong.
0:10:34 I used to think it was a moral failing.
0:10:35 It was a weakness.
0:10:37 It was that I needed to eat less lettuce.
0:10:39 No, what I was doing wasn’t working.
0:10:40 And I just said, wait a minute.
0:10:45 I just studied how to manage a complex system where you don’t know what’s going on.
0:10:46 Because that’s what the internet is.
0:10:50 I teach classes at the University of California on how to do this and I can’t do it to myself.
0:10:53 My doctor, when I went in, said something’s not right.
0:10:55 So maybe you should try to lose weight.
0:10:56 I’m like, no, really?
0:10:57 You think so?
0:10:58 Tell me how.
0:10:58 Eat healthy.
0:11:01 And I just fired the doctor.
0:11:03 I literally said, you’re fired.
0:11:05 When he didn’t know some very basic info about nutrition.
0:11:08 And I went off and said, I’m going to do it myself.
0:11:18 And so every night after I’d finish the building cloud computing phase of my career, I would go home and I would study biology because I didn’t want to die and I was tired of feeling like crap.
0:11:20 So it was enlightened self-interest.
0:11:25 I started learning from people three times my age who ran an anti-aging nonprofit group who had more energy than I did.
0:11:26 And I hacked it.
0:11:35 And then I said, okay, I’m a VP at a publicly traded computer security company in charge of cloud security.
0:11:37 So I have some credibility in that space.
0:11:41 And I started blogging.
0:11:50 I said, you know, five people are going to read my blog, but it’s going to prevent them from spending hundreds of thousands of dollars on recovering their health.
0:11:55 And I’m performing better than I ever have, better than I ever thought was possible, even when I was younger.
0:12:02 And so if five people avoid my pain, avoid all the money that I spent, I have done a solid for the world and I’m okay with that.
0:12:04 I wasn’t starting a company.
0:12:08 I was sharing hard earned knowledge through suffering.
0:12:12 And it turns out more than five people liked what I had to say.
0:12:16 And pretty soon I said, I want to make coffee that doesn’t make me crash.
0:12:18 So I said, this will be my first product.
0:12:21 The market size for functional coffee was zero.
0:12:23 It’s a multiple hundred million dollar product.
0:12:25 I said, I want a protein powder that works.
0:12:30 I’m going to do the research and the work around collagen.
0:12:32 Today, collagen is a billion dollar category.
0:12:32 It was not.
0:12:36 And I said, hmm, MCT oil from the anti-aging world.
0:12:38 It’s an unknown thing.
0:12:40 It’s now a billion dollar category.
0:12:51 So what I started as a blog to help people not go through what I went through with all the brain fog and obesity and arthritis and just acting like a jerk because you have enough energy to be nice.
0:12:55 Well, I wrote it not for heavy people.
0:12:56 I wrote it for entrepreneurs.
0:13:03 I wrote it for tech people because we are the ones who put the most mental energy and I don’t care if I have dad bod.
0:13:04 Okay.
0:13:04 I’m married.
0:13:05 I have kids.
0:13:07 I care about building companies.
0:13:09 I care about leading teams.
0:13:10 I care about innovating and creating.
0:13:12 And that requires energy.
0:13:17 And it turns out I grew abs as a side effect, not as the goal.
0:13:23 You can build abs and feel like crap or you can build energy and abs grow.
0:13:28 And I wanted to teach that to my people, which were the geeks pretty soon.
0:13:29 Go ahead.
0:13:31 I’m just going to say I love that.
0:13:32 I just love the story.
0:13:33 You go ahead.
0:13:37 Pretty soon, though, it wasn’t just entrepreneurs in Silicon Valley.
0:13:39 It was Wall Street where it took off next.
0:13:40 Let’s see.
0:13:43 These people are working 16, 18 hour days.
0:13:44 They never get a break.
0:13:46 They need their brains to work all the time.
0:13:55 My seed capital for what became Bulletproof was actually an investment bank hiring me to fly around the world to meet with hedge fund managers to teach them how to be smarter.
0:13:58 And I did this so they could walk into the room with me.
0:14:06 So their salespeople could come in because the hedge fund managers wouldn’t take a meeting with a banker, but they would take a meeting with a brain hacker and a banker walking in with them.
0:14:10 So I was the booth babe, for lack of a better word, for hedge fund managers.
0:14:15 I took the money from that and I used it to buy my first round of coffee and to hire the first members of my team.
0:14:17 So that’s how it got started.
0:14:22 And I started until I could replace my salary from a publicly traded company.
0:14:25 I worked as a VP and I grew Bulletproof.
0:14:28 That is such an amazing story.
0:14:41 And it’s so cool how just having good intentions will almost always when you’re starting a business or starting something, having good intentions and just wanting to help people, eventually the money will come find you.
0:14:51 You know, you just wanted to put that information out there to the world and it all worked out because you were doing a service to others and having pure intentions with it.
0:14:53 I find that a lot with all the people that I talk with.
0:14:56 It’s cool that you mentioned that.
0:15:01 When I was young, it was like, look, I’ll do anything for money because money is going to make me happy.
0:15:05 And I really believe that and it motivated a lot of my decisions.
0:15:11 What taught me that the two biggest lessons in my career, it was like money and fame are what people want.
0:15:13 We’re told that that will make us happy since we’re young.
0:15:13 Okay.
0:15:16 So here I am, I’m 22, 23, whatever.
0:15:19 I’m in Entrepreneur Magazine, like full color photo.
0:15:20 Right.
0:15:24 And I got some phone calls and some emails from people.
0:15:28 And then two weeks later, okay, that was cool, but it didn’t make me happy.
0:15:29 And I was like, what the heck?
0:15:30 I’m famous.
0:15:31 I should be happy.
0:15:32 I was happy for 10 minutes.
0:15:33 Right.
0:15:37 And then I said, okay, a little while our money.
0:15:38 So I made a ton of money.
0:15:45 $6 million in late 1990s dollars is $18 million in today dollars because of inflation driven by the government.
0:15:48 So it should be enough, right?
0:15:56 I looked at a friend who all of us at this company, I mean, this was, let’s see, our market cap hit $36 billion.
0:15:58 We split three times on one year NASDAQ.
0:16:03 This is one of the most phenomenal companies that helped to build the first wave of internet companies.
0:16:06 It’s called Exodus Communications for people who were around back then.
0:16:14 And I looked at a friend and I said, I’ll be happy when I have $10 million because $6 million wasn’t enough.
0:16:20 And if you are motivated by money, you will probably act like a jerk and you will never be happy.
0:16:23 And you will have what the Buddhists call hungry ghost syndrome.
0:16:27 And in the hungry ghost realm of hell, it’s one of the many levels of hell Buddhists talk about.
0:16:34 This is where no matter what you eat, you’re constantly hungry and you walk around with a distended belly and you can never be satisfied.
0:16:41 So if, when I finally figured out, I’m going to start this thing as a, it’s just a blog.
0:16:42 I just want to share things.
0:16:44 It makes me feel good to help people.
0:16:48 I didn’t understand that flow states come from service to others because we didn’t have the science for that.
0:16:58 So all of a sudden I’m motivated to stay up late and write these blog posts and to share this knowledge and to start a podcast before podcasts were really much of a thing.
0:17:03 I’ve been blessed to be, I don’t know if it’s genetic or something, but I’m a futurist.
0:17:07 I can see what’s coming and like podcasts.
0:17:09 Yeah, that’s going to be, it’s going to be a big thing.
0:17:14 And it’s why I was successful in tech as well, because I could say, I could tell the direction of it.
0:17:16 And if some people are good at telling the weather, that’s what I do.
0:17:17 I tell the future.
0:17:22 And so for, for this, this just seemed like it mattered.
0:17:23 Yeah.
0:17:26 And I wanted to do it for no financial motivation whatsoever.
0:17:30 I just didn’t want anyone to suffer the way I had no other motivation.
0:17:32 And now it’s made me pretty successful.
0:17:34 That’s super powerful.
0:17:40 So speaking of being a futurist, you think that people are going to start living a lot longer.
0:17:45 And you say that you think you’re going to live to 180 years old.
0:17:47 Now, the average human.
0:17:47 Hold on a second here.
0:17:48 You’re trying to cut me short.
0:17:50 It’s at least 180.
0:17:52 Oh, at least 180.
0:17:52 That’s not the ceiling.
0:17:53 That’s the floor.
0:17:54 That’s the floor.
0:17:55 Oh, okay.
0:17:56 I didn’t realize that.
0:17:59 So you think you’re going to live to at least 180 years old.
0:18:00 I believe you.
0:18:04 I mean, I know that you’ve spent hundreds of thousands of dollars biohacking your body
0:18:06 and we can get into that later.
0:18:13 So I definitely believe you on this because humans are, you know, living to be older and
0:18:15 hopefully we figure out the science to do this.
0:18:19 But talk to us about why you think this is even possible, because a lot of people are hearing
0:18:24 that and, you know, the average lifespan is 80 years old and we’re tacking on 100 years
0:18:24 to that.
0:18:27 Why is that even possible in your opinion?
0:18:29 Here’s why it’s possible.
0:18:33 Do you know what the best we can do today is?
0:18:37 120 or something like that.
0:18:37 There you go.
0:18:39 It’s about 120, 122 maybe.
0:18:41 So our current best is 120.
0:18:47 If you were 120 years old today, you were born around 1901.
0:18:49 We didn’t have airplanes.
0:18:53 World War I would be fought largely on horseback.
0:18:56 We didn’t have DNA because we couldn’t spell it.
0:18:56 Actually, we had it.
0:18:57 We just didn’t know about it.
0:18:59 We had no antibiotics.
0:19:05 We didn’t have public sanitation and you still live to 120.
0:19:08 So if that’s possible and you probably drank and smoked every day too.
0:19:11 Okay.
0:19:20 If you can do that, why can’t we do 50% better than our current best in the next hundred years?
0:19:21 Okay.
0:19:25 Because the next hundred years is going to be way different than the last hundred years.
0:19:30 Because the last hundred years, we did not have computers to make ourselves faster and better.
0:19:34 What we’re doing now is every 18 months, we double our compute capacity.
0:19:35 That’s Moore’s law.
0:19:38 And it’s held strong for ridiculous amounts of time.
0:19:46 What that means is that you and I are going to live longer because we have the technology to talk about living longer that we didn’t have before.
0:19:56 And my company, 40 years of Zen, that does neuroscience brain upgrades, has the ability to do machine learning on your brain waves.
0:20:09 One of the companies I am an investor and advisor to, Viome, just discovered 10,000 new species of gut bacteria that didn’t exist, that live in humans, that we didn’t know about.
0:20:12 And it’s 2020, whatever it is today, right?
0:20:14 That is phenomenal.
0:20:25 So given all of that, if a comet doesn’t hit the planet, it is inevitable that we will improve only 50% on our current best in the next hundred years.
0:20:26 In fact, we’ll do way better than that.
0:20:35 My job is to explain and make it real so that everyone knows this is possible and it is coming.
0:20:37 And so it becomes our expectation.
0:20:43 The same thing happened if you go back to when the Wright brothers were about to fly.
0:20:47 They’re working on flying machines and everyone looks around and goes, those idiots.
0:20:48 Who do they think they are?
0:20:50 Don’t they know man will never fly?
0:20:53 Literally, they were saying that a week before it happened.
0:20:55 And then all of a sudden it happens.
0:20:57 And then, oh, yeah, of course we can do that.
0:20:58 It’s always been that way.
0:21:07 So every great change that is brought about, usually by entrepreneurs or entrepreneurs in combination with crazy inventors, when they pair up, it’s very powerful.
0:21:12 And when that happens, magically, suddenly it’s obvious.
0:21:15 And we’re at that stage right now with anti-aging.
0:21:26 When I started this, I was the only person under 30 attending a meeting, a nonprofit that was based next door to Stanford University called the Silicon Valley Health Institute.
0:21:27 I ended up becoming chairman.
0:21:31 I’m learning from an 88-year-old and I’m 26.
0:21:33 And he had more energy than I did at the time.
0:21:34 Okay.
0:21:35 What?
0:21:38 These guys were considered truly crazy.
0:21:40 And so did the people who talked about smart drugs.
0:21:42 Where we are now with nootropics.
0:21:44 Nootropics are a thing and people know that they work.
0:21:46 And I played a hand at that as well.
0:21:51 I went on Nightline and said, guys, I’ve took a smart drug called modafinil for eight years, which is the limitless drug.
0:21:53 And it got me through Wharton Business School.
0:21:55 And I don’t regret it one bit.
0:21:56 It was a beautiful thing.
0:21:59 I don’t need it anymore because my brain’s that fast without it.
0:22:02 By the way, have you noticed?
0:22:05 Yeah, your tongue is blue.
0:22:06 What’s that about?
0:22:08 I kissed a smurf.
0:22:15 I use a compound called methylene blue, which I’ve written about in a couple of my books that enhances mitochondrial function.
0:22:16 It’s a nootropic.
0:22:18 It’s just one that makes your tongue blue.
0:22:24 Well, it’s super interesting, you know, what you’re saying about how long we’ll live.
0:22:32 This episode of Young & Profiting is brought to you by Mercury, the modern business banking experience that brands like mine used to manage their finances.
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0:24:17 Hey, Yap Gang.
0:24:25 This podcast started as a side hustle, a late-night labor of love fueled by a dream to share stories, lessons, and real experiences with other entrepreneurs.
0:24:28 Back then, it was just me, a mic, and a mission.
0:24:34 Taking your business to the next level is a dream that a lot of us share, but too often, it just remains a dream.
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0:25:54 Yeah, fam.
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0:27:27 Do you think that there’s a max limit to the human lifespan?
0:27:33 Like, what do you, I just want to, like, pick your brain about the future of what humans will look like, in your opinion.
0:27:38 There is a maximum life, absolutely.
0:27:39 Actually, there’s two of them.
0:27:43 The longest one is the universe, as we understand it, will collapse in on itself.
0:27:44 Okay?
0:27:48 There’s probably going to be a hard limit that’s based on physics and stuff like that.
0:27:49 I’m less worried about that.
0:27:53 The real limit to human lifespan is curiosity.
0:28:04 As long as you have a reason to live, to be of service to others, to be curious about things, to be constantly learning, and walking around with that childlike curiosity going, I wonder why that works.
0:28:05 How is it that way?
0:28:06 How can I make that better?
0:28:16 However, if you have the biology, so that when you’re old, you look and feel like you do now, we’re not talking about the skin so thin you can see through it with tubes and monitors and diapers and not knowing your own name.
0:28:17 People think that’s aging.
0:28:19 That is an aberration.
0:28:24 It has never existed in all of human history, except for in the last maybe 40, 50 years, and it’s sick and wrong.
0:28:41 So we are on the path of returning to having our village elders, the keepers of the knowledge, and returning them to what is right, which is a level of respect and veneration for our elders, because they will keep us from making mistakes.
0:28:42 And here’s why this matters.
0:28:50 You look back to when I made that $6 million, or even better yet, when I sold that first T-shirt online.
0:28:57 Now, I was exactly the same age as Mark Andreessen, who’s a really famous investor, multi-multi-billionaire.
0:28:59 Now, Mark created the first web browser.
0:29:01 I did the first e-commerce.
0:29:04 Very similar, about as similar as you can.
0:29:09 In fact, I wrote an article as a journalist about his first web browser.
0:29:10 So we’re in the same thing.
0:29:12 He flew to Silicon Valley.
0:29:13 I would have had to drive.
0:29:15 I was 80 miles from Silicon Valley.
0:29:20 But he flew to Silicon Valley, and he found a guy, 20 years older, who ran one of the large tech companies and said,
0:29:21 Teach me.
0:29:22 And he did.
0:29:24 What did I do?
0:29:26 I said, I’ll do it all myself.
0:29:27 I knew everything.
0:29:28 Right?
0:29:29 I had a big ego.
0:29:30 Right?
0:29:32 So I did not do that.
0:29:36 And at this point, Mark’s a multi-billionaire, and I’m not.
0:29:36 Okay?
0:29:37 I’m okay with that.
0:29:38 I’m doing quite well.
0:29:39 Thank you very much.
0:29:50 But it took me another 10 or 15 years to figure out the value of mentorship and to basically get control of my ego so that I could listen to and learn from others so I didn’t have to make all the mistakes myself.
0:29:53 And that’s a really, really big thing.
0:29:54 We can do that with aging.
0:29:56 We can do that with everything.
0:29:59 But it comes down to curiosity and willingness to learn.
0:30:01 And we’ve just got to get that.
0:30:02 That’s what keeps you young.
0:30:13 So once you’re bored, even if you have the biology, the real goal of anti-aging, you should die at a time and by a method of your choice.
0:30:15 When you’re done, you’re done.
0:30:17 That is so interesting.
0:30:19 And it’s so important.
0:30:21 I definitely want to drive this point home.
0:30:26 There’s like 13 million people by, I think, 2050 are going to have Alzheimer’s.
0:30:30 And I think the rate of Alzheimer’s is at an all-time high.
0:30:30 It keeps increasing.
0:30:32 And there’s so much dementia going on.
0:30:41 And like you said, when we think of older people, we think of children now instead of these wise people where we should be getting information from.
0:30:51 And it’s so important that as we all grow older, that people actually have the mental capacity to tell the knowledge to everybody else so that we can learn from those people.
0:30:55 I love it that you brought up Alzheimer’s.
0:31:03 My book, Headstrong, was on the New York Times monthly science bestseller list sandwiched between Homo Deuce and Sapiens, two of my other favorite books.
0:31:05 I’m like, oh, I finally made the big list.
0:31:06 I look at me.
0:31:06 I’m a big deal.
0:31:11 But I was just sort of in awe going, oh, my God, I can’t believe that.
0:31:12 I wasn’t expecting it.
0:31:16 But that book is largely based on research around Alzheimer’s.
0:31:20 And I’ve had Dale Bredesen on my podcast who wrote The End of Alzheimer’s.
0:31:25 And I was a couple years ago the largest donor to the women’s Alzheimer’s movement, which is Maria Shriver’s charity.
0:31:27 She’s been on my show as well.
0:31:30 Women get Alzheimer’s twice as much as men do.
0:31:32 And we don’t talk about that nearly as much as we should.
0:31:35 Alzheimer’s is preventable and avoidable.
0:31:37 It’s not even that hard, given what we know now.
0:31:40 But reversing it is a little bit more work.
0:31:42 And if you’re a late stage, it might not be reversible.
0:31:55 But if you and your mind today listening to this are saying, oh, it’s inevitable that I’m going to get cancer, cardiovascular disease, diabetes, and Alzheimer’s, which are the big four killers that you have to avoid to live a long time, you’re totally wrong.
0:31:56 These are metabolic diseases.
0:31:58 You can fix your metabolism.
0:32:02 In fact, my newest startup, the one where I’m CEO and fully focused now is called Upgrade Labs.
0:32:13 And we’re opening franchise locations across the US and Canada to start and soon the world where you can come in and fix your metabolism in less time than you currently spend going to the gym.
0:32:24 So you get your cardio, get your strength, get your neurofeedback, and fix your metabolism because we know how, because of machine learning, because of artificial intelligence, because of tech.
0:32:26 So you can do better than cavemen did.
0:32:31 And this is all necessary if you don’t want to go down that path of slow degradation.
0:32:33 That is not natural.
0:32:34 Yeah.
0:32:37 I’m so happy that you’re working on all this kind of stuff.
0:32:39 It’s really important that you’re doing this kind of work.
0:32:43 So a couple last questions before we move on to fast this way.
0:32:47 You’re currently, I believe, 49 years old.
0:32:49 I’d love to know.
0:32:49 48.
0:32:50 Here’s the deal.
0:32:51 Okay.
0:32:55 It is ageist to talk about someone’s age, right?
0:33:07 So if I am allowed to specify the gender I identify as, and I’m allowed to choose the race I identify as, I’ll be damned if I’m not allowed to choose the age I identify as.
0:33:08 I’m 28% right now.
0:33:13 I’m 28% of my goal, so I’m not 49, I’m not 48, so I’m 28%.
0:33:19 And everyone listening, get this, pick a number, that’s your goal, you are the percentage of that.
0:33:23 And if you believe in this whole, oh, identify with the calendar, no, screw the calendar, the calendar’s wrong.
0:33:27 If you measure my biology, I am measurably younger than my number of years.
0:33:28 So that’s what I identify as.
0:33:30 That’s exactly what I was going to ask you.
0:33:32 And by the way, I totally agree.
0:33:34 I look way younger than I am.
0:33:35 Are you like 24?
0:33:37 No, I’m not.
0:33:41 I’m in my early 30s and nobody believes, and like I look way younger.
0:33:41 It’s awesome.
0:33:45 And so I hate when people ask me because I’m like, no, I worked out my whole life.
0:33:50 I eat healthy and yeah, I look younger and I’m not, I don’t feel my age.
0:33:54 And so I totally, I love that, like saying a percentage of your goal.
0:33:58 So how, what are you biologically and how do you figure that out?
0:34:02 And the second part of the question is how much money have you spent on this?
0:34:05 And what are the types of things that you do to reverse your aging?
0:34:07 All right.
0:34:12 Well, it depends on which, which measure of age you want to look at.
0:34:16 And right now there isn’t one accepted thing.
0:34:18 I just did a big show on this.
0:34:22 And one of the, the probably more trustworthy tests is called true age.
0:34:30 And this is one that looks at the, the types of sugar molecules that line your cells.
0:34:32 And it looks at DNA methylation.
0:34:35 Like actually those are two different methods of looking at aging.
0:34:41 So you look at those things and I am between five and eight years younger than my biological
0:34:41 age right now.
0:34:46 And when I get the new tests, I would not be surprised if now it’s going to be about 12
0:34:51 years because I just did some more interventions that are lengthening telomeres, but telomere length,
0:34:56 which is the old way of measuring aging probably isn’t as accurate as we hoped it would be.
0:34:59 So there’s all sorts of discussions about it.
0:35:04 But the number one thing is, do you wake up and you have more energy than you did 20 years ago?
0:35:07 That’s a pretty good sign that something’s working, right?
0:35:08 And do you wake up and your body hurts?
0:35:10 That’s a sign something’s not working.
0:35:15 So like, like you, you have an unfair advantage.
0:35:18 See, I started out with bad genetics and bad lifestyle that I thought was a good lifestyle.
0:35:20 And I recovered from all that.
0:35:24 You are preventing the damage in the first place because you’re in your thirties.
0:35:27 And we know more now than we did when I was in my thirties.
0:35:29 And you actually took action early in your life.
0:35:30 Most people are like, are you kidding?
0:35:32 Here’s what I care about in my twenties.
0:35:37 I care about having enough money to make sure that I get laid.
0:35:42 Sorry, human development, all personal development right there.
0:35:49 People care about power and they care about reproduction, not because we choose to, because our biology does that for us when we’re not paying attention.
0:35:52 And then we’re like, oh, why did I go on the date instead of the job interview?
0:35:55 You just blame yourself when you think you’re a bad person.
0:35:57 No, it’s because your biology told you to do that.
0:35:59 And your biology is in charge more than we like to think.
0:36:02 And this is the struggle of personal development.
0:36:10 So whatever you did, whatever your parents did that made you wise enough to take care of your hardware means that your rate of aging is going to be flat.
0:36:16 Whereas someone who says, I’m just going to go party and drink way more than I should and eat ramen all the time because it’s cheap.
0:36:18 Their rate of aging is going to be really steep.
0:36:20 They just don’t feel it until they’re 35.
0:36:22 So kudos to you.
0:36:27 And I want everyone to not do what I did when I was 16 because I just didn’t do it right.
0:36:27 Yeah.
0:36:30 Well, this has been so interesting.
0:36:34 I would love to move on to your book fast this way because there’s so much.
0:36:37 Before we get there, I didn’t answer your last question.
0:36:38 You wonder how much I spent.
0:36:39 How much you spent.
0:36:39 Yes.
0:36:43 How much you spent and what are the types of things that you’re spending your money on?
0:36:51 So I have spent at this point around $2 million on anti-aging on upgrading my biology.
0:36:56 Part of that, I built a lab here at my house that has all of the gear that is now a part of Upgrade Labs.
0:37:03 So when you’re able to go to an Upgrade Labs or if you open an Upgrade Labs franchise in your neighborhood, a lot of the gear there, well, I bought all that gear.
0:37:13 And I’ve spent God knows how much on lab testing, on traveling around the world and trying all of the anti-aging technologies that billionaires are doing right now.
0:37:19 And that was the subject of Superhuman, which is my big anti-aging book that tells you all of the stuff that you can do now, including the free stuff.
0:37:25 So the problem is that when you’re young, you’re not going to spend $100,000 on a stem cell treatment.
0:37:29 It doesn’t even make sense because you don’t need to because you have young stem cells, right?
0:37:31 So that’s part of it.
0:37:35 But there are things you can do now that we know what’s making you older.
0:37:44 The things you can do that are free, that give you the advantages so you can hold off on spending lots more money as you age in order to not age.
0:37:52 So the biggest one you can do that has the highest ROI is intermittent fasting, which is my latest book.
0:37:54 Love it.
0:37:56 So why don’t, well, let me ask you one other thing.
0:37:59 What is, so you spent $2 million.
0:38:03 What would you say is the most effective thing that you’ve done so far?
0:38:06 Wow.
0:38:13 It’s sort of like, okay, you have a car and you want to keep your car running for a long time.
0:38:18 So what was more important, changing the oil or rotating the tires?
0:38:20 They’re probably both important.
0:38:25 Like if you don’t rotate the tires, you’re going to have a blowout and flip the car and that’s no good, right?
0:38:28 But if you don’t change the oil, the engine is going to wear out before it’s time.
0:38:28 So which one was more important?
0:38:37 It’s really hard for me to say that, but I will tell you that having a healthy metabolism that makes energy very effectively from air plus food.
0:38:48 If you can hack that system, everything else, including your cognition, your meditation, your personal development, your rate of aging, your DNA methylation, all of it will be better.
0:38:52 So fixing your metabolism would be the number one thing.
0:38:55 And of all the things I’ve done, which fixed it a lot.
0:38:56 The supplements are important.
0:39:00 You absolutely need to be taking supplements.
0:39:01 The reason is straightforward.
0:39:08 You’ll never get all of your nutrients from food because that presupposes you get all of your toxins from mother nature.
0:39:11 You live in a world that is not the natural world.
0:39:14 You need to support the systems in your body for the world you live in.
0:39:15 That’s why you use supplements.
0:39:22 The other thing is intermittent fasting, brief periods of exercise, not over-exercising, is also very important.
0:39:26 And so those are some of the very basic cheap things.
0:39:28 And frankly, sleeping, learning how to sleep.
0:39:32 When I was a young entrepreneur, like sleep, why would I do that?
0:39:34 I could learn instead of sleep.
0:39:38 So I would sleep five hours a night sometimes because I had work, because I had things to do.
0:39:40 The ROI on sleep is very high.
0:39:52 But a new study came out literally two days before we recorded this that showed sleeping more than six and a half hours a night is related to negative changes neurologically.
0:40:01 The correct amount of time for high-performance, healthy people who are not under undue stress is about six and a half hours a night.
0:40:15 I went from five minutes of deep sleep and five minutes of REM sleep in a six and a half hour period 15 years ago to getting an hour and a half to two hours of deep sleep and an hour and a half to two hours of REM sleep.
0:40:19 That is more sleep than a 20-year-old gets in eight hours.
0:40:25 I’m getting as a 48-year-old who identifies as a 28-year-old in six and a half hours.
0:40:28 So less sleep, but more quality.
0:40:31 That in and of itself is your biggest anti-aging strategy right now.
0:40:33 So learn how to sleep and learn how to skip breakfast.
0:40:38 Those two things are going to buy you 20 years, even if you don’t spend any money on it.
0:40:39 Okay.
0:40:46 Well, this is a great segue into your new book that came out last January called Fast This Way.
0:40:52 So I thought the best way to kick this off is to get your definition of fasting because it’s not only about food.
0:40:56 Fasting means to go without.
0:40:57 That’s it.
0:41:01 And people say, well, fasting means you can have no calories.
0:41:02 You can only have water.
0:41:05 Because that’s what mice did in a study.
0:41:09 I’m like, well, I hate to tell you there’s something called dry fasting.
0:41:12 That’s when you fast without water too.
0:41:15 So which is the real fasting, right?
0:41:19 Well, there is no real definition other than the one I just gave, which is to go without.
0:41:20 You can fast from alcohol.
0:41:21 It’s called abstaining.
0:41:22 You can fast from sex.
0:41:26 It’s called chastity or celibacy, whatever you want to call it.
0:41:31 And you can fast from hate, which is called compassion meditation.
0:41:33 It’s called forgiveness.
0:41:39 All of those are practices of fasting, saying I am not going to do X for some period of time.
0:41:45 And it turns out when fasting from food, it’s not even fasting from calories.
0:41:51 It’s fasting from specific types of calories that cause metabolic changes you don’t want.
0:41:59 So I wrote the first book, which is about fasting for performance, a working fast versus fasting for a spiritual fast.
0:42:03 And I fasted in a cave for four days led by a shaman who was remote from me.
0:42:08 So I’m all by myself because I knew that if I didn’t eat, this was going back to 2008.
0:42:13 If I didn’t eat six meals a day, I would go into starvation mode, which is not a real thing.
0:42:18 And then that would make me fat and some bizarre mental gymnastics taught to me by big food.
0:42:26 I also knew that I would get hypoglybitchy, which meant that if I didn’t eat often, I would yell at everyone around me because I would get cranky.
0:42:29 So I’m like, put me in a cave, no food, no one to yell at.
0:42:30 Everybody wins.
0:42:36 And the book is actually based on the psychology of fasting plus the physiology of fasting.
0:42:38 And I just tell you, here’s how to fast without pain.
0:42:42 So you work better than you did before and you save money and time in the morning.
0:42:46 And then here’s what to do on a weekend or when you want to do a spiritual fast.
0:42:53 And to date, 70,000 people have done the free fasting training, the challenge that comes with the book.
0:42:55 Fastestway.com is where that is.
0:43:00 And I just want people to learn if you skip breakfast the right way, you’re nicer to the people around you.
0:43:02 You’re more focused than you were before.
0:43:03 Your metabolism gets better.
0:43:08 You’re less likely to get diabetes and cancer and Alzheimer’s and cardiovascular disease.
0:43:10 And you save money and time.
0:43:13 Like it’s the best, highest return on investment hack there is.
0:43:14 Yeah, fam.
0:43:16 I want the attention of all you renters out there.
0:43:18 And I know there’s a lot of us.
0:43:22 There is a platform called Built where you can pay your rent through this platform.
0:43:24 I’ve been using it for over a year.
0:43:29 And you can earn your favorite airline miles and hotel points just by paying your rent on time.
0:43:31 I, of course, always pay my rent on time.
0:43:38 And as a result, I accumulated a lot of points, so much so that I’m going on a trip to Tulum for my birthday with my friends.
0:43:41 And I was able to pay for my hotel and my airline flight by using Built.
0:43:42 Sounds too good to be true?
0:43:44 Let me explain.
0:43:45 There’s no cost to join.
0:43:50 And just by paying your rent, you’ll unlock flexible points that can be transferred to your favorite hotels or airlines.
0:43:54 It could even be transferred to a future rent payment, your next Lyft ride, and so much more.
0:43:58 When you pay your rent through Built, you unlock two powerful benefits.
0:44:03 Number one, you earn one of the industry’s most valuable points on rent every single month.
0:44:05 No matter where you live or who your landlord is, it doesn’t matter.
0:44:07 Your rent now works for you.
0:44:11 Second, you gain access to exclusive neighborhood benefits in your city.
0:44:16 Built’s neighborhood benefits are things like extra points on dining out, complimentary post-workout shakes,
0:44:22 free mats or towels at your favorite fitness studios, and unique experiences that only Built members can access.
0:44:27 When you’re ready to travel, Built points can be converted to your favorite miles and hotel points around the world,
0:44:29 meaning your rent can literally take you places.
0:44:32 Get your next vacation for free just by paying your rent.
0:44:35 So my question is, what are you waiting for?
0:44:36 You’re already paying your rent.
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0:48:03 So let’s stick on that since you brought it up, skipping breakfast.
0:48:06 I think it’s, you got to wait six hours.
0:48:10 I think in your book you said six hours after you wake up is when you should first,
0:48:13 you know, break your fast, I guess, or eat your lunch.
0:48:14 Is that true?
0:48:16 It’s not true.
0:48:16 Okay.
0:48:22 And the reason the book is called Fast This Way is that there isn’t one way.
0:48:24 It’s biologically unique.
0:48:29 So let’s just suppose that last night you went out and you maybe had a few drinks with
0:48:32 friends and you stayed up till midnight, right?
0:48:35 And then you woke up this morning and said, I’m going to fast.
0:48:39 You already blew out your biology.
0:48:40 You messed with your sleep.
0:48:41 You had alcohol.
0:48:43 You probably ate way late.
0:48:46 You’re, maybe you worked out the day before too.
0:48:46 Okay.
0:48:48 So you’re already at a point of biological stress.
0:48:52 Adding fasting as a stressor on top of a stressed body isn’t going to work very well.
0:48:53 Have some breakfast.
0:48:54 It’s okay.
0:48:55 Right.
0:48:58 And then let’s say that another day you went to bed on time.
0:49:03 You didn’t have a late dinner and you didn’t have a bright TV in your eyes and whatever.
0:49:06 So you wake up and you’re just fully charged and you’re ready to go.
0:49:09 Maybe you should fast for more than six hours.
0:49:14 The evidence shows at least a 12 hour fast, three days a week.
0:49:18 This is in women over 40 specifically creates metabolic benefits.
0:49:23 So for most people, most days, at least 14 hours without food is a good idea.
0:49:25 However, 14 hours, I would starve.
0:49:28 Now, when you’re asleep counts, it’s like have dinner.
0:49:29 Earlier dinners are better.
0:49:30 So have dinner at five.
0:49:32 Let’s say you’re done eating at six.
0:49:41 If you, if you don’t eat snacks and dessert after that, and you wake up at 6 a.m., you already fasted 12 hours.
0:49:44 You can just wait two more hours and you did a 14 hour fast.
0:49:45 So you have breakfast at eight.
0:49:49 It’s not that big of a deal, but that midnight snack ruins you biologically.
0:49:52 And if you’re saying, okay, I didn’t want, I can go past eight.
0:49:56 I’m just going to wait and I’ll have some breakfasty kind of thing at 10.
0:49:59 Well, you just did a 16 hour fast.
0:50:00 You wait till noon.
0:50:01 Oh my God.
0:50:04 You did an 18 hour fast and 18, six fast.
0:50:05 That’s what all the paleo people do.
0:50:08 It’s not that hard, but here’s when it’s hard.
0:50:11 And I say this as a guy who was obese for much of my life.
0:50:21 If when you wake up, you have a gnawing hunger and all you can do is think about food and you go into the office and someone has a plate of donuts there, the donut’s going to win.
0:50:23 It’s going to say, eat me.
0:50:24 And you’re going to say, no.
0:50:26 And it’s going to say, eat me.
0:50:27 And you’re going to say, no.
0:50:29 And the conversation gets more and more shrill.
0:50:30 And it’s like arguing with the two-year-old.
0:50:34 Eventually there’s going to wear you down and you go, fine, I’ll eat half.
0:50:35 And you have just a bite of donut.
0:50:37 And then you go, God damn it.
0:50:38 Why am I such a bad person?
0:50:39 I’m so weak.
0:50:39 No.
0:50:44 Theology dictates that this will happen to you, especially when you’re not fat adapted.
0:50:46 We don’t have a flexible metabolism.
0:50:52 So what I teach people to do in the fasting challenge or by reading the book, but the fasting challenge is free.
0:50:53 Fast this way.com.
0:50:59 It’s look, there are things you can do that turn off hunger so that in the morning, I just don’t care about food.
0:51:03 The donuts are in front of you and there is no voice telling you to eat it because you’re like, I don’t want it.
0:51:10 And it’s so much, it’s just easier that way because what happens is your willpower is a finite resource.
0:51:16 And if you spend all of your willpower saying no to donuts, no to your biology, it just keeps asking you because your biology doesn’t have what it needs.
0:51:23 You’re probably not going to have enough left over to be nice to the people around you, to be focused at work, to do what you want to do.
0:51:25 And then you’re going to beat yourself up and think it was you.
0:51:32 So fast this way is about the mindset and the physical tools to make yourself never hungry when you’re fasting.
0:51:33 And then it’s just easy.
0:51:35 So fastestway.com.
0:51:37 I’ll stick that in my show notes.
0:51:41 So when people think about fasting, I think the big buzzword is ketosis.
0:51:45 Everybody knows about ketosis and that’s what they, they want to enter into a state of ketosis.
0:51:51 But then there’s also another important world called, called autophagy, phagy, autophagy.
0:51:52 Autophagy.
0:51:52 Autophagy.
0:51:53 Sorry, I read it.
0:51:54 I didn’t hear it.
0:51:55 Autophagy, right?
0:51:59 So tell us about the difference between ketosis and autophagy.
0:52:12 People who read my first big book called The Bulletproof Diet, that’s probably more than half a million copies now, 16 languages, and people have lost more than a million pounds on the Bulletproof Diet.
0:52:18 It was probably the first modern keto book, except it wasn’t just about keto.
0:52:27 What ketosis is, is something that happens when you fast or when you only eat fat or maybe very, very small amounts of carbs and protein and all.
0:52:31 But it’s when your body says, I’ve got no carbs and no protein to burn, what will I do?
0:52:33 I guess I should burn fat.
0:52:37 This is a major part of how I lost the hundred pounds of fat that I lost.
0:52:46 The only problem is that in the Bulletproof Diet, I teach people, here’s how to use ketosis for a brief period and then how to switch out of it and then go back in.
0:52:55 And if you’re saying, I’m only going to eat peanut butter and margarine, you’re not going to have the same results as if you eat the stuff that I talk about.
0:52:57 Actually, grass fed butter instead of peanut butter.
0:53:00 So the type of things you eat when you’re doing ketosis matters greatly.
0:53:04 But essentially, it’s fat burning mode and we’re all capable of it.
0:53:11 And if you go into ketosis even briefly, it has a side effect that no one talks about that’s so important.
0:53:18 When I weigh 300 pounds, there were many times I would lose 30 or 40 pounds and it would come roaring back plus 10.
0:53:28 It happens to anyone who’s been fat and right now it’s like 60, 70% of the U.S. is overweight and struggling with exactly what I went through and what I don’t ever think about now.
0:53:36 And when you go into ketosis, it resets your body’s hunger to that of your current body weight.
0:53:43 If instead you go, oh, I’m going to do what those 1970s people online say, oh, you just have to work out more and eat less and you’ll lose weight.
0:53:44 No, I tried that.
0:53:45 I beat myself up.
0:53:47 I gave myself an autoimmune condition doing that.
0:53:48 It does not work.
0:53:51 You might lose weight for a little bit of time, but it will come back.
0:53:54 So what happens there?
0:53:58 You go in ketosis and all of a sudden, if I weighed 300 pounds, I lost 50 pounds with ketosis.
0:54:03 I’m still going to have the hunger of a 300-year-old unless I use ketosis, right?
0:54:05 So that’s why it matters so much.
0:54:06 So that’s keto.
0:54:08 And autophagy is a totally different thing.
0:54:14 If you think about Las Vegas, all those lights everywhere before they turned to LEDs, there were teams, hundreds of people.
0:54:18 Their job was to go out and find the dim bulbs and the bulbs that were out and go up on a ladder
0:54:21 and take out that bulb and put in a new one so that you didn’t have any bulbs out.
0:54:28 Well, your body has quadrillions of little power plants and some of them are weaker than others.
0:54:31 When you fast, your body goes through and says, what are the weakest ones?
0:54:37 Let me get rid of those, break them down, and use them as building blocks to make new, healthy, young mitochondria.
0:54:44 So when you fast, you get the benefits of ketosis, weight loss, and mental function, and the reduction in Alzheimer’s.
0:54:49 And you get the benefits of autophagy, which is replacing older power plants with younger ones.
0:54:50 Oh, and how much did it cost?
0:54:56 You actually got paid to do it because you didn’t spend money on breakfast and you didn’t spend time on breakfast.
0:54:59 It is the simplest thing to just go, oh, this makes sense.
0:55:02 It is so, so interesting.
0:55:08 You know, I was always never a fan of fasting because I grew up Muslim, right?
0:55:10 I’m the least religious person ever.
0:55:11 Ramadan.
0:55:15 And so, like, I was tortured being fasting during Ramadan.
0:55:19 And it was so hard because you’re not even allowed to drink water.
0:55:22 And I think spiritually, I respect it.
0:55:30 You know, I haven’t fasted since high school because I decided that it made me sluggish and that I couldn’t compete.
0:55:34 I wasn’t going to, you know, when I was getting my MBA, I was like, I won’t get a 4.0 if I fast.
0:55:36 When I was in corporate, I won’t be competitive.
0:55:37 Now I’m an entrepreneur.
0:55:38 Same thing.
0:55:41 I feel like I can’t be competitive if I’m fasting for a month.
0:55:45 And then plus, I feel like it’s kind of an unhealthy way to do it.
0:55:48 So you only eat when it’s dark outside.
0:55:50 And a lot of people usually wake up at 4 a.m.
0:55:55 They eat, then they wake up, then they’ll eat again at like 7 or 8 when the sun goes down.
0:55:56 And they’ll probably eat all night.
0:56:01 And then you can’t have water or coffee during the day.
0:56:04 So what do you think about this kind of fasting?
0:56:05 It can’t be good for you.
0:56:15 Well, it turns out a lot of the studies I reference in Fast This Way are using Ramadan, which is one of our biggest studies of a certain style of fasting.
0:56:18 And it’s intermittent dry fasting, right?
0:56:22 It turns out there are health benefits to Ramadan, which are built in.
0:56:29 And a lot of the ancient nutritional practices that you’ll find through whatever culture you’re looking at are around health.
0:56:32 For instance, the don’t eat pork that you find in multiple religions.
0:56:36 It’s because pork usually had parasites in it.
0:56:40 And pork that is not refrigerated properly has high levels of histamine, which is inflammatory.
0:56:46 So if you were making rules for your population, you’d be like, don’t eat that stuff because it causes problems a lot of times.
0:56:50 However, if it’s preserved properly and it’s fed properly, it has different effects.
0:56:53 But they didn’t have the technology or the abilities there.
0:56:55 So they’re like, just don’t do it, right?
0:56:56 Which makes sense.
0:57:00 Now, what I would say is that it actually is healthy.
0:57:03 And there are many, many people who practice Ramadan.
0:57:10 And the last thing they have before they go into Ramadan, right before the sun comes up, is a huge cup of bulletproof coffee.
0:57:21 And they do that because in Fast This Way, I talk about the mechanisms of butter and specifically the MCT oil and coffee itself to turn off hunger for long periods of time.
0:57:25 So at that point, their ketone levels spike and the ketones suppress hunger.
0:57:28 So then they don’t think about hunger all day long.
0:57:32 And get this, when your body is burning fat, guess what a side effect of burning fat is?
0:57:35 I don’t know.
0:57:36 Losing weight?
0:57:36 Water.
0:57:37 Water?
0:57:37 Okay.
0:57:38 It makes water.
0:57:40 That’s why camels store fat in their humps.
0:57:42 No, they store fat in their humps.
0:57:42 But it’s water.
0:57:46 So they burn the fat in the hump to make water so they don’t need to drink water.
0:57:54 So if you are in Ramadan and you have ketosis going on, you are hydrating yourselves through burning fat.
0:57:55 And you’re not hungry because you’re burning fat.
0:57:58 And then it’s a much less painful fast.
0:58:00 Now, eating after dark is just not good for you.
0:58:01 But that’s traditional in the Middle East.
0:58:08 I’ve spent a lot of time in Dubai, been to Oman, and have investors in my companies from that part of the world.
0:58:10 And I do have a hard time.
0:58:11 I have dinner at 10 o’clock at night.
0:58:12 I don’t sleep as well.
0:58:14 But that’s because of the intense sun during the day.
0:58:17 So you’ve got to adjust what you do for where you live.
0:58:17 Yeah.
0:58:20 So, well, that’s all really helpful.
0:58:24 I guess you gave me a little bit of motivation to figure out how I could do it.
0:58:26 I do this next time it’s Ramadan.
0:58:28 You haven’t done this in a long time.
0:58:30 Connect to your roots.
0:58:32 Try it for just a week.
0:58:33 Just a week.
0:58:34 Not the whole month.
0:58:37 And see if instead of being sluggish, tired, slow.
0:58:46 The reason you’re sluggish and tired and slow is because what you eat at night is full of sugar and carbs and stuff like that.
0:58:54 But when people say, oh, I’m going to practice Ramadan, but I’m going to eat foods that don’t cause hunger all day long, suddenly it’s like rocket fuel.
0:58:56 And it’s totally sustainable for a month.
0:58:58 That’s super interesting.
0:59:03 So let’s talk about – I know we’re running a little short on time.
0:59:04 So actually, I’m going to skip to something else.
0:59:06 Let’s do a quick fire segment.
0:59:10 I’m going to rattle off some ways that you can fast.
0:59:14 And why don’t you tell us quickly what they are and the good and the bad with each one.
0:59:17 So let’s start with the 16-8 fast.
0:59:24 16-8 fast means that you don’t eat for 16 hours and you eat whatever you want during that eight hours.
0:59:29 This is what works for most people most of the time as long as you don’t do too much of it.
0:59:35 And it gives you most of the benefits of intermittent fasting, which can be slightly longer or slightly less long.
0:59:35 Okay.
0:59:38 Let’s do OMAD, one meal a day.
0:59:42 One meal a day means what it says.
0:59:43 So it’s a 24-hour fast every day.
0:59:50 In fact, if during Ramadan, you were to say, I’m just going to eat breakfast right before sun comes up, you’d be doing OMAD.
0:59:52 OMAD is fantastic.
0:59:53 It gives you more autophagy.
1:00:02 However, most people I find who do OMAD every single day for more than especially about five days, their sleep quality goes down.
1:00:05 Women’s before men’s because women and men actually do fast differently.
1:00:07 That’s part of the teachings in Fast This Way.
1:00:10 The 5-2 fast.
1:00:12 5-2 fast.
1:00:18 That’s a fast where for two days of the week, you either eat very low calories or no calories.
1:00:21 And five days, you eat whatever the heck you want, whenever the heck you want.
1:00:24 And there’s plenty of evidence that says that works.
1:00:27 I find it’s much less sustainable for long periods of time.
1:00:29 Probably doesn’t work as well as just skipping breakfast most days.
1:00:32 Okay, spontaneous meal skipping.
1:00:36 Spontaneous meal skipping just says, oh, I don’t feel like eating.
1:00:37 I’m not going to eat.
1:00:38 You should always do that.
1:00:40 But here’s the deal.
1:00:44 If you want to eat within four hours of a meal, your last meal was built wrong.
1:00:46 You have that kale salad you thought was healthy.
1:00:47 No, it wasn’t healthy.
1:00:48 It just made you hungry.
1:00:51 So, if you just don’t feel like eating, don’t eat.
1:00:56 The problem is that skipping meals doesn’t really make it fasting.
1:00:58 Unless you’re skipping breakfast or you’re skipping dinner.
1:01:02 Because you just aren’t getting that 12-hour plus window of having no food.
1:01:03 Okay.
1:01:08 So, let’s go back to, you just mentioned something that I want to touch on.
1:01:10 You said that women and men fast differently.
1:01:11 Why is that?
1:01:14 There is something I call the fasting trap.
1:01:16 And it’s the same as the exercise trap.
1:01:18 It’s the same as the keto trap.
1:01:19 It’s the same as the vegan trap.
1:01:24 If you think something is good and you got results, more of it must be better.
1:01:26 It’s just basic human thinking.
1:01:31 The problem with fasting is that when you fast too much, then bad things start to happen.
1:01:33 But you’re convinced that fasting works for you.
1:01:36 So, then you fast even more and you end up making yourself sick.
1:01:39 Women hit the fasting trap before men do.
1:01:42 Usually in about six weeks of over fasting.
1:01:46 Men, it’s usually closer to eight or even 12 weeks.
1:01:49 Here’s what it looks like for women when you over fast.
1:01:50 You get that fasting trap.
1:01:54 And over fasting means just fasting for too long, too many days in a row.
1:01:58 Number one, you wake up and you feel like you didn’t sleep.
1:01:59 Your sleep quality goes down.
1:02:03 Number two, your hormones start not working right.
1:02:04 Your cycle is less regular.
1:02:06 You have more symptoms.
1:02:06 Huh?
1:02:07 I don’t normally get that.
1:02:09 And then number three is hair thinning.
1:02:14 And with guys, it hits us a couple of weeks later if we’re over fasting.
1:02:16 Number one, we don’t sleep as well.
1:02:20 If you’re monitoring your sleep, you see changes or you just wake up and feel just not well rested
1:02:20 today.
1:02:22 Maybe I’ll just have more coffee and fast extra today.
1:02:23 Not a good idea.
1:02:27 Second thing, guys, experience is you wake up without a kickstand.
1:02:32 And the third thing is you’re looking at me like you don’t know what I’m talking about,
1:02:33 but you know what I’m talking about.
1:02:35 Now I just got it.
1:02:36 Now I got it.
1:02:37 It took me a minute.
1:02:38 I was like kickstand.
1:02:46 And then the third one is, see, I didn’t trigger any warnings there.
1:02:49 The third one for guys is also hair thinning.
1:02:52 So this is why for women and men, it’s different.
1:02:56 And women are more susceptible to over fasting.
1:02:58 And it isn’t true for all women.
1:03:00 This is why fast this way.
1:03:04 You must fast based on your current biological state, your current readiness.
1:03:09 So there are also changes that occur at different times of the month where you are in your cycle.
1:03:10 Right.
1:03:14 So for some women, when you’re menstruating, like, OK, I really do great fasting.
1:03:17 Other women, I need to eat because my blood sugar is unstable.
1:03:21 But you got to figure out what it is so that you feel good and you’re not overdoing it.
1:03:23 And I talk about the techniques in the book for that.
1:03:27 Guys, I have to say fastest way has so much information.
1:03:31 There’s so many things we didn’t get to talk about, really, like sleep related to fasting,
1:03:33 exercise related to fasting.
1:03:35 You guys can get all that information in Dave’s book.
1:03:41 Dave, the last question I ask all my guests is, what is your secret to profiting in life?
1:03:49 My secret to profiting in life is don’t worry about profiting in life.
1:03:50 That’s not what you’re here to do.
1:03:53 You should evolve in life and profit to side effect.
1:03:54 Love it.
1:03:57 And where can our listeners go to learn more about you and everything that you do?
1:04:00 Go to Dave Asprey dot com.
1:04:03 There’s three thousand articles, a thousand hours of video.
1:04:06 There’s a vibrant learning community called the Upgrade Collective.
1:04:11 And there are free challenges where I just teach you all my books for free because I just want you to have the knowledge because,
1:04:13 well, if you have that knowledge, then you won’t suffer the way I did.
1:04:14 And everybody wins.
1:04:15 Amazing.
1:04:16 Thank you so much.
1:04:17 I love this conversation.
1:04:18 It was so good.
1:04:19 It was fun.
1:04:20 Thank you.

0:00:04 the headline here is they made the investment so it’s not like they passed they made the investment
0:00:10 and their best case scenario they wrote was 400 million as an exit value 400 million and now it’s
0:00:18 140 billion i feel like i can rule the world i know i could be what i want to i put my all in it
0:00:23 like my days off on the road let’s travel never look let me uh tell you about something that i’ve
0:00:28 been thinking about and i thought it was really cool and our friend shiel just shares the best
0:00:33 stuff and so i’m sharing man on x the most interesting man on x the most interesting man
0:00:39 i know actually he does a lot of amazing stuff but he shared something but so i got to give him credit
0:00:44 but basically i saw this jeff bezos quote and i want to know what you think about it and he said
0:00:50 something where he said um i think it’s generally human nature to overestimate risk and underestimate
0:00:54 opportunity and then he went on to say and so i think entrepreneurs in general would be well advised
0:01:00 to try and biased against that the risks are probably not as big as you perceive the opportunities may be
0:01:05 a lot bigger than you perceive and so uh the interviewer was like you seem really confident and
0:01:09 he goes well you call it confidence but maybe i’m just accepting that human bias and i’m trying to
0:01:14 compensate against it and i thought this was interesting i’ve been thinking about this i i saw
0:01:19 this like weeks and weeks ago and every time i’ve been thinking i’m like there’s so many businesses
0:01:24 or opportunities that i see where i’m like i can’t believe that that thing is that big and i myself
0:01:29 fight this as well and where i think this thing can’t be that big you know i think i’ve said this
0:01:33 multiple times for different products that i said that will never work and it becomes huge and even
0:01:37 jeff bezos by the way he fell victim of this there’s this one quote where he was like driving
0:01:42 packages he says when i was driving packages to the post office myself and taping up and typing up
0:01:47 all the listings i thought maybe if i’m lucky maybe this can be a hundred million dollar revenue
0:01:52 company someday and so like everyone has this but i saw this amazing thing where it was shiel sharing
0:02:01 a memo from bessemer so bessemer is a vc i think they’re a fantastic vc but they’re a big vc so they
0:02:06 created this part of their website where they release old memos and if you don’t know what that is a memo is
0:02:12 where whoever wants to invest into a company who works at a vc they make a memo justifying their thoughts
0:02:15 and then typically the partners like agree on it they’re like yeah that was a persuasive argument
0:02:21 we’re on board and so they did a cool thing where they released the memos from past deals
0:02:28 and they had this amazing deal or this amazing memo on shopify and this was when shopify was raising
0:02:32 five million dollars at a 20 million dollar valuation the company was doing five million in revenue
0:02:40 and i want to show how bad bessemer who is a professional vc i think they have tens of billions in
0:02:46 under management i want to show how bad they are predicting stuff so they said this is straight these
0:02:54 are quotes from the memo they said in 2010 uh shopify had 132 million dollars in gmv which would
0:03:03 put shopify in the top 50 online retailers and so at the time that is how small the category was
0:03:07 let’s let’s say the other numbers because that sounds like a big number right so they had 5 000
0:03:13 they had 10 000 customers total and they were doing 5 million of revenue themselves so the 5
0:03:18 million of revenue that’s the company’s revenue and then all the shops on shopify their sales total was
0:03:24 132 million right and now do you know how many you know how many customers there do you actually know how
0:03:31 many they have now i know that they add more than 10 000 paid customers every week now i think there’s
0:03:35 there’s multiple million customers they have multiple million and i believe so the company is
0:03:44 now worth 130 billion i believe uh at 1.200 billion i believe they do something like close to a trillion
0:03:50 dollars in gmv so i can’t even tell you what that math is what the multiple is they’re probably doing
0:03:56 this amount like the 132 million like every hour like an hour yeah every hour yeah you’re saying we
0:04:02 underestimate the the upside of of these things we underestimate the market size and the the headline
0:04:07 here is they made the investment so it’s not like they passed they made the investment and their best
0:04:14 case scenario they wrote was 400 million as an exit value and so 400 million and now it’s 140 billion
0:04:22 they said if all things work out we think in four to six years this company could sell for 400 million
0:04:29 dollars right and we will 20x our money something like that uh 15x our money obviously that’s wrong
0:04:35 the company’s worth 130 billion dollars but they had all these other stats that were wrong and in the
0:04:41 memo they even have updated quotes so the person who wrote the memo will give you an update and he
0:04:48 wrote in the memo he goes a few months after we invested oracle had acquired one of shopify’s
0:04:54 competitor for 500 million dollars and i remember emailing toby who’s the ceo of shopify about how
0:05:00 great it would be if someday maybe we can achieve that outcome but i thought it was just a little bit
0:05:07 too aspirational and then he has this other line where he goes um some of the other uh employees and
0:05:12 advisors at shopify when we made our investment they thought to themselves you know i think like this
0:05:18 company at best is going to be worth around 50 million dollars and so the associate at bessemer
0:05:23 who made this deal he goes look toby these guys are saying 50 million dollars can we put something
0:05:27 in the contract that says you are not allowed to sell the company for less than 50 million dollars
0:05:32 because this guy was like that’s all it’s going to be worth and toby was like dude i’m not agreeing
0:05:36 to anything like that but i’ll give you a handshake offer i promise you i won’t sell until at least
0:05:44 75 million dollars and so it’s just funny that this is like how small the best of the best presumably you
0:05:48 know top one percent are thinking about different opportunities that today are so obvious to us but
0:05:50 back then were really hard to predict
0:05:59 you don’t become the world’s most valuable women’s sports franchise by accident angel city football club
0:06:04 did it with a little help from hubspot when they started data was housed across multiple systems
0:06:10 hubspot unified their website email marketing and fan experience in one platform this allowed their
0:06:15 small team of three to build an entire website in just three days the results were nearly 350 new
0:06:22 signups a week and 300 database growth in just two years visit hubspot.com to hear how hubspot can
0:06:29 help you grow better all right back to the pot so i have a bunch of follow-ups on this because
0:06:33 this is a subject i’ve literally been thinking about i’ll tell you i’ll tell you why i was thinking
0:06:37 about this simultaneously but let me first just uh let’s start with a little bit of humbling so
0:06:43 um here’s a list of products that i was totally wrong about meaning they were already working so
0:06:49 forget the scenario of ah that’ll never work but like yeah that’s working but that’s probably small
0:06:53 probably niche okay so here’s products that i personally was wrong about over the last 15 years
0:07:01 um calm and all the meditation apps my buddy alex was doing it he was in my peer group who’s in our
0:07:06 mastermind group and i was like that’s cute you know that’s cute like i hope you know i don’t really
0:07:10 understand what you’re doing here maybe you’ll make some some money it’ll be like a job i didn’t really
0:07:17 fully understand it do like meditations now like a like there’s multiple meditation apps that are
0:07:21 billion dollar companies that seemed implausible at the time he was also really successful already
0:07:28 yeah yeah exactly so so i didn’t doubt him i thought he was awesome and i didn’t even think
0:07:31 like it wasn’t gonna work it’s like oh it’ll work but it’s just small it just seems like a
0:07:37 too small of a market okay other markets i thought were too small on snapchat my username was like has
0:07:42 the word test in it still to this day because i was like yeah cool like but this is never gonna be
0:07:47 a thing and i mean this is just like a goofy kind of sexting thing how big is the market for that
0:07:53 another one airbnb so i met the founder of couch surfing before i heard about airbnb and we hung
0:07:59 out at my office and i was like wow couch surfing what a crazy idea go sleep in someone else’s just go
0:08:04 sleep in their house and they’re in the extra you know couch or air mattress that they have um all right
0:08:10 cool so airbnb comes out and i’m like wow great you’re trying to be couch surfing how ambitious of you
0:08:14 and um i think couch surfing topped out at like 50 million dollars or something like that
0:08:21 uh like it maybe it was max like 100 or 200 million and you know airbnb today is a like 100 billion
0:08:31 dollar company so i i i read that i think in america one out of every 30 dollars spent on travel is on
0:08:38 airbnb that’s a cool stat i like that’s insane right it’s insane i want absolutely insane yeah
0:08:47 in america yeah one minute out of every day for every entrepreneur on average is spent listening
0:08:53 to our podcast i bet there’s like a number like that that’s true right yeah like they said it in like
0:08:59 one of their pitch decks but it’s just absolutely astounding that you and everyone else me too thought
0:09:05 that it was just couch surfing but it’s just it’s not 10 times better it’s not 100 times bigger it’s
0:09:12 10 000 times bigger uber was another one uh black uber was like black car limos i was like cool rich
0:09:17 people in san francisco who takes black cars small idea i don’t understand why you know the founder of uh
0:09:22 of stumble upon is like doing this but okay whatever i guess rich guys just lose touch and they just start
0:09:27 working on niche things that nobody nobody’s gonna be too niche another one musically i remember we were
0:09:32 at the office trying to build social products and morgan this guy who worked with me he was like hey
0:09:38 my daughter loves making these lip sync videos on musically and it was actually even maybe even a
0:09:43 different thing besides musically but this idea of like you record yourself on video and then there’s
0:09:48 music mixed in and you’re kind of lip syncing and dancing uh you make little dance videos and i was
0:09:52 like okay cool morgan but can we get to work now like we’re trying to build the next big thing here
0:09:57 and like you know stop distracting us with this and uh you know has anyone ever just like showed
0:10:00 you a briefcase full of cash and then you like accidentally kick it into the gutter that’s what
0:10:05 that’s what we were doing um okay so those are things that i was totally wrong about well hold let me tell you
0:10:10 one more alex lieberman shared a dm that he got from the founder of cursor so cursor is a company that in
0:10:18 or something like that grew to 10 billion dollars and the guy emailed alex lieberman asking for advice
0:10:25 or like what he should do and left him off yeah left him on red hey we all miss in fact bessemer has a
0:10:29 part of their website called the anti-portfolio have you ever seen this no they were the first bc i think
0:10:35 that did this so they created if you go bessemer bvp.com slash anti dash portfolio it’s basically just
0:10:40 honoring the companies we missed and it’s just like airbnb apple ebay google like it’s all the
0:10:46 companies they had the opportunity to invest in but passed for varying reasons um and they just like
0:10:50 humble themselves with this so this is like the this is the opposite of the hey let me show you our memos
0:10:56 of how smart we were um this is like you know the other side of the coin and it’s crazy man for any
0:11:00 anybody who’s like worth a damn in business your your anti-portfolio is going to be much bigger than
0:11:05 your portfolio which is just a bizarre situation if you’re any good if you’re if you’re any good and
0:11:10 you’re in the game for any like decent amount of time your anti-portfolio is much bigger part of this
0:11:16 is underestimating the size of markets and the other there’s many things here the other part is not
0:11:24 understanding math because 10 000 times or 1 000 times whatever that’s actually it’s really hard to
0:11:30 estimate and so like to put it in really simple terms i remember working with financial uh my financial
0:11:37 advisor and they there was like this line item for 250 000 in 18 years and i was like griffin what is
0:11:43 this man he goes uh well that’s i just baked in like college expenses uh and i was like but i’m not
0:11:47 gonna pay for all four years up front or are you thinking we’re gonna have triplets what’s the deal
0:11:53 here and he was like no i just took the trailing 20 year growth rate of college education and i assumed
0:11:59 that they’re gonna go to like a top 75 like cost school and i just applied that number to the to the
0:12:04 to the future and that’s just what it came out to 250 000 a year and i was like i it’s just it’s it’s
0:12:10 really hard to understand what like five percent growth is per year or whatever it is and a really
0:12:14 good way to understand this though that i’m trying to like get beyond the math is i’m been really
0:12:20 obsessed with thrive so uh josh kushner and one of the reasons why i’m into it is you hosted this event
0:12:26 and we had the founder of oscar come you had um mario come and i thought he was i thought he was
0:12:30 like the most impressive smartest guy there and so i was like going down the rabbit hole i’m like
0:12:34 all right you partnered with josh kushner and josh kushner is now leading all these amazing things
0:12:40 and josh kushner recently invested in open ai at a 250 billion dollar valuation which is astoundingly
0:12:45 expensive that’s just that number’s hard to comprehend and someone was questioning josh kushner
0:12:49 and he was like what i learned was in the real estate days you know his parents are real estate
0:12:58 tycoons in new york city he was like i’ve learned that you can’t really over spend on park avenue real
0:13:02 estate so park avenue is on the upper east side that’s where like the louis vuitton store the tiffany
0:13:07 store he was like there’s just been so many examples where someone said in the fanciest part of new york
0:13:13 city that this building is way too expensive but when you buy the best typically it’s never too expensive
0:13:17 like there’s always going to be someone in 10 years who wants to pay more for it so my logic is
0:13:25 i’m going to find the park avenue of startups so open ai cursor whatever it is and i’m willing to
0:13:29 spend what people think is it a crazy amount of money i don’t care about the valuation because i just
0:13:34 think that those will outperform those the other ones and i’ve been really trying to like embrace that
0:13:39 even though it’s very challenging to like actually do that this is michael saylor’s argument about
0:13:46 bitcoin so his argument about bitcoin is basically that of all the digital assets bitcoin is digital
0:13:53 manhattan and there’s only 21 there’s only 21 million uh million blocks that’s that’s the real
0:13:58 estate that’s the land you want to get as many of the 21 million as you can at basically any price
0:14:02 because this is digital manhattan and over the next hundred years that’s all that’s going to matter
0:14:06 is basically like how much of that did you own you know i shouldn’t say that’s all that’s going to
0:14:12 matter but basically you don’t look for the third best thing you buy manhattan right like you don’t go
0:14:16 try to figure out what’s going to be the seventh thing because it’s cheaper right now like no no
0:14:20 the move is always you buy the manhattan thing and you just plan to hold it over the long haul
0:14:25 when you know it’s a scarce rare asset and like that’s the whole thing with crypto is like there’s
0:14:32 it’s a scarce rare asset which is conceptually that is way easier to understand than 1000x uh you know
0:14:35 like because i see manhattan real estate i’m like yeah this is like bumping this is great
0:14:41 then it goes to the next stage which is having the courage to believe that your opinion is right
0:14:46 yeah and so like for example someone like you who’s who’s in the bitcoin or it was or is in the crypto
0:14:50 industry and you do believe in it it’s like well if you believe that to be true why aren’t you borrowing
0:14:56 every dollar you can to do it and that is where uh courage comes into play and that’s really hard to
0:15:01 buy into this concept so i say i buy into this concept conceptually but i’m not truly acting on it
0:15:10 at least not in uh not not in a 100 type of way all right folks this is a quick plug for a podcast
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0:15:37 there’s also other factors so for example uh i have a very funny goal my last goal on my like
0:15:46 you know uh annual goals is just called it just says avoid ruin because my life is great and so
0:15:53 actually like one key thing at all times is avoid ruin like do not do extremely dangerous things take
0:15:59 care of my health and don’t make disastrously risky financial investments that like even if i believe
0:16:04 even if i have conviction even if the upside is there i really just don’t need to i just don’t
0:16:09 need to risk ruin at any given time i think it’s the kelly criterion just do not risk ruin keep yourself
0:16:13 in the game is always important so like you don’t need to borrow every dollar even when you have
0:16:18 conviction right there’s like there’s but i think that’s what separates uh not all the best so i don’t
0:16:23 think buffett has ever like risked uh you know he famously has said uh don’t risk what you have for
0:16:26 what you don’t need or something like or don’t risk what you need for what you don’t want or i forget
0:16:32 exactly the quote where but it’s like risky needlessly risking things yeah but my brother john
0:16:35 who i’m visiting in missouri he’s not into startups and he was like why do you why are you still doing
0:16:39 this like why don’t don’t don’t risk anything i was like well i don’t really risk anything but he’s
0:16:44 like but do the really successful like the elons risk everything and i was like a lot of them i think
0:16:51 do i think that like there are like the 10 out of 10 the best of the best the crazy elons of the world
0:16:55 i think that when they say i was sleeping on couches i think you don’t really want to believe
0:16:59 that because their friends are billionaires or whatever yeah i’ve been around enough of these
0:17:05 yeah it’s a really nice couch but i’ve been around enough of these like crazy crazy crazy like
0:17:08 one percent of the one percent the freaks amongst the freaks some of them i actually do think
0:17:16 don’t avoid ruin correct i just don’t think that’s wise i don’t think i don’t think a lot of them
0:17:19 very wise i think they’re great achievers and but they’re not necessarily i don’t think they’re wise
0:17:23 and i don’t want to do that but don’t you agree with that though that like have you who have some
0:17:29 people do definitely take it to that extreme right like uh there’s there’s levels right so like buffett
0:17:33 actually has been very concentrated at many times i think it’s you know recently had 50 percent of his
0:17:37 portfolio just in apple stock right so like that’s a very concentrated thing and he believes in
0:17:41 concentration but concentration is not the same thing as like you know risking ruin in a way
0:17:48 even somebody like elon you know the ruin for him isn’t losing his money because he’s a money
0:17:53 making machine he’s a achievement machine at any given time he could have even if he had lost it all
0:17:58 through spacex and tesla and whatever he’d be rich again in 10 years and i think he knows that deep
0:18:03 down too right so like the risk of ruin for him might be reputational right there’s a great leaked email
0:18:09 where open ai is talking about um their path forward and this is like when this is when elon eventually
0:18:14 got like sort of kicked out slash left the project of open ai right he’s a co-founder he put the first
0:18:19 40 billion dollars in uh but along the way they realized they need a lot more money and the leaked
0:18:25 email basically shows the brainstorming that they were doing sam altman greg and elon and basically elon’s
0:18:31 idea was so they all came to the realization holy shit this is like this kind of works but we need way more
0:18:36 money like this is going to need way more money to train these models like we’re talking 100 million
0:18:41 dollars plus just for a single training run like let alone operating the company operating
0:18:45 the business from operating the the project and paying all the salaries and now it’s for what
0:18:49 like servers or something like that like uh like literally the gpus and the compute and the electricity
0:18:54 to train one model and then you’re not going to stop there you’re going to train a better model right
0:18:57 so once they realize shit we need 100 million and we’re a non-profit this is not going to really
0:19:01 work who’s going to just elon’s giving us this but like are you elon are just going to give us like
0:19:05 billions that’s probably not going to happen but that’s where this is going and so when they realize
0:19:11 that they’re like we need a way forward so elon’s suggestion was let’s make open ai a part of tesla
0:19:16 tesla will be the commercial machine and then we’ll take some of that profits as r and d and put it into
0:19:21 open ai we’ll fund it that way now sam and greg didn’t like that because they’re like well yeah but
0:19:25 then like you control everything and we’re just kind of like you little bitch we don’t really love that
0:19:30 idea so what if we uh and they were exploring other ideas so they had a microsoft idea which
0:19:34 is what they ended up doing so he’s like microsoft is really interested in giving us you know like
0:19:40 you know potentially like you know multi-billions of dollars uh and free compute but then you know
0:19:43 we’d have to work out a deal of what’s in it for microsoft and then elon basically replies being like
0:19:50 ew like lame being a part of microsoft you know that was like in his reply basically he’s like why not tesla
0:19:55 and then sam altman then there was like a email that referred to sam has been exploring the idea
0:20:00 of an ico so to do a token launch and like what if we find like it was during the crypto like heyday and
0:20:05 they’re like ah i guess like you could just raise a ton of money for kind of nothing like a promise
0:20:14 um if you just do an ico and elon’s reply is basically like uh i am like i am against the ico it is
0:20:19 like i think reputationally disastrous and i will not be a part of the project if you guys pursue that path
0:20:24 like i will take my name off this project because even if that would succeed i just do not like i
0:20:28 don’t think the risk is worth it and so it’s interesting right because like the guy is willing
0:20:34 to risk you know certain things all of his money but not necessarily others right like you you may not
0:20:39 always there there may be other risks it’s weird that was not weird i mean it’s just like intriguing
0:20:43 that he thinks the ico thing is the risky thing but not like the political thing or not like well he did
0:20:48 with the political things initially he was saying i won’t endorse a candidate and i won’t be donating to
0:20:52 them that was his initial stance because same thing it’s like the michael jordan you know oh
0:20:57 you’d like my opinion on this sorry no comment republicans buy shoes too yeah and like one of
0:21:03 the great lines in in you know in in history and so initially elon did have that stance he got pushed
0:21:09 over the edge you know due to a number of factors that maybe only he can truly describe some people
0:21:14 think it’s because his companies were getting like overly regulated and he just was like we can’t do
0:21:18 spacex and tesla if there’s this much regulation some you know people were basically pushing back
0:21:24 on on you know uh capitalism or attacking him so like you know it’s unclear what all the motivations
0:21:29 were of why he decided to then throw his weight into it but when he did he throws all his weight into it
0:21:33 but he initially did not want to take that risk because it seemed unnecessary you know you take you
0:21:39 only take as much risk as you see necessary what what’s cool about elon is once he sees it’s necessary
0:21:44 he’s willing to do it whereas most people will still dilly dally or hesitate to do it which is the gap
0:21:49 that i was talking about you know it’s like courage is a hard thing and then i also but i also think that
0:21:59 we underestimate how different the outliers are in terms of personality to the normal people and so
0:22:07 what i mean is is you and i are live on coasts we are work in a weird tech world it’s pretty fringe
0:22:16 but then there’s people that are 50 times that do you know what i mean in terms of how strange and
0:22:21 unique thinking they are so so for example the collison brothers of stripe i’ll hear like their
0:22:27 opinion on things and i even to me i’m like wow that’s just like way different that’s like he’s so
0:22:32 out there in terms of how this framework or how you believe that it’s just so logical and you totally buy
0:22:39 into that that’s really challenging for me to understand but imagine to someone who is right in the
0:22:46 mean like just like of understanding how different the different people are in terms of their thinking
0:22:50 yeah there’s level there’s levels to this um there’s levels to everything there’s levels to
0:22:54 intelligence there’s levels to crazy there’s levels to risk-taking there’s levels to all that
0:22:58 that is pretty hard to comprehend until until you get closer and closer and closer to that edge
0:23:02 and you realize like oh what i thought was level 10 was not level 10 it was
0:23:08 7 and there’s that this is what 10 is right just imagine what brian johnson the extent brian johnson
0:23:15 goes to for his health there are people who live you know 30 miles in my radius here that are doing
0:23:19 that in just ways that they’re just not publicly broadcasting at but not in just health they’ll do
0:23:23 it in finance they’ll do it in their obsession over specific technology in the lifestyle choice that
0:23:28 they make whether it’s you know a polyamorous lifestyle or it’s a you know the extent to
0:23:33 which they delegate extreme delegation like we were laughing when we were hanging out with mr beast and
0:23:36 he had a he had his runner outside it’s like wait so you got kind of like a personal door dash guy
0:23:42 that just waits around in case you need something but like yeah there’s that like there’s a lot of people
0:23:47 that have these like lifestyle quirks where it’s like wait you peter teal when he flies to a place
0:23:53 has a mattress shipped that hotel so that he gets right sleep because that’s his favorite mattress
0:23:58 and he just actually some hotels store the peter teal mattress in the lobby or like in there’s like
0:24:03 storage facility in case he’s gonna come because that’s his demand it’s like yep there’s people
0:24:07 that do that it’s like oh wow i thought taking i thought taking my sleep seriously was like wearing
0:24:11 this whoop band i guess there’s levels to this right i guess there’s like an infinite level level
0:24:18 levels to this it’s a honda civic versus a nascar or it’s making the jv like i was telling my brother he
0:24:23 was like he was comparing me to someone and i was like i don’t think you understand i’m
0:24:30 one of the best on jv at a big high school and these guys are olympians like this right that is
0:24:36 the gap that the you know i think um the guy from uh you told me this story about um the redhead
0:24:41 basketball player the celtics what’s his name scallop scallop and he was like he was like joked
0:24:48 as being the worst nba player but he would go to like uh you know blacktop games and just crush everyone
0:24:53 and he was like you don’t understand that i’m closer to lebron than you are to me yeah and that
0:24:58 made that’s sort of like what we’re describing here you want to do something else well i do i
0:25:01 have one other thing but i want to go back to the market size thing because i have i have something
0:25:07 that i think is a pretty sick example of this all right so there is an amazing story about this
0:25:13 from uber so i remember when i was living in san francisco uber had like just come out i think i
0:25:19 moved there 2012 and i was like it was all pretty new then and i think uber that was such a fun era
0:25:24 that was such a fun era wasn’t it yeah that was like you know our version of like the dot-com boom
0:25:30 right it’s like mobile it was so exciting and so i remember getting in my i got there my friend who
0:25:33 lived in san francisco was like yeah here our rides here and we got into the stranger’s car and i was
0:25:38 like what the hell is this it was actually a sidecar which was the third company after uber and lyft that
0:25:44 just died it didn’t make it i remember uber started getting like a pretty big investment and it just seemed
0:25:49 pretty crazy and they just kept getting crazier and crazy they would raise it like you know first it was
0:25:53 was tens of millions and hundreds of millions then billions of dollars valuation and i remember
0:26:00 reading um this bill gurley blog post that really changed my thinking and the blog post is called
0:26:07 how to miss by a mile is the name of the blog post and bill gurley gurley was one of the early believers
0:26:14 and early investors right yeah he’s oh he’s a legendary vc and now retired and he was one of the main
0:26:18 investors in uber um and like you know famously at the end like you know they ended up kicking travis
0:26:22 out and there’s you know it got it got messy at the end but he was one of the early and biggest
0:26:27 believers okay so basically he talks about this guy um i don’t know how to say his name exactly but it’s
0:26:31 i think it’s aswath damaraddon or something like that this guy who’s like a he’s a well-known
0:26:39 thinker on valuations he’s a professor at nyu stern and he teaches like you know finance and
0:26:44 economics there and so he had wrote an article that said uber is not worth 17 billion this is when uber
0:26:50 raised at a 17 billion valuation he was right by the way uber was not worth 17 billion it is actually 10
0:26:56 times more than that but he was making the opposite argument he was like i think uber is vastly over um
0:27:02 overvalued and bill gurley sort of breaks down this argument and this totally changed my thinking and how
0:27:09 you think about startups so what he said was he goes uh this professor just did this wrote this article i
0:27:13 i wrote this blog post and it seems really well thought through and he’s a very like you know
0:27:17 respected expert and i you know i don’t i’m not saying anything about the guy but i think his
0:27:22 analysis is wrong and he starts with he goes the funny thing about any analysis with hard numbers like this
0:27:27 is that it gives you a false sense of security and he talks about like anyone who’s in math knows the
0:27:33 difference between precision and accuracy precision would be you know oh wow you’ve really forecasted this
0:27:39 down to the second decimal and accuracy is like yeah but it’s just wrong it’s precise but wrong uh it’s
0:27:43 not it’s not on target he was basically saying he’s like he makes two arguments so he makes one argument
0:27:50 about the tam so the total addressable market of the of the of what uber’s market potential is and then
0:27:55 market penetration so how much of it uber will get and he basically is like he goes the tam mistake is
0:28:00 the mistake of thinking that the future will look quite like the past but the arrival of a new product or
0:28:06 service will have a non-zero impact on the overall car for hire market so he goes basically it’s a new
0:28:11 offering it’s got new levels of convenience new price points which will open up new use cases and
0:28:17 he gives a story he goes you know once upon a time at&t paid mckinsey a million dollars to forecast how
0:28:20 big will the cell phone market be they want at&t want to know should we become like a cell phone
0:28:27 maker manufacturer or like should we should we care about that market or not and the mckinsey’s top you
0:28:33 know analysts who are getting paid uh predicted that the market in 2000 the year 2000 would be
0:28:38 900 000 people using cell phones which was less than one percent of the actual number it was 109
0:28:44 billion and they were predicting 20 years out which is really freaking hard correct but it was it was
0:28:49 look it was hard numbers it gave you a false sense of security and so at&t decided not to go not to
0:28:54 invest in that area they ended up to make you know once it was once they realized they were behind the
0:28:58 the ball and you know actually cell phones were going to be a big deal uh they ended up having to
0:29:02 buy the cell company for 12 billion dollars so it’s basically a 12 billion dollar mistake and by the way
0:29:08 now like you know five or six billion people have cell phones it’s like just absolutely ubiquitous
0:29:12 aaron levy the founder of box has this tweet where he said sizing the market for a disruptor based on the
0:29:17 incumbents market is like sizing the car industry based on how many horses there were in 1910
0:29:24 and so uh girly’s talking about this now of course you might say well is this always the case like you
0:29:28 could always say well you know forget the past you’re just being you’re stuck in that old way of
0:29:34 thinking that think about the bright future and uh of course no that’s not always true in fact it’s
0:29:40 probably usually correct that the you know the near future will look like the the near past but the funny
0:29:47 thing about entrepreneurship or any tech investing is that it’s a hits it’s a hits driven game so you only need
0:29:52 one and you can actually be wrong eight or nine times out of ten as long as you get the one right
0:29:58 in a really really big way and that’s not true in other businesses like that’s not true in school you
0:30:02 can’t pass a test that way it’s not true at your job you can’t just like have one great day and then
0:30:08 like have nine duds um like you can’t do that in private equity warren buffett famously was like you
0:30:12 know picking stocks rule number one don’t lose money you know vcs lose money all the time entrepreneurs
0:30:17 get it wrong all the time it’s a very distinct difference and so like and this is actually a
0:30:24 distinct difference oftentimes in you and i’s uh personality which is buffett is predicting that the
0:30:31 future will repeat itself and that the past is the past won’t change for the future vc investing tech
0:30:36 investing is doing 100 the opposite correct both are valid games but you have to know what both are
0:30:40 right you have to know they’re right in their game so like in the stock market that’s probably the right
0:30:44 way to think about things and value investing that’s probably the right way to think about things and
0:30:48 private equity is probably the right way to think about things in entrepreneurship or tech investing
0:30:51 it’s absolutely the wrong way to think about things you won’t make any money doing that other
0:30:58 way and so in our business i have this phrase which is that in our business you know the cynics get to be
0:31:03 right and the optimists get to be rich and so it’s like the cynics will be right and you get to be right
0:31:08 eight out of ten times that might feel good but the optimists are the one who get who get rich and you
0:31:14 have to just know that going in what are your uh what your employees replied all like sean i’m just
0:31:20 asking if you want pizza or hamburgers for lunch like can you just tell me like this might be why
0:31:25 i have no friends but i have a podcast i think you nailed it
0:31:34 so you guys know this but i have a company called hampton joinhampton.com it’s a vetted
0:31:40 community for founders and ceos well we have this member named lavon and lavon saw a bunch of members
0:31:44 talking about the same problem within hampton which is that they spent hours manually
0:31:49 moving data into a pdf it’s tedious it’s annoying and it’s a waste of time and so lavon like any great
0:31:55 entrepreneur he built a solution and that solution is called molku molku uses ai to automatically
0:32:00 transfer data from any document into a pdf and so if you need to turn a supplier invoice into a customer
0:32:05 quote or move info from an application into a contract you just put a file into molku and it
0:32:10 auto fills the output pdf in seconds and a little backstory for all the tech nerds out there
0:32:15 slavon built the entire web app without using a line of code he used something called bubble io
0:32:20 they’ve added ai tools that can generate an entire app from one prompt it’s pretty amazing and it means
0:32:25 you can build tools like molku very fast without knowing how to code and so if you’re tired of copying
0:32:34 and pasting between documents or paying people to do that for you check out molku.ai m-o-l-k-u-dot-a-i
0:32:42 all right back to the pod this is a a great um a great blog post the guy who’s like the the the
0:32:47 anti-hero on this like where is he now he’s still there professor he’s still a professor of course he
0:32:52 is because you know you know skin in the game you can never really be wrong um and so he that guy had
0:32:57 estimated the global taxi market to be a hundred billion so anyways let me zoom it in so i remember
0:33:02 living in san francisco and when this happened girly pointed something out which was that
0:33:09 in san francisco the taxi market size whatever it was let’s just pretend it was like 150 million dollars
0:33:16 uber didn’t just have some percent share of that market it was actually three times bigger than what
0:33:22 the total taxi market was in san francisco it was a total like market expander of a force and you see
0:33:27 that over and over and over again any new product that’s creating a new category it doesn’t just eat
0:33:33 some share of the existing category it just explodes and becomes bigger than that thing so let me kind of
0:33:39 like fast forward to to another area that this came up so i was watching these videos from sequoia
0:33:45 sequoia recently had an ai event and my invite must have gotten lost but i was able to catch it on youtube
0:33:51 afterwards luckily and so i was i think uh darmash was one of the speakers yeah yeah i know so again
0:33:57 maybe my speaker invite also was lost i’m not exactly sure what happened uh but but it’s all
0:34:03 it’s all love amongst amongst me and sequoia so the very first speaker this guy i think it’s pat grady
0:34:07 he’s a partner of sequoia and he has a slide on the screen i’m gonna show you the slide it’s
0:34:13 maybe a top five ugly slide like this might be the worst slide i’ve ever seen in my life
0:34:18 like not only is it ugly it doesn’t even make any it’s illegible like you look at this it doesn’t
0:34:23 even mean anything but he explains it so okay so check out the slide you see this thing right here
0:34:29 yeah so like i remember taking the act where it was like showed you like three shapes or three numbers
0:34:33 and you had to predict the fourth one based off of the pattern i cannot do this with this okay exactly
0:34:38 so if you look at this slide it basically is like a bunch of pie charts but the pie charts have no
0:34:41 annotations just random numbers and then there’s an arrow and there’s a question mark and it just
0:34:45 says so what at the top all right so let me explain what this is because it’s actually kind of insightful
0:34:51 so what he was saying was basically like um if you look at the the let’s say the three most recent
0:35:00 waves of of like tech so you had software which was like i buy cds i put i put the cd-rom inside my cd
0:35:07 or i install uh software on my server at our office that was like software 1.0 and then 2.0 was like
0:35:12 the cloud it was like oh the software just lives in the cloud it’s a sass it’s a service you just kind
0:35:17 of like use what you need you don’t need the servers and the cds and he’s like now we have ai
0:35:24 and so he talks about like basically the software market at the time when cloud came out when like
0:35:32 salesforce came out the entire software market was 350 billion dollars of revenue cloud is already 400
0:35:37 billion right like like just just like the top cloud players are like more than 400 billion so
0:35:42 basically it’s like cloud didn’t just take some percent share of the software market wasn’t like oh
0:35:47 yeah maybe like 10 of these applications will now go to the cloud or become sass it was like sass
0:35:53 became bigger than the entire software market before that uh and it became bigger by i think uh uh i
0:35:56 don’t know why the numbers here are like again the pie chart is very confusing but it’s basically some
0:36:02 order like it was like you know two or three times bigger and then he’s talking about like ai and he’s
0:36:07 like ai actually is interesting because ai replaces software but ai also replaces labor like you just
0:36:14 you don’t need people to do those tasks it’s services and software and so um he’s like the
0:36:18 the labor market is basically like whatever like 10 trillion this is some some ridiculous number and
0:36:24 he’s like we don’t even know how big the ai market is going to be predicting that with any accuracy would
0:36:30 be foolish but it’s probably a good bet that ai is going to be bigger than the entire cloud market today
0:36:38 and the labor market in the future and so um how big is the labor market isn’t isn’t the labor market
0:36:45 like the market that’s like the main one i mean like like isn’t that everything ever yeah kind of and
0:36:50 so you know in the same way that when girly was talking about uber he’s like you know um it’s going
0:36:55 to be bigger than taxis because it’s more convenient than taxis right if you called a taxi you didn’t
0:36:58 know when it was going to pick you up you didn’t know if it was going to pick you up with uber you got
0:37:03 precise you know you precise timing it’ll pick you up anywhere before taxis didn’t really go to rural
0:37:07 areas uber had more drivers so it was available everywhere because it was available everywhere
0:37:12 you got lower price points because there was more liquidity in the system so when it’s a lower price
0:37:15 point maybe i wouldn’t have called a taxi just to go from here to my friend’s house but if it’s a
0:37:20 eight dollar uber i’ll actually do it and because you get the price points now you get new use cases
0:37:27 so like people use ubers to like help their elderly parents travel or kids or like and the big one was
0:37:30 basically he’s like the big use case i think people are missing is that some people just won’t
0:37:34 buy a car because they’ll be like i’ll uber when i need it so i just don’t need to own a car which is
0:37:38 exactly what happened to me i sold my car in san francisco because i was like why would i deal with
0:37:44 this car parking issues getting get broke into insurance gas all that like no just uber when i need
0:37:49 a ride and so he’s like it unlocked part of the rental rental car market it unlocked part of the
0:37:54 car ownership market and once you calculate those you’re like oh shit this is a trillion dollar
0:37:58 market not a hundred billion dollar market and so you’re off by you know 10x if you had done
0:38:02 the calculation wrong with the wrong assumptions and so ai is going to do the same thing because
0:38:08 i won’t hire a person to do these little things that i’m basically like telling ai agents to do in
0:38:13 my life right like you know i’ll build little i build a little app for piano tracking for my piano
0:38:18 practice or for my health tracking or i’ll uh you know i don’t hire a concierge doctor but i’ll
0:38:23 feed my lab results to chat uh chat gpt and i’ll pay them to like i’ll pay it to analyze all my blood
0:38:29 results and so things i wouldn’t have otherwise hired people for i’m willing to pay ai a little
0:38:38 bit for it and so there’s a new market how many hours a week are you consuming information on just
0:38:45 staying in the know on this topic on ai specifically yeah we had greg eisenberg on the pod and he was
0:38:52 telling me things where i was like i was almost i i found myself having fear i had fear of like
0:39:00 oh this is clearly the future and if i’m not like in the know of this it’s gonna come and destroy me
0:39:05 therefore i owe it to like that’s how serious it was it wasn’t like i’m missing out on an opportunity
0:39:09 to make my business better i’m missing it was like oh no i gotta protect my family like like
0:39:16 this is like my job and so i felt extreme fear over he was saying like magnus have you heard of magnus
0:39:21 is that like the new chinese agent platform yeah yeah yeah and there’s no g just like i think it’s like
0:39:27 manis manis and he was explaining but he’s like three things where i’m like how do i not know about
0:39:32 this yeah like do i need to sign up to like an ai trade magazine like what’s going on right um and
0:39:37 his answer was horrible when i said greg how do i how do you know he’s like i just do or he said
0:39:40 something like that or he’s just like i just hear about it like i was like well that’s like extremely
0:39:46 not actionable for me thanks a lot dick uh so how are you much time are you spending learning about
0:39:53 this topic and where are you turning to look there’s two minds about it one i would say i have no risk of
0:39:59 over investing my time in this i have pretty big risk of under investing my time in this but no risk of
0:40:04 over investing my time in paying attention to what’s going on with ai and being able to like play with
0:40:09 the tools understand what the companies are doing like really think through like where this puck is
0:40:16 going at the same time i’m not trying to drive myself insane so you know like i do think there’s a very
0:40:22 unproductive version of this which is the constant whiplash of new demo new model new this new that new
0:40:28 whatever and so what i’m doing is basically like an intermittent fasting style model where it’s like i
0:40:35 mostly not paying attention to it as in like i’m not actively trying to like react to everything i see
0:40:41 or go seek out or go read every single thing out there or sign up for every single tool what i’m doing is
0:40:45 i’m trying to make it very useful for me so when i have a problem i now add it into my like sort of
0:40:51 solution list like oh do i think ai could solve this so then whatever research i’m doing it’s
0:40:57 actually like a just-in-time solution to a problem i actually have versus just like the kind of like
0:41:02 intellectual jacking off of like just keeping up with everything just like trying everything just
0:41:04 wanting to know everything watching every podcast listen to every youtube video it’s like
0:41:09 no i’m mostly trying to like if i have a problem i try to see could i solve this day i
0:41:13 maybe yes maybe no but that’s interesting i learn a little bit each time i do that but at
0:41:17 least i’m trying to solve a problem i have the second thing is i am carving out free time so like
0:41:21 last year i thought i think i told you what i did this i did like an ai hack week a think week where
0:41:25 i just basically said clear my calendar the only thing i’m doing this week is just going in depth
0:41:29 and the beauty of that is it’s kind of like checking your email you’re like if you want you could
0:41:34 check your email every three minutes and you might find a new email but you’ll just consistently
0:41:38 like it’ll just keep tearing your attention away whereas if you just batch your email and you
0:41:43 just check your email once at noon and once at you know 8 pm or something like that you’re totally
0:41:48 up to date on email but you didn’t have to like have this nervous energy just constantly doing it
0:41:54 and so i’m treating it more like that i agree with you it was nice to um catch up with you i’m getting
0:42:00 all pumped about all this stuff i i’m currently in um saint louis missouri i’m about to go to the zoo
0:42:06 so i’m gonna go to the zoo i’m gonna go see some family tonight um but i was happy i was able to uh
0:42:11 do this podcast from this hotel and potentially reach hundreds of millions or hundreds of or rather
0:42:16 hundreds of thousands of people and uh hundreds of millions of red blood cells what are we what
0:42:21 are we counting here well because like you just started talking about this ai stuff and i’m like
0:42:26 literally staring out the window right now like whenever you talk about this i have notepads here
0:42:31 and i like get flustered where i’m like like i sometimes i think and i’m like what should i say next
0:42:35 but then other times i’m like oh he’s talking about this ai shit like what am i going to do what
0:42:38 i got to do this thing i gotta do that thing like that’s how i feel right now yeah yeah i
0:42:43 definitely feel that by the way i have a couple of of things i forgot to say on the the uber thing
0:42:48 that are great this is the funniest part of the uber thing at the end of that professor’s blog post
0:42:53 you know what he wrote after he wrote this huge like valuation teardown of uber he goes as i attempt
0:42:57 to attach value to uber i have to confess i just downloaded that but have not used it yet i spent most of
0:43:03 my life in in the suburbs where i go for days without seeing a taxi or if i’m in new york i
0:43:09 just use the subway and so it’s like the experts who literally like not only are they not betting on
0:43:14 this enough skin in the game literally never even use the product it’s like but they should just end it
0:43:21 with like ps but what the fuck do i know like that would have saved him a lot of exactly a lot of like
0:43:27 uh reputation there like there’s some great quotes by the way from some ceos who underestimated their
0:43:33 market size so jan coom ceo of whatsapp he said we’re just trying to make messaging better not build
0:43:39 some big business sells for 20 billion um somebody said i thought i’d make a little side money enough
0:43:46 to quit my job that’s sarah blake the founder of spanks oh so you know female bill you know one of
0:43:53 the like first female billionaire entrepreneurs of this like generation mobile gaming so one of the
0:43:59 first mobile games ever was snake on the nokia phones if you remember so the head of nokia nokia’s
0:44:04 mobile gaming division so this guy is in charge of mobile gaming here’s what he said i think mobile
0:44:09 games are just a small add-on it’s not a real market mobile gaming turns out to be 120 billion
0:44:14 dollar market here’s another one the domino ceo in 2010 the year i graduated from college he said
0:44:20 delivery is a convenience it’s not a game changer at the time delivery was uh 10 billion dollars a year
0:44:25 across food delivery it’s now you know more than 10 times that it’s more than 15 times that
0:44:31 in fact i read a crazy stat that some some i don’t know if this is legit but some study came out or that
0:44:36 somebody was doing some analysis and they said that for most local restaurants now 70 of their order
0:44:43 volume is uh delivery orders they’re no longer restaurants that do delivery they’re delivery machines
0:44:47 that also happen to have a restaurant table you know like a table just a down on if you want i go to
0:44:51 restaurants all the time where i feel like i’m the only person there and drivers are coming in and out
0:44:56 the whole time yeah brian chesky we didn’t know the size of the market because we were inventing it if
0:45:00 we listened to market research we would have just made a better couch surfing app and the last one is
0:45:05 elon i don’t care about the market size i care about if we can make something fundamentally different
0:45:11 because if you make something great the market will come it is sick this is this this was like a little
0:45:14 impromptu topic that turned into a whole thing that was awesome
0:45:32 all right so when my employees join hampton we have them do a whole bunch of onboarding stuff
0:45:37 but the most important thing that they do is they go through this thing i made called copy that copy that
0:45:41 is a thing that i made that teaches people how to write better and the reason this is important is
0:45:47 because at work or even just in life we communicate mostly via text right now whether we’re emailing
0:45:53 slacking blogging texting whatever most of the ways that we’re communicating is by the written word
0:45:57 and so i made this thing called copy that that’s guaranteed to make you write better you can check
0:46:03 it out copy that dot com i post every single person who leaves a review whether it’s good or bad i post it
0:46:07 on the website and you’re going to see a trend which is that this is a very very very simple exercise
0:46:10 something that’s so simple that they laugh at they think how is this going to actually impact us and
0:46:15 make us write better but i promise you it does you got to try it at copy that dot com
0:46:21 i guarantee it’s going to change the way you write again copy that dot com

0:00:09 For the past couple of years, I’ve been letting a very good book collect dust on my shelf.
0:00:15 A friend had told me about the book, and I did read the introduction, a wild introduction,
0:00:21 about the CEO of a British company who flies his private jet into the middle of the Libyan
0:00:27 Civil War to make an oil deal with the rebel army, an army which happened to have the covert
0:00:31 support of the governments of Britain, Qatar, and the U.S.
0:00:37 So, yeah, I probably should have kept reading, but I had 30 other books I wanted to take a look at.
0:00:42 A Dirty Little Secret about me, there are a lot of books where I read only the introduction
0:00:45 or a couple chapters, even books I like.
0:00:49 This may strike some people as a wasteful practice, but I recommend it.
0:00:55 Anyway, as fascinating as I found that introduction about the oil trader in Libya,
0:00:59 the book didn’t seem relevant at that moment.
0:01:06 But at this moment, with the U.S. signing a mineral deal with Ukraine, with Donald Trump
0:01:11 expressing his appetite for the natural resources in Greenland and Canada, even at the bottom of the
0:01:17 ocean, and of course, with an on-again, off-again trade war, the book is very relevant.
0:01:24 It’s called The World for Sale, Money, Power, and the Traders Who Barter the Earth’s Resources.
0:01:30 So, I finally took it off the shelf, read it, and, well, wow.
0:01:37 The traders in this book are not the kind who sit at a desk in New York or London and buy and sell the
0:01:38 options on commodities.
0:01:43 These are the people who finance, procure, and trade the actual commodities.
0:01:47 Petroleum products, agricultural products, and metals.
0:01:49 This is high-stakes territory.
0:01:57 When you think about a commodity trader, it has to have a bit of the Wolf of Wall Street character.
0:02:01 It has to have a bit of James Bond character.
0:02:06 And it has to have a lot of the character of Pirates of the Caribbean.
0:02:12 The authors of this book are two Bloomberg journalists who also used to work together at the Financial Times,
0:02:15 Javier Blas, whom you just heard, and Jack Farchi.
0:02:20 The main subjects of their book are trading firms that you have likely never heard of.
0:02:25 Glencore, Vital, Trafigura, Gunvor Group, Mercuria, and Cargill.
0:02:30 These firms operate all over the world, and their reach is massive.
0:02:31 Here is Jack Farchi.
0:02:37 The revenues of the four largest is just under a trillion dollars last year, which, in terms
0:02:45 of global exports, would make them, I think, the fourth largest country behind the U.S., China,
0:02:47 and Germany, and ahead of Japan.
0:02:53 Have you ever thought that you really understood something, that you were looking into the heart
0:02:57 of it, only to realize that you were just looking at the surface layer?
0:03:01 That’s the sensation I had while reading The World for Sale.
0:03:07 These commodity traders are often at the center of big political and economic events.
0:03:14 Civil wars and military coups seem to be a specialty, but they usually operate deep in the shadows.
0:03:20 Today on Freakonomics Radio, with the help of Javier Blas and Jack Farchi, we try to shine a light.
0:03:40 This is Freakonomics Radio, the podcast that explores the hidden side of everything, with your host, Stephen Dubner.
0:03:53 Last year, there was a record $33 trillion in global trade.
0:03:56 Commodities make up about a third of that.
0:04:00 Here are the two journalists who try to follow that money.
0:04:01 My name’s Jack Farchi.
0:04:04 I’m a senior reporter covering energy and commodities at Bloomberg News.
0:04:06 How did you get onto this beat?
0:04:08 I started my journalism career at the FT.
0:04:13 I started out in 2008, just as the financial crisis was happening.
0:04:14 Good timing for you, really.
0:04:17 Yeah, much better than I had anticipated.
0:04:21 I thought I was interested in geopolitics, global affairs.
0:04:25 I didn’t think I was very interested in finance or business or markets or economics.
0:04:29 Then I sat in the middle of the FT, not understanding half of what was going on,
0:04:33 as the global financial system was collapsing and taking the world economy with it.
0:04:35 And I realized, actually, I was wrong.
0:04:37 I was looking for my first reporting job.
0:04:41 And Gillian Tett, back then, was the capital markets editor, said,
0:04:44 why don’t you go and work with Javier writing about commodities?
0:04:46 My name is Javier Blas.
0:04:49 I’m a commodities columnist for Bloomberg Opinion.
0:04:54 And for the last 25 years, I have been writing about energy and natural resources.
0:04:57 How did you become interested in that?
0:04:59 Or were you shoved into it?
0:05:00 How did that work?
0:05:02 I went to college.
0:05:03 I wanted to become a journalist.
0:05:09 I ended writing about the Spanish economy and was quite bored at my job.
0:05:13 My dream was to be Jerusalem bureau chief or Beirut bureau chief.
0:05:17 One day, the oil correspondent in the newspaper I was writing left.
0:05:20 So there was no one to write about the oil market.
0:05:24 I raised my hand and they say yes.
0:05:30 I started talking to a couple of oil companies and I went to see how they were buying crude oil.
0:05:34 The trader that I was sitting with was a gentleman called Paco Garcia.
0:05:37 He was working at Repsol, the Spanish oil company.
0:05:44 Basically, he was babysitting me because everyone on that trading floor realized I have not a clue what I was even asking.
0:05:47 Literally, I didn’t know what they were doing.
0:05:55 He invited me to the trading floor and gave me his second headset and said, do you want to buy some barrels of oil?
0:05:56 I say, sure.
0:05:57 How?
0:05:58 When?
0:06:00 And he said, now on the phone.
0:06:07 He was negotiating a deal for two million barrels of Iranian oil out of Kar Island, the main export terminal of Iran.
0:06:09 They argue about the price.
0:06:10 It’s all on the phone.
0:06:11 They agree on a price.
0:06:13 And one said, do we have a deal?
0:06:15 The other one says, we have a deal.
0:06:16 That was it.
0:06:18 I said to the trader, what just happened?
0:06:20 He said, we just bought the oil.
0:06:22 And I was like, what do you mean?
0:06:23 I mean, that was on the phone.
0:06:25 Did you sign a contract?
0:06:25 I said, no.
0:06:27 I said, we have a deal.
0:06:28 He said, we have a deal.
0:06:28 And that’s it.
0:06:31 We better find a tanker to bring the oil.
0:06:35 And I became hooked and I became an oil reporter.
0:06:46 Explain the difference between the commodity traders you write about in your book and the people who buy and sell financial instruments on commodity exchanges.
0:06:58 These traders are very different to what people think about a trader behind a computer screen, trading on the keyboard and the mouse, Wall Street, Goldman Sachs, JP Morgan.
0:07:02 These traders work in physical stuff.
0:07:04 They are buying actual barrels of oil.
0:07:08 They buy an actual consignment of copper.
0:07:12 They buy a full shipload of wheat or soybeans.
0:07:20 Something that most commodity traders spend a lot of time trying to explain is they don’t tend to care very much which way prices go.
0:07:31 Oil traders, for example, for the most part, when they buy a cargo of physical oil, will at the very same time hedge the price of oil by selling a future on the futures exchange.
0:07:40 So the oil price element of what they’re doing, they don’t care about at all, whereas your trader on a screen, that’s exactly what they’re trading.
0:07:45 They’re betting on the ups and downs of the prices and they’re saying, okay, there’s a trade war, prices are going to go down, I’ll sell.
0:07:50 Or actually the trade war fears are overdone, I’m going to come and buy.
0:08:01 Whereas the physical commodity traders do definitely bet on outright prices sometimes, but they’re also, and on a day-to-day basis, trading a whole load of other factors.
0:08:20 For example, they’re lending money to some producer in a country where they don’t have much other ability to borrow money, or they’re trading differences in prices between copper in Africa and copper in the US, or they’re trading differences in prices between one grade of oil and another grade of oil.
0:08:30 And maybe they have several different producers who they have contracts with, and they’re buying oil from all three of them and blending it together, and then they can sell it for a higher price than the three barrels would have got individually.
0:08:35 So Jack, you said you thought you were interested in geopolitics and so on.
0:08:45 To me, the irony is that by coming in this side door, I’m sure you’ve learned a lot more about geopolitics than a lot of people who might have been on that beat directly, don’t you think?
0:08:53 Yes, exactly. What I’ve learned is that to understand what’s going on in politics, you have to understand the money.
0:09:04 And a lot of the time, not all of the time, obviously, but a lot of the time, the money is commodities, because commodities are a huge source of global trade, a huge source of profits for some companies in some countries and costs for others.
0:09:15 In a lot of places in the world, be it Russia or the Middle East or South America or Asia, following the money means following the oil, means following the copper, the soybeans.
0:09:20 So if you don’t understand that, then you’re missing a huge part of the political picture.
0:09:27 I’m sure that a lot of people would think that they can follow the money by following the publicly traded markets.
0:09:34 But if I have it right, a lot of the deals that you write about are totally hidden from public view.
0:09:42 And so you’re offering what strikes me as an almost secret window into how a big part of the economy operates.
0:09:44 Am I giving you too much credit?
0:09:46 Probably, but I would agree with you.
0:09:47 I think that’s right.
0:09:50 That was our experience in coming to this trading industry specifically.
0:09:55 Our job was to explain why the oil price was up or the copper price was down.
0:10:06 And we found ourselves more and more hearing about this handful of privately owned, often very secretive commodity trading companies, people in the market telling us,
0:10:14 oh, well, if you really want to know why the oil price is moving or what’s going on in Nigeria, then you need to talk to these guys.
0:10:20 And as we did begin to talk to them, realising that there were these stories going on behind the news headlines,
0:10:27 I think it would be an overstatement of the importance of the commodity traders to say, oh, yes, they’re always the hidden hand moving political events.
0:10:29 Occasionally they are, but a lot of the time they’re not.
0:10:30 But they’re very often there.
0:10:36 The number of examples, including in recent history, we see where there are big geopolitical shifts.
0:10:43 And the first people there are the commodity traders, be it the Libyan civil war or when South Sudan became independent.
0:10:49 Within days after South Sudan declared independence, a whole team of traders from Glencore arrived trying to do an oil deal.
0:10:54 And in fact, with $800,000 in cash to pay bribes at the same time.
0:10:57 Let me back up and ask a super basic question.
0:10:58 What is a commodity?
0:10:59 What is it not?
0:11:02 It’s a fungible raw material.
0:11:05 It has to be something where one is as good as any other.
0:11:13 A ton of pure copper, it doesn’t matter if it comes from Chile or Peru or Congo or Poland, they’re all the same.
0:11:18 There’s one price and you can exchange one for another and it doesn’t matter too much.
0:11:22 Whereas a bottle of fine wine is not so much a commodity because they’re all different.
0:11:27 And connoisseurs will pay a huge price for one and pay nothing at all for another.
0:11:29 Okay, so that’s a commodity.
0:11:35 Javier, give me an example of a commodity trader’s role in a given transaction.
0:11:43 Just imagine that you are a big coffee roaster, the Starbucks of this world, and you need lots of coffee.
0:11:50 You are not going to go yourself to different producing countries and farming companies.
0:11:53 And in some cases, these commodities are produced by smallholders.
0:11:58 You will need to be talking to thousands of farmers to get the commodities.
0:12:08 So you call, say, Cargill, the world’s largest agricultural trader, a very discreet company based near Minneapolis in the United States.
0:12:10 And you say, we need coffee.
0:12:15 So Cargill will go into the business of procuring coffee on your behalf.
0:12:16 They will go to Brazil.
0:12:18 They will go to Vietnam.
0:12:20 They will go to Colombia.
0:12:22 They will go to West Africa.
0:12:26 And they will buy coffee from many suppliers on those places.
0:12:36 They will move those commodities, often in trucks and then into ships, into whatever port in the United States, often the New Orleans area.
0:12:44 That’s where they will perhaps roast the coffee on your behalf and then deliver it to the final destination.
0:12:48 Sometimes they are financing the whole crop and harvesting operation.
0:12:56 It’s a very complex business from the first purchase to the final delivery, for the first finance to the final payment.
0:13:03 There may be six months where the commodity is in transit and where the finance needs to be there.
0:13:06 Let’s hear about the history of this book.
0:13:12 I’m just curious to know how the collaboration started and then how the work happened with the book.
0:13:16 The desire to write the book came from a frustration.
0:13:24 As a journalist, when you are assigned to a new sector, the first thing that you do is you go to the person that was doing the job before you.
0:13:26 And then you ask, OK, so what is the basics?
0:13:31 Can you share with me your phone book and also what I should read?
0:13:37 You go to cover Wall Street, you’re going to read a book on the history of J.P. Morgan or Goldman Sachs, et cetera, et cetera.
0:13:44 When Jack and I started working together at the Financial Times, Jack asked me what I should be reading.
0:13:48 And I think Jack was a bit perplexed that my answer was like, well, there is not a book.
0:13:56 He didn’t believe that in this important industry, no one has the book with capital letters that everyone will read.
0:14:06 Considering it’s such an important topic, considering how much money is at stake, considering how many people are affected by commodities and commodity trading, why was there no book?
0:14:11 I think that there was no book because it was difficult to write about the industry.
0:14:14 The industry wanted to keep everything secret.
0:14:22 As we were writing the book, some of the executives told us, we’d rather have you abandoning this project.
0:14:31 I suppose also that during much of the 90s, there was not a lot of interest in commodities because prices were relatively low.
0:14:36 Therefore, why are you going to write a book about commodity trading if no one is really interested in commodities?
0:14:49 A lot of people were writing books about those financial commodity traders, the Wall Street type, the hedge fund manager type, but not about the people who were buying and selling the stuff.
0:14:57 At some point, the question moved from how is that no one has written the book to maybe we should write the book.
0:14:59 Describe the research and the reporting.
0:15:00 What was your methodology?
0:15:09 We started going through every source, whether it was public records to contacts at banks, at commodity trading houses.
0:15:15 Anyone who had worked in these companies had kept an annual report that was confidential, but they have it at home.
0:15:21 It was very easy to get from some companies the annual report from, say, 1975.
0:15:25 It was a lot more complicated to get the annual report from 2015.
0:15:34 Then we used phone email to everyone in the industry that we knew and said, we’re going to write a book.
0:15:37 Would you sit down to talk to us on the record?
0:15:41 And surprisingly, a lot of people say yes.
0:15:48 A lot of the old hands of the industry really help us because I suppose that they were long retired.
0:15:52 The people who were active in the industry were a lot more complicated.
0:15:59 Some of them said to us, what I’m going to tell you is not all the true and nothing but the true.
0:16:05 Others arrived to the meeting with their personal lawyer alongside the public relations officer.
0:16:10 You left the interview with them after two hours and you felt that you have been boxing almost physically exhausted.
0:16:24 But generally, for an industry that thrives in secrecy, a lot of the old hands were wide open and willing to tell stories that often you couldn’t believe.
0:16:30 It sounds like you’re saying they are willing because what they did was kind of extraordinary.
0:16:43 These people who were retired, they were telling you deals that they did in Angola in 1975 or on Cuba in 1985 or in the Soviet Union after the collapse of the Berlin Wall.
0:16:47 They were very proud of what they did and how they made money.
0:16:55 Also, it was a bit of a different world where perhaps corruption was not seen as is today.
0:17:16 These were executives which made business in very difficult corners of the world and they were operating from Switzerland, a country that not only allowed companies to pay bribes overseas, but allowed companies to deduct the payments as a tax credit.
0:17:21 Bribes were tax deductible in Switzerland until about a decade ago.
0:17:31 To understand how Switzerland became the epicenter of this industry, it helps to understand a commodity trader named Mark Rich.
0:17:34 Blas and Farchi write about Rich a good bit in their book.
0:17:39 There’s also a very good Mark Rich biography called The King of Oil by Daniel Amman.
0:17:42 At least the chapters I read were very good.
0:17:44 Here’s Farchi again.
0:17:48 Mark Rich was the godfather of the modern commodity trading industry.
0:17:51 To a significant extent, invented the industry.
0:17:59 Rich was born into a Jewish family in Belgium in the 1930s, like many other Jews in Europe in the 1930s.
0:18:07 And like many of the people who would go on to be big players in the commodity trading industry, moved to the US because of the rise of Nazism in Europe.
0:18:23 In the post-war period, got his apprenticeship at Philip Brothers, Fibro, which was in the 1950s and 1960s, the dominant force in commodity trading and really kind of invented a lot of the ways in which commodity traders do business and make money.
0:18:26 But there was something gentlemanly and genteel in Philip Brothers.
0:18:33 Mark Rich was this super aggressive, totally driven, always focused entirely on money and nothing else character.
0:18:36 Philip Brothers was too small for him.
0:18:45 In 1974, Rich and his trading partner, Pincus Pinky Green, left Philip Brothers to form their own firm, which would become a powerhouse.
0:18:47 It was called Mark Rich and Co.
0:18:56 He got his big break when the oil market began to fragment and the Seven Sisters, these big American European oil companies, began to lose control of the oil market.
0:19:04 And he started trading oil with abandon at a time when the tradable oil market was only just becoming a thing.
0:19:15 Talk about the ways in which he did things differently from everybody, or maybe another way to put it is the risks he was willing to take, the different actors he was willing to engage with, etc.
0:19:29 A lot of what you needed to do to make money in the oil trade in those early days was to have a good enough relationship with one of the big oil producers that they would sell you oil at a price that was probably too low.
0:19:41 One of his big trade flows was through this extremely secretive pipeline that went through Israel that was built as a joint venture between Israel and Iran before the fall of the Shah in great secrecy.
0:19:58 Mark Rich would be buying Iranian oil, putting it through the pipeline, supplying Israel, but also supplying Europe through this pipeline, which then became enormously valuable when the Suez Canal closed in 1967 after Israel launched an attack on Egypt and Syria.
0:20:02 This brief war was over, but the Suez Canal stayed closed until 1975.
0:20:06 And for Mark Rich, that was a gift from the gods, and he made huge amounts of money.
0:20:12 Mark Rich became this almost larger-than-life figure in commodity trading, the most profitable commodity trader ever.
0:20:27 We spoke to a number of former senior people at Mark Rich who said that the company made a billion dollars of profit in 1979, the year of the Iranian Revolution, which in those days would have made it one of the 10 largest companies in America.
0:20:33 And this was a company owned by a small handful of people that only people in the commodities industry had ever heard of.
0:20:49 But that didn’t last because Mark Rich caught the attention of US law, and particularly of Rudy Giuliani, then a prosecutor, who indicted him for tax fraud and for trading with Iran during the hostage crisis.
0:21:02 So he and his partner, Pinky Green, fled the US to Switzerland, became fugitives from US justice, and then carried on their business of being the world’s largest commodity trading house, despite this US indictment hanging over their head.
0:21:18 So his real undoing came when he lost money in 1991, 1992, when one of Mark Rich’s zinc traders, under the influence of Mark Rich himself, attempted to corner the zinc market, and it went horribly wrong.
0:21:24 Mark Rich lost about $170 million on this attempted zinc corner.
0:21:25 That was really the last straw.
0:21:28 His underlings rounded on him and forced him out of the company.
0:21:33 The company was renamed as Glencore and continues as one of the largest commodity traders today.
0:21:39 Glencore is not only the world’s largest commodity trader, but it’s also a conglomerate.
0:21:41 They do everything and anything.
0:21:48 They trade a lot of energy, whether it’s crude oil, natural gas, refined products, a lot of coal.
0:21:54 They used to trade a lot of agriculture, and they trade a lot of metals and minerals.
0:22:00 It strikes me that the commodity traders are performing a variety of big functions.
0:22:02 They’re acting like bankers.
0:22:12 They’re acting as sort of a government coming in to help another country try to stabilize itself, or maybe more like one of the big financial institutions like a World Bank.
0:22:18 Can you think of any, in history, parallels to the functions that these commodity traders were performing?
0:22:24 The commodity traders look like one of those Swiss knives where you could have everything out of them.
0:22:29 They are the bankers of last resort when no one else will take your phone call for a credit line.
0:22:31 They will offer you money.
0:22:37 They are the McKinsey, the consultant for lost causes, where someone doesn’t know how a market works.
0:22:39 They will come there and explain it to you.
0:22:45 And they’re almost like diplomats for hire, where you have a foreign affairs problem, they can’t explain how to make it work.
0:22:55 The joke in the oil trading industry was that Betel, the world’s largest oil trader, was the trading arm of MI6, the secret service of James Bond.
0:22:58 There is a grain of truth behind that joke.
0:23:02 I can’t imagine the same joke doesn’t exist for the CIA, correct?
0:23:06 The CIA, I don’t think that they have an in-house trading house.
0:23:20 However, Philip Brothers of Fibro, a big American trading house of the 70s and 80s, was known to have very close links to the CIA and just generally the American government.
0:23:47 Coming up after the break, when the political situation gets turbulent, the commodity traders are often the first people to step into the breach.
0:24:02 There comes a time when governments need things to happen, where having a commodity trader helping may come handy, and where everyone can deny their involvement.
0:24:06 I’m Stephen Dubner. This is Freakonomics Radio. We’ll be right back.
0:24:24 The book we are talking about today is called The World for Sale.
0:24:28 Money, power, and the traitors who barter the Earth’s resources.
0:24:34 The authors are Javier Blas and Jack Farchi, a pair of financial journalists at Bloomberg.
0:24:51 I once had a professor who said that when historians write books, they always search for the big macro thesis, all the different events and populations that contribute to producing whatever it is, a war, a new country or whatever.
0:24:58 But that often it really is the product of two people sitting in a room, making a deal, having conversation, shaking a hand.
0:25:03 To that end, I’d like you to talk about Jamaica for a minute and the story you tell in your book.
0:25:09 Single moments and single deals and single trades can shape the course of history.
0:25:19 The Jamaican example was the early 1980s, and this was told to me by a guy called Hugh Hart, who was at the time the Minister for Mines and Energy in the Jamaican government.
0:25:22 The Jamaican economy was in pretty tough shape.
0:25:29 It was reliant on oil imports, and oil prices had surged in the oil crises, and the Jamaican economy was pretty much on its knees.
0:25:34 Each month, Jamaica would import about 300,000 barrels of oil.
0:25:35 Which is like one tanker, you know?
0:25:39 It’s one tanker of oil, exactly, by the standards of today’s big tankers.
0:25:41 A fraction of a tanker.
0:25:49 It would import 300,000 barrels of oil, which would go to the refinery in Kingston, and that would supply Jamaica’s oil consumption for the month.
0:25:56 In order to do that, the central bank would open a letter of credit, which would allow Jamaica to pay for the oil.
0:26:04 So Hugh Hart was in his office one Friday afternoon, and someone came to see him from the central bank in a state of agitation.
0:26:06 He said, what’s going on?
0:26:06 What’s the matter?
0:26:07 He said, we’ve got a problem.
0:26:09 Problem is, we don’t have any money.
0:26:11 We can’t open the letter of credit.
0:26:16 Without that, Jamaica wouldn’t be able to buy this cargo of oil.
0:26:18 They would run out of oil over the weekend.
0:26:21 And they’re literally burning oil for electricity, right?
0:26:22 Yeah, and fueling cars.
0:26:25 You know, the petrol stations would run dry, and there would be chaos on the streets.
0:26:35 This was a fairly febrile time in the Jamaican economy and Jamaican politics, and he thought there would be riots and revolution if they didn’t get any oil.
0:26:39 And this was a Friday afternoon, so he thought, who do I call?
0:26:43 And the only person he could think of to call was Mark Rich & Co., the company that is today Glencore.
0:26:47 He called his contact at Mark Rich, who was in New York, who said, I can’t help you.
0:26:48 I’m a metals trader.
0:26:50 But try Mark Rich himself.
0:26:52 And so he calls Mark Rich in Switzerland.
0:26:53 It’s two in the morning.
0:26:54 He gets Mark Rich out of bed.
0:26:56 Mark Rich says, who are you?
0:26:56 What do you want?
0:27:00 He says, well, I’m the Minister of Energy in Jamaica, and I need some oil.
0:27:03 And Mark Rich says, huh, OK, call back in an hour.
0:27:22 And in that hour, Mark Rich has arranged for a tanker of oil that was going from Venezuela to the US to be diverted to Jamaica, delivers the oil, averts the crisis without even a contract being signed, without any payment, and saves Jamaica’s day, as Hugh Hart told it to me.
0:27:27 Which is an amazing story of a commodity trader, very likely changing the course of history.
0:27:31 Because there might have been a new government in Jamaica by Tuesday if he hadn’t done that.
0:27:32 Absolutely.
0:27:33 What did Mark Rich get out of that?
0:27:37 Mark Rich got a very long relationship in Jamaica that made him an awful lot of money.
0:27:43 Jamaica was then a really big producer of alumina, which is the raw material for aluminium.
0:27:51 Mark Rich came in and struck a whole series of deals to buy Jamaican alumina below the global market price.
0:27:58 And made hundreds of millions of dollars over the years to the point that later Jamaican governments turned around and said Mark Rich was taking advantage of the country.
0:28:03 They were making far too much money and Jamaica was losing out, which probably was true.
0:28:08 But at the same time, there was a moment in the early 1980s where Mark Rich saved Jamaica’s skin.
0:28:19 So this relationship between Mark Rich and Jamaica deepened and took all kinds of interesting turns to the extent that Hugh Hart later on took a portfolio in charge of sport.
0:28:34 And when Jamaica was putting together a bobsleigh team for the 1988 Olympics, Mark Rich actually helped to finance this bobsleigh team that then, of course, became the star of the Disney film Cool Runnings.
0:28:36 And that was paid for by Mark Rich.
0:28:46 Mark Rich died in 2013, but before he did, he pulled off one more mega deal.
0:28:50 He got himself a presidential pardon from Bill Clinton.
0:28:53 Critics called this contemptuous.
0:28:56 Even Clinton himself would later say he regretted it.
0:29:02 So how did commodity traders like Rich come to be so powerful in the first place?
0:29:09 In their book, Javier Blas and Jack Farchi point to four key factors since World War II that have shaped the industry.
0:29:10 Here’s Blas.
0:29:31 The first one is nationalizations of the oil industry starting from 1950, but really culminating in the 1970s, where a lot of Middle East and North African countries took control of their oil destiny, kick out foreign powers and nationalize the industries.
0:29:35 Say just a little bit more about the Seven Sisters and how the new players came in there.
0:29:45 The Seven Sisters were seven vertically integrated American, British and French companies that, until 1973, dominated the oil market.
0:30:01 At that point, typically, a barrel of oil will be produced in an Exxon oil field, transported in an Exxon pipeline or an Exxon tanker into an Exxon refinery and an Exxon fuel station.
0:30:10 Every step of the chain, Exxon has its name, and the same for BP, Shell, and what is today Total of France.
0:30:21 At one point, that is broken apart, and the companies lose a lot of access to the production, and that production is nationalized.
0:30:29 It’s no longer the Saudi American oil company, but the Saudi Arabian oil company that does the drilling in Saudi Arabia.
0:30:45 They have a lot of oil to sell and found that commodity traders were willing to buy the oil, and also that they didn’t ask too many questions, and they were very happy to pay a few bribes in the process.
0:30:53 Also, it’s a time where oil goes from a rather boring commodity to really a big business.
0:30:54 Prices explode.
0:31:03 They go from a couple of dollars to $5 to $11 to $30 in the space of about 15 years.
0:31:12 A lot of these companies make a lot of money because they replace the traditional vertical integrated oil company with something in between.
0:31:22 They became the link between the new, very rich Middle East petro-states and the consumers in America and Europe.
0:31:25 Okay, that’s the first big factor you identify.
0:31:28 Number two is the collapse of the Soviet Union.
0:31:30 Walk me through how that shaped the commodity trade.
0:31:40 We have to remember that at the time of the end of the Berlin Wall and the Soviet Union, Moscow was one of the worst largest producers of commodities.
0:31:49 Not only gas, but crude oil, aluminum, and a number of other metals, and also a significant producer on agricultural commodities.
0:31:57 All of a sudden, the commodity traders have a lot of new production free and available for them to intermediate.
0:32:02 These countries were connected only among themselves.
0:32:06 Russia was making business only with communist countries largely.
0:32:15 They didn’t have the experience of how to place oil or wheat or aluminum into the international market.
0:32:19 They didn’t have the money to finance all of those commodity flows.
0:32:25 And the commodity traders have the expertise and the money to help.
0:32:35 In some cases, they help literally getting bags of money flying into an aluminum smelter in Siberia and saying to the manager,
0:32:38 here is the money for the salaries on the last day of the month.
0:32:40 You pay the people.
0:32:42 You keep producing the aluminum.
0:32:45 I will take care of that aluminum into the global market.
0:33:04 So in a very short time frame, between 1989 and around 1994, billion-dollar-sized fortunes were made just buying and selling what the Soviet Union have to offer to the global economy.
0:33:12 You write that around the same time, there was another big development, which was the financialization of the global economy.
0:33:14 Why was that so important to the commodity traders?
0:33:20 One of the big problems of a commodity trader is that you are taking a lot of risk price-wise.
0:33:22 You are buying a cargo of oil.
0:33:25 That oil sits on a tanker for, say, 40 days.
0:33:30 Until you sell it, you have no way to hedge that price risk.
0:33:42 The financialization of the global economy introduces a new number of commodity derivative contracts in Wall Street that allows the commodity traders to hedge the risk.
0:33:50 They can buy and immediately sell a cargo in the paper market, guaranteeing the price that they’re going to get.
0:34:04 That allows them to try more to secure profits and allows them also to raise finance more easy so they can expand very quickly and also makes their business just a touch more safe.
0:34:14 One of the problems of the commodity traders before the 1980s and 1990s is that they went up very quickly and then collapsed because they lost money on a big transaction and that was the end of the day.
0:34:21 Commodity traders started getting bigger and there were few failures after the financialization started.
0:34:32 Okay, and the fourth big development you cite, the most recent, is, quote, the spectacular rise of China that spurred a massive commodity boom in the early 2000s.
0:34:33 Tell me about that.
0:34:44 China needs a lot of commodities and it goes to the very same players that everyone else have gone through the 70s, 80s, and 90s.
0:35:01 It goes to the commodity traders who see the opportunity and start shifting flows of commodities from the typical end users in Europe and in the United States, Canada, Australia, Japan, into the new buyer, which is China.
0:35:09 It is a spectacular growth in demand and that demand is met mostly by commodity traders.
0:35:14 They see the pie of global trade increasing very rapidly.
0:35:18 It also increases the price of most commodities.
0:35:26 You have more demand, larger margins, so the commodity traders start making money like they have never done before.
0:35:44 After this huge expansion of Chinese imports, you then had a situation in 2010 when the market was pretty tight and then you had this massive Russian crop failure, a huge drought in Russia that caused Russian supply to reduce a lot.
0:35:51 And importers of grain of wheat and barley, particularly from Russia, started to panic and started to panic buy.
0:35:54 Prices rose very rapidly.
0:36:06 There was this key moment in the crisis when the head of Glencore’s grain unit in Moscow went on Russian TV and encouraged the government to ban exports.
0:36:09 A couple of days later, that’s exactly what the government did.
0:36:18 What was panic buying by some importers turned into a huge panic and massive buying and you had this enormous price spike.
0:36:27 It’s not very clear what Glencore was trying to achieve and whether that was an official Glencore position or whether it was just one guy from Glencore’s Moscow office doing what somebody had asked him to do.
0:36:41 But regardless of that, the impact was it gave the Russian government political cover to do something pretty extreme, which was to ban exports, caused a massive run-up in prices and panic from importers around the world, which caused prices to run up even further.
0:36:48 As a result, between middle of June 2010 and early 2011, the price of wheat had more than doubled.
0:36:56 Glencore, by the way, did very well out of that, made a record profit, as often happens in these moments of huge commodity price spikes.
0:37:13 But the political implication was more significant because a doubling of the price of wheat, the people who were most severely affected by that were the poorest people in the world, the people who depend on wheat as a staple and who don’t have a lot of money to buy bread.
0:37:22 And when the price of wheat doubled in a few months, that caused huge inflation, particularly for the poorest people in the Middle East and North Africa.
0:37:24 And what happened in early 2011?
0:37:34 Well, the Arab Spring began when a young fruit seller set himself on fire in Tunisia and set off a chain of events that led to the Arab Spring.
0:37:39 Now, can we directly say the Russian export ban caused the Arab Spring?
0:37:40 No, we can’t.
0:37:42 Was the doubling of the price of wheat an important factor?
0:37:43 Yes, absolutely, it was.
0:37:54 You describe how sanctions and wars and any kind of chaos are impediments for most people, but for commodity traders, they can be opportunities.
0:37:56 The chaos is actually pretty good for them.
0:38:00 Give me some evidence for this argument with examples, please.
0:38:14 I don’t think I have ever seen any sector of global business, with the exception, obviously, of the manufacturers of weapons, that actually thinks that a civil war can be a business opportunity.
0:38:21 And for commodity traders, often that’s the case, and in very incredible, imaginative ways.
0:38:31 Let’s go back to Libya about 15 years ago, when the east of the country rises against the dictatorship of Muammar Gaddafi.
0:38:35 The eastern rebels are short of money.
0:38:41 Surprisingly, for a country as oil-rich as Libya, they don’t have much gasoline and diesel.
0:38:44 And you cannot fight a war without gasoline and diesel.
0:38:47 You don’t have gasoline, the trucks are not moving.
0:38:50 They don’t have that because they don’t have refineries, or why?
0:38:52 The rebels didn’t have any working refinery.
0:38:55 All the big refineries were controlled by the troops of Gaddafi.
0:39:02 So they are trying to get refined products into the areas that they control to fuel their military.
0:39:07 A big political and financial backer of the Libyan rebels was Qatar.
0:39:16 So the Qataris, on behalf of the Ragtag Army of Libya, calls Vitol, the worst largest oil trader, and said,
0:39:19 will you help these guys on our behalf?
0:39:28 Here is a Middle East country asking someone to get into business with an army of a country in the middle of a civil war.
0:39:30 And by the way, the army is the rebel army.
0:39:32 It’s not recognized by anyone.
0:39:33 They don’t have a central bank.
0:39:34 They don’t have a prime minister.
0:39:35 They don’t have anything.
0:39:40 Most businesses will have run away as fast as they could.
0:39:41 Vitol say, yes, of course.
0:39:44 Most governments would have run away, too, by the way, right?
0:39:45 Everyone.
0:39:51 The only people that were flying into Libya were oil traders, journalists, and spies.
0:40:00 So not only Vitol agreed to provide gasoline and diesel with the rebels, but say, look, since you guys don’t have money,
0:40:08 but you control an oil field where you can produce crude, we will take barrels of oil in payment for the refined products.
0:40:12 Then there was a problem because Gaddafi blew up the pipeline.
0:40:15 Most companies, again, will have said, well, sorry, guys.
0:40:21 We were prepared to do this very complicated barter agreement, crude oil for gasoline.
0:40:25 But since you don’t have crude oil, you cannot pay us, so we are out.
0:40:27 And Vitol said, no, no worries.
0:40:29 Actually, we can help you.
0:40:37 Let us extend you a credit card of a billion dollars, and you buy from us gasoline with that credit card.
0:40:41 When the war ends and you win, you pay us back.
0:40:48 So they were effectively taking a bet on who was going to win the civil war in Libya.
0:40:57 You make it sound as though Vitol took this deal and fronted them the money sort of just the way you make a deal with anyone, say, I know you’re good for it.
0:41:00 When in this case, it wasn’t clear that they were good for it at all.
0:41:00 They have to win a war.
0:41:02 But there’s more to it than that, right?
0:41:09 Because Vitol knows that Qatar theoretically could make them whole if the rebels had totally imploded.
0:41:10 Yes?
0:41:17 This is where the political connections of the commodity traders come at play, and that is a very important element of the commodity traders.
0:41:26 They are really well connected politically, not only in places like Libya and Qatar, but also in London, in Brussels, in Berlin, and in Washington.
0:41:39 There comes a time where governments need things to happen in the market and in politics, where having a commodity trader helping may come handy.
0:41:44 And a situation where everyone can deny their involvement.
0:41:50 Was Qatar acknowledging that they were asking Vitol to do what they did?
0:41:50 No.
0:41:59 Was the British government telling Vitol, oh, you should go to Libya, do this deal, because actually London is supporting the rebels?
0:42:00 No.
0:42:10 But I think that the conversations behind the scenes, everyone was tapping the shoulder of Vitol and say, come on, guys, do it, but keep it quiet.
0:42:19 Would you say it’s gotten harder or at least different for commodity traders to operate today than 15 or 20 years ago?
0:42:28 One thing that has happened pretty recently, the last five, 10 years, is that governments, and in particular the U.S. government, has started paying an awful lot more attention to them.
0:42:34 Coming up after the break, what does this attention translate into?
0:42:40 And what happens when the U.S. government itself gets into the commodity trade?
0:42:41 I’m Stephen Dubner.
0:42:43 This is Freakonomics Radio.
0:42:43 We’ll be right back.
0:43:07 In their book, The World for Sale, Javier Blas and Jack Farchi describe a multitude of bribes and handshake deals with a multitude of warlords and dictators.
0:43:12 Today, the top commodity trading firms will tell you, they have changed their ways.
0:43:22 In 2022, Glencore pleaded guilty and agreed to pay more than a billion dollars for making and concealing corrupt payments and bribes and for manipulating oil prices.
0:43:27 That case was brought by prosecutors in the U.S., Britain, and Brazil.
0:43:32 That same year, Glencore released its first-ever ethics and compliance report.
0:43:36 The firm’s chairman said that the company aimed to operate, quote,
0:43:42 transparently under a well-defined set of values with openness and integrity at the forefront.
0:43:48 This kind of corporate speak has been echoed by other big commodity trading firms.
0:43:50 Here is Jack Farchi.
0:44:00 We have seen in the last five years, almost all of the largest commodity traders have pleaded guilty to misconduct, mostly corruption, but also market manipulation.
0:44:06 As a result, we’ve seen them all invest a lot in compliance and due diligence.
0:44:13 It’s fairly clear that commodity traders today can’t do the kind of things that Mark Rich was doing in the 1970s.
0:44:15 Fewer suitcases full of cash.
0:44:17 Certainly fewer suitcases full of cash.
0:44:18 Probably.
0:44:21 These days, it’s a thumb drive with some crypto on it.
0:44:24 If Mark Rich were starting out today, what would he be doing?
0:44:31 He’d probably be trying to trade Russian, Iranian, Venezuelan oil, selling it to India and China.
0:44:40 Those are the dodgy bits of the oil market where there is huge amounts of money to be made and which rely on having good connections and a willingness to bend or break the rules.
0:44:42 Now, somebody is doing that, plainly.
0:44:43 Lots of people are doing that.
0:44:57 For the most part, not the principal characters of our book, because the principal characters of our book have become such enormous companies that they’re too reliant on the U.S. dollar system to risk falling foul of the U.S. government.
0:45:06 For the most part, that Russian oil flow, for example, Iranian oil flow, which is subject to even stricter sanctions, has gone into the hands of more shadowy traders.
0:45:20 There’s this new set of traders that has popped up in Dubai who changes name every few months, including sometimes because they get sanctioned by the U.S. government, which is involved in trading a lot of the Russian oil.
0:45:33 A lot of the Iranian oil gets traded or even bartered directly by Chinese companies and Chinese buyers, sometimes gets shipped via Malaysia, where it gets rebranded as Malaysian oil and then imported into China as Malaysian rather than Iranian oil.
0:45:40 There are political scientists who make the argument that sanctions often fail for a variety of reasons.
0:45:48 Do they factor in what you’re talking about right now, which is just that there are shadow dealers, essentially, who are finding ways to get around the sanctions?
0:46:02 One of the key arguments for why people say that sanctions don’t work, particularly sanctions on things like commodities, because if commodities are produced, then as a rule, they tend to flow and they tend to find a market because they’re fungible.
0:46:03 It’s quite hard to trace them.
0:46:05 I wouldn’t say it’s universally true.
0:46:15 For example, in 2012, when the U.S. and Europe ratcheted up sanctions on Iran, Iranian oil production and exports did fall pretty substantially.
0:46:26 And is that because that was the period when the bigger firms were a little bit more concerned with compliance and there hadn’t yet arisen these smaller, more shadowy firms to fill the space?
0:46:27 Yes.
0:46:32 And because it takes time to build up new networks of trading to circumvent sanctions.
0:46:36 At the end of the day, the U.S. is very powerful.
0:46:41 It probably was more powerful then than it is now in terms of being able to exert its influence on countries like India and China.
0:46:49 And so there was an ability for the U.S. to unofficially say to China, we’d like you to significantly reduce your purchase of Iranian oil and for it to happen.
0:46:53 So predicting the future, as we all know, is really hard.
0:46:57 But let me ask you about a past prediction and why it was so wrong.
0:47:05 Peak oil, which was an argument that was really prominent in mainstream media, just about everywhere for a long time.
0:47:07 And then it turned out to just be wrong.
0:47:13 Why do you think the estimates were so off and what role did commodity traders play in the reality?
0:47:20 The estimates were so wrong with peak oil supply because people keep betting against two things.
0:47:21 One is American engineering.
0:47:27 If you give an American engineer enough time and enough money, it will solve any problem.
0:47:30 And the second one, they bet against American capitalism.
0:47:33 We got $100 oil.
0:47:39 It was just a question of time that someone in America was going to find a way to make money out of that.
0:47:41 And that was the shale industry.
0:47:53 The commodity traders were very helpful because all of a sudden, these are not the typical American big oil companies like ExxonMobil or Chevron or Occidental Petroleum or Conoco.
0:48:03 These are a bunch of, with all due respect, cowboys in Texas with small companies drilling oil wells in a different way, and they need to sell it.
0:48:10 All of a sudden, the U.S. government, who have banned the export of crude oil for many years, says,
0:48:12 OK, guys, it’s fine.
0:48:13 You can export the crude oil.
0:48:24 Small oil producers, which need finance, which need expertise, which need advice, and a government which is willing to let the commodity to flow into the international market.
0:48:35 It’s almost like if all of that was written by the executives of a commodity trader on, like, my Christmas shopping list of all what I need, and bang, you got it.
0:48:47 There have been some pretty significant events in global politics and economics since you published the book.
0:48:54 How do you see the Russia-Ukraine war as connected to commodities and commodity traders?
0:49:00 The invasion of Ukraine by Russia has a huge impact in the commodity markets.
0:49:05 Both countries are huge players in natural resources.
0:49:14 The commodity traders were one of the most active Western business interests in Russia.
0:49:29 I don’t think that Putin will have made it all the way from Crimea to the final invasion if the commodity traders have not been helping Russian companies to sell their cargos in the market.
0:49:31 These are against U.S. sanctions, correct?
0:49:35 There were, again, some American sanctions, but not European sanctions.
0:49:40 So all this business was legal all the way until the final invasion of Ukraine.
0:49:44 But a lot of companies didn’t really want to get into that business.
0:49:51 There were some restrictions, but they were not breaking the law of the respective countries where they were doing it.
0:50:06 But they were very, very important for Vladimir Putin to the point that Putin personally gave one of the highest medals that you could get as a foreigner to Ivan Glassenberg, the CEO of Glencore, for service to Russia.
0:50:11 In that period, in between Crimea was invaded and the rest of Ukraine was invaded.
0:50:17 So the big firms that have reformed to some degree, as you’re describing, are they still doing well financially?
0:50:19 They’re doing better than they’ve ever done before.
0:50:26 This period of the last four or five years, the energy crisis in Europe, COVID, the oil price went negative.
0:50:28 It feels like a lifetime ago, but it happened.
0:50:35 2022 was a bonanza year for all of them because oil prices and gas prices surged.
0:50:36 There was massive volatility.
0:50:40 Many of them had contracts to buy from Russia.
0:50:45 And then the price of Russian commodities collapsed and they were buying at very low prices and making a lot of money.
0:50:57 The four largest commodity traders made profits of $48 billion in 2022, which is more than Amazon, Meta, NVIDIA and Tesla combined that year.
0:51:00 Talk to me about the first few months of the Trump administration.
0:51:05 How do you assess this administration through the lens of commodity trading?
0:51:14 For the commodity trader, Trump has had some very important and perhaps not very widely appreciated benefits.
0:51:22 One is that Donald Trump has instructed the Department of Justice to effectively don’t care about foreign bribery.
0:51:33 Considering that some of these commodity traders have to plead guilty in U.S. court of very serious crimes related with foreign bribery and pay hundreds of millions of dollars in fines,
0:51:36 that is huge news for the commodity trading.
0:51:40 One commodity trader told me that this is like we are back to the 70s.
0:51:42 We can do whatever we want again.
0:51:50 The other thing has been that all the trade policies of Donald Trump have introduced a lot of volatility in commodity trading.
0:51:57 Tariffs, sanctions, restrictions, those kind of things, as long as they don’t affect economic growth,
0:52:04 They are good for commodity traders because typically they open trade opportunities that were not there before.
0:52:12 The problem for commodity traders is that a lot of the current policies from the White House are probably going to lead to lower economic growth.
0:52:20 Typically, commodity traders want a healthy economy because the more the global economy grows, the more it consumes commodities,
0:52:23 the more it demands the business of a commodity trader.
0:52:33 Early in his second administration, President Trump prioritized a mineral deal with Ukraine in exchange for supporting Ukraine in its war with Russia.
0:52:40 The deal, which was signed in April, gives the U.S. a cut of future revenue from Ukraine’s natural resources.
0:52:45 These include minerals used to make electronics, what are often called rare earth metals.
0:52:49 I asked Javier Blas how rare these metals actually are.
0:52:52 The rarity is not their concentration.
0:53:00 The rarity is to find enough of them on a place where you can process them into the actual metals that you can use.
0:53:03 They are also very small in size.
0:53:09 The United States imports about $170 million worth of rare earth metals.
0:53:11 Let me put it this way.
0:53:16 The price of rare earth metals could go up by a factor of 25 times.
0:53:29 And the import bill of the United States for rare earth metals will just start to approach the import bill of that absolutely commodity essential for the American economy that is the Mexican avocado.
0:53:39 Another commodity that has become central to the global economy, primarily for its use in batteries, is cobalt, which is a byproduct of copper mining.
0:53:46 It’s estimated that more than 70% of the world’s cobalt comes from the DRC, the Democratic Republic of Congo.
0:53:54 Congo is in a fascinating place at the moment in that it is this focus of this geopolitical struggle between the US and China.
0:53:58 China has invested a lot there in the last 10, 15 years.
0:54:04 It’s Chinese companies that have driven a lot of the growth in copper production, cobalt used in EV batteries.
0:54:07 It’s a relatively difficult place to operate.
0:54:08 It’s fairly corrupt.
0:54:10 It’s in the middle of Africa and supply chains are difficult.
0:54:18 There’s thousands of kilometres on trucks or rail and truck to get from the copper and cobalt mines in the middle of Congo to a port.
0:54:27 From the Congolese government point of view, there’s a sense that the Congolese feel like they’re rather over-dependent on China.
0:54:34 From the US point of view, Congo is one of the richest sources of minerals that we know about in the world.
0:54:44 So there’s this attempt to do a minerals trade deal between the US and Congo, much like the deal that Trump is trying to do in Ukraine, what he wants to do in Greenland.
0:54:54 At the same time, you have these commodity traders, people like Trafagura, Mercuria, Glencore, who are striking deals to buy copper from the Congolese government.
0:54:58 And then the place that they’re taking it all to is the US.
0:55:08 And the reason is one of these dislocations that’s been driven by Trump and by the trade war, because Trump has threatened to put tariffs on US copper imports, but he hasn’t actually done it yet.
0:55:13 So you have a situation where because there’s a threat, the price of copper in the US has gone up.
0:55:22 Usually the price of copper in the US is trading like $20, $30, $50 more than the price of copper in, I don’t know, China or London.
0:55:28 At the moment, it’s trading $1,500, $2,000 more than the price of copper in China or London.
0:55:31 So there’s $1,500, a tonne of opportunity for traders to make.
0:55:34 The winners there are pretty obvious. Who are the losers?
0:55:38 It’s very clear that the losers are US companies and US consumers.
0:55:47 The price of copper in the US has been trading anywhere between 10% and 25% above the price of copper in the rest of the world, where usually it’s the same.
0:55:50 The price of aluminium, the same. The price of steel, the same.
0:55:53 Because of threatened or actual tariffs.
0:55:58 It’ll take a while for that to feed through into very meaningful inflation for end users, but companies see it straight away.
0:56:02 The companies will pay a copper price that’s based on the US copper contract.
0:56:05 In fact, it’s now 20% more expensive than the rest of the world.
0:56:12 So that’s a great example you just gave, but it’s really just one tiny example in the history of global trading.
0:56:24 If you add it all up, how much do you feel that the inefficiencies or the arbitrage advantages, whatever you want to call them, in commodity trading accounts for inflation overall?
0:56:26 I’m not sure I would see it like that.
0:56:32 In that example, the driver of the inflation is the tariffs.
0:56:35 The arbitrage is essentially bringing it down, right?
0:56:42 The commodity traders in this example are buying copper at the cheap price and selling it at the more expensive US price.
0:56:49 If you add all of their activities together, the impact of that is to bring up the price of copper outside of the US and bring it down inside the US.
0:56:57 Now, if the US turns around and says, oh, actually, the tariff on copper is going to be 5%, not 25%, in that case, it will come down.
0:57:08 But broadly speaking, moving material from where the price is cheap to where it’s expensive, both in location and in form and in time, that’s closing those price gaps at the margin.
0:57:21 And so in a world where you have perfect commodity trading with unlimited capacity to trade and to finance trades and to take risks probably brings down inflation rather than pushes it up.
0:57:36 Having read your book, I could make a pretty compelling argument, I think, that trading resources has shaped the world, the geopolitics, the national economics and societies of countries.
0:57:41 For the past hundred years and probably a couple thousand years before that.
0:57:53 So how do you assess the relationship between this practice, the trading of commodities and all those downstream political, economic and social effects?
0:57:58 Commodity trading at this moment is as large as it has ever been.
0:58:03 We are consuming record amounts of almost every natural resource.
0:58:08 Even the resources that we think we are leaving behind, think about thermal coal.
0:58:11 The global demand is an all-time high.
0:58:18 The consumption of oil, the consumption of copper, the consumption of wheat, the consumption of rice, all of them are at the record.
0:58:28 Therefore, you need commodity traders more than ever to arbitrage those flows, to buy from where those commodities are produced and sell where they are needed.
0:58:37 At one time, I was criticizing the business to Deanne Taylor, who was the CEO of Beetle, the world’s largest oil trader.
0:58:47 I suppose that I presented trading as something that it was easy, that they were taking money from the table under the noses of consumers and producers.
0:58:55 And then he turned to me and said, well, Javier, if you think that this is so easy, why not everyone else is doing it?
0:58:57 Why is only us who is doing it?
0:58:59 This is a more difficult business than you think.
0:59:02 This is not free money that we are taking from the table.
0:59:07 This is not the big bully from high school taking the lunch from the children.
0:59:10 We are putting our money at risk.
0:59:17 And clearly, the global economy needs us because if not, they will have got rid of commodity traders a long time ago.
0:59:19 But it’s not like you have to have all or nothing.
0:59:24 Other products and services have well-established, transparent markets.
0:59:29 And there are certainly trading markets and commodities that are similar to those markets I’m talking about.
0:59:32 But this is a whole other layer.
0:59:36 It could have been replaced by now by a more centralized clearinghouse.
0:59:36 Couldn’t it have been?
0:59:38 I suppose that the answer is no.
0:59:47 If it was so easy to standardize commodity trading and make it, you know, the Amazon of commodity trading, it will have happened already.
0:59:53 I suppose it’s a combination of the quantity and the differences of commodities.
0:59:59 Also, the origins of where a lot of those commodities are coming and where they are going.
1:00:02 And also, how politicized at times is the market?
1:00:08 There’s a market where you need to navigate coup d’etat, civil wars, American sanctions.
1:00:21 It just strikes me that the two of you have exposed a pretty large and foundational layer of the global economy that many people either don’t want to know about or don’t have the resources to find out about.
1:00:28 But when it comes to the government, it still just surprises me that there’s so little appreciation for the depth and wealth of this industry.
1:00:32 So do you see that changing in the U.S. and U.K. at least?
1:00:44 I think there’s been a vast amount of complacency from governments in the West about commodities thinking that’s the past, that’s the old economy, the market will sort it out.
1:00:46 We don’t need to worry about that.
1:00:49 We don’t need to have lots of policy to do with that.
1:00:53 Leave it to some technical specialist and probably don’t fund that technical specialist very well.
1:01:03 There’s not an awful lot of consideration to commodity markets because they maybe don’t affect ordinary voters quite so directly as other things of the economy.
1:01:04 But I think it’s a mistake.
1:01:06 The last few years has borne that out.
1:01:21 Suddenly, you know, we’ve woken up in Europe to how being complacent about commodity supplies and commodity security has suddenly left Europe extremely vulnerable and is essentially in the process of killing a lot of the heavy industry of Europe through high energy prices.
1:01:26 Governments need to pay much more attention to this and need to think much more strategically and more long term about that.
1:01:36 I don’t necessarily think that everything that the current U.S. administration is doing is a good idea, but commodities have risen up the list of political priorities, and I think that’s probably a good thing.
1:01:41 Do you feel your book has changed the way commodities are traded or will be traded in the future?
1:01:47 I think that the book has helped to bring a bit of transparency to the industry.
1:01:52 We find more policymakers that are aware of who these companies are.
1:02:04 It really concerns me that from time to time, a government may invite Jack or me to speak to them as if we were the source of expertise in the industry.
1:02:14 While it’s very flattering, I’m thinking, geez, if the governments are calling us as the experts, they really have no clue what’s going on.
1:02:26 That is really the level of understanding of the industry, where basically the world for sale has become the de facto, if you are interested into commodity trading, you need to read the book.
1:02:31 Are the traders changing the behavior because of our book?
1:02:46 I don’t know, but we know that an oil trader from Betel, which is the world’s largest oil trader, was recorded by the FBI on a secret wiretap, and he was talking about us.
1:02:57 He was talking about our questions and the fact that we were writing stories about commodity trading, and he said that the company that employed him was a bit nervous, so they needed to keep a bit of a low profile.
1:03:10 So, in so many ways, when we saw our names on the FBI wiretap, and then, you know, he did call us an idiot, but it was quite good because we thought, well, maybe we do have a bit of an impact.
1:03:17 Javier Blas and Jack Farchi have certainly had an impact on me.
1:03:19 I hope you as well.
1:03:21 Their book is called The World for Sale.
1:03:23 Let us know what you think.
1:03:26 Our email is radio at Freakonomics.com.
1:03:41 Coming up next time, the economist Austin Goolsby, a repeat guest on this show, is now president and CEO of the Federal Reserve Bank of Chicago, which puts him at the center of some important debates.
1:03:44 From the beginning, they started asking, are you a dove?
1:03:45 Are you a hawk?
1:03:47 I don’t even know if I like birds.
1:03:49 I just want to be a data dog.
1:03:52 And what does it take to be a data dog?
1:03:54 There are two main rules.
1:03:57 There’s a time for walking and there’s a time for sniffing.
1:04:00 And the first rule is know the difference.
1:04:02 The second rule is you never throw anything away.
1:04:07 The diet of the data dog is eat anything that hits the floor.
1:04:13 We asked Goolsby to walk us through the Fed’s data and tell us what it means for the U.S. economy.
1:04:15 That’s next time on the show.
1:04:17 Until then, take care of yourself.
1:04:19 And if you can, someone else too.
1:04:24 Freakonomics Radio is produced by Stitcher and Renbud Radio.
1:04:33 You can find our entire archive on any podcast app, also at Freakonomics.com, where we publish complete transcripts and show notes.
1:04:36 This episode was produced by Tao Jacobs.
1:04:40 It was mixed by Jasmine Klinger with help from Jeremy Johnston.
1:04:44 Thanks to Michael Haberkorn for the original book recommendation.
1:04:51 Thanks also to Ivo Saryanovich, Jonathan Kingsman, and Scott Irwin for their good insights on commodity trading.
1:05:03 The Freakonomics Radio Network staff also includes Alina Coleman, Augusta Chapman, Delvin Abouaji, Eleanor Osborne, Ellen Frankman, Elsa Hernandez, Gabriel Walth, Greg Rippon, Morgan Levy, Sarah Lilly, and Zach Lipinski.
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1:05:11 As always, thank you for listening.
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1:05:32 The Freakonomics Radio Network.
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0:00:08 Today, we’re discussing one of the busiest and most confusing terms in AI right now, agents.
0:00:15 Are they just fancy wrappers around LLMs, full-blown autonomous workers, or something in between?
0:00:28 A16Z Info Partners Guido Appenzeller, Matt Bornstein, and Yoko Lee break down the technical definitions, pricing models, use cases, and why the term agent means so many different things to different people.
0:00:34 If you’re building, buying, or just curious about what agents are and aren’t, this episode is for you.
0:00:36 Let’s get into it.
0:01:14 So I think there’s some things which are probably kind of easy to say, which is that, A, there’s a good amount of disagreement.
0:01:14 What is an agent?
0:01:26 We’ve heard a lot of different definitions of it, both on the technical side as well, I’d say, on the marketing and sales side in some cases, because there’s some sales models associated with it.
0:01:29 So let’s start with the technical side.
0:01:32 I think there’s sort of a continuum here.
0:01:41 You know, the simplest thing that I’ve heard being called an agent is basically just a clever prompt on top of some kind of knowledge base or some kind of context that has this sort of a chat type interface.
0:01:45 So from a user’s perspective, this looks like a human agent would look like, right?
0:01:50 So, for example, I ask it, hey, I have a technical problem with my product X, Y, Z.
0:01:53 It looks at the knowledge base and comes back with a canned response.
0:01:57 Well, there doesn’t have to be a knowledge base, right?
0:01:59 It doesn’t even have to be a knowledge base.
0:01:59 I see.
0:01:59 Got it.
0:02:00 Okay.
0:02:01 So maybe it’s just a trained model.
0:02:02 It’s all in the model weights, the knowledge.
0:02:03 So it’s even simpler.
0:02:06 So an agent could just be an LLM.
0:02:06 Right.
0:02:09 But the chat interface or something like that, by some definition, right?
0:02:18 I think on the other end of the spectrum, there are some people who basically say for something to be a real agent, it has to be something fairly close to AGI, right?
0:02:20 It needs to persist over long periods of time.
0:02:21 It needs to be able to learn.
0:02:22 It needs to have a knowledge base.
0:02:25 It needs to work independently on problems.
0:02:29 If you take the most extensive definition, is it fair to say that doesn’t work yet?
0:02:31 I think so.
0:02:31 It doesn’t work yet.
0:02:35 Will it ever work?
0:02:37 That’s a philosophical question.
0:02:38 All right.
0:02:38 Fair.
0:02:39 Very fair.
0:02:40 Very fair.
0:02:50 So if we take that continuum in between, is there at least a way to chop that up into a couple of categories of maybe degrees of agentic behavior?
0:02:53 And different types of agent.
0:02:59 There’s some artsy agent that help artists to come up with new bezier curves.
0:03:03 There’s coding agent, which we like to talk about as the agent of the day.
0:03:03 Which we use, yeah.
0:03:05 Yeah, which we use.
0:03:08 There’s agent that’s just a wraparound type of LLMs.
0:03:09 That’s right, yeah.
0:03:12 I may be the contrarian in this group.
0:03:12 All right.
0:03:17 Look, I kind of think agent is just a word for AI applications, right?
0:03:20 Anything that uses AI kind of can be an agent.
0:03:28 Now, before we started this talk, I actually went online just to refresh myself about some of the more interesting AI agent perspectives out there.
0:03:34 I found a really cool talk from Karpathy that he gave a couple of years ago about agents, which I can describe a little bit.
0:03:38 But the really funny part was on the YouTube recommended videos to watch next.
0:03:58 The cleanest definition I’ve seen of an agent is just something that does complex planning and something that interacts with outside systems.
0:04:03 The problem with that definition is all LLMs now do both of those things, right?
0:04:05 They have built-in planning in many cases.
0:04:13 And they at least consume information, you know, at least from the internet, maybe from some servers that expose information through MCP or some other protocol.
0:04:15 So the line really is very blurry.
0:04:26 And, you know, what was so interesting about the Karpathy talk is he basically, he related to autonomous vehicles and said, AI agents are a real problem, but it’s like a 10-year problem.
0:04:28 It’s like a decade problem that we need to work on.
0:04:33 And I think most of what we’re seeing in the market now is like, is not the decade version of this problem.
0:04:36 It’s like the weekend demo version of this problem.
0:04:38 And this is why we sort of generate so much confusion.
0:04:42 You have this kind of poorly defined nebulous thing that LLMs are kind of consuming themselves over time.
0:04:49 And so I don’t think anything we have are actually agents is kind of an agent itself may be a poorly defined and kind of overloaded term.
0:04:59 But if someone’s willing to do the hard work and define exactly what it’s like to kind of be a human, but in digital form and spend 10 years to make it actually work, you know, that’s sort of what I’m excited to see.
0:05:00 Okay.
0:05:02 So defining agents is a difficult job.
0:05:08 Maybe it’s easier to talk about how people use the tools they call agents and what are the differing degrees of agentic behavior.
0:05:12 I wonder if part of a conversation is redefining agents.
0:05:16 Because we all know that agent as a term is just not a great term.
0:05:18 It means so many things to so many people.
0:05:21 If it’s interesting to dissect, like, what do we mean?
0:05:23 What do different people mean when they say agents?
0:05:24 What are different ways?
0:05:27 We could utilize this process we call agents.
0:05:37 So it seems to me that if we’re trying to define agents or maybe even degrees of agentic behavior, which might be a little easier, there’s something like a user interface aspect to it, right?
0:05:47 Where something that’s a pure copilot, but basically user goes back and forth with an LM to work on a particular task that’s often not called an agent.
0:05:48 Is that fair?
0:05:52 There’s a little bit of the copilots versus agents UI models.
0:05:59 Yeah, I guess, like, what are the elements we would think that goes into agentic behavior?
0:06:02 Like, Matt mentioned planning could be one.
0:06:04 There could be decisions made by the agent.
0:06:06 There has to be an LM somewhere.
0:06:08 But curious about your take.
0:06:17 So I think another definition we heard from Anthropic recently was this idea that an agent is an LLM running in a loop with tool use, right?
0:06:19 Which there’s two important parts of it.
0:06:26 One is this notion that it’s not just a single prompt and not even just a single static sequence of prompts, right?
0:06:34 But something where the LLM takes the output of a prompt, feeds it back into itself, and based on that, makes decisions on what the next prompt and likely also went to abort.
0:06:36 You went to complete a task.
0:06:43 I think that for the real agents or the more agentic behaviors, I think that’s a reasonably good definition.
0:06:44 And I think the other thing…
0:06:51 But just by that definition, isn’t every chatbot effectively an agent then in this world, right?
0:07:04 Like, if I go just to chatgpt.com and use their latest reasoning model with web search, right, isn’t it using tools and, like, feeding its outputs into a new prompt in order to do kind of chain of thought?
0:07:06 Chain of thought is a little bit in between.
0:07:14 If it’s just a single prompt that comes back with a result, then it wouldn’t have this notion of planning and doing a more long-term concept and deciding itself when it is complete, right?
0:07:19 If you have a chain of thought reasoning where I’m giving a more complex task, that’s starting to look agentic, I agree.
0:07:26 I just think it’s really tough to define a system based on what someone says to it, right?
0:07:29 Because these are, by design, unstructured inputs.
0:07:31 These systems will accept literally anything.
0:07:36 And so, sure, if you tell it, you know, what’s today’s weather, I would agree that’s not agentic, right?
0:07:38 That’s just fetching, you know, from an API.
0:07:43 If you ask it to define a new philosophy of weather, right, it’ll happily go do it, right?
0:07:47 So, it’s like an agent if you ask it one thing, but not an agent if you ask it another thing.
0:07:50 I think that’s kind of a lot of the confusion in the market around this.
0:07:58 And, you know, if we spoke in the terms that you’re talking about, Guido, of like, hey, this is an LLM in a loop with a tool, like, that’s actually a much more productive way to talk about it, I think.
0:08:06 I mean, that said, it seems like we’re seeing to some degree a specialization of user interfaces in sort of two directions, right?
0:08:15 There’s, let’s say, a cursor or something like that, which really emphasizes the tight loop between the user, the tight feedback loop between the user and the LLM and the thing I’m working on, right?
0:08:20 So, I want immediate gratification when I do something, you know, and sort of response time matters.
0:08:33 Then there’s sort of more the back-end, you know, source code management system type plugins, where it’s more about throwing something over the wall by maybe answering a couple of questions, and then you try to maximize the amount of time the agent can work independently.
0:08:42 So, it seems like, I think you’re right that there’s no clean system, like, definition split between the two, but there seems to be a little bit of user interface specialization.
0:08:42 Is that a fair statement?
0:08:51 It almost felt like for all the use cases we’ve described, there’s one element that all agents have, which is reasoning and decision.
0:08:57 Would you call, just a call to LLM to say, translate this text to JSON?
0:08:58 That’s probably not an agent.
0:09:08 But then if you ask LLM to say, hey, decide where, you know, this response goes and route it for me, it feels more like an agent than before.
0:09:13 So, it almost felt like planning, I’m actually not sure, does the agent need to plan or does it need to decide?
0:09:14 Maybe both.
0:09:19 I actually feel like it’s a multi-step LLM chain with a decision tree.
0:09:20 A dynamic decision tree.
0:09:21 A dynamic decision tree.
0:09:22 Yeah, I think that’s fair.
0:09:24 I think we’ve all just been nerd sniped.
0:09:34 I just think, you know, it’s like humanities people love classifying and, you know, they draw kind of like fine distinctions between different types of things, entities, whatever.
0:09:39 We’re computer scientists, like, you know, none of there’s anything wrong with humanities, but we’re just not that.
0:09:45 So, I think we’re not well equipped when it’s a bit isn’t just zero or one, it’s maybe something in between, and we just talk about it a lot.
0:09:49 We, like, try to, like, coerce it to one value or the other.
0:09:49 Yeah.
0:09:52 Of course, agents are more than pure technology.
0:09:56 They’re also becoming products, which means they need to be marketed.
0:10:01 And how someone positions their product has a major effect on how they price it.
0:10:12 What’s more, the ultimate value of any given agent, which is still to be determined for the vast majority of them, is to what degree they can actually replace or simply augment human workers.
0:10:17 There is an interesting point, which is, I think there is a marketing angle to agents, right?
0:10:24 I’ve heard this narrative from a couple of startups that they’re basically saying, like, hey, you know, we can price the software that we’re building much, much higher because this is an agent.
0:10:28 So, we can go to a company and say, you’re replacing a human worker with this agent.
0:10:34 The human worker makes, I don’t know, $50,000 a year, and therefore, this agent you can get for only $30,000 a year.
0:10:36 This sounds really compelling from a first glance.
0:10:46 And actually, I mean, there’s some value to it in the very early days because it essentially, it’s very easy to understand comparative pricing for somebody who has to make a buying decision, right?
0:10:52 Now, on the flip side, we all know that the cost of a product over time converges towards the marginal cost of production, right?
0:10:57 And so, today, if I used to use a translator, maybe to translate a page of text, today you use ChatGPT.
0:11:00 I do not pay ChatGPT like I paid my translator.
0:11:06 I paid a tiny fraction of a cent, right, which is the, via the API, which is the actual cost.
0:11:10 So, I sort of wonder how much of the agent debate is driven by marketing and pricing.
0:11:12 I just actually think this is a really interesting topic.
0:11:20 What fields can you think of that are actually suffering complete replacement from AI or AI agent?
0:11:21 And this is a setup, I’ll warn you.
0:11:24 I have another extreme point of view that I’ll say afterward.
0:11:26 But can you think of fields where this is actually happening?
0:11:35 Not completely, but definitely partially, because there’s a lot of, for example, voice agents that replace receptionists.
0:11:39 I don’t know if we should name, replace people who would, you know, get back to customers.
0:11:45 So, there’s definitely a lot of workloads that have been offloaded from the folks who traditionally did the job.
0:11:49 But I don’t think they’re, you know, 100% replaced.
0:11:51 They can, you know, they can do something else.
0:11:55 But we are seeing headcount growth in some areas are slowing.
0:11:58 So, it’s not that existing jobs are being replaced.
0:12:02 It’s more like they’re hiring net new humans slower.
0:12:03 I think it’s exactly right.
0:12:07 I mean, I think in few cases, humans will get replaced by AI.
0:12:13 In most cases, you know, two humans will get replaced by one human that’s more productive with AI.
0:12:16 Or, yeah, or maybe they keep the two employees.
0:12:18 Maybe they go to three employees because now they’re more productive.
0:12:19 Yeah, right, right.
0:12:20 It’s just a really interesting question.
0:12:30 And the reason I think it’s really relevant to agents is I think part of the ethos and part of the confusion around agents is this idea that we actually will develop human replacements, right?
0:12:34 And that this thing we called an agent, which, by the way, is a name for a person, right?
0:12:37 Before we had AI, we had people called agents.
0:12:38 And we still have all kinds of people called agents.
0:12:41 And it just doesn’t seem like that’s happening, right?
0:12:43 Not in the replacement sense, right?
0:12:45 You mentioned Yoko with agents.
0:12:48 We’ve always had, you know, customer support automation.
0:12:51 You know, we’ve had 1-800 numbers where you like press one for sales.
0:12:55 Plus, you know, if that’s existed for a long time, this is a much better form of that, obviously.
0:12:57 Translation is a great example too, Guido.
0:12:59 These systems can perform translation extremely well.
0:13:05 But you’re probably not going to just stick something to ChatGPT and then publish it on your website, right?
0:13:06 There is actually work that needs to take place.
0:13:13 And I think the reason for this is there’s just fundamental creative work in most things that humans do, right?
0:13:22 I think from our kind of perch in Silicon Valley, we can forget that sometimes, that people all over the country and doing all sorts of jobs actually have hard jobs.
0:13:33 And not just hard in the sense of someone’s got to do it jobs, but hard in the sense of it does take thinking and human decision making, which I just don’t know that AI kind of has what we would think of as decision making or intent, right?
0:13:36 It’s a system that still, somebody has to push the button, right?
0:13:41 It may be running somewhere, it may do a great job of whatever, but someone still has to give it a prompt and hit go.
0:13:44 And to me, that’s a lot of the confusion around agents.
0:13:49 We’re all thinking at some point, a human person with intent and creativity and thinking is going to be replaced.
0:13:51 I’m just not sure that even is theoretically possible, right?
0:13:56 It’s almost just like a catch-22 to say an AI system is thinking for itself, right?
0:13:57 Because somebody has to have sort of created it.
0:14:03 You know, this is old sci-fi philosophy I’m getting into now, but like, I actually do think it’s a big reason for the confusion that, you know, we sort of experienced.
0:14:07 It’s interesting because there’s two types of agent we’re already talking about.
0:14:13 There’s one type where the agent is replacing humans, work with humans, do things humans can do.
0:14:17 There’s the other type of agents that’s more low-level system processes.
0:14:20 They work with each other, they hand off tasks to each other.
0:14:27 To some extent, agents are like technical details in the system in that way, but we mean both when we talk about agents.
0:14:30 In that case, is there actually a difference between an agent and a function?
0:14:31 I think so.
0:14:35 I think agent will be multiple functions with LLMs in the middle.
0:14:43 If you have a low-level agent and I’m giving this low-level agent a task and I get back a task result, it looks a little bit like a classic API call.
0:14:47 But with the LLM in the middle to make decisions on what to do for that API call.
0:14:51 So, but I understood, but that’s sort of how this function works internally?
0:14:51 Yes.
0:14:52 To some degree?
0:14:52 Yes.
0:14:53 Right?
0:14:53 Yeah.
0:14:55 So, from the outside, would I care?
0:14:56 You wouldn’t care.
0:15:13 It’s like most of the time when we see AISDRs, when we talk about AISDR agents, what we mean by that is when the agent can go to the CRM, pull something out, and then filter the list, draft an email, and send the email.
0:15:18 So, that feels very process level instead of human level.
0:15:18 Yeah.
0:15:19 So, that’s what I meant.
0:15:25 If you don’t know how this thing works internally, a classic function and an agent become indistinguishable.
0:15:26 Totally.
0:15:27 I absolutely agree.
0:15:34 But when you, as a programmer, when you find, right, the function, you will define agent, that that’s this thing.
0:15:36 Implementation.
0:15:37 We’ll get back to pricing shortly.
0:15:46 But first, let’s dive a little deeper into this discussion of how interacting with an agent is different than, or similar to, traditional software-based functions.
0:15:50 So, here’s one interesting thing to think about on that topic.
0:15:56 I totally agree with you, Guido, and I think you sort of agreed, too, that it’s really a function if you kind of just look at it that way.
0:16:01 Shareable, reproducible functions have never really been a thing.
0:16:09 This has been one of these long-time goals that people in the market have tried to say, oh, I can just write a function and then anybody on Earth can use it, right?
0:16:14 Like, you know, we have packages, right, that you can download a whole package with various functionality, but literally just one function you can share.
0:16:20 If you kind of squint a little bit, that kind of exists now with AI, right, because you have these models that’s trained by somebody.
0:16:26 Somebody else may download it, fine-tune it, train a LoRa, package it up into some new and interesting way.
0:16:31 And then it’s actually immediately available for someone else to use on hosting services or hugging face or something like that.
0:16:41 So, while it does seem to be just an implementation detail, whether you’re using an LLM or not, there is this interesting thing where the model itself takes up so much of that functionality in the function.
0:16:44 And it’s just a different kind of animal compared to normal code.
0:16:50 It’s actually more, it’s kind of shared by default in a way, because nobody’s going in and training their own model every time they’re writing code.
0:16:52 You know, it’s obviously heavy, right?
0:16:53 It’s harder to move around.
0:16:57 There are all these different characteristics from normal functions, some of which are actually very desirable.
0:17:00 Some are kind of, you know, bad, right?
0:17:06 But many of them are kind of interesting, and I think we’ll actually see new infrastructure, new dev tools kind of built around this in the long run.
0:17:07 I think it would make sense.
0:17:16 I mean, if we go back in time, the last time we sort of invented a major new component for building systems, which was probably networking, right?
0:17:20 How we thought about calling a function before networking afterwards changed a lot, right?
0:17:21 Totally, totally.
0:17:25 The complexities of APIs and the infrastructure around it is completely different today.
0:17:29 This is such a good point, because now I think about it, I feel like humans are just functions, too.
0:17:41 Like, if you have a thought experiment and then replace LLMs in the program to a human, like, how the kind of answers we’ll give to the program is not that different from what the LLM will give to the program.
0:17:50 So if we actually all get hooked up to servers one day and can be called as a function from Lambda, then I will agree that agents have been created.
0:17:51 That’s what an agent is.
0:17:54 Isn’t Mechanical Turk exactly that?
0:17:55 Or maybe even your email inbox?
0:18:01 There’s an Amazon Go supermarket a while back in Soma.
0:18:08 I think they were advertising that it’s computer vision models behind the scenes, identifying what you took from the supermarket.
0:18:15 But then people found that they hire a lot of people behind the scenes to actually label the data in real time.
0:18:19 So the humans, in that case, are the functions that today may be…
0:18:20 Secret agents.
0:18:20 Right.
0:18:22 Replaced by LLMs with…
0:18:23 Well, but this was exactly my point, though, right?
0:18:26 There actually is important creative work.
0:18:29 Even in a grocery store checkout clerk, right?
0:18:31 You could naively think, oh, this is an easy job.
0:18:33 Actually, it’s not an easy job at all, right?
0:18:37 And so you can take this work and kind of shift it, right?
0:18:41 And you can squeeze it down with automation and stuff, but it never really goes away.
0:18:42 Oh, yeah, absolutely.
0:18:42 Yeah.
0:18:43 All right.
0:18:50 So given all of this, how should companies think about pricing their agents per seat, per token, per task?
0:18:54 Hint, it might be too early to truly tell.
0:19:02 Usually, if you introduce a brand-new product category, right, you often initially put a pricing that prices against the status quo, right?
0:19:05 Whatever you replace or augment in some cases.
0:19:07 But let’s assume we have a direct replacement, right?
0:19:11 So that’s, I think, where this idea from, oh, this replaces a human, which it doesn’t.
0:19:15 But if it would, right, then you could charge, you know, X amount for it, right?
0:19:23 Usually, over time, competition kicks in, right, and you’re effectively priced by how much your competitors are charging, right?
0:19:25 And you start sort of an erosion.
0:19:27 Then it depends on many things, like how much of a mode do you have?
0:19:29 Do you have customer lock-in, right, and so on?
0:19:35 Long-term, converge against the marginal cost of production, right?
0:19:40 Which, I mean, look, if I look at most agents today, it’s probably very low, right?
0:19:46 Any agent you can purely model in software with a couple of LLMs calls, you can run at a very low cost.
0:19:48 And the cost is decreasing over time.
0:19:56 And I would sort of argue that’s kind of already what’s happening, that in practice, most AI applications,
0:20:02 and in particular, if we want to call them AI agent applications, you know, they have their sales pitch around,
0:20:05 you should pay us X because we’re saving you.
0:20:07 You know, it’s like a classic ROI calculation.
0:20:07 Established value.
0:20:08 Yeah, exactly.
0:20:10 Value-based pricing, you know.
0:20:15 But in practice, I think most buyers are actually pretty sophisticated about what’s going on under the hood.
0:20:17 And to your point, they know it’s pretty simple stuff happening.
0:20:20 And so it’s like, hey, what does it cost you to run all these GPUs?
0:20:22 And we’ll pay you some premium over that.
0:20:25 And I think that’s how a lot of vendors are pricing in practice these days.
0:20:29 I mean, long-term, you’d expect pretty healthy margins, just like in SaaS, right?
0:20:32 Which software traditionally has very good margins.
0:20:40 It’s so funny because we always advise companies to not price based on the margin, but price based on the value you add, whatever that could be.
0:20:43 It could be compared to other vendors on the market.
0:20:46 It could be compared to just, you know, what it is building in-house.
0:20:54 And traditionally for infra, a rule of thumb, not always the case, is that if a service is used by a human, it’s a per-seat pricing.
0:20:59 And if it’s a service that’s used by other machines, it’s a usage-based pricing.
0:21:02 And I actually don’t know where to put agent here.
0:21:05 Well, it could be used by either, right?
0:21:07 It could be used by either, right?
0:21:10 Look, I think your analysis is exactly right.
0:21:14 And the reality is most AI companies don’t know what value they’re generating.
0:21:20 Yet this is so new and so nascent that it’s like, hey, we’re just going to charge something that we’re not going to lose money on.
0:21:24 And, you know, in the case of OpenAI, they have how many millions of users?
0:21:27 They probably don’t have a very strong sense of what they’re all using it for.
0:21:31 And once they do, right, and you see this more, they’re trying to verticalize a bit more
0:21:36 and have kind of specific products for specific use cases, code obviously being the big one.
0:21:39 You know, then you’ll be able to see the pricing kind of catch up is kind of my hypothesis.
0:21:43 This reminds me of the OpenAI point you brought up.
0:21:49 I was thinking about AI companions because that’s the closest to per-seat human pricing.
0:21:55 Like you can’t charge someone every sentence they talk to their companion, although some of the foundational models do.
0:21:58 There are services that will charge you per response.
0:22:01 I haven’t used them, but they do exist.
0:22:02 I see.
0:22:03 Wow.
0:22:03 Okay.
0:22:10 So usually it’s kind of weird to charge someone, like buy tokens of how much they talk to the companion,
0:22:12 rather than like a flat monthly fee.
0:22:14 It doesn’t feel like a true friend.
0:22:14 Right.
0:22:14 Exactly.
0:22:16 It’s very transactional.
0:22:19 This is, look, this is all theory, right?
0:22:27 People love sitting around and talking, oh, we’re going to charge per person, per task, per, you know, world economy that we rescue.
0:22:29 You know, it’s like, it’s all made up, right?
0:22:31 I think Guido’s thing was exactly right.
0:22:34 Let’s look at the actual technology underlying what we’re calling agents right now.
0:22:35 Where are they being deployed and why?
0:22:40 And honestly, the pricing, the marketing, the sales tactic, all of this kind of follows from what they’re actually selling.
0:22:50 If I’m selling something that looks like an agent, but I haven’t truly figured out the value I’m providing to my users, how do I justify the jump to a higher price point when I do figure out that value?
0:22:53 You just need to be selling a solution rather than a product, right?
0:22:58 This is really well-worn expertise in enterprise go-to-market code.
0:23:03 You can somewhat see the decoupling of price from the underlying technology now because it really works.
0:23:06 There’s a very clear ROI to people who use it.
0:23:13 And so as a VP of engineering or a CTO, you can look at this and say, okay, I’m actually saving a lot of money and my guys are getting a lot more productive.
0:23:14 I can value, I can do a normal ROI.
0:23:14 Are they happier?
0:23:17 Yeah, so you’re kind of buying a solution, right?
0:23:22 You’re buying from a vendor something that solves a problem for you, which, again, Microsoft, Oracle, Salesforce, people have been doing forever.
0:23:28 Once we start to see more of that, it’s going to be these things that become real products and kind of decouple pricing and look kind of like real businesses, I think.
0:23:31 I think it’s dictated by the high-level application.
0:23:33 So I’ll give you an example.
0:23:35 So I’m a Pokemon Go player.
0:23:41 So for those who have played Pokemon Go, once you collect enough Pokemons, you are out of storage in your pocket.
0:23:48 So you need to pay extra to buy a new bag, virtual bag, that you can put more Pokemon in.
0:23:52 And as an infrastructure investor, I invest in storage businesses.
0:24:00 And then when I look at how much I need to pay for like 30 extra Pokemon, it was thousands of times more expensive than what storage is.
0:24:02 So it actually reminded me.
0:24:03 I’m surprised it sounded like thousands.
0:24:06 But if it gets 10 to the 15 or so.
0:24:09 There’s a whole price curve on Pokemon storage, it turns out.
0:24:12 Because this is one JSON blob.
0:24:12 Right.
0:24:14 It’s one JSON blob.
0:24:14 I know.
0:24:16 And they charge you like $5.
0:24:20 And then the Pokemon, normal Pokemon players, they wouldn’t think about this.
0:24:22 Like how much do storage costs, right?
0:24:25 Like a normal Pokemon player would be like, oh, this capability.
0:24:31 I would be happily paying thousands more than I were to have an S3 bucket somewhere.
0:24:33 So one of it is monopoly.
0:24:38 So it’s an application layer monopoly that you wouldn’t have been able to store the Pokemon anywhere else.
0:24:40 And two, it’s a use cases.
0:24:41 It’s for a different audience.
0:24:43 They wouldn’t be asking these questions.
0:24:46 They would be thinking about what is the net new value?
0:24:51 What’s the net new cost I will be willing to, you know, for the bill for if I were to get this value?
0:24:52 Is it a fun game?
0:24:53 It’s a fun game.
0:24:54 Take a hundred more dollars.
0:24:55 Yeah.
0:24:56 I think that’s exactly right.
0:25:02 And implicit is what you’re saying is this idea that the product or the solution has to actually work for them, right?
0:25:08 For a less technical person who’s, you know, the person who’s not going to try to provision their own storage bucket to self-host their Pokemon.
0:25:16 And it’s quite defensible, differentiated too, because, you know, Pokemon Go is not open source.
0:25:18 There’s no other replacement of Pokemon Go.
0:25:20 There’s only one Pokemon Go.
0:25:25 So there’s only one place where you would be willing to pay so much money for Pokemon storage.
0:25:26 Plus very strong brand.
0:25:28 Plus you have a little bit of network effect because you can play together.
0:25:28 Yeah.
0:25:31 And then we’ll see the AI agent version of this.
0:25:34 I can’t wait to see the AI companion version of this.
0:25:37 Playing storage for AI companions wardrobe.
0:25:43 As the AI market continues to shake out and evolve, where will agent capabilities ultimately live?
0:25:48 For example, can they live inside LLMs or must they call external tools?
0:25:51 And who’s ultimately in the best position to influence this?
0:25:53 Super interesting question, right?
0:25:56 What’s the systems perspective of how an agent is built?
0:26:06 And I personally think that architecturally, there really is no difference between your typical SaaS software today and agent in terms of how you build it, right?
0:26:07 And let me explain why, right?
0:26:14 So an agent, we said you have sort of an overall loop with an LLM and prompts that feeds into itself plus external tool use.
0:26:19 The LLM itself, you probably want to run a separate infrastructure just because it’s highly specialized.
0:26:24 You need these vast GPU farms, you can’t easily run today’s large LLMs in a single GPU.
0:26:26 So that’s a very specialized infrastructure, that’s externally.
0:26:29 So the LLM call is external.
0:26:36 The state management, well, today in SaaS applications, we do all the state management externally in databases or something like that.
0:26:38 So you probably also want to externalize that, right?
0:26:41 And then what remains is fairly lightweight logic, right?
0:26:50 Where I basically, I’m taking context that I retrieve somehow from databases, I assemble that into a prompt, I run the prompt, and then I occasionally invoke tools.
0:26:53 Maybe I do that with MCP or something like that with an external server.
0:26:56 But the core loop is actually pretty lightweight, right?
0:26:59 And I can run a gazillion agents on a single server.
0:27:01 Not a gazillion, but many agents on a single server.
0:27:04 I don’t need a lot of compute performance for that.
0:27:05 Does that sound about right?
0:27:06 Yeah, yeah, I totally agree.
0:27:13 The interesting architectural question for me has always been, how do you handle the kind of non-determinism that may come?
0:27:21 Many of these successful AI applications that we all use and love really just spit model outputs back out to the user, right?
0:27:23 Like a chatbot or image generator.
0:27:26 It’s like, hey, I called the LLM, here’s what I got, you know, good luck.
0:27:34 When you try to actually incorporate the output from an LLM into the control flow of your program, that is actually a very hard, very unsolved problem.
0:27:37 That, you know, to your point, there are relatively minor architectural differences today.
0:27:40 But this may actually drive more significant changes in the future.
0:27:45 I actually think the winners will be the specialists, not the foundational models.
0:27:50 It’s the people who will build on top of the foundational models or fine-tune the foundational models.
0:27:58 So like a very artistic example of this is that I’ve been spending the last two weeks just prompting GPT-40, their image model.
0:28:00 It’s very good at cartooning.
0:28:01 So it’s very good at manga.
0:28:03 It can spell.
0:28:04 So it has a storyline.
0:28:09 But then I realized that there’s only top two or three styles it’s good at.
0:28:10 So it’s good at Ghibli.
0:28:11 It’s good at manga.
0:28:14 And then there’s variations of the style in that realm.
0:28:20 So now where art comes in is that the market likes out-of-distribution art.
0:28:26 Everyone doesn’t want to see the same things over and over again because that’s how they value art, something that’s different.
0:28:28 Ideally, maybe.
0:28:33 Did somebody recently define art as out-of-distribution samples?
0:28:34 Yeah.
0:28:38 Art can be in-distribution as pop art, right?
0:28:41 It could also be out-of-distribution.
0:28:44 That’s like when impressionism came up many years ago.
0:28:46 Everyone was drawing impressionism.
0:28:50 And then at the time, the painters before, they were like, what’s wrong with your eyes?
0:28:51 Why are you drawing blurry images?
0:28:53 So styles come and go.
0:28:57 But because of that, I think it’s a pushing distribution question.
0:29:01 How the foundational model will never cover 100% of everything.
0:29:10 So it’s really up to the humans and specialists of the next wave to come up with the new data, new workflows, new aesthetics to push that distribution.
0:29:16 Of course, at the end of the day, agents are only as useful as the tools and data to which they have access.
0:29:21 So what happens if major web platforms decide they want to keep agents from accessing their data?
0:29:27 It seems like one of the hardest things about agents today are data modes, right?
0:29:30 In some cases, just because they’re technically difficult, I’m trying to access data.
0:29:33 An agent’s trying to access data, and it’s just very hard to integrate with that system.
0:29:36 In some cases, it’s very deliberate, right?
0:29:41 My iPhone, the photos are not accessible via any API because it’s a walled garden.
0:29:43 So it’s sort of data silos you’re talking about.
0:29:43 Data silos, right?
0:29:48 So is that something that’s holding back agents or is making them more difficult?
0:29:59 Or to make it even stronger, consumer companies traditionally often were opposed to offering automated access to their services because they want their user engagement.
0:30:01 They want the time to advertise to the user.
0:30:03 Will that limit how much we can deploy agents?
0:30:09 And would that be changed once we have the browser-native agents that can browse the web and browse on the phone?
0:30:10 Great question, yes.
0:30:14 I think that I think Yoko is totally right.
0:30:24 You know, it’s like there’s strong incentives for people who own data about, you know, physical entities, you know, people, businesses, et cetera, to keep to themselves, right?
0:30:27 Especially because they may be scared what AI is going to do to them, by the way.
0:30:29 So they’re kind of clinging tight to what they have.
0:30:37 And these problems are rarely solved by defining a new protocol and just saying, hey, if we make it easy for people to give away their core assets, they’ll just do it.
0:30:39 You know, obviously, you know, that’s very unlikely to work.
0:30:44 But someone eventually will solve this by saying, hey, if your data is publicly visible, we’re going to get it.
0:30:47 You know, it’s like, by the way, it’s not actually your data.
0:30:48 It’s data about me.
0:30:49 So why should you be holding on to it?
0:30:55 Actually, I feel like the new advancement in models may just change the data mode.
0:30:59 Kind of to the point of today, web browsing using an agent doesn’t work super well.
0:31:00 It’s very slow.
0:31:01 It’s very clunky.
0:31:04 You have to try it multiple times for it to do any task.
0:31:12 But imagine if we have foundational model capability of giving an agent ability to go to any website, logging as a human.
0:31:13 We’ll table that one.
0:31:15 I don’t know how agent identity works yet.
0:31:28 Or go, you know, go SSH into a server, like execute certain commands or like spin up a virtual machine for a mobile or access a device farm, devising a device farm to play Pokemon Go.
0:31:36 Like maybe those are the data traditionally only available to humans under that account now may be available to agents.
0:31:38 There’s also the opposite that could happen, right?
0:31:49 That basically all the consumer sites are starting with more and more complex anti-agent captures trying to keep out the agents because they only want the humans that have attention to come to those sites.
0:31:53 I mean, I recently did use one of these deep research tools, one of the major LLMs.
0:32:00 And one of the steps, if you look through it, all the steps I went through was like, you know, trying to see how I can get around a capture mechanism for a site.
0:32:01 That was an actual reasoning step, right?
0:32:05 It knew what information it wanted and it was blocked from accessing it.
0:32:09 So is that, you know, how dystopian is the future going to be here?
0:32:10 It solved it, actually.
0:32:13 I mean, it’s so interesting.
0:32:15 So here’s a really early machine learning example of this.
0:32:19 I don’t know if you guys remember when Gmail first implemented ads.
0:32:27 It was a big controversy because they basically said, okay, we are not going to read your emails, but our algorithms are going to read your emails.
0:32:31 And we’re going to suggest ads that you should watch, you know, click on based on that.
0:32:33 We all sort of, I think, just forgot and got used to it.
0:32:36 I still think we don’t love the idea, but we kind of lived with it.
0:32:41 But some of the data providers reacted by removing data from email, right?
0:32:46 So Amazon famously now, when you order something, they send you a confirmation email that says, hey, you just ordered something.
0:32:51 Click here to find out what you ordered, when it’s going to arrive or any information you might want to know.
0:32:57 And so that actually did happen in practice in that example that the major data holders kind of found ways to withhold it.
0:32:59 It’ll be interesting to see whether that’s possible now or not.
0:33:05 But that same data is scraped on the client side from the ad networks that install.
0:33:06 Oh, sure.
0:33:07 Yeah, yeah, yeah.
0:33:08 Yeah, there’s always some other way.
0:33:08 Yeah, some, yeah.
0:33:11 Yeah, not maybe exactly the same, but pretty good proxy.
0:33:20 It may be that it’s much harder to tell the difference between an LLM and a human than a classic, you know, API call mechanism and a human.
0:33:22 That may change the dynamics.
0:33:29 Finally, Guido, Matt, and Yoko answer an obvious question on the longest timeline into which we might have clear visibility.
0:33:35 What needs to happen to make agents a truly game-changing innovation within the next, say, two years?
0:33:44 I think the positive vision is that in two years we figured out how an agent working on my behalf can use most of the tools that I have access to.
0:33:48 I think it’s also clear what are all the pieces that are missing for that, right?
0:33:53 We have not figured out security, authentication, access control for agents working on my behalf yet, right?
0:34:02 We have not figured out how data retention works, you know, we have not figured out the relationship with consumer websites that potentially want to block that agent.
0:34:06 But if you had that, it could make many tasks much, much easier, right?
0:34:18 Today, if I have data sitting, say, my Google Drive or so, right, how easy I can reason about that data versus other data that’s in more fragmented sources, it makes an incredible difference, right?
0:34:27 So I think that’s the bold case, right, where you have agents that can take all the data that you can access, they can access it on your behalf and perform tasks on your behalf, right, and save you a ton of time.
0:34:31 It could make you, depending on what you do, like, you know, multiple times as productive as you are today.
0:34:35 My answer to that is actually different modalities on the foundational model.
0:34:41 Today is still very much text-based, and that worked really well for coding and text-based tests.
0:34:45 But then for more visual-first tests, there’s just no one-to-one mapping.
0:34:52 Even for web browsing, it’s like a very clunky experience of take a screenshot every couple seconds and send it back to the foundational model.
0:35:06 So I will actually bet on multimodality when it comes to if we train the model with different traces of clicking on buttons on the website, navigating the web, using different devices, drawing, producing vector art.
0:35:10 I think there will be new things that the model could unlock on the agent level.
0:35:12 You can probably guess my answer.
0:35:16 If we don’t use the word agent two years from now or five years from now, I think that’s a huge win.
0:35:23 There’s actually a fun paper put out by some folks at Columbia, I think, called AI as Normal Technology.
0:35:27 And they sort of make the argument that there’s a false dichotomy out there.
0:35:35 It’s like AI is either going to bring about utopia or dystopia, meaning everything’s going to be amazing because we have AI or everything’s going to be terrible.
0:35:36 This is kind of the national discourse.
0:35:44 But if you just think of it as normal, right, like water or electricity or the internet or things like that, I think that’s the world we’re kind of headed towards.
0:35:48 An agent is this kind of way to help us get there.
0:35:49 And so that’s my goal.
0:35:51 I mean, this stuff is just incredibly powerful.
0:35:52 We understand how to use it.
0:35:53 We understand how to use cases.
0:35:55 And we’re kind of, you know, we’re kind of putting it to use for us.
0:36:00 Thanks for listening to the A16Z podcast.
0:36:06 If you enjoyed the episode, let us know by leaving a review at ratethispodcast.com slash A16Z.
0:36:08 We’ve got more great conversations coming your way.
0:36:09 See you next time.
0:36:15 you

0:00:07 If your traffic has been eroded by AI snippets and Reddit in the search results, this episode
0:00:10 is going to show you how to fight back and tap into the power of Reddit.
0:00:15 Now it feels a little bit like if you can’t beat them, join them kind of strategy, but
0:00:19 there’s no ignoring that Reddit, the self-proclaimed front page of the internet, has found itself
0:00:22 on the front page of just about every Google search.
0:00:26 Stick around in this one, we’re breaking down how to get some of that traffic flowing back
0:00:31 to you, the Reddit research and content best practices to be aware of, and some common
0:00:33 mistakes to avoid.
0:00:37 Now to help out, I’ve enlisted a professional content marketer who’s been helping businesses
0:00:44 and brands take advantage of this brave new Reddit-dominated search world from redvisible.com,
0:00:46 red with two Ds, Amy Aitman.
0:00:47 Welcome to the Side Hustle Show.
0:00:49 Hi, I’m so excited.
0:00:52 I love this show and I’m really excited to get into this.
0:00:53 So much fun.
0:00:57 And me as well, I’ve got some big Reddit news to share coming up, but maybe you can
0:01:03 kick us off with an example of what is possible from a publishing standpoint of, well, maybe
0:01:08 my own site is having a hard time ranking anymore, but I could publish the same or similar content
0:01:11 on Reddit and have it jump to the first page almost immediately.
0:01:14 So case study, really fun.
0:01:19 I was looking at one of our clients today and in SaaS, I guess a SaaS tool.
0:01:20 Okay.
0:01:21 Software product.
0:01:27 And we have a website that we publish, reviews, comparisons, been around for a long time.
0:01:35 We still do publish on our third party publishers, but we will publish a full scale article, blog,
0:01:42 and then we’ll share something in Reddit and either a subreddit that we own and that we built out and we’ll share.
0:01:47 Often Reddit content is quite different than a full blog.
0:01:53 It’ll often be sort of a share and, you know, it has to fit the Reddit world and the Reddit narrative and the Reddit site.
0:01:58 But if you go the next day, you’ll see the ranking for our content.
0:02:06 And what’s really fun now is we’re seeing that because all roads lead to Reddit, it’s informing AI overviews.
0:02:09 We’re seeing results in chat GPT search.
0:02:11 We’re seeing results in Bing.
0:02:13 Reddit has their own AI search tool.
0:02:15 So you can show up there.
0:02:20 You can show up in people also asking, show up in what people are saying.
0:02:25 Everything can show up all over the place because all roads do sort of lead to Reddit.
0:02:25 Yeah.
0:02:37 From kind of late 2023 helpful content update to late 2024, like 12 months later, where so many publishers got hit by a series of algorithm updates, starting with helpful content.
0:02:43 Reddit was like 10x, like 10 times the traffic that it used to get.
0:02:46 It’s like, oh, there’s this giant sucking sound.
0:02:49 And how do we, you know, get in front of that audience?
0:02:51 You mentioned there’s going to be some nuance to it.
0:02:53 So I want to get into the best practices here.
0:02:57 It’s not just copying and pasting the content that I used to publish on my website.
0:03:03 They’re like, maybe I still want to publish there because there’s hopefully down the road, like an opportunity to double, maybe triple dip.
0:03:04 Maybe I create the video.
0:03:10 Like I could take up potentially a lot of real estate on that first page of Google if I do it right.
0:03:19 But you mentioned, okay, I’ve got my own subreddit that I own and moderate and manage, but then like tapping into potentially others that could be relevant.
0:03:29 Maybe it would be helpful to have an example of like a product review type of article or like a roundup, like best, you know, 10 best toaster ovens or like that kind of traditional affiliate content.
0:03:30 Maybe we’ll start there.
0:03:30 Yeah, that’s great.
0:03:35 Well, 10 best toaster ovens, let’s say that we’re working on getting that ranking.
0:03:37 Obviously, we still have our publication.
0:03:42 And I feel like that’s, to me, it’s like one spoke in this internet realm right now.
0:03:46 And it’s an important spoke, but it used to be like the hub.
0:03:50 And that’s where like all roads led to our publications.
0:03:55 And now I look at it as one part in this entire landscape.
0:03:59 Publication meaning like a website, like your domain that you have full control over.
0:04:00 Yeah, okay.
0:04:01 That you own, yeah.
0:04:05 And that you do want to lead people to eventually, which is nice.
0:04:09 But it’s only one spoke and that’s the reality of it.
0:04:15 And posting a best toaster roundup in Reddit is not just copying and pasting your blog.
0:04:22 For example, like Redditors really, I think they’re really suspicious generally of brands and of affiliates.
0:04:25 And they know that kind of game things.
0:04:26 Like people squeeze in there.
0:04:27 We see it all the time.
0:04:33 There’s a lot of Reddit rules and best practices that you have to engage in.
0:04:36 But I would say generally be helpful.
0:04:41 And a lot of times when we’re sharing those types of best of in ours, it’s, you know,
0:04:44 we could take an angle of like, we’re looking into this, like we genuinely care.
0:04:47 We come at it through the side of like, we’re the users.
0:04:52 We are the curious people that are actually in their kitchen looking at toasters and,
0:04:55 and comparing them and, you know, like UGC.
0:04:59 But that’s how I would probably approach that in a Reddit list.
0:05:04 Like I’m looking at these and can you add some recommendations or have you tried these?
0:05:08 So that’s the kind of content I think that does really well in Reddit.
0:05:13 And if you want to publish in your own subreddit, that’s great.
0:05:15 I think it’s a great distribution play.
0:05:20 And I think all publishers, at the very least, if you are intimidated with Reddit,
0:05:23 create your own subreddit and start distributing your content.
0:05:25 That’s where we really started.
0:05:30 We would just distribute our content in Reddit and start to see some natural engagement.
0:05:36 I mean, you can use the sidebar, you can link back to your site, you can add, you can add links back to your site.
0:05:41 You can give them little teasers, like the full review is on my site, which is really great.
0:05:42 That’s a great technique to Reddit.
0:05:44 Like, you know, I’ve been looking into this.
0:05:46 These are three things I learned.
0:05:53 Not just straight copy and paste syndication, but a little teaser summary and, hey, the full review is back on my domain.
0:05:57 Yeah, there are subreddits that let you distribute your content.
0:06:06 And I see a lot of news driven content or if you have that type of a site where it’s like, you know, breaking news or breaking like entertainment.
0:06:11 So there are some subreddits that will do just that and you can engage in that as well.
0:06:12 That can be a strategy.
0:06:18 But for a lot of my, like for our type of publishing or for review sites or affiliate sites,
0:06:26 I think kind of crafting something that is valuable and answers a question or shares and then you can bring them back to your site.
0:06:30 So that’s a really good baseline strategy for publishers out there.
0:06:39 OK, and this is this is very timely because we like just as of literally yesterday got control of the Side Hustle Nation subreddit.
0:06:40 Somebody had been squatting.
0:06:43 I was wondering that I was looking at us.
0:06:46 It’s like, wondered if you had control of that.
0:06:53 Squatting is probably an aggressive term, but somebody was using that trademark term as their own subreddit in promoting who knows what.
0:06:54 But it had kind of been abandoned.
0:06:55 Yeah.
0:07:00 And so we submitted a trademark request, submitted like a moderator takeover request.
0:07:00 I don’t know what it was.
0:07:04 And was able to get on board with that.
0:07:12 And so now it’s like the question mark of why, you know, obviously we can invite the audience to come be members and contribute to the conversation and the content there.
0:07:24 But from a publishing standpoint, like do we start with like the archive, like the dozens and dozens of posts in the archive that like start to drip those out as threads in this community or in this subreddit?
0:07:30 Oh, I mean, that is definitely one strategy that you can do and, you know, figure out what kind of works.
0:07:36 The great thing about Reddit, I would say, one, it’s great that you got your subreddit back.
0:07:47 So for all the publishers out there, if you do anything right now, it’s like, you know, get your Reddit subreddit name because anybody can create any subreddit for any brand.
0:07:48 There’s no, there’s no rules.
0:07:52 It’s the wild, wild west of the world, Reddit.
0:07:55 So it’s nice when you can recover that and you can take it over.
0:07:59 So, yes, I would generally say have that distribution strategy.
0:08:04 But think if you if your goal is a traffic arbitrage, there’s things that you might want to do.
0:08:13 If your goal is to build a community there, there’s definitely a lot of community building things that you can do, you know, questions and engagement.
0:08:14 Like you said, bring your audience back there.
0:08:17 And what could that really look like?
0:08:26 I would spend a few minutes actually strategizing what you want your group to look like and what it’s going to lead back to and what you want people to do.
0:08:36 OK, but there’s a lot of opportunity there for for you to repurpose your tips, build some excitement, get some more views, ideas.
0:08:46 Yeah. I mean, one thing that’s that’s top of mind is looking at some of the highest performing articles, historically highest performing articles that have lost traffic and then saying, well, why?
0:08:50 You know, they’re still they’re still on the first page, but they’re just lower down.
0:09:03 Right. And so it’s like, how could we create, you know, the Reddit thread or the red, you know, some sort of post around that in an attempt to sure, hopefully this still exists on the site and maybe we update it, make it more relevant and timely.
0:09:08 Sure. But also, like, could we leapfrog that with some sort of Reddit in the search results?
0:09:17 Like, do you see people going after that or trying to create, you know, some other little compelling little tentacle out into the Internet world to like draw people back in?
0:09:22 Oh, yeah. I mean, it’s great. I love the feedback loop that can come from that, too.
0:09:36 So if you have an old listicle article that has done well and you can share some of that and ask people to, you know, weigh in on are these great choices or do you agree with this advice or any other advice, you can update the article and you can actually share and write it.
0:09:39 We’ve updated the article. We’ve updated the guide.
0:09:43 There’s so many things you can do with your subreddit as a community as well.
0:09:51 And for brands, I think, and for publishers, having that branded publisher subreddit is really great.
0:09:59 But you can expand your footprint as well and have like affinity subreddits, which are more like topical.
0:10:06 So you can, you know, just like just like a topical content map, you can have a subreddit for almost anything.
0:10:12 And I feel like it’s almost like the old days of SEO and there’s like exact match.
0:10:20 The more topical and the more niche the subreddit is, I feel like the easier it is to rank for certain things as well.
0:10:29 So sometimes having those brand new subreddits that are really, really topical, like wedding flower arrangements, let’s say.
0:10:32 And that’s all you talk about in that subreddit.
0:10:38 And it becomes a place where people can ask questions, but also where you can share really topical things.
0:10:41 And I feel like that also helps you rank.
0:10:43 It all will depend on the landscape.
0:10:49 Just looking at if you, you know, do a deep dive and look at what’s in the SERPs for anything.
0:10:54 There’s certain subreddits that are just dominant, like moving is a dominant subreddit.
0:10:59 A lot of business groups, you know, like project management, business, there’s a lot of that.
0:11:02 So like the broad terms have kind of been taken over.
0:11:03 Okay.
0:11:13 So going a little bit nichier and having those little mini affinity groups, you don’t need to have a ton of content.
0:11:19 You don’t need to have a hundred pieces, a hundred posts in your subreddit to start ranking and start seeing results.
0:11:25 The thing that people don’t really talk about Reddit a lot is that Reddit will serve your content right away.
0:11:36 The very first post, you create a new subreddit, you create a post, a welcome post or a new post, and it gets served to other editors right away.
0:11:44 Yeah, it’s getting indexed and everything, spending a lot of computing power, indexing all this content, user-generated content here.
0:11:51 We’ve built a lot of websites from scratch, and we know that it takes months to see those early results.
0:11:55 And you’re in Ahrefs and you’re like, okay, are we getting every indexed?
0:11:55 Are we getting some rankings?
0:11:56 Are we doing that?
0:12:03 It takes months to see if your original strategy is working, and Reddit, it takes days.
0:12:05 Yeah, yeah, you get the quick feedback loop.
0:12:08 Let’s go back to this, you know, best toasters example.
0:12:12 So maybe I put the list on my site and it’s, you know, bestkitchengadgets.com or something.
0:12:18 And I also have the best kitchen gadgets subreddit, sure, and I can post, you know, the teaser of it there.
0:12:23 And then I’m going to r slash kitchens, r slash cooking.
0:12:27 Am I, like, treading carefully not to, you know, get in trouble for self-promotion?
0:12:35 Or does it make sense to make, like, the best toaster, like, to create a completely separate subreddit, like, only for that day?
0:12:38 Or to piggyback on the brands themselves?
0:12:41 Like, oh, you know, KitchenAid was, you know, one of the…
0:12:48 So, I mean, that probably already exists, but, like, you know, if it’s an up-and-coming brand, like, if it doesn’t exist, like, you could be the first, you could be the creator of this thing.
0:12:51 And this is the exciting thing about Reddit right now.
0:13:01 And when we even start to work with partners and work with clients or even do a Reddit strategy for one of our sites, it’s, like, that’s part of the strategy is figuring out…
0:13:06 It’s, like, kind of, like, choosing your own adventure in Reddit and where you want to go.
0:13:13 And it is really just, like, evaluating the landscape and saying, okay, the brands, that’s, like, that’s already out there.
0:13:14 There’s already…
0:13:17 There might even be, like, a best toaster subreddit.
0:13:19 So maybe we take a different approach.
0:13:20 And, like, where can we kind of see?
0:13:28 And also kind of evaluate the titles and the kind of thing that is ranking but also is getting engagement from Redditors.
0:13:36 Because I think that’s another factor in getting your Reddit post up is comments and engagement as well.
0:13:39 And we really like to have great content.
0:13:41 I’m a content purist, a content nerd.
0:13:43 I don’t want to have a bunch of…
0:13:44 Oh, no bots.
0:13:47 But I don’t have a bunch of people just upvoting things to upvote.
0:13:51 I want great content that gets natural engagement.
0:13:57 And knowing that Reddit serves your content, if it’s good, people will like it and comment and engage in it, too.
0:14:01 So that’s another factor as well to keep in mind when you’re creating these strategies.
0:14:08 But there is a lot of initial put things out there, put a few Reddit posts together, see what’s working.
0:14:11 And then you can adjust the strategy.
0:14:13 Yeah, isn’t it?
0:14:14 In a way, it’s just nuts.
0:14:20 Like, I miss the EAT, whatever, you know, expertise and authority and trust.
0:14:25 It’s like, no, any old Joe Schmo can now create this thing and it ranks instantly.
0:14:28 It’s like, well, what happened to building domain authority?
0:14:34 I’ve been part of editorial and I’ve been a big EAT champion for many years.
0:14:38 And the goalpost for content quality, it kept moving and moving and moving.
0:14:44 And that was something like my editorial got tougher and tougher and we kept hiring more and more experts.
0:14:45 And we still do that.
0:14:49 I still hire the real deal experts, the real deal nerds.
0:14:49 Yeah.
0:14:54 But the Reddit thing coming up, it was like, that was my first kind of like gut.
0:14:57 It was like, oh, these people are may or may not be experts.
0:15:03 And I kind of had to like take a step back and embrace it.
0:15:11 Because if you think about with AI overviews and AI content creation and all the things that are happening, content is a bit of a commodity.
0:15:15 But at least with Reddit, as for the most part, it’s real.
0:15:16 It is real people.
0:15:20 I’m not saying they’re all experts, but they are real people.
0:15:28 And the more that I spend time in Reddit, the more I kind of get it and kind of respect the ecosystem that is there.
0:15:31 And I can’t believe the things that people are willing to share.
0:15:32 Yeah.
0:15:35 It’s a lot of anonymous usernames.
0:15:37 It’s like, well, who’s to say?
0:15:41 I mean, I guess you’re speaking from personal experience in a lot of cases as a commenter.
0:15:43 But, you know, who’s behind it?
0:15:43 I don’t know.
0:15:45 I can see the pros and cons to that.
0:15:49 But I think the anonymity really does help people express themselves.
0:15:51 Let’s just like say that.
0:15:54 Express, share things that they might not share.
0:15:57 Even like horror stories with work or insights.
0:16:04 Things that, you know, like even when you’re doing a podcast, there’s always going to be this thing where you’re holding back.
0:16:06 But on Reddit, someone might not hold back.
0:16:08 They might tell everything.
0:16:09 And they often do.
0:16:18 So I think that anonymity, it’s almost a tradeoff, but it could almost bring out more expertise and more insights than without it, to be fair.
0:16:19 Okay.
0:16:29 More with Amy in just a moment, including encouraging that engagement, building your community, and how you might do keyword research to figure out what kind of content to post in the first place.
0:16:30 Coming up right after this.
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0:18:52 There’s still a lot to unpack here.
0:18:57 You mentioned that comments and engagement seem to be a positive signal, right?
0:19:05 Like if this is getting a lot of upvotes and comments, like that may be more likely to get more eyeballs to both on the Reddit platform and potentially through Google later.
0:19:10 Do anything specific to encourage that feedback, to encourage commenting?
0:19:16 I would say create good content and learn what works when you get it served.
0:19:18 Like I said, you create a post in Reddit.
0:19:21 It gets served to other people in Reddit.
0:19:23 You’ll see what’s kind of ranking.
0:19:26 And once people are there, are they actually clicking through?
0:19:27 Are they actually engaging?
0:19:28 Are they actually upvoting?
0:19:34 Those signals are really great and you can work on the editorial from there.
0:19:35 You can kind of make adjustments.
0:19:41 And do you have an example or two of a post or a thread that did get that level of engagement you were looking for?
0:19:55 One of the things that we did in the beginning was we started just a subreddit for one of our websites and it naturally got a lot of engagement and people joining in and saying, OK, can you look into this tool?
0:19:59 Can you look into this review or I don’t agree with you on this?
0:20:04 So like sometimes even having like really strong opinions will get engagement, which is great.
0:20:10 And I was looking at a post today and someone said, I don’t agree with your list for CFOs.
0:20:14 I think these are not really great recommendations and it’s a talking point.
0:20:15 It’s great.
0:20:18 And they’re making my post have more engagement.
0:20:21 I can always edit the post if I agree with them.
0:20:23 I can always disagree with them.
0:20:27 And I think that back and forth is actually a really good starting point for Reddit.
0:20:33 So, I mean, just like sometimes you can, if you have a strong opinion, people are going to agree or disagree with you.
0:20:38 It’s not about giving everything away like in a full blog.
0:20:43 It’s about sharing a strong opinion, showing your expertise, having a side.
0:20:45 I think that works really well to get engagement.
0:20:52 I mean, is this any different than blog comments, you know, back in the day or is this just, you know, nobody’s nobody’s reading the blog anymore.
0:20:53 So you got to go where the people are.
0:20:54 Yeah.
0:20:55 And that’s a really good point.
0:21:00 I feel like everything I’ve done for the past decade or more has led me to this.
0:21:09 It’s the way we’ve done editorial, like even just like how to get engagement, how to like improve a title, what to look for and what works.
0:21:11 It’s just we’re on a different platform, right?
0:21:15 It’s just a different place to put content and, you know, slightly different way.
0:21:24 Is there anything proactive that you’re doing to build your own subreddit community on the platform?
0:21:28 It’s like, I’m like such a newbie user.
0:21:29 It’s like, does it just happen organically?
0:21:32 People search side hustles and they find it?
0:21:32 Like, how does it work?
0:21:37 It can happen organically, but also like we do old fashioned community building.
0:21:46 So we do reach out if somebody comments on one of our posts, I will reach out through the mod mail and say, thank you so much for your comment.
0:21:47 Can you join our community?
0:21:52 Can invite other mods and other people to contribute to your community?
0:21:54 That’s that’s another thing that you can do.
0:21:57 You can do cross posting on Reddit.
0:22:02 I think Reddit is more friendly to cross post and sharing those kind of things.
0:22:07 Self promotion is you have to kind of play it a little bit safe.
0:22:12 But I think if you bring something valuable and it makes sense and it’s not all that you do.
0:22:19 Remember, every single Reddit profile that we that you have, you can see in the entire history of what someone’s done.
0:22:23 So every single thing you’ve done is a cross post promotion.
0:22:31 You’ve mentioned the same brand or same publication everywhere you go or that’s all you talk about is the AI tool that you love.
0:22:37 It’s very obvious to other writers that you’re not there to contribute to this Reddit community.
0:22:38 OK, yeah, no shortcuts there.
0:22:41 You got to be a part, be a good steward of the community.
0:22:42 Can you explain cross posting really quick?
0:22:47 This is like taking something from your subreddit into another subreddit.
0:22:52 And sharing and it’s like there is a way that you can actually cross post and share.
0:22:53 Yes.
0:22:57 And that’s also you can also cross post a question into more than one.
0:23:03 If you ask a question in another subreddit, you can cross post the question if you feel like you need more answers.
0:23:05 So there is that, too.
0:23:09 But yes, you can cross post your content into other subreddits.
0:23:14 And again, every subreddit has their own rules, their own ecosystem, their own guidelines.
0:23:22 So I just caution before you do any promotion, make sure you read the full subreddit rules.
0:23:25 And when you control your subreddit, you get to control that, too.
0:23:27 You can you can literally say no cross posting.
0:23:28 You can say anything.
0:23:30 You can say no cross posting, no brand promotions.
0:23:35 You have to start every post with a Yahoo to get approved.
0:23:36 Like it’s wild, wild.
0:23:41 Let’s say I’m coming to you as a new client or new prospective client.
0:23:52 Like talk to me about the like keyword research strategy, if that’s even the right term here, like to figure out where to go, what to post, what kind of keywords to target.
0:24:03 It’s a similar type of conversations working with, you know, creating a content plan or working with just like an SEO type of content strategy, depending on the client goals, like figuring out what they want to do first.
0:24:07 Do they want, is it going to be sort of a traffic arbitrage?
0:24:09 Is it going to be an awareness play?
0:24:12 Is it going to be a brand reputation management play?
0:24:18 Is it going to be there’s a lot of different things that you can do with Reddit?
0:24:23 But we start like literally looking at the search landscape, like where is Reddit coming up?
0:24:26 Where are their brand terms coming up?
0:24:29 What their brand terms are important to them?
0:24:34 Obviously, like review comparisons, all those commercial intent terms are really important.
0:24:44 We also look at AI overviews because Reddit’s being informed, like using Reddit’s in AI overviews now, which has only been for a few months, to be fair.
0:24:57 So that’s really interesting to see like what kind of what are they pulling and then determine the content strategy and keyword strategy and what type of content where we put it from there.
0:25:02 Any tools or tech that you like on this?
0:25:14 I’m just trying to think of, well, in Ahrefs, I could pull up like a competitor report or like a content gap type of report and say, oh, you know, these 10 similar sites are ranking for these keywords.
0:25:19 If you haven’t covered that, you might consider it because clearly there’s interest in that.
0:25:22 Well, in Ahrefs, you can look up everything in Reddit.
0:25:32 I feel like it’s a little bit behind still, like because there’s so much Reddit results that Ahrefs can be a little behind and displaying all the terms and the keywords that are actually ranking in Reddit.
0:25:33 But that’s a good place to start.
0:25:43 Like just look up Reddit, you know, look up your brand, look up your keywords, see it and also see like look up the keywords with your brand and then append Reddit.
0:25:46 So like, you know, Nike review Reddit.
0:25:47 So look to see that.
0:26:01 So kind of like look at that landscape, like digging into those Reddit results and and seeing if it’s major subreddits that are coming up, if it’s if it’s a geo play, because a lot of times it could be something where it’s a lot of geographical locations.
0:26:09 Like, you know, ask in Toronto or in Canada or in North Carolina or in L.A. and those kind of things, too.
0:26:15 And seeing some of the terms that come up, a lot of times for brands, we see things like is Brand X legit?
0:26:19 That’s a very something that comes up in Reddit a lot, as you can imagine.
0:26:19 Yes.
0:26:25 If you have a review of that brand, would you title that the three, you know, is Brand X legit here?
0:26:26 I tested this out.
0:26:28 I found these results.
0:26:28 Yes or no?
0:26:30 Like, here’s here’s the link to my full review.
0:26:31 Yeah.
0:26:38 I mean, for our blog, we might our third party, we might do a full review and that might be a subheading for a Reddit post.
0:26:40 That might be the title of a Reddit post is blah, blah, blah legit.
0:26:44 If we’re seeing that, if we’re seeing that people are asking that or is it worth it?
0:26:45 Is it legit?
0:26:46 Those kind of things.
0:26:56 And you can see the type of questions that people are asking in Reddit results already and deciding what to do with the information is like the next step in the strategy for sure.
0:26:57 But yeah, legit’s a good one.
0:26:58 Worth it’s a good one.
0:27:01 Would you create a new thread in that case?
0:27:03 Like kind of with that same title?
0:27:04 Or would you just comment on it?
0:27:06 Like, yes, it’s legit.
0:27:06 No, it’s not.
0:27:08 Like whatever your results finding was.
0:27:17 So a lot of times I evaluate sentiment of for the reviews that are coming up currently when we first start working with a client.
0:27:30 And if it’s negative sentiment, if something’s definitely negative sentiment, one thing you don’t want to kind of do is like add to the fire because comments and upvotes make that post better.
0:27:32 Give it more, give it more juice.
0:27:43 So we kind of have an approach of like love bombing around the negative sentiments, at least having more of an editorial approach or creating things around that.
0:27:48 I wouldn’t go and engage with a fully negative review and hoping to like turn the brain.
0:27:50 And that’s what brands have done.
0:27:51 They’re like, oh, I have a negative.
0:28:01 Someone said something and it’s and it could be for something 10 years ago that happened and somebody was upset and it’s actually we could be a post from 10 years ago and write it like this is what we’re dealing with now.
0:28:08 And so they’ll go and they’ll comment on that right at their head and just give it more juice and that it can stay in the ranking.
0:28:14 But we like to kind of love bomb, let’s say, around those and to shift the sentiment.
0:28:16 Sorry, I’m not sure if I’m clear on that.
0:28:22 Are you saying like don’t jump on that overwhelmingly negative thread with a positive spin?
0:28:23 You’re just like you’re just adding more fuel.
0:28:27 And the consensus is still like we want to bury this thing.
0:28:29 Like we don’t want this to have any more visibility than it already does.
0:28:32 Starting something else that, you know, has a clean slate.
0:28:33 It could be more positive.
0:28:43 Yes, I would say the exception would be if it’s something that’s in your own branded subreddit and it’s a customer service type of question that’s genuine.
0:28:46 I think then brands need to address it and need to comment.
0:28:49 And I think that’s, you know, that’s a different strategy.
0:28:52 That’s more of like a customer service strategy.
0:29:01 But as far as like if you’re for the ranking, remember, like the more you engage in a post and read it, the more it’s going to surface to the top.
0:29:01 Okay.
0:29:02 Yeah.
0:29:07 So maybe not adding more visibility to something that you don’t want people to read or you don’t want people to see.
0:29:13 Or even if you’re just an affiliate partner, it’s like we don’t necessarily want that to be front and center.
0:29:17 But I think evaluating that sentiment as content creators is really important.
0:29:22 And I think that’s part of the research and part of what I tell our writers as well.
0:29:34 Because if we’re talking about brands or products or things that we like and every single thing in Reddit is negative and we come across as this overly positive, which we would never do.
0:29:41 Because we have a real editorial UGC approach to this, but it’s also doesn’t fly and it stands out.
0:29:52 So like I think digging into what’s there and seeing what other people think is really important to create honest and genuine editorial and making recommendations as well.
0:29:52 Yeah.
0:29:54 Be upfront.
0:29:56 Like, hey, here’s what we liked about it.
0:29:56 Here’s what’s good.
0:29:58 Here were some of the downsides.
0:30:03 Or here’s, you know, here’s what some of the detractors say, you know, just to be aware of both sides.
0:30:14 Yeah, it’s like we posted a post the other day and that said, I see a lot, just as many Reddit posts love this mattress versus just as many Reddit people don’t love this mattress.
0:30:15 And here’s why.
0:30:16 And that’s how we kind of approached it.
0:30:23 But to completely ignore that there’s like people that are like, I, this is a way too soft of a mattress and I don’t like it.
0:30:26 I think doesn’t play well on Reddit either.
0:30:26 Yeah.
0:30:28 I mean, I don’t think it’s a great editorial either.
0:30:31 I think I like the balanced kind of approach.
0:30:32 Okay.
0:30:38 So that would be maybe how to approach some of the review content looking like, is this brand legit?
0:30:39 Is this brand worth it?
0:30:40 Is this product worth it?
0:30:48 Imagine you could do similar for like this product versus this product, kind of like bottom of the funnel, you know, high buyer intent type of keywords.
0:31:01 And then even going, you know, the 10 best toasters, like something a little bit higher in a buyer’s decision and kind of teasing that, hey, we’ve just undergone this, you know, month long intensive testing process.
0:31:07 And I can’t wait to share all the results, you know, here, here on our site, but I’ll tease, you might be surprised who won or something.
0:31:15 And I think if you want to embrace the Reddit values of things, you’ll be opinionated, you’ll share something.
0:31:22 And overall, I think what’s gotten me really excited about doing editorial already is that it does feel fresh.
0:31:24 It does feel a little different.
0:31:31 And it does feel more human for a long time in SEO, in content websites, in affiliate websites.
0:31:34 I feel like we were creating very similar types of content.
0:31:40 And there was a lot of people in the industry saying the top 10 results all look the same.
0:31:43 The top 20 results all look the same.
0:31:45 And then we were just competing on content quality.
0:31:47 We’re competing on a lot of different things.
0:31:50 But to be fair, that was the landscape for a while.
0:31:58 Yeah, authority, domain age, everybody plugs it into a phrase or something and says, well, this is what, you know, is already on the first page.
0:32:00 Make sure you include that in your article.
0:32:01 Make sure you include that.
0:32:09 And even when we had these, like, you know, really underground reviews for, like, indie games on our sites that would get to it.
0:32:17 Once something started getting searchable, once something started having enough search volume, one of the bigger publications would pick it up and destroy us.
0:32:23 Because they would do, you know, a content pack of, you know, 200 articles or 50 articles to our three, right?
0:32:24 Yeah.
0:32:37 And now I think Reddit is giving other people a way to, you know, have those discussions, share those insights in the SERPs that the publishers, you know, competing with the publishers, yes.
0:32:39 But it can be really refreshing and exciting, too.
0:32:47 More with Amy in just a moment, including mistakes to avoid and how to get more mileage out of the content you’re already creating right after this.
0:32:53 Remember data from the Goonies, the guy with all the gadgets, or data from Star Trek?
0:32:56 I think that’s why I say data instead.
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0:34:04 One strategy I didn’t fully embrace or maybe wasn’t fully aware of when I was starting out was this idea of the piggyback principle.
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0:35:17 Is it primarily text written content versus, you know, people sharing videos or trying to get more juice to their YouTube channel or to their short form content?
0:35:20 Yeah, I think there’s all sorts of things.
0:35:24 Video content right now is really another exciting avenue.
0:35:26 I see video in tons of SERPs.
0:35:28 A lot more short videos.
0:35:32 I see, like, obviously YouTube, TikTok, all of those channels being promoted.
0:35:35 But yeah, you can use video in Reddit as well.
0:35:36 And you can do all that.
0:35:40 I don’t think we do a lot of video in Reddit, but we have.
0:35:52 Okay, so what I’m hearing, own your community, own your subreddit as a place where hopefully nobody can, like, ban you for, like, dropping links or, like, you know, being self-promotional.
0:35:53 Like, hey, of course I want to promote my stuff.
0:35:54 This is my subreddit.
0:35:58 But treading really, really carefully in others.
0:36:03 Like, if there is, you know, r slash cooking and you come in, well, here’s my best, 10 best toasters.
0:36:08 It’s like, ah, it’s a recipe to get the post deleted at best or get yourself banned at worst.
0:36:15 Well, I would say even with your own subreddit, there’s no guarantee that you cannot be, that you won’t be suspended or banned.
0:36:17 Reddit is a risky platform in that way.
0:36:22 So I would say, like, give, and I call it paying the Reddit tax.
0:36:25 Go in, give, share valuable information.
0:36:29 I would never, ever start a new subreddit and start adding affiliate links.
0:36:33 In fact, I, like, kind of don’t want to share any affiliate links.
0:36:34 I think it’s a red flag.
0:36:35 I think Redditors hate it.
0:36:38 I think it’s sad because that’s how people, obviously, we’re…
0:36:39 Yeah, Amy, we’re trying to make money.
0:36:40 Come on.
0:36:42 We are trying to make money.
0:36:47 So you have to take a few extra steps and you have to, you know, you know, give till it hurts.
0:36:48 Follow the rules.
0:36:49 Share.
0:36:53 You can share links to your own site and have affiliate links there.
0:36:55 Yes, it’s another step that people have to take.
0:36:58 But I think it’s worth it.
0:37:10 I think it’s not worth the risk and, you know, just losing people, like, losing the Redditors’ kind of trust by, you know, just having a bunch of spammy, kind of linky kind of things.
0:37:10 So.
0:37:11 All right.
0:37:15 So that’s helpful to be, like, I don’t know, to hear you say, like, I wouldn’t put any affiliate links.
0:37:18 Like, okay, just tread, tread super carefully.
0:37:21 Any other risks or mistakes that we should know about?
0:37:25 I mean, it does feel, this is my beef with all these platforms.
0:37:28 It’s like, yeah, you got to go where the eyeballs are, but you’re still playing in somebody else’s sandbox.
0:37:31 They could take their ball and go home at any time.
0:37:34 And you’re like, I feel like I’m building on borrowed land here.
0:37:35 It’s really tough.
0:37:36 I feel like that, too.
0:37:41 I mean, the advice that I would have given five years ago is not what we’re doing now.
0:37:46 In fact, like, being publishing and we publish a lot on YouTube.
0:37:47 We publish on our own site.
0:37:48 We publish in Reddit.
0:37:52 We publish in Medium and TikTok and Quora and other forms.
0:37:55 I would have said before, don’t do that.
0:37:56 Don’t spread yourself thin.
0:37:58 The editorial is different.
0:38:01 It takes a lot more effort to get into all these things.
0:38:05 And you’re, you know, going on rent to land and Reddit does have its risks.
0:38:08 But it’s such a huge platform.
0:38:10 There’s so much visibility.
0:38:12 You almost have no choice.
0:38:16 If you’re not on Reddit, you’re missing out on a lot of opportunities to be in the SERPs.
0:38:21 And so we had to, our motto was like, we’re going to figure it out.
0:38:23 No matter what, we’re going to figure it out.
0:38:25 And so that was like, challenge accepted.
0:38:26 We’ll do it.
0:38:26 Yeah.
0:38:30 Tell me about the Medium and Quora strategies.
0:38:31 It’s like the same type of content.
0:38:35 You know, we started a thread or somebody asked this question or a very similar question.
0:38:37 So we could answer it over there as well.
0:38:38 Yeah, I would say similar.
0:38:41 They’re a little bit more edit friendly.
0:38:46 You can edit a Quora question after it’s been asked a little bit easier.
0:38:48 You can edit your Reddit questions too.
0:38:54 But I think the etiquette is to say edited because I added this and it has to be valuable.
0:38:55 Okay.
0:38:55 Okay.
0:39:01 I think Quora and Medium are obviously a little less risky as far as like you can publish what you want.
0:39:05 And depending on the SERP, sometimes Quora outranks Reddit.
0:39:13 So I think just evaluating that landscape again and seeing and also asking questions that people will answer is really important.
0:39:15 Knowing how to ask the question.
0:39:17 Quora has their own kind of etiquette as well.
0:39:21 Like they ask you, don’t ask questions that have already been asked.
0:39:23 So that kind of thing.
0:39:28 So all these different things, they all have their own little quirks, let’s say, that you have to figure out.
0:39:35 I mean, do you give any weight to like, you know, back in the day, it would be like, oh, that would be considered duplicate content to publish the same stuff on your site.
0:39:40 And to paste it on Medium or paste it in, you know, syndicate to MSN.
0:39:43 It’s like, or publish it on Substack.
0:39:51 Like there’s lots of different channels where like, okay, on the plus side, it’s like, well, I have the potential to take up half of the first page if all of these somehow get ranking.
0:39:56 But, you know, maybe only one of them is going to get indexed if it’s the same.
0:39:56 Well, that’s the thing.
0:40:02 We might have the same topic, but the approach to every single different platform is going to be different.
0:40:06 And it’s different content for every single platform that we create.
0:40:07 It might be remixed.
0:40:08 Sounds like a lot of work.
0:40:09 It is a lot of work.
0:40:12 And I feel like maybe that’s why there’s bad sentiment.
0:40:17 Like scaling up these teams, these editorial teams.
0:40:28 But I have a great team of writers, creators that do video, will create a blog post, will create a Reddit share, will create a Quora, will create a Medium.
0:40:32 And it is very, it is different for every single approach.
0:40:34 And they will do fresh content for every single thing.
0:40:36 So it is a lot of work.
0:40:43 But it’s worth it because we have a client that I was doing a report for, and we were ranking in seven spots on the first page of Google.
0:40:44 Yeah.
0:40:46 For seven different things.
0:40:47 Yeah, that’s what’s possible.
0:40:51 They just completely dominate the front page real estate if done right.
0:40:51 Yeah.
0:40:57 Are there any rules of thumb in terms of, you know, publishing cadence where it’s like, well, every Monday I got to have a new thread?
0:41:02 Is there any rules like that or just kind of like as you see fit or as you see necessary?
0:41:06 With Reddit, I think starting off, don’t publish a 50 or a 100.
0:41:09 I wouldn’t publish, mass publish anything.
0:41:11 I wouldn’t, I would have a human approach to it.
0:41:14 So I would start with publishing one thing, publishing two.
0:41:21 And like I said before, you don’t need to have a ton of content to start seeing some results and start seeing what works.
0:41:25 I’ve seen friends of mine, I think that’s their mistake because they put a lot,
0:41:31 they invest a lot of their team’s energy and effort into their subreddit and they start to like, you know,
0:41:36 I’m going to publish a hundred things, 150 things and put a ton of effort into it.
0:41:41 One, the risk is if something happens and you lose that subreddit, which can happen.
0:41:43 I hope it doesn’t.
0:41:44 You’ve lost 150.
0:41:53 But two, you can get enough data and validation and review from a few posts and then see what kind of works.
0:41:55 But I also think just like be human.
0:41:58 Like I think too much cadence, kind of maybe like a tripwire.
0:42:00 So I would space it out a little bit.
0:42:01 Okay.
0:42:01 Yeah.
0:42:10 So if, so if other publishers are in the same boat as me, they’ve, you know, been running their sites for five or 10 years, they’ve got like this huge library of content.
0:42:13 The strategy is not to go and try to dump that all at once, even every single day.
0:42:16 It’s just like, take a, take a metered approach.
0:42:28 And if you want to publish more, I would say create those affinity subreddits as well that you can publish more and to different things like expand it that way instead of just expanding.
0:42:35 But once your subreddit is established and you have members and you have engagement and all the good things that come from that, it’s a little bit more solid.
0:42:40 And you can do, you can do a lot more and you can publish on more of a regular cadence.
0:42:50 And of course, ideally people are publishing on your subreddit, they’re publishing questions and you have moderators and it can, you know, become this humongous thing eventually.
0:42:51 Yeah, it can be its own.
0:42:57 So it’s another touch point for the brand is kind of how I’ve traditionally viewed the Sino Salvation Facebook group.
0:43:02 It’s like, hey, you know, wherever you are, if you’re in the car, hey, listen to the podcast.
0:43:06 If you’re scrolling through your feed, make sure you see our stuff in the Facebook group.
0:43:14 So there’s, I guess I could see another touch point here with people being engaged with the brand and fueling future content through their questions.
0:43:26 Like, yeah, hey, anybody ever tried this particular side business or this particular money making app or whatever and try and gather feedback on that or like, sure, I never heard of that.
0:43:27 I won’t test it out.
0:43:28 Yeah.
0:43:31 And then you can create a podcast or find somebody by an expert.
0:43:39 And a lot of great things can happen with that kind of community and that feedback loop that I think is really fun for something like this, for sure.
0:43:46 And remember, like, Reddit is not like a Facebook or like another social because it’s just so prevalent in the SERPs as well.
0:43:53 So people that may even tell us that they’re not Reddit users, like my husband says he isn’t on Reddit, but he’s on Reddit.
0:43:53 Sure.
0:43:57 Because when he does any kind of Google search, Reddit will show up.
0:43:58 He’ll be on it.
0:44:00 You know, he might not realize it.
0:44:01 Okay.
0:44:02 Personal question.
0:44:08 Like, you’ve talked a lot about, like, the affiliate type of content, which, you know, okay, there’s an extra step.
0:44:09 Hopefully I draw people back to the site.
0:44:11 Maybe they eventually click the affiliate link.
0:44:18 If I want to promote an episode of the show and say, hey, we just had this really interesting guest on.
0:44:24 She was getting paid to create short form videos for brands, you know, two, three hundred bucks a video, sometimes more.
0:44:28 I genuinely think it’s like a super creative business, like a really cool story.
0:44:31 Hey, I made a hundred grand on the side from my day job.
0:44:37 You know, just trying to get the word out there, but not be like, hey, come listen to my stuff.
0:44:45 Like, what’s, how do you, I don’t know, how do you tread lightly or, you know, figure out the best way to promote something like that or like that story based type of content?
0:44:47 Oh, yeah, that’s really interesting.
0:44:53 Because I think that there is a case for having more of a cadence then because you have real things that you want to share.
0:45:02 And maybe there is like, maybe you share it in your brand and subreddit, maybe you have your own like, like subreddit for the podcast only.
0:45:08 And this is where you get updates and it can be kind of a feed, but you can engage in other subreddits as well.
0:45:13 And if you are genuinely excited, and I see a lot of people promoting themselves like that.
0:45:16 But again, it’s like where it’s kind of like the approach.
0:45:22 So, you know, it’s like this is such a really interesting story and I think you’re going to really get good tips.
0:45:24 I think that can, that can work.
0:45:31 I just think it’s when, I think it’s just when brands are almost lazy and too self-promotionals when they get into trouble.
0:45:31 All right.
0:45:31 All right.
0:45:39 But I think if you’re a genuine content creator and you generally do what you do on Reddit, it does translate.
0:45:39 It can.
0:45:41 Not perfect, but it can.
0:45:50 To what extent are you using AI to spin up, you know, different intros or different ways to say the same type of thing and like to make it unique and different?
0:45:55 Well, we have like a no AI policy in our content.
0:46:09 And to be fair, I don’t really know if our writers have used AI in their brainstorming process and their, but I don’t want it to look like AI, feel like AI, sound like AI.
0:46:12 Even if they haven’t used AI to create it, if that makes sense.
0:46:13 You can kind of sense it.
0:46:16 I want them to, I want it to be a little imperfect.
0:46:18 I want it to be, you know, opinionated.
0:46:24 I want it to be, for Reddit especially, I think anything that feels computer generated.
0:46:29 But yeah, for testing, I think that’s something that you could do.
0:46:29 I don’t know.
0:46:31 We don’t, we don’t really do that right now.
0:46:32 All right.
0:46:33 Fair enough.
0:46:45 The people that are creating our editorial or creating our post are real experts, real nerds, full of like, you know, humor, edginess, opinions that I want to pull that out of them.
0:46:49 I don’t want to figure out a formula for, you know, testing.
0:46:50 Mass, mass producing.
0:46:51 Okay.
0:46:52 Fair.
0:46:53 What’s next?
0:46:55 Where do you see Red Visible going?
0:46:58 Where, I mean, what’s got you excited this year?
0:47:12 Well, the first thing is, I feel like it’s really exciting to survive in this new landscape when AI reviews are, you know, at the forefront, taking up half the listing on Google right now.
0:47:16 When our publications, when the traffic changed, there was a huge shift.
0:47:26 All of the things that have happened in publishing and digital, to be still here and to be excited and to be in content is a really big win for me and still gets me really motivated.
0:47:36 And to be able to work with people that I love and creatives and, you know, and do the thing I love, that is really what’s kept me going for the past year, year and a half, two years.
0:47:37 It’s been a roller coaster.
0:47:50 Looking forward, I feel like because we’ve figured out how to distribute content, create content on different platforms, I feel like it’s a moat around our business, around what we do.
0:47:54 Because no matter how the SERPs change, I feel like we have a stake somewhere.
0:48:01 Whether it’s if Reddit completely disappeared from the SERPs, we still have our third party, but we still have our publishers.
0:48:04 We still have, there’s still Quora Medium.
0:48:06 There’s still video, which is really exciting.
0:48:21 So, moving into that and just embracing search for what it is right now and for how people are discovering us and for where people are living online has been really what’s kept me motivated and what I look forward to doing.
0:48:23 And every day is a new day.
0:48:29 And in one year, I may be talking about something else, but for right now, that’s what keeps me going.
0:48:32 Yeah, the change is the only constant.
0:48:40 You never know what’s coming, but for the time being, a lot of that traffic and attention is certainly flowing towards Reddit.
0:48:44 So, you might as well figure out how to take advantage of that, whatever that means for your brand.
0:48:47 Redvisible.com is where you can find Amy.
0:48:51 Let’s wrap this thing up with your number one tip for Side Hustle Nation.
0:48:53 Embrace your side hustle.
0:49:01 Like, I feel like everybody needs to have a side hustle, no matter how busy you are, and I feel like it’s a great way to test new things.
0:49:03 I still have my little side hustles out there.
0:49:11 You don’t necessarily have to make a lot of money right away, but the things that you learn, you never know where it’s going to come into play.
0:49:20 So, I would say one of my side hustles is I love to play around with AI and play around with AI tools and things like that and create things.
0:49:22 But have I put anything out into the orbit yet?
0:49:23 No.
0:49:24 But I’m learning a lot.
0:49:29 Yeah, but you learn from that, like, just messing around time, like the tinkering time.
0:49:30 But, I mean, I love it.
0:49:37 I listened to the interview you did on UGC and how amazing that is and how much freedom someone gets.
0:49:43 And I love hiring UGC creators and I love finding people and it can fit into your life.
0:49:51 And these kind of things that people are discovering now and doing now, there’s going to be different opportunities in two years and three years.
0:50:01 So, if you have a passion to do that and I have a 14-year-old and he’s done some videos with us and I was really hoping he would really get into it and be a creator.
0:50:02 But it’s funny.
0:50:07 Like, some of those episodes that you’re like, I know the perfect person for this.
0:50:09 And you send it to them and they’re like, eh.
0:50:11 I was like, man, I really thought that was going to hit.
0:50:14 But when the student is ready, the teacher will appear.
0:50:15 So, maybe they’ll come back to it.
0:50:21 I think listening and hearing other people’s stories and getting inspired, you never know what’s going to be.
0:50:22 And just, like, tinker around.
0:50:23 It’s fun.
0:50:25 Like, I think that’s my advice.
0:50:29 I am in the very early stages of my Reddit tinkering.
0:50:30 I hope you’ll come by and join.
0:50:33 If you’re listening to this, it’s r slash side hustle nation.
0:50:34 Come and come by.
0:50:38 Help us out and build a helpful community for side hustlers on the internet.
0:50:41 A couple of takeaways from me before we wrap.
0:50:42 Like Amy said, no shortcuts.
0:50:44 You got to be a member of the community.
0:50:45 It’s real work.
0:50:46 It’s real effort.
0:50:51 And, you know, you can’t come in guns blazing and just spamming up a place with your affiliate links.
0:50:52 You got to be there for the long haul.
0:50:57 And the second thing is to build that subreddit that you are the moderator of, that you have some ownership over.
0:51:00 It could be a distribution channel for your content.
0:51:05 It could be a place to gather community feedback and questions that fuels future content.
0:51:12 It could be just another touchpoint for your brand if people are going about their day-to-day lives and they see you pop up in their feed there.
0:51:20 So those are kind of the highlights for me and I’ll probably update as we go forward with our newfound reddit journey here.
0:51:24 But big news, the Side Hustle Show just had its 12th birthday.
0:51:31 So whether this is your first time listening or you’ve been around since the beginning, I appreciate you spending some time with us in your earbuds today.
0:51:39 If you are new or newer to the show and you want to dig a little bit deeper, you can actually get a personalized playlist at hustle.show.
0:51:48 You just answer a few short, multiple-choice questions and it’ll recommend 8 to 10 of our greatest hits to start out with based on your answers.
0:51:48 Totally free.
0:51:51 Hustle.show for your personalized playlist.
0:51:53 Big thanks to Amy for sharing her insight.
0:51:57 Big thanks to our sponsors for helping make this content free for everyone.
0:52:02 SideHustleNation.com slash deals is where you can find all the latest offers from our sponsors in one place.
0:52:05 Thank you for supporting the advertisers that support the show.
0:52:07 It really does make a difference.
0:52:08 That is it for me.
0:52:10 Thank you so much for tuning in.
0:52:14 If you’re finding value in the show, the greatest compliment is to share it with a friend.
0:52:15 So fire off that text message.
0:52:19 Maybe somebody that you know who had their traffic hit in the last year or two.
0:52:22 Say, hey, maybe here’s a path forward like we talked about at the beginning.
0:52:24 If you can’t beat them, join them.
0:52:27 Until next time, let’s go out there and make something happen.
0:52:30 And I’ll catch you in the next edition of the Side Hustle Show.