#AIS: FiveThirtyEight's Nate Silver on how gamblers think

This talk was recorded LIVE at the All-In Summit in Miami and included slides. To watch on YouTube, check out our All-In Summit playlist: https://bit.ly/aisytplaylist 0:00 Nate Silver gives a presentation on how gamblers think 19:25 Bestie Q&A with Nate Silver: building probabilistic models, getting blamed for Trump winning in 2016, polarization reality, 2022 midterms Follow Nate: https://twitter.com/NateSilver538 Follow the besties: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg Follow the pod: https://twitter.com/theallinpod https://linktr.ee/allinpodcast Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Intro Video Credit: https://twitter.com/TheZachEffect

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Jason Calacanis?

  We're really excited to have our next speaker here. Nate Silver is the editor in chief of FiveThirtyEight. And he came to our poker game recently. Oh, Nate came to our game. Come on out, Nate. Ran the game over.

• 0:15Chamath Palihapitiya?

  See you, Rob. Good morning.

• 0:19Chamath Palihapitiya?

  Who was the big loser that night? I think, wait, who was the big loser? Because Nate was the big winner, right? Well, he was the big winner. I was basically trying to kind of break even.

• 0:29Jason Calacanis?

  I think I donated a little bit to Nate Silver's new Model S Plaid.

• 0:34Chamath Palihapitiya?

  Model Y, Model S Plaid.

• 0:36Jason Calacanis?

  I think he got the Model S Plaid coming to the game. This was the largest poker win you've had in your life? Largest cash game win, yeah. By a factor of five? Two. Two, okay. Yeah. Well, we're happy to donate. You're getting, by the way, your speaker fee, I just canceled it. Okay. But ladies and gentlemen, Nate Silver on The Mind of a Gambler.

• 0:58Chamath Palihapitiya?

  Cool.

• 1:17Speaker 02

  I'm really excited to talk to you all today. I'm working on a book about gambling, risk, and rationality. I've turned the term critical thinking to rationality. It's partly involved talking to people about global societal risks. So talking to people about the risk of nuclear war, which is like not very cheery conversations, by the way. But also people who take risk for a living, or at the very least, manage risk and have real skin in the game. They're not just some actuary getting a salary. They're assessing risk and making big decisions financially, mostly based on that assessment. So I've started out talking to poker players and sports bettors. I'm a former poker player myself. I still play recreationally a lot. I'm currently, I think, number 301 in the Global Poker Rankings.

• 2:02Speaker 02

  Not that I look that up every morning.

• 2:06Speaker 02

  But mostly it's the examples of talking to other fantastic poker players and sports bettors about their process. And I'm also talking now more to VCs, to founders, to hedge fund managers, for example. There are a lot of similarities. There's a certain type of person, that's what I'm talking about today. Personality traits, modes of thinking, it even affects maybe their political views a little bit, and you see a lot of things in common. So I gave you some of this context already. This is a work in progress. I mean, the book is kind of halfway, 0% written, about 50% research, so things may change. I'm evolving and learning and correcting things. But it's fun to write a book. It's fun to have great conversations with the besties and other people and really kind of experience this firsthand.

• 2:49Speaker 02

  So I'm gonna start with some things that I think are relatively straightforward and obvious, and then get into things that are maybe less so toward the end. But one really obvious one is that successful gamblers think probabilistically. It's not just a matter of understanding probability, but being comfortable with uncertainty, being willing to take bets on an uncertain basis. That's kind of table stakes for even getting into any field involving risk. In poker at least, you probably also need a fair amount of mathematical ability. There are now these things called solvers in poker, that come up with a game theory, optimal strategy for every situation. It's a very complex situation. It's way too hard to memorize.

• 3:30Speaker 02

  You have to kind of develop a mathematical intuition behind it. But even players, with rare exception, Phil Hellrich might be the one exception, actually, right? But even players who are known as being field players, or exploitative players, people who rely on tells, and psychology, and table talk. I talked to Daniel Negreanu, for example, one of the probably five best poker players of all time. And he told me that about four years ago, he realized that these solver kids, as he calls them, the math whizzes, were better than him, at least at certain forms of poker. And he totally remade his game to look at computer solutions, to be more studious and mathematical, and it's improved his results quite a bit. In the VC field, I don't know if you're necessarily doing as much modeling as I might in an election

• 4:14Speaker 02

  model, for example, but at the very least, people understand the intuition. And the intuition is, you need both, but I think the intuition is more important than the application.

• 4:25Speaker 02

  Number two, this one ought to be really obvious, but it needs to be said. Successful gamblers are highly competitive. Things that you hear from people over and over again is, "I want to kind of prove people wrong. I want to outsmart the competition. I want to show who's best." It's almost more this motivation than financial motivation, I think. It's partly a matter of you can't settle for being average as a gambler. The average poker player loses money to the house, so does the average sports better, so therefore you have to deviate from average in some ways. But kind of one conclusion I've come to talking to people for this book is that human beings are a competitive species, right? To get people to get along in society is pretty hard.

• 5:08Speaker 02

  You know, one good thing about capitalism is that you have some managed type of competition. Democracy is kind of a type of competition, and that's probably a better way to kind of challenge these conflicting urges we have than things that are too centrally planned. But certainly people in this room, people I talk to, are on the high end of the competitive scale. Successful poker players and sports bettors have to care a lot about small edges. It's the nature of placing bets in a field where you lose money on average. So, a very good sports better might win 55 or so percent of his or her bets. You have to win 52.5% to make up for the house cut, for the rake or the vig, as different names. That means you can't afford to make 1% errors, right?

• 5:53Speaker 02

  You really have to squeeze every last drop of expected value or EV out of any situation that you're in. This makes people very, very, very detail-oriented. Poker players tend to be very studious about their craft. They really kind of love poker. You can't just get the big things right in poker. You have to get the small things right, too. It's too competitive a field right now. This might not be as true, by the way, of VC. The average investment makes money. It may not make an above-market return, but it'll make money, which is not true for the average poker hand that you play. By the way, casinos, too, if you talk to casino executives, you might think you walk into a casino and everything that you do is maximized to make the maximum amount of revenue possible. Not really, right? They're pretty good at the big stuff.

• 6:38Speaker 02

  They protect their downside risk a lot. But they're not maximizing as much as you would think because when you have like a license to make money, you don't have to get the small stuff, right? But in poker, where only 10% of players probably make money in the long run, you have to be very, very detail oriented. Number four, you see here a Paul Graham thread about Elon, actually. Successful gamblers are contrarian, at least to some degree. And again, I'm kind of repeating myself a little bit, but there's no edge if everyone does the same thing in the same way. You have to have some angle that you think makes you better than what the market thinks, and the market's pretty good, so it's a hard thing to manage. I think risk takers tend to view themselves as outsiders, whether they are or not is

• 7:23Speaker 02

  probably an open question. What they think of themselves is thinking differently from the rest of the world, potentially. This can also make them potentially like a little bit annoying, like outside of investing and gambling context, right? Where if you're kind of always the person who says, "Well, actually..." That can get kind of pushed back in social settings, for example, or on Twitter. But you can't kind of settle for having the average view because the average view doesn't do better than the market. There is a fine line between being ahead of the curve and a permanent contrarian. In sports betting, if there's a line that's constantly mispriced, then I can just bet that, and I don't want that market to correct itself. I want to keep exploiting that error in pricing, right?

• 8:05Speaker 02

  In VC, I mean, you might want to find a founder, or a sector, or a company that's undervalued by the market, but eventually you want that sector to grow. You want to attract more talent, you want to attract future fundraising rounds. So you kind of are more being ahead of the curve by half a year to a year. I think in some ways, it's analogous to real estate, where you're trying to kind of anticipate where the market will be in the future, and that's a subtly different skill than being maybe contrarian, per se, but related at least.

• 8:36Speaker 02

  Number five, and again, this might be a little bit redundant, but successful gamblers take shots. And this is very intuitive in VC, where you have a field where you might only have a unicorn or decacorn, you know, 1% of the time or 10% of the time. Of course, you have a whole portfolio. It may not be that risky in the aggregate. But you have to be willing to make decisions under pressure and be somewhat fearless as a result, right? Timing is important. You want to be first to market. In poker, you have a finite amount of time you can spend on a hand in practice. Sometimes people take these risks in a calculated way, right? I talked to Sam Beckman-Fried for the book, for example, and he's like, "Yeah, I knew this would have like only a 50% chance of succeeding, but the payoff was so high, I would take it."

• 9:21Speaker 02

  Some people just kind of more intuitively, just kind of want to put skin in the game, want to take risks, get some excitement or pleasure from it. Again, we're talking about the very extreme tales here too, right? The people who are super uber-successful maybe are almost taking on more risk than they maybe should. You can instead likely have a very happy and complacent life as an investment banker or something. But people who are true entrepreneurs think at scale and think very, very big. I should say, one challenge of writing the book is that talking only to successful people, you risk survivorship bias, right? So kind of which people fell along by the wayside. If you know unsuccessful investors or gamblers, then send them my way. I need to talk to some of them as well.

• 10:04Speaker 02

  Number six, successful gamblers, especially in poker, work well with incomplete information. One thing that differentiates kind of people in academia, and academia is very useful for basic research and for advancing science and things like that, right? But like, but you don't get months and months and years and years to develop a hypothesis when there's actual money on the line. By that time, the people who were faster will already have moved. So the skill is kind of knowing what information was available at the time you made the decision. I think there is a limit to how useful like an after-action review might be if you kind of pretend as though you had perfect hindsight, right? We can say, "What would we have done about COVID now if we had known all the things we know now about it back in February 2020?

• 10:48Speaker 02

  And it would be an easier problem to solve." But like, that's not how the real world works. So decision-making under uncertainty is, I think, an understudied and underappreciated topic.

• 10:58Speaker 02

  You can't be too much of a control freak, certainly in a game like poker. You can lose your temper very easily. Emotional management's a big part of people who are successful in these fields. But, you know, all the value is in making the hard decisions, right? Hard because they're edge cases, hard because you have some information but not others, and you're gonna get some things wrong. But otherwise, if it's easy, then everyone else is already gonna do it. There's no excess returns to be made.

• 11:24Speaker 02

  I think related to this is that successful gamblers focus on process much more than results. One thing I've found good for the book and refreshing is, people, if you ask them, kind of, "What makes you tick? What's your advantage?", they're quite thoughtful and deliberate about it. They step back and think about, "What skills do I possess? What's the bigger kind of problem that I'm trying to solve?". Again, emotional displacement is a big part of this. I'm not saying that you're supposed to be totally emotionless. I mean, emotion can help to guide intuition, which we'll talk about in a bit. But it does mean you have to be willing to, like, lose a poker hand, lose 10,000 bucks, and then play the next hand as best as you can, right? Or have an investment, or many investments, that go sour,

• 12:07Speaker 02

  and still be on your kind of best state of mind for making future investments. It's pretty hard. Most people aren't very good at this at all. You can't go too far and sometimes make excuses. There are lots of different ways to get unlucky in poker or investing. But having that focus on, kind of, "What was my thought process?". It seems intuitive for people in this audience, maybe, but it's not intuitive for the average person. It differentiates successful gamblers quite a bit.

• 12:37Speaker 02

  This next slide here, you may have seen this video online, where there are a bunch of girls bouncing basketballs. They ask you to count how many times the basketball passed back and forth. And during the video, kind of unbeknownst to the watcher, a gorilla walks on stage, like, things change colors, weird things happen. And the point is to try and say, "Okay, well, you were so focused on counting the number of basketballs being passed that you ignored the gorilla in the room", so to speak, right? I think though that if you're instructed to count the number of passes, that it's actually a sign of intelligence that you do focus on that, right? If you're an air traffic controller and you're trying to like land planes at Miami Airport and you get a bunch of text messages from your teenage daughter, right?

• 13:19Speaker 02

  You shouldn't be distracted by that, you should kind of focus on the task at hand. But the point is that people have an amazing ability to vary what they're paying attention to, especially in the moment. And in poker, this is very important because most of the time poker is pretty boring, right? Good players fold 70% of their hands for the most part, right? A lot of decisions are fairly automatic, but maybe once an hour or once a day, you'll have a decision for tens of thousands of dollars or where you'll be knocked out of the tournament or win the tournament, right? And so having that kind of, knowing where you focus your attentions is an underrated skill that I think people who are, at least in poker, are pretty good at. By the way, one thing I've noticed is that you used to kind of think of poker players

• 14:02Speaker 02

  as being kind of quite schlubby and sloppy, and some of them still are. But more and more, the good players are focusing on physical and mental fitness. It is like a demanding game, it's a little bit demanding physically to kind of keep your composure and not give away information from your mental state. And to really concentrate is like actually a lot of work. I mean, there are kind of famous studies of chess players and how Magnus Carlsen will lose, you know, five pounds over the course of a chess match just thinking, which might seem ridiculous, but like, but if you're really playing poker at your A game, at your A-plus game, which you don't achieve very often, I often find that when I am able to do that, rarely, I'm completely wiped out afterward. It is a physically demanding game.

• 14:45Speaker 02

  But in general, kind of being, having your ear to the ground, looking out for opportunities and being flexible enough to take advantage of those opportunities is an underrated skillset.

• 14:55Speaker 02

  Number nine, successful gamblers apply practiced intuition. So I'm 44, one of the things about becoming middle-aged, you start to kind of potentially trust your gut a lot more, which can be risky in some ways. I think people can, in matters that happen on the occasional, like a presidential election, people think, well, my gut is that so-and-so will win. You don't have enough practice at forecasting elections for that to be very useful. We have one election every four years. If you're a poker player, though, you're playing tens of thousands of hands every year. If you're a VC, you're hearing thousands of pitches every year. And part of what experience does is take things that were once hard and then become more automatic.

• 15:38Speaker 02

  You'll hear people say, "Oh, I made a decision very quickly." And I make snap decisions. You hear someone give a pitch, and you decide maybe in 30 minutes whether or not to fund them or not. You hear examples like that. But it doesn't really reflect the fact that this person has spent years and years and years honing their insight and listening to pitches, and that produces value down the line. So it's intuition of a sort, but it's practiced, refined, well-calibrated intuition that involves working really hard and learning. In poker, you go through cycles where you are grinding and get better at something. You feel like you achieved some condition of mastery. Then you slip. You get complacent. Maybe you tilt a little bit.

• 16:20Speaker 02

  Having the ability to step back and reevaluate your game, like Negra, you or someone, and say, "Look, I have to make some adjustments here. Maybe I'm playing better than I ever have, but now I learned different flaws that I have. My opponents are getting better, too." That bottom of this chart here, where you reevaluate and grind back up and expect that you're going to have to keep doing that for your whole life, frankly, differentiates successful people, I think. Number 10, this is one of the more subtle ones, I think, but successful gamblers are structured thinkers. They want to understand the process behind the outcome. Again, in poker, it's too complex a game just to purely learn through memorization and rote skill.

• 17:03Speaker 02

  You want to understand how things adapt, what the underlying curvatures are and everything. Heuristics or rules of thumb are pretty useful. Like in poker, a heuristic might be that you should call with your medium-strength hands. Your best hands, you raise. Your worst hands, you fold or check. And then you call with your medium-strength hands. But there are exceptions to that, and heuristics only go so far. But the flipside of this is, at this conference, there's a lot of talk about investing and gambling, but also politics. I do think when you're a highly structured philosophical thinker... That politics is very frustrating, right? People in the other world I work in, which is, you know, I run a website, I talk to people

• 17:45Speaker 02

  in politics, talk to academics who are trying to get on CTV and stuff like that, right? It's a lot of very hypocritical and ad hoc thinking in politics, right? It's instrumental reasoning toward trying to win an argument at that moment in that day. And so you can see why someone like Elon Musk might get very fed up with the kind of hypocritical nature of political discourse. That's another conversation we might have in the Q and A, but it does lead to some personality clashes, I think. The last one here, which is maybe a little bit counterintuitive, but I've kind of learned, I think, from observation, is that the most attestial gamblers don't actually care that much about money. You know, they tend to be, for the most part, very generous, they're always going to pick

• 18:29Speaker 02

  up the tab, they're going to spend a lot on good wine and things like that, right? They're in it really for the love of the game, and when they get bored, they tend to quit. Again, this might differentiate the 0.01% or 0.001% from like the 1%. Certainly you want to manage your money carefully in poker, but still, when you have people whose net worth fluctuates by the amount that poker players does, like in poker, there's basically like, you know, three states, right? Super rich, somewhat rich, and dead broke, like not a lot in between. When that's the nature of your field, and you've been in those states for different parts of your life, and many good poker players have had periods where they're broke, you tend to recognize the ephemeral nature of success and to celebrate life in the moment a bit more.

• 19:14Speaker 02

  So, that's all. Thank you very much. Look forward to the Q and A now.

• 19:19David Friedberg?

  Ladies and gentlemen, Nate Silver. I don't know if, was this in the introduction that you run 538? Like, does everyone know the site?

• 19:31David Friedberg?

  So during the election cycle Nate does the best job of anyone on earth gathering together polling data and then using statistical models to represent a distribution or a set of expected outcomes and making that known on his site in a way that's super informative better than anything else that's out there. So thanks for that. Now I get really addicted to them leading up to elections. I'm like I gotta go in and check what Nate's changed on the site every day and I know a lot of people did. Then what I observed on Twitter, which I think speaks to your first point here, was a lot of people followed your prediction on the Trump election, right? And they're like, Nate made a prediction that Trump was gonna win, but what you said was that there was a 43% chance that Trump would win and therefore people assumed he was going to lose.

• 20:16David Friedberg?

  And that the nature of a lot of people's understanding of things is very deterministic and binary. It's like win or lose as opposed to, hey, the future is not binary, the future is not deterministic. There's a set of outcomes that may occur and you can get a better sense of what that set is. You make that determination enough times, you'll be right most of the time, you'll be wrong some of the time. Do you think most, so my question for you, based on how I saw people react negatively to your polling, which was crazy because it was like dude, he gave a really good set of statistical models.

• 20:46Speaker 02

  No, people blamed you.

• 20:48David Friedberg?

  But my question is like, do people have the ability to think probabilistically? Because you say you need to think probabilistically, or is that a minority of people that can really get themselves there? Because so many people just want a yes or no answer. They want to say this is the future, this isn't. They don't want to think about a distribution of outcomes, which is really the way the world works.

• 21:06Speaker 02

  I mean, I think people think probabilistically all the time in real life, right? If you're like running late for a meeting, you have to decide, should I speed? What's the risk of getting into an accident? What's the risk of getting pulled over or things like that? I think in...

• 21:18David Friedberg?

  They don't realize they're doing that.

• 21:19Speaker 02

  Yeah, I mean, they don't know they're doing that. I think part of the answer is that, I think politics kind of breaks people's brain, right? Because like before the 2016 election, we got a lot of criticism from liberals for being too bullish on Trump. The market price was about 15%, we have it 30%, right? So we were very bullish on Trump relative to other people, but like, people thought we were like playing with the numbers to try to, I don't know, affect turnout somehow or try to cover our asses or things like that. And so I just don't think that like... Politics teaches people to think critically and it's like, yeah, part of that is like they're not thinking probabilistically, but it's more like people just want to see their kind of priors confirmed.

• 22:04Chamath Palihapitiya?

  What was it like when people blamed you for Trump winning?

• 22:09Speaker 02

  Yeah, there was a lot of that, right?

• 22:10Chamath Palihapitiya?

  Yeah.

• 22:10Jason Calacanis?

  And why did you pick Trump as president?

• 22:12Chamath Palihapitiya?

  They literally, I think they pointed to you and basically said, "You tipped the election." Like, you, you, it's almost as if like you convinced people to go and like, how did you, how did you deal with that?

• 22:22Speaker 02

  You just kind of have to say like, "Fuck you" and move on with your life. I mean, I don't like, I've been very lucky in my life overall, right? Including that like, things that I think are not that remarkable, like, you know, saying, "Oh, the polls are gonna be right usually," which they were in 2008 and 2012, like, I think we got way too much credit for that, but you can't like, I mean, again, we're all poker players here, right? So it's kind of like, if you kind of get your money in really good, right? And you make a flush or something, like, you kind of have to have that attitude about it.

• 22:52Chamath Palihapitiya?

  So you were able to just basically shut it out and say this? And, and what about just the fact that like, you live inside of an organization? Now 538 is owned by ABC.

• 23:01Speaker 02

  ABC News, yeah.

• 23:04Chamath Palihapitiya?

  Was that before the election?

• 23:05Speaker 02

  That was, so we were, we were ESPN at the time of 2016 election, now we're ABC News currently.

• 23:11Chamath Palihapitiya?

  And so, does that change sort of like?

• 23:15Chamath Palihapitiya?

  Like, how do you make sure that you can actually just do your job no matter how unpopular the answer may be or the distribution of outcomes may be?

• 23:23Speaker 02

  Okay, so why I'm working on this book? It's partly because I want to diversify away from just, uh, first of all, I think forecasting elections is an interesting problem, but it's not like the most interesting problem, right? But no, I'm not gonna spend the rest of my life just like being the like the election forecasting guy. It's, it's, um, I mean, you also face disincentives where like, the downside, like, we got some elections like really right, like 2018 midterm, we like, Nail like perfectly, about as good as you could, right? And people are like, oh, that's nice, right? If you get kind of like the 2020 primary, like we were very bullish on Joe Biden when people weren't and thought he was gonna lose. And so you don't get like a lot of credit and you do face like a lot of downside for

• 24:07Speaker 02

  being actually wrong or perceived to be wrong. And so, yeah, I'm not gonna spend the rest of my life making election forecasts. I hope that's part of the portfolio of things that I do, but like I'm interested in like a lot of other questions about the world.

• 24:20David Friedberg?

  Nate, what do you think about like social markets that are defined about social behavior? Like an election, people are gonna vote one way or another. You then make a prediction and then that changes the way people vote. And so like, and the same is true in stock markets. I was gonna ask you about your experience in stock markets because people have an assumption about rate hikes. The market then reacts to the assumption about rate hikes, then the market tanks, and then the Fed is like, let's change the rate hikes system because the market's tanking. How do you think about building probabilistic models that account for social feedback loops? Where the social decision that's made is driven by the forecast you make or by the market making a forecast?

• 24:59Speaker 02

  I think the evidence is that in two-way elections, so Democrat versus Republican, that there's no clear effect from. And by the way, like what we do is a tradition. There's always been horse race media coverage, there's always been polling going back for many years, right? You know, we think our version of it is a little bit more grounded and objective. In two-way races, it's not clear if there's any impact either way. Where a candidate effect is when you're having a multiple candidate race, right? In 2020, when Elizabeth Warren started to fall behind Bernie Sanders in the polls, right? If you're a left-wing voter who prefers Warren to Sanders but Sanders to Biden, right? You may kind of switch your vote as a result of the poll that can create momentum.

• 25:41Speaker 02

  Mathematically trying to model like a multi-way election, we do it. It's very hard, it's way more complex, in part because of the feedback loops that it introduces for sure.

• 25:50David Friedberg?

  And stock markets are the same?

• 25:52Speaker 02

  Again, I don't-

• 25:53David Friedberg?

  Or any financial market behavior?

• 25:55Speaker 02

  It is funny, by the way, that like if I like lose a thousand bucks at poker, I'd be like furious, right? But like I'll lose like much more than that in the stock market and like they're like, oh, I don't care, I just invest in, you know, low fee like mutual funds and stuff like that. I mean, for sure, I mean, it's-

• 26:10Speaker 02

  I don't know, you guys would know more than I would, but I think there are certainly complexities that involve feedback loops, for sure.

• 26:17Jason Calacanis?

  Nate, we live in a very polarized world right now. We all spend far too much time on Twitter. And we're seeing this, you know, sort of house of mirrors. I'm curious how, you know, the 19% of people who believe in banning abortion and their impact and their outsized voice versus the far-left and their outsized voice with, you know, sort of democratic socialism affect your ability to predict what's going to happen in the country? Because the majority of the country's beliefs sometimes are in stark contrast to political things that happen.

• 26:55Speaker 02

  Yeah.

• 26:56Jason Calacanis?

  And even on our podcast, people want to pit, you know, Sacks and I as being incredible rivals. No, no, no, you want to pit yourself. Well, for a reason. Just to be clear. But, in fact, we agree on almost everything, yet it feels like in our society, you know, they want to push us to pick very binary belief systems. And I'm just curious how that impacts what you do day-to-day in your job in predicting what's going to actually happen in reality. And maybe you could tell us, based on what you've learned over time, are people as polarized as it seems? Or is America actually got a majority consensus on most of the issues that we struggle with?

• 27:39Speaker 02

  Well, okay, one reason that markets work is because you get feedback in the market, right? And you adjust your strategy as a result of negative feedback from consumers, people voting with their feet. I think one problem with Twitter and with kind of the political atmosphere more generally is that both the left and the right are now insulating themselves from feedback in a lot of ways. And if you're someone who kind of like tries to call BS, I mean, when, you know, if there's a 12 character, just like having a good bullshit detector is kind of an implicit theme of people who are successful gamblers, right? And if you're like someone who like, "That's kind of bullshit, I can't let that sit there, I have to say something about it, even though it'll piss off my followers," like, you really get boundary policed a lot.

• 28:21Jason Calacanis?

  Totally.

• 28:22Speaker 02

  Yeah.

• 28:23Jason Calacanis?

  Boundary policed, yes.

• 28:24Speaker 02

  Yeah, and when feedback systems are broken, then you run into potentially some really... Dangerous outcomes, right? Like, I think, I think both the left and the right have become more authoritarian in certain ways. I think the type of authoritarianism on the right is quite a bit more dangerous in the moment. But they're both kind of moving away from kind of liberalism in some kind of classical sense in some ways, and, and I think that has to do with the feedback loops that social media tend to, tend to produce. That they're very, the other thing about social media too is like, it really, really flattens things, right? One thing that people in Silicon Valley get right, for all their faults and self-servingness in some ways, right? They kind of get the orders of magnitudes, right? They understand scale.

• 29:07Speaker 02

  And social media and the daily news cycle really collapses that, right? So, some extremely important problem and some trivial nonsense are kind of treated on the same level when one is 1,000 times more important than the other, and that, and that produces a lot of news.

• 29:21Chamath Palihapitiya?

  Right, in a feed, it's one right after the other.

• 29:23Speaker 02

  Yeah, and, and, you know, again, I don't know if, if there are ways to redesign Twitter to make that better, but like, the fact that you're kind of always on, right? I mean, before Twitter, the kind of cable news cycle, you have to have like some controversy to talk about, and things are completely dropped, the next day there's another news event. I mean, sometimes it should be, maybe actually this thing was terrible, but something is like, way more important, and so we should continue to focus on that, and so, that's damaging, I think.

• 29:46Jason Calacanis?

  Is there a way out of this? Will this pass, in your estimation? Is this, you know, an intractable problem?

• 29:53Speaker 02

  I'm a little bit bearish in

• 29:57Chamath Palihapitiya?

  Concerned.

• 29:58Speaker 02

  In the short term, yeah. Uh, to be honest.

• 30:01Chamath Palihapitiya?

  Can you, can you say more? What does that mean?

• 30:03Speaker 02

  I mean, there are different types of risks that we face, right? I mean, you know, one problem in particular is that if we have a close election next time, particularly one that's close where the, where the Democrat appears to narrowly win, right? I mean, you're having more and more Republican elected officials, secretaries of state, some of the candidates in Pennsylvania for governor, for example, who kind of believe the election was, was stolen in 2020, and like, um, which it wasn't, to be clear. And like, that's a very dangerous argument to have. It may not resolve itself in the end of democracy, but like, that's like a, you know... A risk that's, you know, in the 10% range, or maybe higher, of a severe constitutional crisis in 2024, and maybe repeated that in 2028 and so forth.

• 30:45Speaker 02

  And so, I mean, that's the, I think, the most immediate threat. But also kind of government capacity to deal with big problems, right? You know, I don't necessarily take the standard line about COVID, where you say, "Oh, we should have done this and that, and managed it more top-down, more." But clearly, like, state capacity seem to be not so great, right? As we deal with other existential risks, from climate change, to AI potentially, to nuclear threats. You know, I'm a little bit bearish about state capacity.

• 31:15Jason Calacanis?

  To make good decisions in complex situations with not perfect information.

• 31:20Speaker 02

  Yeah. You know, in fact, like, being down in Miami, you know, or traveling to other parts of the world, you see, like, there's more reason to be optimistic, right? Where, where people at least are excited and dynamic, and there's something happening. It may not be exactly the right thing, but people are, are, are happy. But no, I think, I think, I don't know. I'm usually an optimistic person, and I'm a little bit worried about...

• 31:42Chamath Palihapitiya?

  What should we expect, then, going into the 2020 midterms?

• 31:47Speaker 02

  2022 midterms.

• 31:48Chamath Palihapitiya?

  2022 midterms.

• 31:49Speaker 02

  So, the baseline is pretty strong, which is that the president's party loses seats the large majority of the time. And given that Democrats' majorities are so narrow, they're pretty big underdogs to keep both the House and the Senate. With that said, in Senate races in particular, individual candidates do matter to some extent. And you might have enough off-the-wall GOP candidates nominated that would cost them two or three seats, potentially, and that might be enough to save Democrats in the Senate. The House for the candidates are more anonymous, and there are more seats in play, is a little bit tougher. I do think something like Roe v. Wade is important. Democrats talk a lot about Republican extremism, but a lot of it is theoretical, right?

• 32:32Speaker 02

  It's saying, "Well, what will happen in 2024 will be this or that." This is the kind of rare example of big social change by the opposition party. And that could, I think, motivate Democrats a little bit. But, but midterm elections are more predictable than presidential elections. And the base case is that you wind up with, with Republican majorities of some magnitude.

• 32:53Jason Calacanis?

  Sack, any thoughts on Nate's handicapping of the situation and description of the political climate we're in?

• 33:01David Sacks?

  Well, I mean, pretty clearly, the Republicans are expected to have big pickups in this midterm, right? I mean, I agree with you, the Senate is tougher for the GOP because there aren't that many. Most of the at-risk seats are on the Republican side, right? Not the Democratic side.

• 33:18Speaker 02

  Yeah, I mean, there are also seats like Pennsylvania that the GOP held and could lose potentially, but you have like, I mean, I don't know how technical you want to get. If you have a generic ballot that favors Republicans by like two points, the Democrats can probably keep the Senate. If it gets to like six points or seven points, then the wall topples and like, there's just too many forces going the other way. And so, yeah.

• 33:42David Sacks?

  So where is it right now? Are you looking at that?

• 33:46Speaker 02

  Right now, it's two or three. However, that's among registered voters and doesn't reflect voter enthusiasm. So typically, the challenger party is more motivated to turn out. You saw that in states like Virginia last year. That gap seems to be closing a little bit. I do think some of the anti-abortion legislation, right? Some of the fact that the GOP kind of is now back on offense, on culture wars against LGBT people, right? I think potentially is going to help motivate Democrats to turn out, right? It wasn't the stuff in Virginia where they were talking about, oh, schools and kind of,

• 34:31Speaker 02

  I mean, you always want to like play counterattack in politics, right? And Republicans found some effective counterattacks with respect to educational policy, certain attitudes where kind of very left-wing ideas had crept into discussions of education and race and other things, right? But now they're like kind of calling like gay and lesbian people and trans people pedophiles and stuff like that, right? And it's like surprisingly mainstream discourse and like, it's not, I don't think, politically wise. It's also a little bit dangerous in terms of potentially, you know, triggering violence and things like that. So, I don't know. I mean, neither party can really like help itself, I don't think, in kind of being like the worst version of itself.

• 35:15David Sacks?

  Yeah, that's interesting. But Yonkin is an interesting case because one year after Biden won that state by 10, Yonkin wins that race by 2 or 3. So it was 12-point swing in one year. How emblematic is that of how quickly the mood of the country has changed? Is it like a one-off because Yonkin was a strong candidate against a weak candidate? Or does it represent, you know, a much stronger generic Republican ballot?

• 35:44Speaker 02

  I think it's, I mean, that's what you might get if you had 50 Glenn Yonkins running for Senate, right? He clearly, I mean, there's usually a pretty big midterm shift, but that was a little bigger than normal in Virginia. And that reflects the fact that, I mean, you can like model it out mathematically. We have lots of data points. We have 35 Senate races every two years, right? And you can actually see the effect of being more moderate will gain you an extra 2 or 3 or 4 points, right? Being less moderate, more radical in some cases, will lose you 2 or 3 or 4 points. And so, and so, the fact that the G P didn't kind of take that lesson and say, we can actually kind of occupy the mainstream and have potentially really large majorities,

• 36:29Speaker 02

  at least in 2022, I mean, I think that's kind of, kind of disheartening in, in some ways. And of course, Trump is still a big figure in the G P.

• 36:36David Sacks?

  Have Democrats learned the lesson of that race either?

• 36:38Chamath Palihapitiya?

  No, of course they haven't.

• 36:41Speaker 02

  Yeah, I don't think anyone's really learned very much. Nobody's learned any lesson at this point. It's still chaos, right?

• 36:46David Sacks?

  The lesson for Democrats would be to tack towards the center as well and instead of embracing sort of the progressive left.

• 36:52Chamath Palihapitiya?

  I mean, the Democrats are still talking about canceling student debt, which is a fringe issue that affects 8 to 10% of the Democratic Party without realizing that it actually is because it represents 50 or 60% of the working majority of the Democratic infrastructure.

• 37:08Speaker 02

  No, I'm sure, I mean, people are, people are, people are self-serving, and if you don't have good BS detectors, then... You become more self-serving, right? Like, clearly, like, the class of people who are high student loan debt are people who are well-educated and aren't necessarily making as much money. And those describe people that are, tend to be Democrats, right? It describes people like academics and people in media.

• 37:34Chamath Palihapitiya?

  I understand, but Democrats used to also be the Workers' Party for the welders, the truckers, the construction workers.

• 37:41Speaker 02

  So, what you should say, you should say, "Let's forgive up to $10,000 in debt for public university students' undergraduate educations," right? That really does capture a lot more people who are, you know, truly middle-class, right? Half of student loan debt is people going to graduate school. You know, I'm not that sympathetic. If you went to Dartmouth and got a philosophy degree...

• 38:06Chamath Palihapitiya?

  Masters.

• 38:07Speaker 02

  Masters, right?

• 38:08Chamath Palihapitiya?

  Yeah, you're on your own.

• 38:09Speaker 02

  If you went to a state school and, yeah, and got a degree in nursing and are kind of...

• 38:13Chamath Palihapitiya?

  Yeah, why should an electrician bail out the person getting a master's in philosophy at Dartmouth?

• 38:17Speaker 02

  But, like, this is kind of a matter of, like, the... I mean, that's a reasonable thing to say. Yeah, it doesn't seem partisan. Doesn't seem unreasonable. Super reasonable. But, you know, but, I don't know. And again, people are, it's also different. I think if you needed more financial stimulus, then it might make more sense to find some way to do that. It's a thing that the president can probably do by executive authority. It's a little bit disputed. But, no, you kind of have, I mean, both parties are quite self-serving, and if you're kind of not listening to critiques or feedback, then you can kind of wallow in that self-serving-ness, I think, a little bit more easily. All right, everybody? Please thank Nate Silver. Thank you.

• 39:23Speaker 05

  Besties are gone.

• 39:26Speaker 05

  That is my dog taking a notice in your driveway.

• 39:34Chamath Palihapitiya?

  We should all just get a room and just have one big huge orgy because they're all just just like this like sexual tension that they just need to release somehow.

• 39:42Speaker 05

  What your b- b- what your b-

• 39:44David Sacks?

  What your b-

• 39:45Speaker 05

  B-

• 39:46David Sacks?

  What?

• 39:47Speaker 05

  We need to get merch. Besties are back.