Balaji & Benedict Evans: When Tech Breaks Industries

This episode originally appeared on the Network State Podcast. Balaji Srinivasan and Benedict Evans sit down in Singapore for a wide-ranging conversation on the mechanics of disruption. Evans, a former Andreessen Horowitz partner who now writes one of tech's most-read newsletters, argues that the conversation about any technology peaks during the transition—not at 0% or 100% adoption. They cover AI's real capabilities and limits, the politics of technological disruption, why crypto's killer metric is block space, and what smart glasses, elevator attendants, and the elephant graph reveal about how change works.

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

• 0:00Benedict Evans?

  I feel like AI has almost become like the word metaverse, where like you don't know what somebody means when they say it. Could you explain it to another human being? Can you actually kind of shut your eyes and conceptualize? How is it that I'm going to explain what it is that I want this thing to do?

• 0:17Balaji Srinivasan?

  Blockchains are, in a sense, one of the frontiers of operating system research. Like in the same way, like there's operating system like Windows. There's a browser, which is itself an operating system because you can run apps in it. It's got a full programming language.

• 0:30Benedict Evans?

  Mark Zuckerberg bought Oculus because he thinks this is the next smartphone. He didn't buy it to be a games device or to have 100 million people using it. He bought it because he thinks this is the next smartphone.

• 0:39Erik Torenberg?

  The moment you finally understand a technology is often the moment you should stop paying attention to it. What matters isn't the absolute level of adoption, but the rate of change. We talk about a technology most during the transition, then forget it exists. Today, that transition is happening simultaneously in AI, crypto, smart glasses and robotics. The conversation about each is at maximum volume, which means the interesting question isn't whether they matter, but what each one actually disrupts and what it leaves standing. Today, we're bringing you a conversation from the Network State Podcast. Host Balaji Srini Vasan speaks with Benedict Evans,

• 1:23Erik Torenberg?

  independent technology analyst and one of tech's most read newsletter authors.

• 1:30Balaji Srinivasan?

  I'm here with Benedict Evans. We worked together at A6 and Z more than 10 years ago. Benedict is a well-known newsletter author, probably needs your introduction for people watching this. We're here in Singapore. We just came here for an AI conference. You do about one-fourth newsletter, three-fourths conference nowadays or speaking. That's what brought you out here, right?

• 1:49Benedict Evans?

  Pretty much, yeah.

• 1:50Balaji Srinivasan?

  And newsletters now at like 175, something like that, you said?

• 1:53Benedict Evans?

  Yeah, something like that. It wobbles a bit from day to day.

• 1:56Balaji Srinivasan?

  And it started out, you started as a mobile analyst and you became like a broader tech analyst? Is that, is that the evolution?

• 2:02Benedict Evans?

  Yeah, it's one way to put it. I mean, I think I was

• 2:05Balaji Srinivasan?

  You're at Orange, is that right?

• 2:07Benedict Evans?

  A long time ago, yes.

• 2:08Balaji Srinivasan?

  A long time ago, yes.

• 2:09Benedict Evans?

  Just when it was all becoming horribly French. There's, there's like, as we were chatting before this and I said like, the thing in tech is that the point that you understand something is often the point that you should be moving on to pay attention to something else. So I started my career in the dot com bubble as an equity analyst and I was covering mobile stocks. And at that time, mobile was kind of dynamic and exciting and sexy and disruptive. And they turned into water companies.

• 2:32Balaji Srinivasan?

  Into water companies?

• 2:34Benedict Evans?

  Utilities.

• 2:34Balaji Srinivasan?

  Oh, utilities. Yeah, okay.

• 2:35Benedict Evans?

  They were going to connect everybody in the world and then they did. And like, now what? They were like Marc Andreessen's phrase, they were like the dog that caught the truck.

• 2:42Balaji Srinivasan?

  Right.

• 2:42Benedict Evans?

  And I went and worked in a strategy and a bunch of media and telecom things. And yeah, I was analyzing, looking at smartphones because that was suddenly become the center of the industry and no one understood it. Now, like it happened, I'm time to look for different questions.

• 2:58Balaji Srinivasan?

  Well, it's funny because I think when we were overlapping, it was right in the middle of the smartphone dividend, the smartphone explosion. And just to, you know, we, actually, there's a few things. One is the smartphone dividend, that's a useful concept, right? Like that the rise of a billion smartphones meant that everything that went into them became cheaper. And that enabled VR headsets, that enabled drones, right? All this stuff.

• 3:20Benedict Evans?

  Yeah, all the components that came out of it. Yeah, so smartphone sales are now for memory, like one and a quarter, one and a half billion units a year. And all the supply chain from that, all of those components is then available off the shelf. If you want to buy 5,000 of them or 10,000 of them, all the wifi chips and the batteries and the cameras and all the other bits. And before, if you wanted to put computer into something, you basically need to use PC components. So ATMs and so on are all basically PCs, like elevators are basically PCs.

• 3:54Benedict Evans?

  And that has size and power and cost constraints. And then smartphones become the thing and then all those components are available. And so that's what gets you drones and connected light bulbs and all the other bits and pieces around the edge of that.

• 4:08Balaji Srinivasan?

  One of the things I think people don't appreciate is they think, for example, like the consumer, they think like the military has like special gear and it's got its own kind of supply chain and often the military supply chain is often just a subset of the consumer supply chain because you sell a billion units of this and maybe you have a hundred thousand or a million units of a military thing.

• 4:27Benedict Evans?

  It's actually, it's almost kind of the reverse now in that it used to be, so the way I think about this is like in the past, like before we were born, the intelligence agencies would get the cool new stuff first and then the military would get it and then big corporations would get it and eventually consumers would get it like 30 years afterwards. So this is like the chemical thing.

• 4:46Balaji Srinivasan?

  Now it's the inversion, yes.

• 4:47Benedict Evans?

  Is like microwaves were invented for NASA.

• 4:48Balaji Srinivasan?

  Right.

• 4:49Benedict Evans?

  And eventually consumers get them.

• 4:50Balaji Srinivasan?

  Yeah, or like GPS was invented to guide missiles.

• 4:53Benedict Evans?

  Exactly.

• 4:53Balaji Srinivasan?

  And now it's used for tagging cat photos.

• 4:55Benedict Evans?

  And the shift is like a combination of the stuff getting cheap enough that it can be for consumers instead of you needing a billion dollars to have one and then the scale of consumers, once it gets cheap enough. And so now the way it works is the consumers get the new stuff and the military gets it 10 years later because that's how long it takes to.

• 5:15Balaji Srinivasan?

  The bureaucracy to similar to that.

• 5:17Benedict Evans?

  A, the bureaucracy, B, to harden it and productize it and turn it into what you need if you're going to get shot at or it's going to be cold or hot or warm or whatever it is.

• 5:27Balaji Srinivasan?

  Yeah, that's, it's funny, does it really improve through that process? I know people think it does, but I'm not sure it does relative to the, the cost of not using the pretty good product versus whatever improvements come from the delay to harden it, I'm not sure if it actually.

• 5:43Benedict Evans?

  I don't know. But there's clearly, there's a sort of a process of you have to put it into a fighter jet.

• 5:48Balaji Srinivasan?

  Yes.

• 5:49Benedict Evans?

  You don't replace the avionics in a fighter jet every six months.

• 5:51Balaji Srinivasan?

  Right.

• 5:51Benedict Evans?

  But yeah, you know, that's the kind of the core of it is the cutting edge of the innovation is for consumers and then that flows back through to everything else.

• 6:00Balaji Srinivasan?

  That's right. Well, you know, I was going to say, maybe in China you do, maybe in China, like I think what happened with the consumer drones, they got good at quadcopters.

• 6:08Benedict Evans?

  Yep.

• 6:09Balaji Srinivasan?

  And that's led them to their new form. Have you seen eHeng? It's like the Chinese flying cars.

• 6:14Benedict Evans?

  Oh, okay.

• 6:15Balaji Srinivasan?

  And, you know, I played this clip like a year, year and a half ago and people said, you know, the teal one, like we want a flying cars, we got 140 characters. And I was like, a lot of people didn't riff on that, but I was like, we want a flying cars, we got them in Chinese characters. Okay.

• 6:30Benedict Evans?

  Yeah.

• 6:30Balaji Srinivasan?

  And the thing is, when I put that up there, people are like. That's not a car. It's a, you know, it's a, it's a copter, right? It's not a car, it doesn't have wheels, but it solved the problem differently, right? And actually, I think was one of your lines, it's like unfair comparisons are often the best kind of comparisons, right?

• 6:47Benedict Evans?

  Yeah, I remember seeing a bunch of flying cars when we were at Andreessen Horowitz. I think Marc Andreessen, he said it's like, they're all like houseboats. And a houseboat is a crap house and a crap boat.

• 6:56Balaji Srinivasan?

  Yes, that's right.

• 6:57Benedict Evans?

  And, you know, thinking of it as a flying car is like the wrong term. It's better to think of it as like a much, a small, much better, much cheaper helicopter.

• 7:07Balaji Srinivasan?

  Yes, maybe. But the point is that they now, the other thing is it's meant for short hops and like city to city where you fly over the traffic. And they've got this, Uber was gonna do this, by the way, before they decapitated Uber. Like the low altitude economy was something they were thinking about. And a lot of things get like cut off in the West and then they appear fully formed in China. Like consumer drones, for example, you know, Chris Anderson?

• 7:33Balaji Srinivasan?

  He was very early on drones and that got blocked by the FAA. And so consumer drones were hobbled in the US, and that's why DJI arose in China. So lots of things get blocked in the West and they arise in China because of that. Anyway, coming back up, so smartphones, I mean, I think you and Horace Didion of Asimpo, who I saw on his pod a while ago, I think you're two of the best. He's also like European or something like that, French or something.

• 7:58Benedict Evans?

  He was at Nokia. I mean, there's an interesting kind of like information.

• 8:01Balaji Srinivasan?

  Do you know him?

• 8:02Benedict Evans?

  Yeah, I know Horace. Yeah, he's a great guy. Part of it was, it was like, and there was a moment in time when there weren't many people

• 8:12Balaji Srinivasan?

  Doing mobile, yeah.

• 8:13Benedict Evans?

  who really understood this and were industry analysts and were able to talk in public.

• 8:20Balaji Srinivasan?

  Ah, right, yes.

• 8:21Benedict Evans?

  So there were people inside Nokia or Goldman's or Bain or wherever. Who had all the data, but they couldn't publish your data and they weren't allowed to say stuff in public. Or if they were writing analysis, it was analysis for public markets investors or something.

• 8:36Balaji Srinivasan?

  Right.

• 8:36Benedict Evans?

  And so there were very few people who were like, knew that you could go and take Apple's reports and make a chart of unit sales and make a chart of ASP and knew what ASP was.

• 8:44Balaji Srinivasan?

  Right.

• 8:45Benedict Evans?

  Or knew what ARPU was.

• 8:46Balaji Srinivasan?

  Right.

• 8:46Benedict Evans?

  Now, there's like an explosion of this. So there's huge numbers of, if you look at AI now, there's like 10 people who do a really, really good 200 page deck of every possible AI chart.

• 8:58Balaji Srinivasan?

  Is that right? Interesting, yeah.

• 9:00Benedict Evans?

  And so that whole thing shifted. But at the time, yes, it was me and Horace and like Ben Bahar and like the only.

• 9:08Balaji Srinivasan?

  And Stratechery kind of.

• 9:09Benedict Evans?

  Yeah, yeah, exactly. There were like, you know, a handful of people who understood this and could do the charts and were allowed to do the charts. And so that was sort of, you know, being at the right place, right time got me a lot of attention.

• 9:21Balaji Srinivasan?

  Yeah, it's interesting. I think like you and Ben Thompson of Stratechery and I'm not sure if Horace had a newsletter, but you guys were newsletters before Substack productized it. Sort of like Rogan was podcast before that became productized as a category. And are you on Substack or were you on Ghost? No.

• 9:43Benedict Evans?

  No.

• 9:43Balaji Srinivasan?

  You got your own custom thing?

• 9:44Benedict Evans?

  I'm still on my old cobble together stack of Mailchimp plus Memberful plus Squarespace.

• 9:50Balaji Srinivasan?

  Why don't you, you don't want to move to something? It's just a pain to move.

• 9:52Benedict Evans?

  It's a heavy lift to move platform and you sit and do the analysis and you're like, this is a good use of like a week of my time.

• 10:00Balaji Srinivasan?

  Right.

• 10:01Benedict Evans?

  Maybe.

• 10:01Balaji Srinivasan?

  Maybe, it might be. At this point, Substack's pretty good, but I mean, it's your, you know, your.

• 10:04Benedict Evans?

  Well, there's, there's a separate Substack thing, which is, do you want it to be on your newsletter or your Substack?

• 10:11Balaji Srinivasan?

  Yes, that's true. Yeah, because it's a platform.

• 10:13Benedict Evans?

  And you get the advantage of, I mean, this is something we can talk about, you know, it's Chris Dixon's line of come for the tool, stay for the network.

• 10:19Balaji Srinivasan?

  Right.

• 10:20Benedict Evans?

  You go on Substack, they will get you new subscribers, Ghost won't get you subscribers.

• 10:23Balaji Srinivasan?

  Yes.

• 10:23Benedict Evans?

  On the other hand, they now they control who you'll read as well and you don't. Which is always a thing of a network.

• 10:29Balaji Srinivasan?

  Well, I mean, you sell mail out to everybody.

• 10:31Benedict Evans?

  You do, but then they're trying to get you to use their website and their algorithm to decide who reads what.

• 10:38Balaji Srinivasan?

  That's true.

• 10:39Benedict Evans?

  So there's always these kind of questions like, do you want to go with the people who will give you an audience? And in exchange for that, they're deciding that they'll give you.

• 10:47Balaji Srinivasan?

  There's always a trade off for the distribution. Yeah. I think Ghost is another option.

• 10:51Benedict Evans?

  Yeah.

• 10:51Balaji Srinivasan?

  And, and I think.

• 10:52Benedict Evans?

  Ghost and Beehive are the two others that people use.

• 10:55Balaji Srinivasan?

  Ghost is like, you know, I saw Ghost when it was very early and I just thought it was so good for what it was. Like it was, I mean, not even for it. It's just a very polished thought through. For an open source product, it's unusually polished. John Nolan's very, very good. It's funny, you know, like on that, well, but there's a bunch of things we could talk about, but the, the whole newsletter thing, it's, sometimes there's things that are like newsletters or podcasts that are what I consider lowercase in technology before they become uppercase. Like for example, Odeo, you know, like what Twitter was, Twitter was a podcasting company before it became Twitter. And the time constant, they just got the time constant wrong where you needed, which is hard to predict.

• 11:37Balaji Srinivasan?

  That microblogging would take off first and then it required like AirPods and everybody being online for a long time. And maybe, you know, COVID before podcasts really exploded and the term was around in lowercase.

• 11:51Benedict Evans?

  You can even argue it's needed like 5G or 4G.

• 11:53Balaji Srinivasan?

  Something like that. Yes.

• 11:54Benedict Evans?

  If you're, if you're listening to it on the, in the car, then you need a half fast enough network.

• 11:59Balaji Srinivasan?

  Yes. Bandwidth is a constraint. Yes.

• 12:01Benedict Evans?

  And then the time works.

• 12:03Balaji Srinivasan?

  So what do you think is lowercase today that's going to become uppercase? Like what's, what's, what exists in tech that people are like, oh yeah, that exists, that it's going to go big. I have some ideas. I want to hear yours.

• 12:14Benedict Evans?

  Interesting question.

• 12:17Benedict Evans?

  I think there's probably the answer, if I was at a consultant and trying to whiteboard this is I would be looking around AI. Because that's a new platform. And, you know, there's a lot, all the, the old white space got filled in and now you've got a whole bunch of new white space. So deterministically, there should be a bunch of those things here. AI, which I'm sure we'll talk about, does feel very sort of mid nineties in that you're like mid nineties internet in that like, well, is this a browser? How do you use it? What's it for? How would you get to it? How does this work? Where's the value? Where's the value capture going to be? I'm not sure that there's like, maybe one answer is like, I'm too old and I'm not

• 13:01Benedict Evans?

  like spending too much time looking for like weird weird stuff around the edges. The last one of these that I spotted personally was Shein, which-

• 13:10Balaji Srinivasan?

  Shine? Is it Shein or Shine?

• 13:12Benedict Evans?

  I'm told it's Shein-

• 13:13Balaji Srinivasan?

  Is that right?

• 13:13Benedict Evans?

  -speaking to people there. Like, I haven't worked out how to pronounce. That was an interesting one that it was, maybe you could also say it was the last of the ones that you could spot because suddenly, wait, what is this thing that's at the top of the iPod, of the iPhone App Store chart all the time?

• 13:27Balaji Srinivasan?

  Oh, I see, yeah.

• 13:28Benedict Evans?

  Suddenly that thing exploded. And that's like probably the sec- probably the largest apparel, pure player apparel retailer on earth.

• 13:34Balaji Srinivasan?

  Yeah. And like Shein and Temu-

• 13:37Benedict Evans?

  Temu.

• 13:38Balaji Srinivasan?

  Yeah, that's right. They're now getting here with the tariff stuff and, you know, we'll see.

• 13:41Benedict Evans?

  Yeah, tariffs plus, plus the de minimis rule in the US-

• 13:45Balaji Srinivasan?

  But that's only the US market and that's not, you know, I don't know what fraction of their sales that is-

• 13:48Benedict Evans?

  Yeah, yeah. It's like a third of their sales or a half quarter of their sales or something. So that was like, that was, that was a thing that was interesting. I'm not sure. There's not like a new thing that I'm watching that I've noticed recently. I'm sure there will be, you know, I keep looking.

• 14:01Balaji Srinivasan?

  So a few. We were talking about the glasses, right? Like, I think smart glasses are sort of like the most predictable thing after the iPhone.

• 14:09Benedict Evans?

  Oh, yeah. That's, I'd put it in a different category. I was sort of thinking like, what stuff that's being used now that people haven't quite noticed is being used yet?

• 14:15Balaji Srinivasan?

  I see. So well, I, I guess-

• 14:16Benedict Evans?

  Glasses, glasses definitely your next thing.

• 14:19Balaji Srinivasan?

  Sure. So, so I guess I would, I would sort of bundle VR headsets, AR headsets, you know, like that with glasses and say that that's just, glasses are sort of the next version for goggles. But, okay, so that's one that, that we'd agree on, except the question is, as you said, is it going to be watches or phones? How big does that get, right?

• 14:38Benedict Evans?

  Yeah.

• 14:40Balaji Srinivasan?

  I think, you know, just like podcasts grew to mean like a video podcast and so on. The robot dogs are interesting. They are fun to play with and they're getting way cheaper now, right? They went from the Boston Dynamics kind of things. So the home robot as a toy, I think, is probably going to become more and more popular, like a Christmas present kind of thing at first, right? Because I see kids playing with them and they just love them just as a toy. And the, you know, it's kind of like the robot dog, the drone as like a, it's starting to become a, like a Christmas present kind of thing. I think that that becomes a thing. And eventually, like, we were talking about this at the Museum of the Future in the UAE.

• 15:22Balaji Srinivasan?

  They clad these so that it doesn't, it's not just like a skeleton of a robot dog, but it actually looks like an animal. And that completely changes your perception of it, right? So I think that that'll be a thing. And with respect to AI, and so let's do, I mean, there's AI, there's Bitcoin, there's China, there's drones, there's biotech, there's actually several different areas that I'm tracking, I'm tracking a bunch of these various singularities, whatever. Not really actually singularities in the technical sense of going to infinity. Curves, curves, that's right, yeah. With AI, there's, you know, one way of thinking about it is, like, now we're two and a half years in, let's say, let's call it the chat GPT moment, right?

• 16:02Balaji Srinivasan?

  And it's interesting because it, I think what people really overestimated was how much it's agentic intelligence versus amplified intelligence. Like that's say, you still have to prompt it. So prompting is like higher level programming, number one. You still have to verify the output. And that means you kind of need to know what it is you're looking for. For example, if it spits out a bunch of mathematical symbols in an area of math that you don't know, then

• 16:33Balaji Srinivasan?

  You have to be Terrence Tao to verify it. It might be gibberish, it might be real, who knows, right? And so the prompting and verifying are actually the bottlenecks in many areas. Now, Karpathy and I, you know, the, Andrej Karpathy, we were just having a discussion on this like a week or so ago. And the thing about verifying is if you're using the GPUs that we have built in, and you're looking at images, or video, or front-end code, right? Like the user interface, your eye can just instantly pick out, and you can verify pretty quickly. So for that side of things, AI is quite good. Anything that's images, video, your ear can also pick out audio, right? And front-end. But when it's backend stuff, right?

• 17:15Balaji Srinivasan?

  When it's like database code, when it's like crypto, when it's mathematical equations, that, you don't have like GPUs, you can't just like hit it with your eyes and quickly detect it, right? That whether it's correct or not, you have to deep read it carefully, right? So it can generate reams of text, but then you have to verify it. Exactly, that's right. Maybe you have some thoughts on that?

• 17:35Benedict Evans?

  Well, so, it's funny, I was talking to John Boltwick the other day, and he said, Benedict, you think in slides?

• 17:41Balaji Srinivasan?

  That we do too, we both think in slides.

• 17:43Benedict Evans?

  So I have a slide.

• 17:44Balaji Srinivasan?

  Yes.

• 17:45Benedict Evans?

  And maybe there's sort of a, I'll talk about the slide, and there's an observation around it. I think a lot of discussion of LLMs is sort of hunting for the like, what's the right, what would the right way to conceptualize this? It's like with machine learning, the right way to conceptualize it was this is pattern recognition. And we're sort of hunting for the right way to conceptualize LLMs. The slide is that traditional software is deterministic and does things that are easy to explain to machines. In fact, automation, machine tools, sewing machines, typewriters, adding machines.

• 18:14Balaji Srinivasan?

  Correct.

• 18:15Benedict Evans?

  Things that are easy to explain to a computer. There may be things that are very hard for people to do, but they're easy to explain. So it's hard for you to drill a hole 100 times, or to calculate a mortgage in your head. But it's easy for you to write down the logical steps to explain how you do this. So that's traditional software, like databases, data processing, the whole 60s, 70s mainframe thing. Machine learning is stuff that's hard to explain. To a computer. So it's hard to explain why that credit card transaction is weird.

• 18:40Balaji Srinivasan?

  Or how to move your hand or something.

• 18:42Benedict Evans?

  Yeah, it's hard to explain why that's a picture of a dog and not a cat. And you think it's easy until you try and do it. And then it's like you tried to make a mechanical horse. It always falls over until robotics comes along. So that was machine learning. I also think that as a kind of quiz for you, do you think machine learning is still AI? Or is that now just software?

• 18:58Balaji Srinivasan?

  Well, so the way that.

• 19:00Benedict Evans?

  I think there's a process that like once it's been around for a while, it's not AI anymore.

• 19:04Balaji Srinivasan?

  It's funny. So I think like within the field, technically, the division would be machine learning would be, everything up to linear logistic regression and S V Ms, all that kind of stuff. And then right at the point you start doing deep learning and you have large neural networks. Now you start getting into what people would call modern AI. So M L is almost like the boundary of understandability, you might say, right? Where you can write, write clean equations and like really understand what's going on. And to me, the most surprising and confusing, I'm still, I still don't feel like, I know the phenomenon is, but I still find it magical is something called the double descent problem. Do you know what that is?

• 19:48Balaji Srinivasan?

  Basically, normally when you're fitting to data, you want to have the fewest possible parameters because you can overfit, right? And so your error goes down and then your error starts going up on the, on the, on the holdout set. So you, you train your, your model in machine learning and you want the minimum number of parameters to be able to explain the, the, the, the training data and predict the test data. And if you overfit, then you're no longer predicting out of sampled stuff. But double descent is when you do AI, you get actually a second wind when you start going to a very highly parameterized model and the error actually drops again, right?

• 20:29Balaji Srinivasan?

  And which is just a really weird phenomenon that there, there's, there's papers on this and so on. And.

• 20:38Balaji Srinivasan?

  It's one of the most counterintuitive things about the whole thing that just having these gigantically parameterized models would generalize well, right? Because it violates, that's the biggest difference. Go ahead. There's other things people might see as the biggest difference.

• 20:50Benedict Evans?

  I think there's, one of the ways I sort of think about the term AI is that people kind of use it like technology, the word technology.

• 20:59Balaji Srinivasan?

  Yeah, that's right.

• 21:00Benedict Evans?

  That anything new is technology, anything your parents had isn't technology.

• 21:04Balaji Srinivasan?

  I'm a stickler for precision.

• 21:05Benedict Evans?

  There's different ways that you can say, what do we mean by the word AI? I feel like AI has almost become like the word metaverse, where like you don't know what somebody means when they say it. But to continue my slide, so the first point is deterministic software, which is stuff that's easy to explain. There's machine learning, which is stuff that was hard to explain, which basically machine learning solved this. And now an LLM is maybe stuff that's easy to explain to an intern. So it's something where if you had to go away and have a kickoff meeting and spend half an hour working out how we're going to do this project, then an LLM probably can't do that. But if it's something that you could explain in 10 seconds or 20 seconds, then an LLM's going to be able to do that.

• 21:47Benedict Evans?

  And part of the problem is, are you able to explain it even to yourself? Could you explain it to another human being? Can you actually kind of shut your eyes and conceptualize, how is it that I'm going to explain what it is that I want this thing to do?

• 22:02Balaji Srinivasan?

  What you're saying is very important because, you know, there's several different angles I can, I want to take off of that. You know, in one sense, I had this tweet, we're living in the age of the phrase, right? So the prompt for the AI, or the 140-character tweet, or actually in crypto, like 14 words, 13 words, 12 words can be your crypto reset phrase, right? These are phrases of power, right? In AI, in social, in crypto, right? Like this, strings of characters that do a lot, you know?

• 22:37Benedict Evans?

  They're spells.

• 22:38Balaji Srinivasan?

  They're spells, right? And the thing about it is,

• 22:43Balaji Srinivasan?

  The crisper you are as a manager, like, you know, if you're, if you're, if you're a really good engineering manager, you're great at prompting AI. Because crucially, you don't just say, hey, code this. You say, hey, you know, try and use, you know, React for this. You can use React Native for, you know, the iOS and Android interfaces. Use Tailwind, use it. The more, in a sense, vocabulary terms you have, the better you can prompt something with. And if you use vocabulary terms correctly. And what that meant is, for example, I realized with DALL-E, you know, when that was first, you know, before the ChatGPT moment, I was like, wow, art history is now an applied subject. Knowing like Cezanne and Picasso and what, you know, these various kinds of obscure styles, suddenly you can be like, boom, style it like this, style it like this, and it'll do that, right?

• 23:27Benedict Evans?

  You could say the same thing for music, like, what exactly is it that's being done there? I knew there is a word for that. So, and you have to know that word.

• 23:35Balaji Srinivasan?

  That's right, exactly. So you can upload a track and you can say, what style is this? How do you caption this, right? Ever seen, you know, like the restaurants with the fancy menus and they don't say, um, they don't say tomatoes, they say like heirloom.

• 23:51Benedict Evans?

  There's a word, there's things that are theoretically subjective.

• 23:54Balaji Srinivasan?

  Yeah.

• 23:55Benedict Evans?

  But there are, within the provision, there is a particular term for doing that particular thing.

• 23:59Balaji Srinivasan?

  Exactly. It's like, they're interesting, like red versus burgundy and, you know, crimson and what have you. They've got precise words which mean something. And then you can summon greater precision with those precise words. And so what, a way I was thinking about, you know, what you're saying is that, and I've written about this, AI is like undocumented APIs. Right? So normal API, every function is like written out and it's like, you can do this and you can do that. And so I got 20 functions and here's, everything is there, right? With AI, it can do lots of things that even the people who wrote it up, so there's, it's much more mysterious as to what it can do. You just have to try things, right?

• 24:36Benedict Evans?

  So the way I was thinking about this from a different angle was to think about GUIs.

• 24:40Balaji Srinivasan?

  Oh, yeah.

• 24:40Benedict Evans?

  What a GUI is doing, several things that a GUI is doing. One of them is it's telling you all the features that the developers have created. And part of the reason that was a revolution is A, you knew what they were and you didn't need to memorize keyboard commands.

• 24:52Balaji Srinivasan?

  Yeah.

• 24:52Benedict Evans?

  But B, you can actually have more stuff because you're not constrained by the number of keyboard commands you can write down. So you can have hundreds of functions instead of like, you know, you can just put them all, you can just add more shit to the menus.

• 25:02Balaji Srinivasan?

  Yes.

• 25:03Benedict Evans?

  But the other part of it is that the GUI is telling the user a whole bunch of accumulated decision and institutional knowledge about what the right things to do at this point would be.

• 25:14Balaji Srinivasan?

  That's right.

• 25:14Benedict Evans?

  And so if you're in a workflow as opposed to just a blank screen, you know, it is one thing if you're in like Photoshop or Excel.

• 25:20Balaji Srinivasan?

  Yeah, it can prompt you on the prompt.

• 25:22Benedict Evans?

  But if you're in a workflow in Salesforce, then there's a decision taken. This is, I'm going to offer the user these five options here and not 750 options.

• 25:32Balaji Srinivasan?

  Yeah.

• 25:32Benedict Evans?

  And with a prompt, you don't have any of that. So you've got to shut your eyes and think for a minute of like, well, what would I do here? And you don't have that help.

• 25:42Balaji Srinivasan?

  This is, you know, Karpati has talked about this also, but I do think there's room for AIOs, right? Like, in a sense, and we can talk about crypto in a second, but I think AI and crypto are both

• 25:55Balaji Srinivasan?

  actually operating system level innovations. And for example, maybe someone just does it as an app or like a downloadable thing and just does it as a layer on top of the Mac. But if you have the full context of all the actions that are happening on your Mac, you can suggest which apps to use, suggest which apps to download, suggest, hey, you probably want to change these keyboard settings. And so like, there's, you know, it's funny to put it this way, but Clippy is finally vindicated. Clippy, but for everything, right? And because Clippy can now be really, really, really, really smart, right? Like, you know, it was Anderson's line, it's like, everything in tech works, it's just when, right?

• 26:36Balaji Srinivasan?

  And, and even the thing that's interesting about the Clippy thing is somebody also made a point, which is that.

• 26:45Balaji Srinivasan?

  You actually want to put faces on your AI avatars, on your AI agents, so you could pick from Clippy or 10 other kinds of things. And the reason you want to do that, this is counterintuitive, but people, like you and I can use ChatGPT and Claude and what have you, because we're familiar with interfaces. But the reason they're actually intuitive to 100 million people is they're used to chatting with another human on the other side. So they're already modeling the chat box as being a human-like response because they've been using WhatsApp or Facebook Messenger or Instagram chat or something like that for a long time, right? But when it's outside of that chat box environment and it's like suggesting on the screen, you kind of want a face to pop up so they can associate,

• 27:28Balaji Srinivasan?

  okay, this person is suggesting this because that's who they are. And they kind of map that personality onto the AI agent. And so you could choose from different kinds of Clippies that would give you prompts on what to do. Or it just does it for you. That's the other possibility. But I don't think people like it when it does it. They want to be able to approve it before they do it.

• 27:47Benedict Evans?

  I think there's a sort of sense in here of how people conceptualize what this thing is and how it works. I remember John Prathero at Google showing me a chart, a Google Trends chart of best versus cheap.

• 28:03Balaji Srinivasan?

  Best versus cheap, uh huh, yeah.

• 28:05Benedict Evans?

  So the best does this and cheap does that.

• 28:08Balaji Srinivasan?

  And what are the axes?

• 28:09Benedict Evans?

  Crossing over time. So Google Trends, so what's the frequency of the word best?

• 28:14Balaji Srinivasan?

  So it starts with like cheap phones and then it goes to best phones?

• 28:17Benedict Evans?

  Yes. And so the thesis was that this was shifting from the internet as price comparison, where you'd already knew what you wanted and then it's at the top of the, and then it's at the bottom of the funnel, to the internet as recommendation, curation, suggestion, where you're looking for suggestions.

• 28:32Balaji Srinivasan?

  That's so interesting. So let me see if I can understand the psychology. So when the, when people are...

• 28:36Benedict Evans?

  So it starts from 2004. In 2004, you go on the internet and you already know what you want and you look for the cheap. What is the cheap X? And then you put in a scoop. Or you put in a product or something. Whereas over time, that goes down.

• 28:52Balaji Srinivasan?

  And best goes up.

• 28:53Benedict Evans?

  And best goes up and crosses it. It's a perfect X on the chart, unfortunate. And but the thesis is you're going further up the funnel. You're looking more and more for, I want someone on the internet to tell me the best X or Y. Where previously you'd have got that from a magazine or a newspaper or something.

• 29:09Balaji Srinivasan?

  There's two or three, there's two things about that. The first is... You know Andy Grove's thing about the paired metrics? So Andy Grove, whenever anybody's optimizing like sales, for example, they will usually start recruiting, they'll start by optimizing quantity. But there's, you know, you can sometimes optimize quantity and then quality drops off.

• 29:28Benedict Evans?

  Yeah, yeah.

• 29:29Balaji Srinivasan?

  So quantity is easy to measure. It's like just a number of people we hired or whatever. But quality is how good were they, right? And so that's the second paired metric is usually a quality metric. And so quantity is cheap, right? And people start with cheap. And then quality is best and they go to best. So that's another lens on this. A third lens, what I thought, my explanation, maybe it's different than what actually happened, was when people are just trying out a space, they just want the cheap version to try it out. And once they've committed to a space, like for example, they have cheap digital camera, cheap drone or something like that, they want to try it out, right? And they want to try it out at low cost, try it before you buy. And then once they're committed to a space, then they're like, I want the best drone out there now because I want to.

• 30:13Benedict Evans?

  The analysis then would be cheap drone versus best drone.

• 30:16Balaji Srinivasan?

  Right.

• 30:17Benedict Evans?

  But I think the.

• 30:19Balaji Srinivasan?

  That's what I thought you were saying. You're saying cheap versus best overall.

• 30:21Benedict Evans?

  Yes, overall.

• 30:22Balaji Srinivasan?

  But I'd love to see it category by category. I wouldn't be surprised to see that happen category by category, but maybe not.

• 30:27Benedict Evans?

  Well, there's a different point there, which is sort of what I was talking about in our panel this morning, which is there's infinite product, so how do you know what to buy?

• 30:36Balaji Srinivasan?

  Yeah.

• 30:36Benedict Evans?

  And it used to be that you'd start with a magazine and then you'd go to the internet to find the cheap place to buy it. Or you know what you wanted and now you go to the internet to find, figure out like where's, what's the right place to do this. So the internet has become much more kind of a default. But actually the thing, the thought that prompted me to that was you can also go and play with Google Trends. And I did a chart, played with like how, why, where, what, like more kind of basic questions. And you really need to be inside Google to do that analysis properly.

• 31:05Balaji Srinivasan?

  Yes, exactly.

• 31:05Benedict Evans?

  But it's that sense of how much are people doing conversational queries into Google? As opposed to typing keywords into Google? And things that are not really a Google query, like what is A is not.

• 31:17Balaji Srinivasan?

  Well, it's funny.

• 31:18Benedict Evans?

  Probably doesn't help Google, but that's still how people use it.

• 31:21Balaji Srinivasan?

  People were trained for years to not to to to remove all prepositions, to remove all that stuff and just do keyword ease. And now we're trained the opposite, to write full and complete English sentences like prompting is the new searching, but it's a completely different, you know, behavior, right? Go ahead.

• 31:38Benedict Evans?

  Well, as you say, this is one of the, there's a such tangential point to that, like one of the like, the early, easy, obvious things that people have deployed with AI, with LLMs on the internet is different kinds of queries, instead of natural language queries or different, not so much natural language, but like different kinds of query. So the canonical one people talk about is Walmart saying, now you can search for what should I buy to take on a picnic? Which isn't a database query. And for Google, for Walmart or for Amazon, five years ago, that search just wouldn't work. Because unless there's a product that's like tagged with picnic, it's not going to come up. Whereas now, there's an LLM with a world model.

• 32:16Balaji Srinivasan?

  They can pull it, yes.

• 32:17Benedict Evans?

  That has some sense of what, how you might answer that question.

• 32:20Balaji Srinivasan?

  Yes, is it a world model? It is, it's, it's a web model.

• 32:22Benedict Evans?

  It's a different kind of query anyway. It's not, you're not doing a SQL query, you're doing something else.

• 32:27Balaji Srinivasan?

  That's right. And I think, you know, one of the things that's interesting is, the computers are, we knew they were very good at that first kind of deterministic computation, the SQL query, the calculation, that's what they're built for, doing math, right?

• 32:40Benedict Evans?

  Yeah.

• 32:41Balaji Srinivasan?

  And now they've gotten good at probabilistic kinds of things, right? So this would be like, system one and system two thinking, right? Probabilistic is like the quick impression, and then, you know, this is like the logical calculation. So it's actually good at the heart, the thing that's harder for humans is the, you know, like, long, involved mathematical calculation, you can do that errorlessly. And now it can also do the other kind of thing. And so it does suggest that there'd be some synthesis of that eventually, where an AI can, I mean, this is like AI tool use or what have you, like, it detects that it needs to go to system one and, and it starts invoking Python for that. And this is getting better, but it's surprisingly not amazing two and a half years in, right? When it needs to go deterministic.

• 33:25Benedict Evans?

  Well, so I, I would. Last long thing I wrote about this was about looking at deep research, which OpenAI launched. And one of the kind of traps in looking at the new thing is to test it based on what was important to the old thing. So, you know, to look at the Apple two and say, does this match the uptime of a mainframe? No, so it's useless. Well, no, but that's not the right question.

• 33:48Balaji Srinivasan?

  Yes.

• 33:50Benedict Evans?

  Can you write and build an Excel model on an iPhone? No, but that's not the point. It can still replace PCs. And the reason I mentioned this is so, so, so, so deep research, OpenAI launches this thing. And it's whatever it was a hundred dollars a month or whatever. So, but they look at the marketing page. And the marketing page shows it doing a research project about mobile, which, as we said, I know a lot about. And it got the answers wrong. And

• 34:15Balaji Srinivasan?

  That's verifying. See, you knew, you could tell that it was wrong.

• 34:18Benedict Evans?

  Well, this is, this is

• 34:18Balaji Srinivasan?

  It looked

• 34:19Benedict Evans?

  Exactly. So this is the thing, and it got stuff wrong in several levels. People can, remembering now what I wrote like three months ago. And so there was a specific, it was make a table which shows mobile smartphone adoption in a bunch of countries and then the operating system market share. And then this is like an intern teaching moment. Cause first of all, what does adoption mean? Does that mean unit sales share installed base, app store sales? Like what, what, what are you, what metric specific are you asking me for?

• 34:48Balaji Srinivasan?

  Yeah.

• 34:49Benedict Evans?

  Then it had given a source for the number it had come up with, which was Statista. And Statista is an aggregator that steals other people's data and you hushes it.

• 34:58Balaji Srinivasan?

  Yeah.

• 34:58Benedict Evans?

  And when you jump through a bunch of registration hoops, you discover that the actual source was, I think, Kantor.

• 35:05Balaji Srinivasan?

  Kantor?

• 35:06Benedict Evans?

  It's an ad agency. It's a, it's a, it's part of GroupM. It, I thought it was part of one of that. It's, it's consumer survey data. So it's, it's a proper, proper, proper company.

• 35:14Balaji Srinivasan?

  Yeah.

• 35:14Benedict Evans?

  So it was actual proper consumer survey data. But the two things, so then when you go to the Kantor chart page, you discover that deep research had got the numbers the opposite. So it had flipped percentages.

• 35:26Balaji Srinivasan?

  I see.

• 35:28Benedict Evans?

  And then it had also said.

• 35:30Balaji Srinivasan?

  Right, because it would have just had pages behind login or something.

• 35:33Benedict Evans?

  It had copied them from the website wrong.

• 35:34Balaji Srinivasan?

  I see.

• 35:35Benedict Evans?

  And then the other source it gave was stat counter. And stat counter.

• 35:40Balaji Srinivasan?

  Was just using the same wrong data.

• 35:41Benedict Evans?

  Which is a traffic measure.

• 35:42Balaji Srinivasan?

  Right.

• 35:42Benedict Evans?

  So that's not going to tell you adoption. Because high end phones get used more and iPhones get used more. So, and there's a bunch of things in here where you'd like, this is what I'd expect from an intern.

• 35:52Balaji Srinivasan?

  Right.

• 35:53Benedict Evans?

  I would, I would go back and say, no, this is what I mean by adoption. And this is a good data source and that isn't.

• 35:58Balaji Srinivasan?

  Right.

• 35:59Benedict Evans?

  And it was like a great first version. The problem is A, it copied the number out wrong, which is not what I would expect from an intern, or at least not a good intern. But secondly, I'd have to be a mobile analyst to know any of these things.

• 36:12Balaji Srinivasan?

  And that's a verifying thing that I was getting at.

• 36:14Benedict Evans?

  This is, this is the kind of the core of it is I, all these people were looking at deep research and saying, this is fantastic for researching things you don't know anything about. And I was like, no.

• 36:22Balaji Srinivasan?

  No, it's not. Yeah.

• 36:23Benedict Evans?

  It's fantastic if you need a bunch of material about something you know a lot about.

• 36:27Balaji Srinivasan?

  Exactly. So that's the thing is that's why I think AI in its current incarnation is better thought of as amplified intelligence. Because the better, the more you know about a field, the better you are at prompting, because you've got better vocabulary. And the better you are at verifying, because you know more facts about it and you have more cross cutting checks. And that is less true for the visual area. But just identifying that is a very important limitation where you have a completely different system you can use for the visual stuff, which is just your eyes. Right? You don't have to use the, you know, we have, we have just different hardware for quickly seeing, you know, this way the hands or something like that. Whereas if that was.

• 37:02Benedict Evans?

  It's a monkey brain.

• 37:03Balaji Srinivasan?

  It's a monkey brain. Exactly. Right? So that's, now, an interesting question, this is, you know, a car path here are discussing this is, is there some way to turn some or a subset of the non visual things into visual cues where you could see it was wrong immediately? So give me, I'll give you a small, a simple example. Let's say it generated an audio file, right? You know, you know, like a spectrogram of an audio file, right? You could maybe immediately see if there's some artifact there, right? That's a trivial example.

• 37:30Benedict Evans?

  So I think this, I'm, it's a fascinating concept.

• 37:35Benedict Evans?

  I would wonder whether that's the right split.

• 37:38Balaji Srinivasan?

  Okay, it's at least one split I've found useful for now. What were you thinking?

• 37:41Benedict Evans?

  Well, so the split I was thinking was that the natural language generation to make text is perfect. So the text is always grammatically correct.

• 37:50Balaji Srinivasan?

  That is true, yes.

• 37:51Benedict Evans?

  But the model underneath, like the facts presented by the not in the text, might be wrong.

• 37:56Balaji Srinivasan?

  Yes.

• 37:57Benedict Evans?

  And that's sort of deceptive to us because we see the text is correct and it looks confident.

• 38:01Balaji Srinivasan?

  Yeah, that's right.

• 38:02Benedict Evans?

  Whereas in an image,

• 38:06Benedict Evans?

  like you ask it for a picture of somebody and everything's perfect except the person's got six hands.

• 38:13Benedict Evans?

  I'm not sure conceptually what, is it that that's flattened, is that you're seeing two things in one layer? Or is it that, do you see what I mean?

• 38:24Balaji Srinivasan?

  I see what you mean. I think there is.

• 38:25Benedict Evans?

  Or is it that it's a different level? Well, maybe there's a different point here, which is,

• 38:32Benedict Evans?

  if you ask for an image of a car.

• 38:34Balaji Srinivasan?

  Yeah.

• 38:34Benedict Evans?

  And the car, I actually do this, ask for a fantasy 1960s French sports car.

• 38:40Balaji Srinivasan?

  Right.

• 38:40Benedict Evans?

  It will look French. It will look like a sports car. It will have four wheels. It might have two steering wheels.

• 38:45Balaji Srinivasan?

  Yes, that's right.

• 38:46Benedict Evans?

  The two steering wheels is the equivalent of a grammatical mistake or spelling mistake in the text generator.

• 38:51Balaji Srinivasan?

  Yes, because.

• 38:52Benedict Evans?

  However, it may also be that the balance of the car is all wrong and it would flip over if it tried to go around a corner. But you'd have to be an automotive expert to know that.

• 39:02Balaji Srinivasan?

  Yes.

• 39:03Benedict Evans?

  So I'm saying there's like, there's.

• 39:03Balaji Srinivasan?

  I understand what you're saying.

• 39:04Benedict Evans?

  There's different levels of error.

• 39:06Balaji Srinivasan?

  That's right. What you're saying is the two steering wheels is like a spelling error. But spelling errors are very rare for AI, whereas the two steering wheels is a common error, right? And I think that has to do with,

• 39:19Balaji Srinivasan?

  just the way diffusion models work versus how transformers work. That'd be like one high level answer I'd give. Where it's doing like kind of, it's more local with the diffusion model and.

• 39:32Balaji Srinivasan?

  You can be locally correct with the steering wheel, but globally incorrect. Whereas locally correct with spelling is usually correct. That's like maybe one's. That's useful. That's one answer. The second is that with, there's only a small space, I think. Like, for example, we are optimized to recognize faces. So we can detect very subtle differences in faces. But if I gave you like five different sheets of like static noise, right? Even if they're very clear patterns, like mathematically, like these are all like Fourier transforms of the same object. And this is the one I, they just look like total noise to you. A computer would be like, these 12 are the same. And this one is odd one out, right? So in a sense, our eyes are optimized for a very low dimensional

• 40:17Balaji Srinivasan?

  set of things, which are the things that occur in the real world. Like those are the things we can pick out, right? Which is also that our eyes are like, dogs are better at motion than us. Yeah, exactly. Even eyes are different depending on the species. That's right. So because of that, we actually have a, like, because they can't detect patterns in static, that's like too high dimensional space. I think text is kind of like that because it can describe. One of the most, I mean, surprising things to me about how AI has evolved. We were asked, we were talking about this question before is, I was surprised you could get so much mileage out of pure text. The reason is. So much what, so? So much mileage out of pure text, right? And the reason I was surprised by that is, you know, you'd think.

• 41:02Balaji Srinivasan?

  You mean like reasoning and all stuff that looks like reasoning. Reasoning and also spatial manipulation, like picking, like having cameras, having eyes, seeing the world, reasoning about it, like a baby and so on and so forth. It is amazing how much of that world humans have assigned machine readable labels to with text. And the way that, you know, it's just, it's just very surprising how well that worked. Like language, what I'm trying to say is, in a few, in like 40 words, you can describe, it's like code. You can describe many, many, many different kinds of things in like 40 words, right? And, and it's just more general.

• 41:46Balaji Srinivasan?

  It's one of those things where if you're, sometimes when you're really close to a space, you're actually more surprised by a breakthrough than if you're farther away. And I should say like, you know, even looking, seeing all the style transfer stuff in the mid 2010s and seeing ImageNet and seeing the benchmarks and so on and so forth. I was surprised that it got, you know, Markov chain is, well,

• 42:07Balaji Srinivasan?

  if you saw the stuff before GPT-3, right? It was like semi coherent, but it didn't look like it was converging on something, you know? It just looked like, you know, it repeated itself many times and what have you. And the fact that it broke through to what it did, just based on language, was so counterintuitive. And it's, I think it's because it's such a high dimensional thing. It captures so many different aspects of the world, like anything you can perceive in the world, there's a word for it, there's many words for it. And then we also have billions of people who've been typing those words for two decades, right? So in a sense, like the entire internet, the video games and social media were like this bootstrapper for AI. Anyway, so

• 42:51Balaji Srinivasan?

  on the, on the other hand, AI is very bad at spatial stuff. You know this thing called Arc? Francois Choulet has this benchmark.

• 42:58Benedict Evans?

  Oh, yeah, I know Francois.

• 43:00Balaji Srinivasan?

  Yeah, and so he is, he has benchmark that actually got beaten by the recent, you know, chat GPT release. And he's got like a new one. And it's, it's almost like a Tetris-y kind of thing. That's got some degree of logic and spatial type of stuff that AI finds it hard, but humans still find it easy. It's kind of like maybe the next generation captcha.

• 43:22Balaji Srinivasan?

  And it's, it's visual more than it is verbal, right? So for every reason.

• 43:28Benedict Evans?

  Is it something that would be hard to explain in words?

• 43:33Balaji Srinivasan?

  Yes, I think, kind of. It's, it's about like this is here and it's almost like Minesweeper. You know Minesweeper where you click and it expands and so on and so forth?

• 43:45Balaji Srinivasan?

  I think AI, because it started with words, it doesn't do well with the spatial side of things. Now, on their hand, what the Chinese are working on in particular is physical robotics. Obviously Elon's working on it and so on and so forth, but China's way ahead on the physical supply chain. So like, physical AI is robots, and those definitely have cameras and XYZ and spatial and rotation and so on and so forth. So there's some eventual fusion. You know, like the self-driving cars have gathered hundreds of millions, billions of miles at this point. So there's some fusion of the web, which is words, and the world, which is, you know, spatial, that will get you like a completely, you know, maybe a fusion set, where it can reason about the world as it is.

• 44:29Balaji Srinivasan?

  It knows how tall Everest is because someone, some robot has hiked it. You know, like Google Street View? You might eventually imagine a bunch of humanoids walking the world, just like that, you know?

• 44:39Benedict Evans?

  I wrote a thing years ago about Street View and Yahoo. And the sort of thing I was kind of poking away at is that basically every big internet system is a mechanical Turk. And the question is, where do you put the people?

• 44:53Balaji Srinivasan?

  Where's the humans, yes, yeah.

• 44:54Benedict Evans?

  And with Google Search, the people are, A, everybody making a link on a webpage, and B, everybody using Google.

• 45:02Balaji Srinivasan?

  That's true.

• 45:03Benedict Evans?

  Whereas with Yahoo, they tried to like have a bunch of people in an office.

• 45:07Balaji Srinivasan?

  Yeah, doing it in the mean, middle.

• 45:08Benedict Evans?

  Making a hierarchical list of all the websites on the internet, which was, became impossible.

• 45:12Balaji Srinivasan?

  Yeah.

• 45:12Benedict Evans?

  And with Street View, you just pay a bunch of people to drive down every street in the world, which is actually not impossible, it's just expensive.

• 45:17Balaji Srinivasan?

  It's just expensive. It's really, it's an interesting computation. It's not obvious that it would be feasible to. It's funny, you know, the Yahoo thing, Yahoo, you know, I think got started in like the early, mid 90s, right? I think 94-ish, 93, something like that, yeah. And the thing about it is, it, like, Yahoo had to kind of get to its limit before it was obvious that you needed something like Google. Because like, webpages had to be suffused with, at the time, they put on-page spam and so on and so forth. You had to kind of top out, you had to get enough webpages that the hierarchical model broke down.

• 45:57Balaji Srinivasan?

  You had to get enough economic value that people really incentivized to game the system and so on and so forth before, you know, maybe Yahoo could have self-disrupted, but before something like Google was there, Yahoo almost built out enough of the web economy to make something like Google necessary, you know?

• 46:14Balaji Srinivasan?

  Anyway, so one thing I wanted to talk about, I want to go through various other areas, but what is AI disrupted? What is AI going to disrupt? Right? So what is it already disrupted? So, search, it's taken points off of Google share. You know, like Stack Overflow, you know, their queries are down. Image search, because now image search is image generation. Obviously, video, obviously, many different kinds of specialty apps will, you know, things that are, for example, like various sales tools that make templated emails and things like that, those all, you know, change. I'm not sure Salesforce, I mean Salesforce is,

• 46:59Balaji Srinivasan?

  you know, certainly they're using AI, but the entire Salesforce model of like spamming people with email, I'm not sure that's going to last in the age of AI because you can spam so many of them now, right? So, so those are some of the, you know, obviously robotics, obviously protein folding and whatnot. What is it going to disrupt that people haven't thought about yet? And I can, I can give some ideas as well.

• 47:22Benedict Evans?

  Well, I mean, one answer is we don't know. It's like, it's like trying to say that, ask that question about the internet in 1994.

• 47:27Balaji Srinivasan?

  Sure.

• 47:28Benedict Evans?

  And the joke is always that newspapers thought the internet would be great because they'd save on printing and they did.

• 47:32Balaji Srinivasan?

  At first, at first, probably it was good for them. Yes.

• 47:34Benedict Evans?

  They did, yes. I did a slide in my, the last presentation I did, because it struck me that people would always say, well, you know, Uber didn't sell software to taxi companies and Airbnb didn't sell software to hotels. They redefined what those things were. So I went and did a chart of, well, what happened to taxis versus what happened to hotels? And well, actually, rather unsurprisingly.

• 47:53Balaji Srinivasan?

  What happened? Taxi medallion is crushed.

• 47:55Benedict Evans?

  Uber demolishes taxis mostly. Airbnb is mostly additive to hotels.

• 48:01Balaji Srinivasan?

  Why is that? I think Airbnb is a different kind of experience than a hotel.

• 48:05Benedict Evans?

  It's not a substitutional experience in the same way.

• 48:07Balaji Srinivasan?

  Yeah, it's complementary, yeah.

• 48:07Benedict Evans?

  Half of business, half of hotels are business. There's another whole bunch of conferences. There's a bunch that's about like, I mean, just, you know, okay, so two examples, like my fiance works, goes, goes to fly to Milwaukee. She arrives in town at 10 o'clock at night. She needs a gym. She's got a client meeting the next morning and then she's got to flying back to New York. Actually, she doesn't want to go and stay in some random stranger's hotel, which, which she's got no idea what it's going to be like. She wants, you know, a very specific. Brand promise from.

• 48:36Balaji Srinivasan?

  You mean Airbnb, she wants to stay in a hotel.

• 48:38Benedict Evans?

  No, she will stay in a hotel. She's not going to stay in an Airbnb. The other side of this is, I think there's a more general point, and same thing, I arrived in Singapore two o'clock this morning, I'm not going to go and work out whether this Airbnb is any good, I'm going to stay in a hotel.

• 48:49Balaji Srinivasan?

  Sure.

• 48:50Benedict Evans?

  I think there's a more general point, which is that like, everything is probably disruptive to someone at some point in the value chain, but it kind of depends on the industry quite how much and in what sense. So like the iPhone demolished the existing cellular industry, didn't really have any effect on telcos. And telcos kind of hoped that they were going to do all these services, but that was never going to happen. But telco, mobile operators today are basically the same companies that they were 20 years ago with more, basically the same share price. Because their business was not in anything that the iPhone changed, except that they're providing massively more data than they were in the past.

• 49:32Benedict Evans?

  The business is basically owning sites and owning spectrum and connecting them up and selling that to consumers. The same thing with like online travel booking, completely demolished your travel agent industry, didn't really change the airline business. Airlines had to do a bunch of stuff around loyalty and pricing and maybe pricing became much more transparent and so on. But the end of the day, their business is owning or leasing aeroplanes and.

• 49:54Balaji Srinivasan?

  There's a front end change and a back end change.

• 49:56Benedict Evans?

  And owning landing slots.

• 49:57Balaji Srinivasan?

  Right.

• 49:58Benedict Evans?

  And maintaining the aircraft. And so there now, of course, the counter argument would be you could have looked at taxis and say, well, clearly that's not going to get changed by the internet. Except maybe you'll be able to book a taxi more efficiently until it becomes long and changes it. But the point is, you can't, there's this sort of very naive view that says, oh, well, the software will just destroy everything.

• 50:20Balaji Srinivasan?

  Right, right.

• 50:21Benedict Evans?

  And the answer is, well, it kind of depends.

• 50:23Balaji Srinivasan?

  It's Pat's point, that's true, yeah.

• 50:25Benedict Evans?

  And like, one of the ways that I sort of think about this is that like, the tech industry kind of comes and changes everything in an industry and resets how it works. And then leaves. And goes off and works and say, you know, the joke about how consultants are seagulls.

• 50:38Balaji Srinivasan?

  Yeah.

• 50:39Benedict Evans?

  They fly and crap everywhere, make lots of noise and fly out.

• 50:41Balaji Srinivasan?

  Right.

• 50:42Benedict Evans?

  And so if you think about what happened to books or music, no one in the tech industry cares about music anymore.

• 50:47Balaji Srinivasan?

  Right.

• 50:48Benedict Evans?

  Like recorded.

• 50:48Balaji Srinivasan?

  Yeah, Spotify does.

• 50:49Benedict Evans?

  Yeah, Spotify.

• 50:50Balaji Srinivasan?

  It's not the main event.

• 50:51Benedict Evans?

  Yeah, recorded music is like $20 billion a year. It's like a branding error in the scale of the tech industry. It has no streaming means it has no strategic leverage for Apple or Google.

• 51:00Balaji Srinivasan?

  Suno is interesting, though. So the AI.

• 51:02Benedict Evans?

  So that's.

• 51:03Balaji Srinivasan?

  Yes, yeah.

• 51:03Benedict Evans?

  But, but, but the last 20 years, 20 years ago, the internet completely screwed the music industry. And since then, it left and doesn't care. Same thing in books. Like all the conversations around books right now, some of which are about Amazon, are book industry conversations. I think there's something similar happening now with video generation and Hollywood. Like everybody in Hollywood, like all over the panic. And now everyone is sitting and looking at this and thinking, okay, well, this saves a bunch of second unit stuff.

• 51:29Balaji Srinivasan?

  So when we think.

• 51:30Benedict Evans?

  But they're all like, all the questions for what does this mean are questions for people in LA.

• 51:35Balaji Srinivasan?

  So one, one way of thinking about it is conversation is proportional to derivative rather than absolute value. So let's say you have a sigmoid that's going like v like this, and then it flattens out, right?

• 51:45Benedict Evans?

  Yeah.

• 51:46Balaji Srinivasan?

  So when it's like annulity or ubiquity, you know, when it, when it, when it doesn't exist or when it's everywhere, when 0% or 100%, it's just not notable. It's not worth talking about, right?

• 51:59Benedict Evans?

  Yeah.

• 51:59Balaji Srinivasan?

  People use Uber or Dropbox a lot more today than when they were talking about Dropbox and Uber a lot. Right? So the conversation is maximum at the time of maximum growth. And then it's just much less because now it's like not notable. It's just a feature of the environment, right?

• 52:17Benedict Evans?

  So you can do Google N-grams.

• 52:19Balaji Srinivasan?

  Yeah.

• 52:19Benedict Evans?

  That show exactly this.

• 52:21Balaji Srinivasan?

  I think that'd be a great, that'd be a great craft.

• 52:22Benedict Evans?

  So you can do them for like steel.

• 52:25Balaji Srinivasan?

  Mm hmm.

• 52:26Benedict Evans?

  Or and some of these.

• 52:27Balaji Srinivasan?

  Oh, yeah, railroads.

• 52:28Benedict Evans?

  Yeah, railroad steel, because it starts in 1800. And of course, some of them, you look at it, you go, oh, I'm actually seeing a chart of World War II.

• 52:35Balaji Srinivasan?

  Yeah.

• 52:36Benedict Evans?

  Where you see steel suddenly does that, or shipping suddenly does that in World War.

• 52:40Balaji Srinivasan?

  And that's not obvious, right? Because conversations or like attention is focused on change rather than absolute value.

• 52:47Benedict Evans?

  Well, I always used to do a, I was fascinated by elevators. I get these kind of autistic autism spectrum fascinations about things. And I, there's a chart I did of the number of people employed in the US as elevator attendants, which is a perfect bell curve.

• 53:01Balaji Srinivasan?

  Mm hmm. Oh, interesting.

• 53:02Benedict Evans?

  Yeah, it's all curves up and down. And and this is because first half of the 20th century.

• 53:07Balaji Srinivasan?

  You didn't have any elevators.

• 53:08Benedict Evans?

  You'd employ a lot of elevators.

• 53:09Balaji Srinivasan?

  Right.

• 53:09Benedict Evans?

  Second half of the 20th century, they become automatic.

• 53:12Balaji Srinivasan?

  Right.

• 53:12Benedict Evans?

  You have a button and you can go and find all this advertising.

• 53:14Balaji Srinivasan?

  Why were they at the beginning, was it just like short operators?

• 53:17Benedict Evans?

  That was how they worked.

• 53:18Balaji Srinivasan?

  Was it technical enough?

• 53:19Benedict Evans?

  There was no button, there was the, well, if you think about what it actually takes to have an automatic or automatic elevator system in a building, you've got to have all the dispatching.

• 53:28Balaji Srinivasan?

  Uh huh.

• 53:28Benedict Evans?

  And you've got to have the dispatching and the queuing.

• 53:31Balaji Srinivasan?

  I see.

• 53:32Benedict Evans?

  Um, there's an interim stage, we have an elevator attendant who would just stand in the elevator and you would say, I want Buffalo five, please. And they'd press the button for five.

• 53:39Balaji Srinivasan?

  Right.

• 53:40Benedict Evans?

  But if you get in, you know, and originally elevator.

• 53:42Balaji Srinivasan?

  What was it originally before the buttons?

• 53:44Benedict Evans?

  There is a lever that's an accelerator and a brake.

• 53:47Balaji Srinivasan?

  Oh, so it was like a car almost.

• 53:49Benedict Evans?

  Exactly. It's a street car.

• 53:51Balaji Srinivasan?

  It was a vertical street car. I didn't know that. That's interesting.

• 53:53Benedict Evans?

  So there's a fantastic book I have called Cultural History of Elevators, which is all about how weird this was.

• 54:00Balaji Srinivasan?

  So it was a vertical train?

• 54:01Benedict Evans?

  Yes, it's a vertical train.

• 54:03Balaji Srinivasan?

  Wow.

• 54:03Benedict Evans?

  And so.

• 54:04Balaji Srinivasan?

  That's how people thought about it.

• 54:05Benedict Evans?

  Yeah. And so an elevator train, you can kill people.

• 54:11Benedict Evans?

  And there's this wonderful story I tell everybody, which is that you you press the buzzer to summon the elevator, but it's literally, you're just ringing a bell and a light goes on in the elevator car. And there's this story from the war department.

• 54:26Balaji Srinivasan?

  It's like hailing a taxi.

• 54:27Benedict Evans?

  Yeah, there's a story from a war department or ringing for a servant. There's a story from the war department in DC, which is that you would buzz more based on how senior you were. So imagine you're like a lieutenant and you get into the elevator on the second floor and you want to go to the 10th floor. But on the way, the buzz rang, it rings four times.

• 54:45Balaji Srinivasan?

  And so general and you have to go downstairs.

• 54:47Benedict Evans?

  He has to stop on the sixth floor and go down to the first floor and then a major gets in. So now you're theoretically, this poor lieutenant could spend the entire day in the elevator going up and down.

• 54:56Balaji Srinivasan?

  So interesting.

• 54:57Benedict Evans?

  And we don't see any of this now, which is your point about conversation.

• 55:00Balaji Srinivasan?

  Yeah.

• 55:01Benedict Evans?

  You don't get into an elevator now and say it's an electronic elevator.

• 55:04Balaji Srinivasan?

  Right, right.

• 55:05Benedict Evans?

  It's automatic.

• 55:06Balaji Srinivasan?

  Right.

• 55:06Benedict Evans?

  It's just an elevator.

• 55:07Balaji Srinivasan?

  It's somebody said something like, there's a phrase which is civilization advances as you can do more things without thinking about them, like they could just work, right?

• 55:18Benedict Evans?

  The classic one is light, people always.

• 55:20Balaji Srinivasan?

  Yeah, electricity.

• 55:21Benedict Evans?

  Light gets cheap.

• 55:21Balaji Srinivasan?

  Yes, that's right. I think, you know, the age of internet. Now, sometimes what happens is these things get really ubiquitous and they're out of the conversation. And then there's this, now that you can treat them as like at 100% adoption, then the new thing arises. For example, all of the craziness of the last 10 years is in part a function of the fact that social media got such ubiquity in the early 2010s, such that it was no longer, the novelty was, oh, I'm on social media, I'm using it. How do I use this Twitter app or whatever? Everybody knows what Twitter is, everybody knows how to use it, they know what a like is, whatever, whatever. And then you start getting.

• 56:03Benedict Evans?

  And then you get the second order effects.

• 56:05Balaji Srinivasan?

  The second order effects, that's right. So it's almost like, it's like installing a device driver and then you can install the next one and the next one. But it's like, the device driver is the percentage of the population that's adopted something. And once it gets to 100% or 90 something, then you can, like, I'll give you an example. Like during the pandemic, there's just the assumption that everybody had a mobile phone, right? And they could QR code scan this and the other. In Asia, that was a really big thing, right? That's how you'd show your health.

• 56:32Benedict Evans?

  Yeah, that made QR codes work in the West as well.

• 56:35Balaji Srinivasan?

  Yeah, that's right. But basically, obviously 10 years ago, you know, 10 years beforehand, they wouldn't be able to do that. They would have to have some other paper system or something like that. In 2010, you couldn't assume everybody on the planet had a smartphone. It was getting big, but it wasn't yet there. Certainly 15 years ago, nobody would have it, right? So that was something where the ubiquity of something.

• 56:57Balaji Srinivasan?

  Maybe sometimes the next step is, comes from that ubiquity. Or you could have two or three things at the same time.

• 57:04Benedict Evans?

  Yeah, I mean, you could think about TV and radio, all forms of mass media in the past. And, you know, the growth of pop music requires recorded music and requires radio. And, you know, the growth of mass democracy kind of goes hand in hand with literacy and cheap newspapers.

• 57:21Balaji Srinivasan?

  Right.

• 57:22Benedict Evans?

  But you need newspapers before you can have.

• 57:25Balaji Srinivasan?

  A vote.

• 57:25Benedict Evans?

  Other stuff has to happen.

• 57:26Balaji Srinivasan?

  Right.

• 57:27Benedict Evans?

  For that to come. And then, of course, you have backlash. So I sort of think there's something interesting in looking at stuff like the arts and crafts movement in the late 19th century. Because these are a bunch of people who say, we hate all this mass manufactured stuff.

• 57:39Balaji Srinivasan?

  Yeah.

• 57:39Benedict Evans?

  Handcrafted things.

• 57:40Balaji Srinivasan?

  It's funny that that's.

• 57:40Benedict Evans?

  And that's not a statement that would make any sense in 1800.

• 57:43Balaji Srinivasan?

  Well, well, it's funny because there's this, what you're talking about, like, people were farmers, or artisans, and they're like, oh, my God, this automation is disrupting us. We hate it so much. We want to go back to the old ways. And now what's funny is those manufacturing jobs that all these workers were so mad about in the late 200s and early 1900s, all the strikes, all communism and so on. Those are now the things that are looked back on romantically by a lot of MAGA types. Where they're like, oh, that was such a great job. I wish I had that. I hate this information job kind of thing. I hate this, you know, these, these, these desk jobs and so on and so forth. So it's interesting because there's a romanticization sometimes of the past thing. Even as millions of people are exiting that for the next thing.

• 58:26Balaji Srinivasan?

  Now, this is a little more complicated, obviously, by the fact that China has a lot of those, quote, manufacturing jobs. But yet, a lot of them are being automated in China as well with the robots. So it's funny, the thing that people were so mad about, that they were getting seemingly pushed into, which was manufacturing, out of farming into manufacturing. Are things that at least some fraction of this generation wants to go back to, or they think they do, you know. I think that's interesting.

• 58:49Benedict Evans?

  Some of those things, I mean, the Luddites are one of these sort of misunderstood movements. Because a lot of what the Luddites were about is self-employed, high-status artisans. Losing that status and being pushed into low-status commodity jobs.

• 59:06Balaji Srinivasan?

  So this is going to be the big thing with, I think, have you seen the elephant graph? So the elephant graph, and some people dispute the graph, but I think it's probably gesturing at something that's right. It shows percentiles or deciles of the world in terms of income. And it shows over the last 20 something years, I think from 91 to 2008 or something like that, where the growth went, like whose incomes rose. And basically, most of the world, so the lower 10% in Africa didn't gain that much, but like maybe from the 10 to 20% through the 70 to 80% had huge growth. Then it drops off in the 80 to 90% to almost zero, and then it picks up again at the very top, right?

• 59:49Balaji Srinivasan?

  And so that means is the like global, you know, elite in every country did great. And so did China, India, Vietnam, Eastern Europe, all these countries are no longer socialist, communist, et cetera, right? But the Western middle class didn't. And that is a big part of, I think, the societal instability now. When we're looking at it is, you know, in America, they have, you know, obviously red versus blue. But one way of thinking about it is, starting in, you know, certainly in 2008, there's a ramp where China flips US manufacturing. And so China puts all this pressure on red America, and that leads to Trump and trade war. And you've seen that that graph of print media disruption, right?

• 1:00:31Balaji Srinivasan?

  That's the internet suddenly rising after 2008 to flip blue America, and it takes all the ad revenue away. And it's not just ad revenue, it's also Craigslist's classified ads, a bunch of other things. So the internet disrupts blue America, and that leads to woke-ness in the 2010s, I think. And also tech clash, right? Which is the anti-tech movement. So we look at it as red and blue, but there's also China and the internet over here, where the internet is disrupting blue and China is disrupting red. So the thing I think that's coming next is AI disrupts blue America and robots disrupt red America. And so Chinese robots and internet AI. And so that artisan movement kind of thing is going to accelerate, where people are going to be mad about that happening. I think on balance, there's going to be a lot more productivity in the rest of the

• 1:01:16Balaji Srinivasan?

  world, but it's possible, for example, that a job that's at Let's say 200K or something like that in the US. And there's somebody in India or Mongolia or Vietnam or something who's at $2,000 a year that that equilibrates at like 20K, right? For like somebody supervising medical results or something like that, right? Where the licensure is no longer as important, the Western licensure, the Western state doesn't, can't really protect it as much because it's all on the internet. And that's a boon for everybody who's a customer of that, like healthcare costs go down around the world. You've got a great doctor on tap at any time. Most people benefit from it, but those people who lost, you know, relative status, relative money and that get super angry.

• 1:01:59Balaji Srinivasan?

  And I think the burning of the Waymos and like the extreme anti-AI sentiment that I see among some people is, is kind of a precursor to that. Let me know your thoughts.

• 1:02:12Benedict Evans?

  So I think this is a general observation that like when Europeans live in Europe, probably something similar in Asia, when Europeans live in Europe, we all feel different. So like Germans are very different to Italians and different to British people, different French people and so on. And when Europeans live in America, they all feel European. And America is in a different place to the aggregate of Europe. And the US has its own sort of political culture and political questions.

• 1:02:49Balaji Srinivasan?

  Ah, yes.

• 1:02:49Benedict Evans?

  That are different to the questions in France or Germany or Britain. I do think some of what's happened, and I don't, wouldn't call myself a political analyst, but I think some of what's happened is that certainly in the US, to some extent the UK, there were coalitions, particularly there were on the progressive side or the left side, there was a coalition of urban, upper middle class, highly educated people with a certain set of social attitudes and working collar, blue collar, working class, blue collar people.

• 1:03:24Balaji Srinivasan?

  Has been totally busted.

• 1:03:25Benedict Evans?

  In a different part of the country.

• 1:03:26Balaji Srinivasan?

  Right.

• 1:03:27Benedict Evans?

  Often with rather different social and political attitudes.

• 1:03:30Balaji Srinivasan?

  Yes.

• 1:03:31Benedict Evans?

  And.

• 1:03:33Benedict Evans?

  The same thing, I think, in the US and the Republican Party on the right. There was a coalition of sort of.

• 1:03:42Balaji Srinivasan?

  Wall Street Journal reading capitalists.

• 1:03:44Benedict Evans?

  Yeah, like Mitt Romney and.

• 1:03:46Balaji Srinivasan?

  Military guys.

• 1:03:47Benedict Evans?

  That that has split apart completely. And all of those, you know, center right, economically conservative, socially liberal people who are Republicans kind of don't have a political party anymore.

• 1:04:01Balaji Srinivasan?

  Right.

• 1:04:02Benedict Evans?

  And equally, people who were sort of all slightly.

• 1:04:07Balaji Srinivasan?

  Bloomberg central, you know.

• 1:04:09Benedict Evans?

  Bloomberg centralists, centrists kind of don't have a political party anymore. And there's a lot of those coalitions have kind of broken apart. Now, what you have in a bunch of European countries is partly because of proportional representation, is it's viable to have half a dozen different parties. And the US and the UK, because of the first past the post system, you don't have multiple, it's never been viable to have five different political parties at different points in the spectrum in the same way. And the US has got, the UK has got this kind of weird hangover liberal party, which is, no one's ever been quite clear what it was for, sort of in the middle, quote unquote, called liberal party is. There's an interesting sort of sideline there, which is the liberal party in the UK in the 19th century was one of the two parties of government, and it was socially liberal

• 1:04:53Benedict Evans?

  and economically conservative. But in the 19th century, what we now call economically conservative in the 19th century meant pro free trade and against regulation.

• 1:05:02Balaji Srinivasan?

  Right.

• 1:05:02Benedict Evans?

  Whereas now economically conservative is the other way around.

• 1:05:05Balaji Srinivasan?

  Yes.

• 1:05:05Benedict Evans?

  So all of those labels kind of shift and move and change in different things over time.

• 1:05:09Balaji Srinivasan?

  It's interesting, MAGA, I would say MAGA is arguably against, certainly against free trade, but they're also against regulation. So it's like half, right? But but it's, I finish what you're saying, I agree with you, of course, the labels do change.

• 1:05:21Benedict Evans?

  Yeah, the labels change, the coalitions broke apart, break apart. I think there's always this tension in looking at progressive ideas and saying, because if you look at the last hundred years, the social progressive ideas have always won.

• 1:05:40Benedict Evans?

  Like, nobody today says like being gay should be illegal. Like, so, you know, it's a little bit like what we were saying about AI a while ago. Today, you could deterministically say that what is woke today in thirty years' time will be what every far-right conservative agrees with.

• 1:05:59Balaji Srinivasan?

  Yeah, people have said that kind of thing.

• 1:06:00Benedict Evans?

  Theoretically, in fifty years, you know, maybe, maybe not.

• 1:06:03Balaji Srinivasan?

  Yeah, it's interesting.

• 1:06:04Benedict Evans?

  You also have these kind of overreaches around this.

• 1:06:06Balaji Srinivasan?

  Right.

• 1:06:06Benedict Evans?

  It does strike me that one of the differences between the US, US and UK politics, is that what happened in the last, in my lifetime, is that the right, for want of a better term, won the economic argument that state ownership and government control of the economy is bad.

• 1:06:22Balaji Srinivasan?

  Right.

• 1:06:23Benedict Evans?

  And the left won the social arguments that, like, gay marriage is okay.

• 1:06:29Balaji Srinivasan?

  Well, it's.

• 1:06:30Benedict Evans?

  And, and so on. And in what happened in the UK was that the right embraced that, and the Conservative Party is the party that brought in gay marriage in the UK.

• 1:06:40Balaji Srinivasan?

  Oh, really?

• 1:06:41Benedict Evans?

  Whereas in the left, in the US, it's kind of the other way around. The Republicans kind of never.

• 1:06:45Balaji Srinivasan?

  And Tony Blair sure brought in kind of capitalism, free trade.

• 1:06:48Benedict Evans?

  Level economics. Whereas what happened in the US is that the Republican Party in the US never kind of accepted that it had lost the social arguments.

• 1:06:56Balaji Srinivasan?

  Hmm. Well, it's interesting. I think from nineteen fifty, like, the moment of nineteen fifty, you do have something where, because communism fell, basically because Nazis is defeated, the world moved socially to the left. And then when communism, as communism was defeated, it moved economically to the right. And so thus, for example, like, the immigrant billionaire or gay billionaire is, like, in a sense.

• 1:07:21Benedict Evans?

  Can be white wing.

• 1:07:22Balaji Srinivasan?

  Well, they're far, well, they're far to the left of nineteen fifty socially, and they're far to the right, in an economic right, in a sense, of nineteen fifty economically. Because nineteen fifty, yes, the Soviet Union had a hundred percent taxes because it's communism, but the US had ninety percent marginal tax rates, and you really couldn't get rich mid-century in the US. You could be a corporation man. You could work for NASA or GM, General Motors, General Mills, General Electric, but you're sort of funnel-channeled into like these gigantic things. You had more freedom in the US than other places, but you're still very stultified. It was too capitalist to be an entrepreneur and so on. And then gradually with, you know, I think the transition was the mirror moment, where that's begun a decentralization arc, and history's running in reverse since that moment. But.

• 1:08:07Balaji Srinivasan?

  And so I think a lot of things are happening this century that are like a reversal of things in the past. You know.

• 1:08:11Benedict Evans?

  I think it would be interesting, and I have no opinion about this at all, but it would be interesting to ask, what is behind the growth in billionaires?

• 1:08:20Balaji Srinivasan?

  Oh.

• 1:08:20Benedict Evans?

  Is this an unlocking of a new kind? Is this a wave of company creation?

• 1:08:24Balaji Srinivasan?

  So I have.

• 1:08:25Benedict Evans?

  Do you see what I mean?

• 1:08:26Balaji Srinivasan?

  Yeah, I do have a thesis on this. Go ahead.

• 1:08:28Benedict Evans?

  Which is, is your point is why are there new billionaires? Is that because there were a bunch of new companies and there are first generation owners? And where did those come from? And certainly some of them came from Google and, you know, winner, global winner takes all effects. And some of them didn't. I don't know. I mean, I, I, I, I'm, I'm not sure how much value I can, I can, I kind of add to that conversation. There's a bunch of kind of economic and statistical questions where I just not.

• 1:08:54Balaji Srinivasan?

  I can, um, I can give some thoughts on that, um, which is that has a U curve, right? Where, for example, like who is the richest guy in the Soviet Union? Like, didn't exist. Communism, you know, basically Stalin, you know, didn't need money because he could just requisition anything.

• 1:09:10Benedict Evans?

  I think that, well, the Soviet Union is kind of a bad example of creating billionaires. No, no. They just cut the country up and gave it to 20 people.

• 1:09:15Balaji Srinivasan?

  Well, no, well, it's right, but that's starting in the 90s, right? Then it wasn't, that was Russia then, right? But basically, the number of like independently wealthy men who could do things in the US, for example, a lot of the, the great fortunes, the robber barons and, and captains of industry were forced into foundations. That's why you have the Ford Foundation, Carnegie Foundation, Mellon Foundation, Rockefeller Foundation. Because in 1930s, Roosevelt didn't want any other powers besides him. So he, you know, went after Andrew Mellon, all these people. Ida Tarbell went after Rockefeller and those fortunes were corralled and basically controlled by the state in these foundations in the Soviet Union, in Communist China, they were just seized, right? So basically, let me give the, the, the normal way of talking about this is inequality is rising and that's terrible. Right?

• 1:09:58Balaji Srinivasan?

  Another way of thinking about it is, what is the state? Right? The state is, in a sense, it's like all the people who are its citizens and they kind of crowdfund the state. Right? And the question is.

• 1:10:12Balaji Srinivasan?

  Do they have a choice in doing that? Can they opt out of that? Like, what set are they part of? You know, for example, if they're on the Franco-German border, can they call themselves part of the German side or the French side? You know, how about the Polish-German border? But that kind of thing. And how much does a state take? And how powerful is it? And mid-century, because of mass media and mass production, the states were more centralized than they've ever been in history. I can show a bunch of graphs on that. That's not just, that's a quantitative thing. So you had these Gaiiga states. You had fewer sovereign units on the planet than at any time before or since, like only like 50 UN countries. Today, there's like 196. So things have decentralized since then. If you go backwards in time, you go to like Germany under Bismarck. You've got all these principalities. Go to France before the revolution. You have all these things. Italy before Garibaldi.

• 1:10:56Balaji Srinivasan?

  You have all of these little, you know, city-states and so on, right? So you go backwards in time and forwards in time, it's decentralized. And the same thing happens where you've got lots of fortunes. You've got lots of, you know, individual potentates and what have you, right? So in a sense, like, the world is sort of returning to what it used to be, with the big exception being China. I think China is the, like, the 20th century centralized state that will keep scaling into the, into this century. So anyway, the reason I just say that is I think there is something real going on, which is that the state is just capturing less of the wealth of its individuals. People are sort of breaking away on the borders of it and then being able to do their own thing. And so it's like Elon, not NASA. It's like Travis, not taxi medallions and so on.

• 1:11:41Balaji Srinivasan?

  And there's a good to that, where there's a lot more room for individual initiative. But there's a bad to that as well, which is then people don't feel as bought in on the collective project and they're not like included in it. It's some guy's thing. It's not their thing. It's not like America lands on the moon or it's Elon. Okay, fine, you know? And they don't feel as bought in, right? So it's a complicated kind of thing. I think we're going to have to renegotiate all that stuff in the future.

• 1:12:01Benedict Evans?

  I think there's a layer to this outside, again, outside sort of US politics, which is that... Partly because the US, you know, partly the nature of the US economy, partly because the US has a big domestic market, partly because the successful internet companies are in the US and have global winner takes all effects. People outside the US, for the first time, think, well, we've got all these giant US companies that are running stuff in our country. And that was kind of true for like General Motors or Coca-Cola.

• 1:12:32Balaji Srinivasan?

  But it's much more direct now.

• 1:12:33Benedict Evans?

  But not really.

• 1:12:34Balaji Srinivasan?

  Yeah, yeah, right.

• 1:12:35Benedict Evans?

  You know, General Motors sold cars, but you had a lot of your own car companies as well. And IPM didn't decide how you built roads or anything. And there's certainly a sort of, you know, you go to European events now and there's people saying, well, do we need our own Google? And at one level, those are like dumb questions, but they're dumb questions about like a real issue, which is you have this other layer of stuff that you're using, which didn't used to be globalized and used to be subject to local democratic control. And now, well, it's not quite clear how that works.

• 1:13:04Balaji Srinivasan?

  Yeah, yeah. So actually, it's very important. I mean, what you're hitting on there is, I think, one of the core questions, and I'll actually ask it in reverse, which is, are those American companies, basically, is the internet American? Right? Now, on one level, you'd say, that's a weird question.

• 1:13:18Benedict Evans?

  Well, there's two parts to that is, are they American? But also is they're not, they're not in our country. If you're Swedish or Italian, it's not a Swedish company.

• 1:13:27Balaji Srinivasan?

  That's right, that's right. So, like, you know, my view is the internet is to America, but America was to Britain. It is like the version 3.0. And because the early Americans actually considered themselves, as you know, British, right? All the folkways and stuff came from Britain.

• 1:13:46Benedict Evans?

  Yeah, the American War of Independence is essentially a civil war.

• 1:13:49Balaji Srinivasan?

  Yeah, exactly. That's right. So they had a people and they had a, they had a land, but they didn't have a government, right? Because the government was in London, right? And when they, when they had all three, they became Americans. They had a sense of self. And I think with the internet, we have actually a lot of tribes that actually have a people and a government, but not land. And the reason they have a government is they have a blockchain. They have a social network. They have with moderators or forums. And now increasingly, they have like an AI agent or like a central oracle or something like that, where it almost takes the role of like a god, which they all ask questions to, right? So you think of every large enough online community that has its own social network, whether it's a Discord or a forum or something like that, its own cryptocurrency, which has its, you know, smart contracts and currency,

• 1:14:35Balaji Srinivasan?

  and its own AI, which is sort of like its oracle or search of all the community's knowledge, right? And that's like a digital community that actually has a fair amount of strength. And then, because you know, where your communication is happening, they're happening online, whereas your, where your transactions are online. More and more of your wealth is stored online, like crypto is at trillions of dollars now. It wasn't, wasn't that 15 years ago, it was at zero, basically. And so the significance of these cloud communities, I think, is underappreciated. And eventually, they're going to be able to have enough money to crowdfund territory. And so the, because the tension between your primary identity is online, your social network's online, your currency's online, your, your information is online, and then not being grouped offline, that'll resolve, in my view, in terms of the descent of the clouds that land.

• 1:15:20Benedict Evans?

  So it's interesting. I mean, I probably take a sort of more, more prosaic view of this, but listening to you talk, I am reminded of like distant memories of being at university and looking at social history. And you know, there are a lot of social history is about the kind of the joining into groups.

• 1:15:36Balaji Srinivasan?

  Yes.

• 1:15:37Benedict Evans?

  And so the, the joining.

• 1:15:39Balaji Srinivasan?

  I think about this a lot.

• 1:15:40Benedict Evans?

  Why you're joining and how you, what is this sort of form of sort of self-expression?

• 1:15:43Balaji Srinivasan?

  On what terms? Yes.

• 1:15:43Benedict Evans?

  Why do people want to fund monasteries? Why do people form lay brotherhoods around the church? Why do people, like, there's a whole 19th century British thing of like all sorts of social joining. Why do people want to join militias? And, you know, why do they want to form all these kind of former guild? Why do they want to form all of these kind of different social groups and social clubs and ways of getting together?

• 1:16:10Benedict Evans?

  And what are they trying to achieve? And some of it is about, you know, self-defense, you know, or putting, not, not in a kind of military sense, but about, you know, forming your group to protect your group's interests. Some of it is about establishing status. Some of it is about, you know, self-expression and self-actualization, you know, kind of classic Maslow hierarchy stuff. But it's not new to have lots of communities. What is new is that they're not necessarily kind of physically like co-located. And they're not necessarily centered around, I mean, things like women's suffrage, you know, they're not necessarily centered around a movement or some specific political objective.

• 1:16:45Balaji Srinivasan?

  I think they will be, I think they will be.

• 1:16:46Benedict Evans?

  Well, they may be, but we've had those in the past, you know, the Corn Law League or women's suffrage, all of those.

• 1:16:50Balaji Srinivasan?

  Yes, veganism.

• 1:16:51Benedict Evans?

  Slavery, anti-slavery movements and so on. So those senses of, you know, social organization and joining and grouping in clubs in different forms, in different aspects of society for different reasons is kind of a recurrent pattern of human society.

• 1:17:08Balaji Srinivasan?

  Yes.

• 1:17:08Benedict Evans?

  And now it gets expressed, which is the sort of thing we always talk about, is you know, the internet is human behavior and it expresses and channels it in new ways. And that's everything from, you know, people being horrible on Twitter or doing terrible things on the internet through to people forming groups, clubs and societies on Discord or Reddit or whatever it is.

• 1:17:27Balaji Srinivasan?

  That's right. You know, by the way, I have, I have an explanation, which you might find funny as to, I, I used to wonder, why are people so crazy on Twitter? Why are they so crazy on social media? Because, you know, like starting fights and stuff, just as a sidebar, I was able to explain it in the following way. You know, you know, the Unabomber in the early 90s?

• 1:17:44Benedict Evans?

  Yeah.

• 1:17:45Balaji Srinivasan?

  So he blew up all these people.

• 1:17:47Benedict Evans?

  Yep.

• 1:17:47Balaji Srinivasan?

  But you know, the reason he did that was to get an op-ed in the Washington Post, right? So he killed all those people for the distribution. He killed all those people just to get his message out there. So when you realize there's people like that, then it actually makes it more understandable how many crazy people there are on social media. If, if someone is willing to kill all these people to get, you know, just his message out there, a lot of other people would be willing to be very nasty on social media to get their message out.

• 1:18:08Benedict Evans?

  Yeah, I always thought a lot of it was about context collapse, which is sort of actually a fuzzy word that doesn't mean anything.

• 1:18:14Balaji Srinivasan?

  Yes, yes.

• 1:18:14Benedict Evans?

  I felt like some of it was you don't know who that person is and you haven't understood what they've said and what else they think and you presume they think X. It's like it's lossy compression. You kind of compress three paragraphs. There's no subclause, there's no nuance. You can't say, of course, I'm not a Nazi. And, you know, some of it is also which.

• 1:18:33Balaji Srinivasan?

  And in fact, they can't take that for granted because you're not their tribe.

• 1:18:35Benedict Evans?

  Because maybe you are.

• 1:18:36Balaji Srinivasan?

  Yeah, well, yeah, or, or basically they're like, you know, they have no context on you, they can't read 5,000 posts, they don't know where to trust you and so and so.

• 1:18:44Benedict Evans?

  Yeah, some of it is also just, what says Morgan Housel, I think?

• 1:18:47Balaji Srinivasan?

  Yeah, Morgan Housel.

• 1:18:48Benedict Evans?

  Yeah, he wrote a book, quoted me, and that gets endlessly requoted. Where I'd said something like, like. The internet means that basically you're confronted with people who disagree with you.

• 1:18:57Balaji Srinivasan?

  Yes, all the time.

• 1:18:59Benedict Evans?

  And you didn't realize there were all these people who like, the particular thing I always found was weird was there were people who were like very, very far left. There are people who are communists. And they're like, you'll say something that isn't communist and they'll be like amazed. They were like, oh, the thing was always, I always thought was weird is like, I can, I think it's weird that you're communist because at this stage you have to be an idiot to be a communist.

• 1:19:19Balaji Srinivasan?

  Yeah, yeah, right.

• 1:19:20Benedict Evans?

  But it's even more weird that you don't know that most people aren't.

• 1:19:23Balaji Srinivasan?

  Yeah, yeah, yeah, yeah. They're like shocked by it.

• 1:19:25Benedict Evans?

  They're like amazed that anyone doesn't agree with their tiny minority opinion.

• 1:19:29Balaji Srinivasan?

  Yes, that's right.

• 1:19:30Benedict Evans?

  And a lot of Twitter was that. It was like, you're amazed that I don't think everybody should own a car. You're amazed that I don't agree with, I mean, that I don't necessarily share your opinion on every possible matter.

• 1:19:42Balaji Srinivasan?

  That's right. And I think the way that's going to reconcile is you're going to get a lot more, I think, smaller. I mean, in a sense, Twitter doesn't exist anymore, right? Um, X.

• 1:19:52Benedict Evans?

  Well, Twitter's fragmented.

• 1:19:53Balaji Srinivasan?

  Exactly. It's a tower building moment, right? So Twitter no longer exists. There's X and there's Truth and there's Gab and Blue Sky on the left and Mastodon and Threads. And, uh, and then the crypto ones like Farcaster, Lynx, Nostr.

• 1:20:07Benedict Evans?

  A lot of stuff went to things that didn't look like that. So stuff went to LinkedIn.

• 1:20:11Balaji Srinivasan?

  TikTok.

• 1:20:11Benedict Evans?

  Or it went to TikTok.

• 1:20:13Balaji Srinivasan?

  Yeah.

• 1:20:13Benedict Evans?

  Or it went to Instagram. And people make fun of LinkedIn like there isn't a bunch of bullshit on Twitter. But, you know, the, I realized that an awful lot of corporate people were sitting quietly using LinkedIn when it didn't feel that they could use Twitter.

• 1:20:26Balaji Srinivasan?

  Yeah, because basically, the funny thing is, it's interesting. Something about LinkedIn means people are artificially polite. And something about X or Twitter, especially Twitter, I think, even more than X in some ways, meant that they were artificially negative, hostile, right? And the funny thing about it is artificially hostile reads to people as more sincere. Like, that's to say, of the two. There's something about the artificially polite, like, like, for example, a good review is not a rave review. A good review is, I love, you know, Ben's book, it was great, but he could improve X, Y, and Z. That's like the best review you'll get.

• 1:21:05Benedict Evans?

  Yeah.

• 1:21:05Balaji Srinivasan?

  You know what I mean, usually. Whereas a hater will be like, just, just completely crap on you, right? So the, the negative is generally much more negative than the positive is positive. And so when you see a LinkedIn seller post, it's often like super positive and it feels fake immediately. But people don't apply the same filter. They think negative is real, but they don't think negative could also be fake.

• 1:21:25Benedict Evans?

  I always like, there was a thing that went viral a while ago, some surgeon who'd got a, they'd got a review and it was like, he saved my life. He's the most wonderful surgeon in history. It's amazing. It's wonderful. Four out of five stars.

• 1:21:38Balaji Srinivasan?

  Yeah, yeah, yeah, yeah, yeah. Yeah, exactly. Exactly.

• 1:21:41Benedict Evans?

  Wow. What did I have to do to get five stars?

• 1:21:43Balaji Srinivasan?

  Yeah, exactly. That's right. Like, you know, I forgot to give the mint chocolate under the pillar or something. Yeah. Okay. So like, you know, let's do, let's change gears. Let's talk about just survey of tech, just things, you know, and you could tell me you've been thinking about this, you have anything about this. So we talked about like gadgets. So we talked about, you know, the glasses. We talked about.

• 1:22:05Benedict Evans?

  Did we talk about glasses on the podcast or on the car, in the car?

• 1:22:08Balaji Srinivasan?

  Uh, we talked about glasses a little bit on the pod, but basically, well, tell me, tell me your thoughts on glasses.

• 1:22:11Benedict Evans?

  Oh, so.

• 1:22:12Balaji Srinivasan?

  AR, VR glasses.

• 1:22:13Benedict Evans?

  AR VR.

• 1:22:14Balaji Srinivasan?

  Yeah, XR glasses. Yeah.

• 1:22:15Benedict Evans?

  So I've made this point a while, a bunch on, online. As far as I can see, like, you have the VR experience. You think it's amazing. It's not clear to me that this, my base case for VR is that it may end up like games consoles, in that you see a games console, it's amazing. Most people don't buy it. There's a portion of people that don't understand that games is actually quite a small industry in terms of number of people. It's a lot of money, but a lot, there's like two or 300 million people play games console games. And so it may be that VR, you have the experience, it's amazing. You put it down, you walk away. Most people don't buy it, no matter how good the hardware gets. I think it's much easier to see something like what I'm wearing now being a universal device at the level of a smartphone.

• 1:22:59Benedict Evans?

  Clearly, we don't have the optics for that yet. We may have-

• 1:23:02Balaji Srinivasan?

  It's improving every year, though.

• 1:23:03Benedict Evans?

  It is.

• 1:23:04Balaji Srinivasan?

  Yeah, it is.

• 1:23:04Benedict Evans?

  The question is, is that next five years' time? Is that two years' time? Is that 10 years? It's not clear yet.

• 1:23:14Balaji Srinivasan?

  Yeah, there's a few people I know who just, like, they almost subscribe to this space in the sense of they're constantly just getting the latest glasses, usually out of China, and they're just trying them out, right? Or getting prototypes, there's various prototypes people are making. And this is something that I feel there's some value in tracking, because it's almost being ignored by the world right now.

• 1:23:37Benedict Evans?

  It is, because it's like it's one of those-

• 1:23:38Balaji Srinivasan?

  You hit that Gardner hype cycle thing, yeah.

• 1:23:40Benedict Evans?

  It's the S-curve that's bumping on the bottom and hasn't quite happened.

• 1:23:42Balaji Srinivasan?

  Yeah, or it's a trough after the hypermetaverse or something.

• 1:23:45Benedict Evans?

  And there's a subset of that, which is, okay, clearly you want a wide field of view. Do you need to have something that looks like it's 3D, like it's really there? So do I need to have glasses that could put something on the table in front of us that looked like it was there? And that's radically harder than having a really good heads-up display that could put a public, that could put, that could put like an iPad display hovering in front of me.

• 1:24:07Balaji Srinivasan?

  I think it helps a lot with things like repair, like, you know, for example, you open the hood of a car and-

• 1:24:14Benedict Evans?

  Well, that, but that's still a HUD. That's still like a hovering label over the thing. Versus, does it need to work in broad daylight? Does it need to have black? Does it need to be able to occlude a bright white table like this?

• 1:24:25Balaji Srinivasan?

  Right.

• 1:24:26Benedict Evans?

  Maybe, maybe not. I think there's a range of outcomes there where maybe it ends up like a watch, that it's, to be clearly to begin with, it'll be a smartphone accessory just to have the component and the battery.

• 1:24:35Balaji Srinivasan?

  Yeah, yes, yes.

• 1:24:35Benedict Evans?

  But does it end up like a watch where there's hundreds of millions of people who have it, but the smartphone is the main device?

• 1:24:40Balaji Srinivasan?

  Right.

• 1:24:41Benedict Evans?

  Or does it end up, no, actually, a couple of billion people are wearing this?

• 1:24:45Balaji Srinivasan?

  Let me ask you another question. Does a watch top out? And because the thing is, wearables are another thing that has huge traction, and it's kind of, like, there's a lot, a lot, a lot. We could fill this table, this whole room now, with-

• 1:25:03Balaji Srinivasan?

  IoT health stuff, right? Cause there's watches, there's rings, like the Oura ring, there's, um, you know, wristbands.

• 1:25:12Benedict Evans?

  I suppose it depends, it depends on the question. Is, and Nick Lee White, like Mark Zuckerberg bought Oculus.

• 1:25:17Balaji Srinivasan?

  Borac, sorry.

• 1:25:18Benedict Evans?

  Mark Zuckerberg bought Oculus because he thinks this is the next smartphone. He didn't buy it to be a games device or to have a hundred million people using it. He bought it because he thinks this is the next smartphone.

• 1:25:27Balaji Srinivasan?

  Yeah, because also he'd been hit by the platform so hard. Yeah, he wants to own the platform, for sure. It makes sense.

• 1:25:32Benedict Evans?

  So there's, I, my base case is that VR might be, might crap out at 50 or 100 million people. And I've struggled to see it being 5 billion. I can see glasses being a couple of hundred quite easily, once it work, the optics are there. I can imagine it being 5 billion. I think that's harder, but oh no.

• 1:25:52Balaji Srinivasan?

  Yeah, AR, AR slash XR is probably bigger than VR. But as we were talking about VR is very, you know, the thing, new thing they're doing with, uh, for controlling military drones, like, uh,

• 1:26:02Benedict Evans?

  There's loads of vertical stuff where absolutely that's gonna nail it. Definitely. No question.

• 1:26:06Balaji Srinivasan?

  That's right. So all the telepresence.

• 1:26:07Benedict Evans?

  Yeah. And, you know, the guy up the telephone pole, the guy on the oil with wearing glasses. Yes, absolutely. That will be, that is a thing already.

• 1:26:13Balaji Srinivasan?

  That's right. And I think, have you ever seen this movie, uh, it's called Surrogates? It's actually, you know, a pretty good sci-fi movie from like almost 10, 15 years ago. And essentially like, people are like, uh, they, they stay at home and they pilot a good-looking version of themselves as a surrogate walking around outside. So you can take more risks and so on, because if that thing gets in a car crash or whatever, nobody cares. And then they could just do another surrogate and run or something, right? So I do think, what are the use cases for like a proper, the VR, the VR, um, control of a remote thing? So it starts with, I think, drones. Um, and have you ever done a VR headset with a drone? It's an experience. You should definitely try it. It's a wow moment because it really does feel like you're flying, right?

• 1:26:55Balaji Srinivasan?

  Which is very cool and an interesting experience. So, um, I think it starts with drones, but I think it eventually gets to something where you've got gloves and maybe an omnidirectional treadmill or something like that. There's various kinds of things like that. And you are able to control a humanoid anywhere, right? So you control a humanoid and you can, I don't know, clamber up a telephone pole and fix something. And you're training the AI as you're doing this, right? You could have a maintenance worker with skill in the art. And we're not there yet. It'll be years before we're there. But eventually, you have all these humanoids around where you can just go into this, like animate the suit and start doing things, you know? So that's a pretty important use case for VR, like physical telepresence. You have

• 1:27:40Balaji Srinivasan?

  to nail a bunch of technologies for that, but I could go through the gloves, I could go through the haptics. A lot of those things are moving forward, right? And, you know, a lot of people are pouring money into this. That's something I give a lot of credit to Zuck for. He's just, you know, he's just continuing this, you know? Like, I don't know how many, tens of billions of dollars have been put into this.

• 1:27:59Benedict Evans?

  He's probably put the thick end of a hundred billion into that.

• 1:28:03Balaji Srinivasan?

  Something along those lines.

• 1:28:04Benedict Evans?

  Like, seventy-five to a hundred.

• 1:28:05Balaji Srinivasan?

  Yeah. I mean, they are actually selling a fair number of units now. It just hasn't come close to keeping up with the spend. Yeah.

• 1:28:11Benedict Evans?

  The sales, the sales are just bouncing along. It's like it's not good enough to break out of the R enthusiasts. And it's funny, you go back to what you said about Twitter. There's almost like a test, which is if you say that something probably isn't working yet, and you get a bunch of people shouting at you on social media, then that proves you're right. Because if it was working, they wouldn't care.

• 1:28:33Balaji Srinivasan?

  Yeah, yeah, that's right. Well, so.

• 1:28:35Benedict Evans?

  If you went on social media and said, nobody uses TikTok, then people would just say, this guy's an idiot. If you go on social media and say, yeah, and there aren't actually any consumer use cases for drones, you'll get like the ten people who love their drones shouting at you.

• 1:28:46Balaji Srinivasan?

  Okay, there's the one exception, which I will argue with you on, which is crypto. Yes, right? So that is something where people will say there's no use for crypto. You will say there's no use for crypto.

• 1:28:54Benedict Evans?

  Yes, but there, there's just a huge number of idiots on every side.

• 1:28:56Balaji Srinivasan?

  That's also true. That's right. That's right. So, so, okay, so we did.

• 1:28:59Benedict Evans?

  So I don't say there's no use in use case for crypto. I have the most unpopular position possible, which, as I say, it's kind of useful, but not completely useful, which means I get both sides screaming at me.

• 1:29:07Balaji Srinivasan?

  Yeah, that's funny. That's this perfect position. So.

• 1:29:11Balaji Srinivasan?

  Actually, what is Ben Evans on crypto? Then I'll tell you a biology on crypto.

• 1:29:14Benedict Evans?

  There's several answers to that question. One of them is, and this is sort of more an observation, which I hope you won't tell me I'm wrong, is like, there's a bunch of clever people working away, building, like, all the tourists left, like, the whole NFT thing was all nonsense, and that all there, that all, all the tourists left. The tourists and the grifters basically all moved on to AI.

• 1:29:33Balaji Srinivasan?

  Yeah, a lot of them, yes.

• 1:29:34Benedict Evans?

  And all the kind of people trying to build content brands, saying, this is all wonderful, or this is all bullshit, they all moved off to AI. And there's a bunch of people sitting and doing, like, obstruse, very clever, very technical stuff. There's a bunch of stuff working or being built that may work around a financial, the finance industry, around finance rails, around stable coins, various kinds of financial instruments, most of which is storing money or speculating in money or moving money around.

• 1:30:03Balaji Srinivasan?

  Yeah.

• 1:30:04Benedict Evans?

  There is a thesis that you could build Instagram on this, that this is sort of an open source computer in which you could write software that consumers would use. And I have a bunch of questions about how that would work, whether that would work, whether you would need to abstract the open source, the crypto stuff away so that the consumers didn't see it. And if you did that, then why would they care?

• 1:30:30Balaji Srinivasan?

  Totally.

• 1:30:31Benedict Evans?

  So, and, but none of that's kind of there yet. Like, there aren't billion scale consumer apps built on blockchain yet. So there's a sort of watch this space around that. And then there's the finance side, which I think is sort of theoretically very interesting, but I struggle to get very interested in it just personally. It's not what I'm interested in. And I struggle to see ways that I could add value in talking about it. So I kind of pay attention to it. And every now and then I point out, like, my newsletter on Sunday, I pointed to the Shopify and Stripe announcements.

• 1:31:10Balaji Srinivasan?

  The stable coins, yeah.

• 1:31:11Benedict Evans?

  And said, like, there's stuff happening here.

• 1:31:14Balaji Srinivasan?

  Yeah.

• 1:31:14Benedict Evans?

  And you should pay attention to this. And there's people still interested in trying to build things. So if you've just written this off as all bullshit, you're kind of wrong.

• 1:31:22Balaji Srinivasan?

  Right.

• 1:31:22Benedict Evans?

  But as a writer and an analyst. I haven't moved it on to something that I feel I should write about.

• 1:31:29Balaji Srinivasan?

  Totally. So, okay, so that's very helpful. It's always helpful for me to kind of triangulate on an area, you know. The, so here is my basic view. You may have heard me say this 12 years ago. I think this is still true. Crypto is good for transactions that are very large, very small, very fast, very international, very automated, very complex, or that need to be very transparent. And the reason for that is, like, for example, a Starbucks swipe, like of a credit card, is none of those things. It's not very large or very small. It's like a mezzanine transaction. It doesn't need to be very automated because you can just talk to the cashier and see your receipt.

• 1:32:12Balaji Srinivasan?

  It's not international. Both you and them are in the same room at the same time. It doesn't need to be transparent. You don't need a receipt on the blockchain for everybody to see, and so on and so forth, right? So the reason people think about the coffee transaction when they think about crypto is it's one of the most common transactions people do. They pay for their coffee every day, right? So it's like, I don't know, 10% of your transactions, 20% are maybe coffee, because there's very few things you buy every day. Coffee is one of those things people buy every day. So where crypto really shines is the alternative forms of traffic. Actually, let me take your mobile example, right?

• 1:32:48Balaji Srinivasan?

  The internet can do telephony, but that was actually the thing that was best served by the existing system, right? We still have, like, local telephone calls, right? You can still use a telephone network to place telephone calls. Where the internet shined was, and telephone calls were sort of like mezzanine amounts of information, right? Especially local was like between people in the same country. It wasn't very international. Where the internet shined was, for example, moving really large files like Dropbox or very small files like tweets, right? Being very international, like across borders, being very automated, so it wasn't a human on both sides of the call, right? It shone for, you know, being very transparent. You're broadcasting the webpage to everybody. It's not a phone call just between two people, and so on and so forth, right?

• 1:33:33Balaji Srinivasan?

  So that, I think, is a good analogy where, like, yeah. Yes, now, today, eventually, the Internet took over long-distance telephony, because that was Skype and then WhatsApp and what have you. But even still today, telephony is well captured by the current system, right? And like the existing phone lines still exist. That, I think, is a useful analogy for crypto, where crypto, for example, if you have, if you're a power user of money, right? If I want to receive or send a wire to a startup in Japan, USDC, I can do that in seconds. And then I can refresh the page, they can refresh the page, and they can see it's cleared, right?

• 1:34:07Benedict Evans?

  Yep.

• 1:34:08Balaji Srinivasan?

  That is a real use case, that's international wire transfers from anybody to anybody with, and by the way, the bank account setup also is instant, right? So, think about what we've done. We've taken it from days to get a US and Japanese bank account set up to seconds. We've taken it from paying money to do that, for the, for the transfer itself, to free. We've taken it from taking multiple days for a wire transfer to clear to seconds. And we also, by the way, the uptime, it's not nine to five banking hours. You can do it, you know, 24/7, and you can do it on any device, right? That's a lot of improvements, just for the, the important use case of international wire transfers, right? Then you also have the digital gold use case.

• 1:34:49Benedict Evans?

  Yeah, it's also, I mean, digital gold, I think, is also something that, there's a kind of country mapping here. Because some of what you're talking about is a much bigger problem in, say, in the US

• 1:34:59Balaji Srinivasan?

  Yes.

• 1:35:00Benedict Evans?

  than it is in countries with less, with different banking systems.

• 1:35:02Balaji Srinivasan?

  Yes.

• 1:35:03Benedict Evans?

  Some of it is also-

• 1:35:03Balaji Srinivasan?

  Yeah, SEPA, you guys have SEPA in Europe, and it's like, no terrible, yes.

• 1:35:06Benedict Evans?

  You send the money, it arrives for free. Like, it's also, this is a point about PayPal.

• 1:35:10Balaji Srinivasan?

  But, but the SEPA's worse than Europe, though. SEPA would not work for a wire transfer to Brazil, for example. So you still have the same issue then.

• 1:35:16Benedict Evans?

  I think that there's another point, which is like, I remember reading about people in Argentina-

• 1:35:22Balaji Srinivasan?

  Yes.

• 1:35:23Benedict Evans?

  literally keeping their money in bricks.

• 1:35:25Balaji Srinivasan?

  Exactly, that's right. So it's Argentina, Nigeria, Lebanon-

• 1:35:28Benedict Evans?

  Places where you, you actually can't trust your government.

• 1:35:31Balaji Srinivasan?

  Yes.

• 1:35:31Benedict Evans?

  And there are kind of places-

• 1:35:32Balaji Srinivasan?

  There's a lot of places like that, unfortunately, yes.

• 1:35:34Benedict Evans?

  There's also a bunch of places where nobody's worried about that, they send it for 100 years.

• 1:35:39Balaji Srinivasan?

  Exactly, that's right. So, so the more middle-class, stable, and so on, you are, the, like, basically crypto is for the power user of money and the powerless, right? The person who's like reinventing what a bank account even is, and the person who's just trying to hang on to a bank account. So it's like a U-shaped coalition, right? Similar to the people who actually benefited most from the global economy. Remember I said it was like the, the elephant graph, right? You had the- Basically 10th to 80th percentile of the world who grew. And you had the top 1% who grew and the the Western middle class didn't, right? That coalition is actually also the crypto coalition. It's like the people who are just, you know, um, internet, uh, as as Tim Ferriss put it,

• 1:36:23Balaji Srinivasan?

  James, um, what's his name? Jason Bourne's of the internet, right? Like just internet hackers who are just trying to move money. Like, for example, I'll give a concrete example. Brian Armstrong, you know, my friend, CEO of Coinbase. Yes. One of the reasons he got into crypto, he had a few different life experiences that led him there. One was actually lived in Argentina for a while. So he saw like what a failed state would be like. And the second, though, was actually being an Airbnb engineer. So the thing is Airbnb, even still today, has the problem of transactions that are very large, very international, right? And and also very one time, low trust, right? Because you've got like somebody from Denmark staying with someone from Japan.

• 1:37:04Balaji Srinivasan?

  And it's it's a one time transaction of maybe on the order of $1,000. Which is actually a fair amount of money. Yep. And, uh, like, the wire system is simply not set up for that frequency of use between unrelated parties. And so there's a lot of friction on something like that. And to a surprising extent, Airbnb had a lot of Forex risk, like, you know, because they had to hold currencies and all these different things. And the thing you thought was a solid problem, like just moving money from one country to another. It's like, well, Airbnb has to do its accounting in USD, but it's got income in, you know, if they're if they're an American company and they've got somebody transferring money from Denmark to Japan, there's three currencies in that transaction just right there.

• 1:37:49Balaji Srinivasan?

  Right? So there's at least three currency pairs which fluctuate. And you've got at least two or three banking systems and all the delays and fees. You start to see if people are like, wow, this sucks so much. We need an internet first banking system, right? We need something which is payments as packets. Yep. Right? So that was the second thing that motivated Brian to do it, right? There's other things as well, right? But, um, So where would I put crypto today, right? I'd say there's at least three applications. There's more, but I'd say at least three that are at the trillion or multi-hundred billion range. And those are A, digital gold, right? Just whether you believe in gold or not, like that's there. People do believe, even if you're just concerned in insurance policy.

• 1:38:30Benedict Evans?

  It's a thing that people are doing.

• 1:38:31Balaji Srinivasan?

  It's a thing that people are doing, that's right. B is, it's like, even if you didn't believe in luxury cars, that's a market, right? So there's a market for it, right? Okay. B is international wire transfers. I think stablecoins are now there at this point. There are now 1%, 2% is $250 billion, is trillions. Stablecoins have passed Visa, they passed Mastercard, right? And then third is actually crowdfunding, right? So if you look at the largest crowdfunding of all time, most of them are crypto. And the reason is the capital formation online. Like, if you think about something like Kickstarter or what have you, it's actually more geographically limited and more limited by the credit card rails than you might think. For example, it's not that easy for somebody in Brazil and Japan and India

• 1:39:13Balaji Srinivasan?

  to put 5,000 bucks into your Kickstarter, right? The credit card rails may not accept it, maybe fraud hit, go ahead.

• 1:39:20Benedict Evans?

  Yeah, I was just gonna say, I wonder with some of the, there's a certain amount of swapping paper for paper in some of that.

• 1:39:27Balaji Srinivasan?

  Go ahead.

• 1:39:27Benedict Evans?

  Well, in the sense of, here is a new crypto project.

• 1:39:32Balaji Srinivasan?

  Yes.

• 1:39:32Benedict Evans?

  A bunch of people who've speculated and made a bunch of crypto money.

• 1:39:36Balaji Srinivasan?

  For sure.

• 1:39:37Benedict Evans?

  Put their paper gains in Bitcoin into this new crypto project.

• 1:39:41Balaji Srinivasan?

  Yes, that's right, that's right. But I'd say you're right, a bunch of it is like that.

• 1:39:45Benedict Evans?

  Which is what a lot of NFTs was.

• 1:39:47Balaji Srinivasan?

  Yes, that's right. But even if we, even if you're totally right, what was funded off? Just the mechanic of crowdfunding.

• 1:39:54Benedict Evans?

  Yeah.

• 1:39:55Balaji Srinivasan?

  Shows that that mechanic for capital formation, what they spent it on, I would agree with you, many of those projects didn't go somewhere. Some of them went really far, like Ethereum was a really, that paid for all the rest in a sense. Even if all the ones that went to zero, that was so successful. But, but just the mechanic of capital formation, where you have, so, so that gets me to number four, right? If you look at, now you may, you may start to disbelieve, so at least those three markets, gold. Wire transfers, crowdfunding, those are very large markets. Those are $100 billion, trillion dollar markets. Then you go to like other cases. Now, if I just look at trade volume, right? Crypto today is actually the number four stock exchange in the world in terms of volume. Number one, NISI, number two, NASDAQ, number three, Shenzhen, number four, crypto.

• 1:40:39Balaji Srinivasan?

  And it's rising fast. The thing that has held it back for almost 15 years is the doing the obvious things was pathologized, meaning it like literally yesterday or like a day or two ago, we finally fully legalized, very clearly legalized, putting a dollar on chain, right? Now that we can put a dollar on chain very clearly, such to the point that Amazon and Walmart are like, okay, congressional legislation is perfectly good. Let's go time, right? Now we can finally put an equity on chain and we can put a fund interest on chain. We could put every paper kind of thing on chain. That is a very big deal, right? That means that crowdfunding thing I talked about says that an internet company can issue

• 1:41:23Balaji Srinivasan?

  internet equity and anybody in the world can be part of that cap table. Whether you choose to accept them or not is another thing, but the capital formation mechanism, it's now possible for somebody in Japan or Brazil or Mexico to invest in your company. Once you have internet equities, internet capital markets, that is now within sight. Now that we have the stablecoin thing, boom, done. There's nothing, you know, now it's just a mechanical thing to get the legal system going to make the on-chain equities work. And there's already work on that. So that is a big deal, right? Because the US doesn't want to be the center of a global financial empire anymore, right? It's like, it's very conflicted about this, but with the tariffs and the trade war and, you know, tourist visas, work visas, student visa bans and so on.

• 1:42:07Balaji Srinivasan?

  It like is very conflicted about whether it even wants foreign money coming in to America, right? And they've got remittances, taxes coming up, like one for 5%. So US financial markets, I don't think are going to be there in the same way by 2035. I think Chinese markets are rising, Chinese stocks are rising. That's going to be one thing that's there, but I think the internet capital markets will take over from American capital markets. And that's a very, very big application. Let me go through a few more. Is this interesting so far?

• 1:42:34Benedict Evans?

  Yeah, no, it's interesting. I mean, I think about.

• 1:42:39Balaji Srinivasan?

  I mean, we've got numbers now. Yeah.

• 1:42:40Benedict Evans?

  There was a thing that I was, so I'm leaning away from the microphone. As I was, we were chatting about it in the car this morning. I have a sort of a mental Venn diagram of like stuff I'm feel I can add something to.

• 1:42:53Balaji Srinivasan?

  Sure.

• 1:42:53Benedict Evans?

  Stuff that I feel I understand and stuff where there's an audience.

• 1:42:57Balaji Srinivasan?

  Yes.

• 1:42:57Benedict Evans?

  And the challenge I always had in writing about crypto, this is like a kind of a practical question as an analyst, is all AI, all kind of crypto questions, it felt like they were either very, very technical conversations about, it was kind of like writing about Linux.

• 1:43:14Balaji Srinivasan?

  Yes.

• 1:43:15Benedict Evans?

  And I should always think that like crypto reminds me a lot of open source.

• 1:43:18Balaji Srinivasan?

  Yes.

• 1:43:19Benedict Evans?

  And you are either.

• 1:43:20Balaji Srinivasan?

  It is open source.

• 1:43:20Benedict Evans?

  Yeah, I know, but in just in the sense of the general movement around it.

• 1:43:23Balaji Srinivasan?

  Yes, yes, yes, yes, yes.

• 1:43:24Benedict Evans?

  It was sort of, it reminded me a bit of like, either I write something about like the new kernel memory management thing in Linux where I don't understand it and the people who do aren't interested in what I'm going to say and no one else cares.

• 1:43:37Balaji Srinivasan?

  Yes.

• 1:43:37Benedict Evans?

  It just, it gets better.

• 1:43:38Balaji Srinivasan?

  Right.

• 1:43:39Benedict Evans?

  Or it was like, imagine what will happen when, it's like talking about open source in the early nineties, imagine what's, what is going to happen when software is free. And there's not, there was, I've, I've struggled and it's actually, it's a, it's a, it's a thing I've also had writing about AI because I would have kind of, it's not, it's not a specific about what you think about this. It's what I'm most good at, I think, or the stuff that I write that people seem to like most, is kind of talking about the product strategy of how is this going to work? Who's going to win? Who's not going to win? How is a corporation or a consumer going to buy this? What would you do with it?

• 1:44:16Balaji Srinivasan?

  Right.

• 1:44:17Benedict Evans?

  And I struggled for a while to, to write about LLMs on that point because it was either like, what are the 30 new papers this year?

• 1:44:24Balaji Srinivasan?

  Yeah.

• 1:44:24Benedict Evans?

  Or like, this is going to transform humanity.

• 1:44:27Balaji Srinivasan?

  Right.

• 1:44:27Benedict Evans?

  And it was kind of hard to find anything in the middle.

• 1:44:29Balaji Srinivasan?

  Is in the weeds or super macro, but the mezzo is hard.

• 1:44:33Benedict Evans?

  Or super kind of messianic, but not much about like product strategy in the middle. And I have the same challenge in writing about crypto in that it's either very, very technical.

• 1:44:42Balaji Srinivasan?

  Okay, I've got something for you then.

• 1:44:43Benedict Evans?

  Or it's. Imagine in thirty years.

• 1:44:45Balaji Srinivasan?

  Okay.

• 1:44:46Benedict Evans?

  Or it's about finance where I don't.

• 1:44:48Balaji Srinivasan?

  You don't care that much about it, yeah.

• 1:44:49Benedict Evans?

  It's not just that I don't care. It's like I would have to spend six months to get to the point that I know what all the acronyms for moving money between banks are.

• 1:44:57Balaji Srinivasan?

  Totally, totally.

• 1:44:57Benedict Evans?

  And have an opinion about them.

• 1:44:58Balaji Srinivasan?

  Totally.

• 1:44:58Benedict Evans?

  So I've never like seen, well, is that, is it, is it, in a completely different analogy, it's also like talking about chips.

• 1:45:06Balaji Srinivasan?

  You know.

• 1:45:07Benedict Evans?

  Should I, should I get to the point that I understand what's going on in chips? Is that a good use of my time? Would I be able to say anything of value there? And I, so far, I've kind of felt, no, there's a bunch of people who know way more about it. Like the semis analyst guys have got it.

• 1:45:20Balaji Srinivasan?

  So it, it, so let me, let me actually empathize with you in a certain way, which is, I was actually a very late user of social media.

• 1:45:29Benedict Evans?

  Hmm.

• 1:45:29Balaji Srinivasan?

  Right? I only got on Twitter in like December twenty thirteen. Okay? Which is like, like a decade.

• 1:45:36Benedict Evans?

  Like a hello boomer.

• 1:45:37Balaji Srinivasan?

  Huh? Hello boomer, exactly, that's right. No, I mean, I, the thing is, I got onto Facebook very early because it just was like moving around universities or what have you at the time. But I didn't really use it. And the reason is that until twenty thirteen, I essentially believed that there was absolutely, I was just a very private person, you know, I was just like, you know, it's weird because I now post a lot or what have you. I was just a very private person and I never, I didn't give any public talks until late twenty thirteen and so on. And I just thought social media was a complete waste of time and all that mattered was genomics and math and, you know, like, like hard, like what people call hard tech now. Like I was doing genomics and robotics and I'm, you know, proud of that work.

• 1:46:22Balaji Srinivasan?

  I think it was, it was important stuff. And I didn't see the utility in tweeting my breakfast. And I didn't see the utility in just, you know, petting each other's fur, which is a lot of what people do on Facebook or whatever, you know, right? So I didn't see the value in any of that. And it was only once.

• 1:46:42Balaji Srinivasan?

  All of that was what bootstrapped the space. All of the fur petting got hundreds of millions of people on there, all of the breakfast tweeting and so on. Until, you know, what actually made it useful and interesting to me was I saw somebody tweeting a summary of a genomics conference at Cole Spring Harbor that I didn't have the time to attend. And they gave a much better account of it than any layman would have. It's like, you know, like someone tweeting a mobile thing and you're like, oh, that's those are really great details and you're skilled in the art, right? Yep. And as then I was like, oh, wow, I can get like really detailed information here. Okay, now this is valuable to me as a reader, right? What's my point? My point is, I think the parameter that you want to track when you're looking at crypto is block space. Have you heard that parameter before?

• 1:47:25Balaji Srinivasan?

  Okay, that is the most important parameter in crypto that people outside crypto don't realize governs crypto. Block space is to crypto what bandwidth is to the web. So if you think about the early internet or the early web, I should be more precise, in the 90s. Like it was very bandwidth constrained, it was 288, 57.6 modems. And so that's why like Google was 10 blue links. And I think Amazon even had many images at all. And in fact, you remember six degrees? It was a social network, right? So that was a text-based social network and it didn't take off because without images, people didn't really. Yeah, you've got nothing to share. You've got nothing to share, exactly, right? ICQ was a chat app that did work, AOL and Submessenger worked because that was just text that could be sent and that low bandwidth thing.

• 1:48:07Balaji Srinivasan?

  It was only in the 2000s that you started to get more graphical things when bandwidth increased, like Facebook. The reason it took off at Harvard, everybody had a T1 connection being at Harvard. And they finally had digital cameras, you could have photos. And as digital cameras propagated out, so did Facebook, right? And you go further and further and like, you know, the internet only, or Internet Explorer only got disrupted by Firefox in like the late 2000s, right? It was only really by the early 2010s that you had the full JavaScript stack of like jQuery and then only later for React and what have you. So this concept that we have today of like a mobile web app where you can download JavaScript and run an app in the browser on a phone was a vision in the 90s, but it took a long time together because bandwidth had to increase for that, right? So what's the analogy here?

• 1:48:52Balaji Srinivasan?

  Block space. Basically, block space is the amount of storage that you have on a blockchain. Like think of a blockchain as like an armored car for data, right? Because this is data that people want to corrupt, right? In a sense. If it's a file on disk, it's important to you. If it's a file online, it's important to others. And if it's a file on chain, it's really important to others. And it's so important that they might try to screw with it. And so Bitcoin came up with like an armored car for data, where you could guard the minus one or plus one of who had what Bitcoin. And over time, that block space increased so that you could do some basic smart contracts on Ethereum. And now it's increased enough that you can blast

• 1:49:35Balaji Srinivasan?

  millions of stablecoin transactions a day on like Base and Solana and so on and so forth. And so you should conceptualize it as, oh, why hasn't this happened yet? And instead think of, okay, these applications are gated by the amount of block space. And so they're coming online similar to the amount of bandwidth. You had like text-only apps, then you had images, then you had videos. And like Netflix only did streaming video in like the early 2010s, right? I mean, we think about all that as recent.

• 1:50:03Benedict Evans?

  No, I don't.

• 1:50:04Balaji Srinivasan?

  That's the way of thinking about it.

• 1:50:06Benedict Evans?

  I don't have a problem with the idea that you couldn't build Instagram on this because the infrastructure isn't fast enough.

• 1:50:11Balaji Srinivasan?

  Block space wasn't there, yes.

• 1:50:12Benedict Evans?

  Yet. I think there's a bunch of like interesting conceptual questions around, well, what would happen when we got there?

• 1:50:20Balaji Srinivasan?

  Yeah, so here's a few things.

• 1:50:22Benedict Evans?

  But there will be also kind of your sort of speculating five years in advance.

• 1:50:26Balaji Srinivasan?

  Yeah, so my view is I'm not sure if it'll be exactly Instagram, you know.

• 1:50:33Benedict Evans?

  Well, I think we can be sure it wouldn't be exactly Instagram.

• 1:50:36Balaji Srinivasan?

  Right, right, right.

• 1:50:37Benedict Evans?

  But just kind of conceptually.

• 1:50:38Balaji Srinivasan?

  What is the app?

• 1:50:39Benedict Evans?

  You could build consumer applications. You could use, I mean, this is the phrasing I remember you using years ago, that one should think of, one should think of a blockchain as a distributed virtual machine.

• 1:50:51Balaji Srinivasan?

  Yes.

• 1:50:51Benedict Evans?

  And it's another layer of abstraction.

• 1:50:53Balaji Srinivasan?

  That's right.

• 1:50:53Benedict Evans?

  And every layer of abstraction is always. Slower and crapper than running on the bare metal. Except that it allows you to do a bunch of stuff that you can't do if you run on the bare metal.

• 1:51:04Balaji Srinivasan?

  That's exactly right. That's exactly right. And the thing is, um, blockchains are, in a sense, one of the frontiers of operating systems research. Like, in the same way, like, there's the operating system like Windows, there's a browser, which is itself an operating system because you can run apps in it. It's got a full programming language. Like, that's how Chrome layered it, right?

• 1:51:20Benedict Evans?

  Were you at A16Z when Martin Casado was there? I can't remember if you...

• 1:51:23Balaji Srinivasan?

  Yeah, we overlapped just a bit, and I'm, I'm, we invested a bunch of things together, yeah.

• 1:51:27Benedict Evans?

  Well, Martin had this great observation. You remember when, um, YC said that, like, for a quarter of their companies, 90% of the code was written with AI?

• 1:51:36Balaji Srinivasan?

  Yeah.

• 1:51:37Benedict Evans?

  And, and he responded to this by saying, yes, but if you write an iPhone app, 90% of your code is written by Apple.

• 1:51:42Balaji Srinivasan?

  Yes.

• 1:51:42Benedict Evans?

  And so there were all those levels of abstraction.

• 1:51:44Balaji Srinivasan?

  Prompting is just a higher level of programming. That's right, yeah.

• 1:51:46Benedict Evans?

  Yeah, exactly. Um, and so there's a, the, I suppose the, you know, another way of answering your question is like, the finance stuff is there. I can see it. I get it. I'm not sure I can add any value to that. It's, it's interesting. And I would tell people, it's kind of interesting. But you should pay attention to this.

• 1:52:02Balaji Srinivasan?

  I think you'll be a leader. Go ahead, sir.

• 1:52:03Benedict Evans?

  The running, the building more generalized consumer applications on it is conceptually more, more interesting to me as something that I could make money telling other people about.

• 1:52:14Balaji Srinivasan?

  Yes.

• 1:52:14Benedict Evans?

  Except that it isn't happening yet. And it probably will, at a certain point, the curve will curve up, the block space will expand, the stuff will get faster and cheaper and can store more stuff. And people, you will be, people will be able to build stuff on this. Deterministically, it won't be exactly Instagram. I think that's just kind of a useful mental model for thinking that you could build something like that.

• 1:52:35Balaji Srinivasan?

  Yeah, a consumer app, yes.

• 1:52:35Benedict Evans?

  Could build consumer network apps like that on this. At that point, then I think you have a bunch of kind of new, interesting questions, like, well, is it a good idea to have a social network where all the users have a vote? What would that look like? What problems does that create?

• 1:52:49Balaji Srinivasan?

  Right, right, right, right, yes. Well, DAOs are that already. This is, yeah.

• 1:52:52Benedict Evans?

  Yeah, exactly. Which struck me the other day, that all the arguments against that are basically all the argument, and saying, no, you need a CEO in charge. They're basically all the same arguments to say, no, you don't want mass democracy, you need, you need a king.

• 1:53:03Balaji Srinivasan?

  And you can have some balance, like representative democracy, right? So you have the vote, and they vote for somebody for a term, and so, yeah.

• 1:53:08Benedict Evans?

  Even mixed constitutions, which, again, like, look at Africa to see how, Latin America to see how, um, mixed constitutions block out.

• 1:53:14Balaji Srinivasan?

  Well, I'm saying, representative democracy where you have a leader, but they've got a fixed term, and there's a vote for them, for example.

• 1:53:19Benedict Evans?

  You have, all of that stuff is fascinating. I... It's like, we don't have it yet. And I, and no one's going to pay me to go to a conference and give a presentation.

• 1:53:29Balaji Srinivasan?

  Totally, totally.

• 1:53:29Benedict Evans?

  So it's kind of tough for me to write about.

• 1:53:31Balaji Srinivasan?

  Yeah, totally, too. I will say, all I'll just say is to put it on your radar. If you go to like snapshot.org or votagora, there are actually very large treasuries where all that voting stuff is happening on-chain, cryptographic voting and so and so. So that's, that's growing like stablecoins, kind of. People had ignored stablecoins for a while, they just kept compounding. So the on-chain voting stuff is there. But what I will say is that I think, just like I was like a late adopter of social media, since I just, it had to get to a certain level of significance before I cared about it for the kinds of things I care about. Just, I think the kinds of people interested in crypto are either A, they're engineers and they just like to develop, or as I said, they're power users. B, they're financiers, right? Or in some sense, financiers or day traders, whatever, just both the high and the low. And then C, and the part we didn't say is just like, they're political, right?

• 1:54:16Balaji Srinivasan?

  It's like a political motivation. So I kind of mean like being a Protestant or a Catholic. They have a certain worldview.

• 1:54:20Benedict Evans?

  Which is also very open source.

• 1:54:22Balaji Srinivasan?

  Yeah, that's right. Exactly. So, so like, I have that, you know, we both like enterprise SaaS type stuff, product type stuff, that kind of discussion. And, but I also like a bunch of other things. And you like, you like art museums and things like that, which I'm like, okay, that's cool. You know, go have fun, right? So we have, we have our own Venn diagram kind of thing, right? So, okay, so switching gears, I think you'll be more interested in crypto as block space increases. And once crypto evolves, let me actually give you an example of something which it's used for, useful for right now, where the block space increased enough. You know, OpenRouter? That, that allows you to try a bunch of different AI models and it just uses crypto to pay for all of it.

• 1:54:59Benedict Evans?

  Okay.

• 1:55:00Balaji Srinivasan?

  So this way, you don't have to have 500 different accounts at 500 different, because there's so many different AI models. You don't necessarily set up accounts and all that stuff, right? So it just takes all that account setup process and you just have one account, you pay crypto and it settles it with all these other guys, right?

• 1:55:13Benedict Evans?

  That is a kind of completely tangential thing that just occurs to me as you were speaking, is, you know, Alm Arena as this distributed voting system. The thing I always thought would be interesting would be to flip that and say, can you pass a double blind test?

• 1:55:28Balaji Srinivasan?

  Yeah, yeah.

• 1:55:29Benedict Evans?

  If you take a model that's on the top 20, la Marina, and give me a bunch of responses, how many people would pass a double bind test to know which is which?

• 1:55:38Balaji Srinivasan?

  Well, the thing is-

• 1:55:38Benedict Evans?

  There's probably some kinds of question you would tell very easily. But an awful lot, I bet, most people probably wouldn't.

• 1:55:43Balaji Srinivasan?

  So the most fundamental one would be like, what is the private key to this? Or like, basically, what is the private key to this wallet? That's something that, depending on how it's set up. We were talking about this in the car, but basically, another major use case for crypto is, AI makes everything fake, crypto makes it real again. Because AI can fake all kinds of stuff and give you this very convincing thing on like, the deep resourcing where it said 40% of the phones or whatever you're saying. But it cannot fake the private key, so it cannot show a non-zero Bitcoin balance or non-zero Ethereum balance without actually having the cryptographic solution there.

• 1:56:17Benedict Evans?

  Yeah, but it could probably just tell you that the balance is zero, because it might be.

• 1:56:21Balaji Srinivasan?

  Yeah, sure, sure.

• 1:56:22Benedict Evans?

  It could make it up.

• 1:56:22Balaji Srinivasan?

  But what I mean by that is, like, for example, all kinds of, let me give you, you know, captchas, right? We're websites. So AI can bust a lot of captchas now. It can get through, it can, "Am I a robot?", it can figure it out, get through. But if you had to log in with a crypto wallet that had $1 in it, or $10, or $100, AI can't fake that. It cannot fake the possession of that cryptography, right? Like, to give you one, here's one motivating example for why crypto will get, maybe this argument will convince you, maybe not, but it's fine, you know. Google login, you agree, is at billions of users, right? But Google login, when you log into a website, you only can log in basically with your email address and the permissions to your Google account. There's something very obvious that somehow even Google, with all of its strength,

• 1:57:06Balaji Srinivasan?

  has not been able to implement, which is an international balance, a spendable balance, right? Google login could not have, for rare reason, a spendable balance across different countries. They've solved that for Google itself, where everybody can pay Google and subscribe to Google with a zillion credit cards in all these different countries. But somehow they couldn't make it work so you could log into a third-party site with a spendable balance. Crypto did solve that. Just that alone means that every Google and Facebook login will eventually be either augmented or replaced by a crypto login.

• 1:57:38Benedict Evans?

  So I'm gonna pick up something you said, which I you mentioned, which I mentioned in the car, around what's fake and what's real.

• 1:57:45Balaji Srinivasan?

  Yeah.

• 1:57:46Benedict Evans?

  So if you're buying an apartment, and well, so going back a step, like, I think most of what most people follow on Instagram is no longer their friends, it's interest graph.

• 1:57:57Balaji Srinivasan?

  Yes, that's right.

• 1:57:58Benedict Evans?

  And so, do you care if that photo is a photo of a real thing or not?

• 1:58:05Balaji Srinivasan?

  Sometimes you really do, and sometimes you really don't.

• 1:58:07Benedict Evans?

  Exactly.

• 1:58:08Balaji Srinivasan?

  Yes.

• 1:58:08Benedict Evans?

  And I think that's kind of interesting, it's a sort of, not so much generative search, just generative content.

• 1:58:13Balaji Srinivasan?

  Exactly.

• 1:58:13Benedict Evans?

  If you're decorating your apartment, and you want a mood board, and you can specify some styles, and you can say, I like this, and this, and this, and this, and it gives you more, and you look, and you say, oh, more like that, or more like this, it doesn't necessarily matter at all if those images are real. It does if, like, maybe you wanna buy that table, and that table doesn't exist, it just looks like those kinds of tables, or it looks like those kinds of chairs, or whatever. But if what you're looking for is, no, I want to be more like this, or more like that, and you keep going until you get a mood board of exactly what you want, doesn't, may not matter at all whether those images are real.

• 1:58:51Balaji Srinivasan?

  That's right. So if it's Pinterest, on the one hand, then it's just inspiration or what have you. But if it is...

• 1:58:57Benedict Evans?

  If it's shoppable, then maybe it does, unless you, then there's, there's an extreme case here, which is, just send that to the rest of Shein, and Shein will make it for you.

• 1:59:04Balaji Srinivasan?

  That's right. Or, or let's say, you know, there's some photo of a fire somewhere, right? And quite a lot of times, people will post photos of fires, and it's from like, some, a concrete example, the Brazilian fires from a few years ago, there was like, a fake photo, like, from, that Macron tweeted out, because he was told it was a photo of the Brazilian fires, but someone was able to show that it was actually like, a, like, I think it was like, a Reuters image or something, but from a photographer who had died years ago.

• 1:59:31Benedict Evans?

  Yeah, it wasn't that image. Well, this is the funny thing about people complaining about deepfakes, it's like, we don't, the problem isn't the picture, the problem is the label.

• 1:59:38Balaji Srinivasan?

  The label, exactly, that's right. So, so the thing is that with, with crypto, you can do what I call chain of custody, right, blockchain of custody, where you can have a camera...

• 1:59:50Balaji Srinivasan?

  And by the way, this is also important in scientific work as well. There's this huge replication crisis with all these labs and data.

• 1:59:56Benedict Evans?

  People fake the data.

• 1:59:57Balaji Srinivasan?

  Yeah, exactly, or something, right? So you could have, you know, there's something called preregistration of studies, where like if you're doing a study, you have to describe in some places who you're doing it on, what you're doing, it's like monitored to make sure that people report the results, whether they're positive or negative, right? So let's say it's a, you know, it's a study or it's a camera. You can have like a, either crypto software or hardware in there, such that when the frames of images are recorded, they're instantly hashed and put on chain either directly or as a digest of some kind, right? That basically is like tamper-proofing, such that before the data's even like collected or analyzed, this internet-connected thing is doing something. Now, it's possible maybe to hack the firmware and mess with that,

• 2:00:41Balaji Srinivasan?

  but it would be pretty hard to, depending on how you do this, it would be pretty hard to do that.

• 2:00:45Benedict Evans?

  We also have this on, you know, Google and so on, trying to watermark generated images. So the challenge is if the image isn't watermark, that doesn't, that won't stop people believing it.

• 2:00:56Balaji Srinivasan?

  True, that's right. But I think over time, this type of stuff where it'll gain traction at first are crypto oracles for prediction markets. Because if you're making a financial decision, I don't know if you've seen that stuff, Alex Tabarrok has talked about this. When people have money on the line, their partisanship reduces and they actually get a different chip in their head where they're like, is this true or not? They're trying to dispassionately figure it out, right? They're not just cheering my tribe, your tribe, whatever. And the is this true chip basically means, okay, I'm going to double-click into this. I'm going to verify this. I'm going to look at this. And that's where like oracles come in. They're like feeds of data that have some degree of verification. And right now, they're like mostly price data, but people use it for weather data. They use it for this, that and the other, right? All these different feeds of information that people trade on.

• 2:01:41Balaji Srinivasan?

  And over time, I think those feeds, once you can guard price data, weather data, you know, health data, et cetera, eventually you can guard any kind of data. And then now you've got like a chain of custody for data, like the scientific data rough, you know, rough off it. Anyway, why don't we, we should, we should wrap, but this is actually awesome conversation. Anything, you know, what's your latest stuff? What should people go and check out anything?

• 2:02:06Benedict Evans?

  Well, I've been publishing a newsletter every week since 2013, and I always welcome all subscribers to that.

• 2:02:11Balaji Srinivasan?

  You should write, where is it? Is there gonna be a Benedict book?

• 2:02:14Benedict Evans?

  Google Benedict Evans. My parents had good SEO. Book is interesting. I've had publishers approach me every now and then about doing a book. I have to work out what it would actually be and why it would be worth reading.

• 2:02:23Balaji Srinivasan?

  Honestly, if you just, I don't know, maybe a history of tech, like, because all your slide decks are very good, right? And there's, one of the things I learned from, you know, my friend Neville, like the Navalmanak, right?

• 2:02:34Benedict Evans?

  Yeah.

• 2:02:35Balaji Srinivasan?

  That sold a million copies. Why did it sell a million copies? I was surprised, but he was surprised by that. It was Eric Jorgensen went and curated Neville's old content and turned it into a book. And I was really surprised. I was like, wait a second, isn't that all available on Twitter for free already? Didn't people already see it? They did, however, if you say, what is the one work that represents like the best of Neville's thought over years? You know, just to see his latest tweets is not the entry point for that. You want to kind of collect all of them, sort them, filter them, organize them thematically, style them and so on and so forth. And I think you could have a pretty good book. If you do that, let me know.

• 2:03:12Benedict Evans?

  Well, that's one thing on the, on the list. And yes, the other thing is I, I used to do an annual presentation. I've now shifted my cadence. So I did a, a new AI presentation last month that I published, which I, I was just in town to present. And then I will do another one in the autumn, the fall for American listeners.

• 2:03:29Balaji Srinivasan?

  Great.

• 2:03:29Benedict Evans?

  On a sort of e-commerce, advertising, marketing, brand, like all the other stuff that's being transformed by AI right now. And in general, what do I do? I try and work out what's going on and how to explain it and how I can explain it. And then I go and do presentations and speak at events and talk to companies and I do slides for money, basically.

• 2:03:50Balaji Srinivasan?

  Well, that is similar. I do a lot of slides too. I do a lot of speaking. So, you know, I've mentioned the cloud community thing and materializing those cloud communities. So that's what I'm working on at ns.com, like Network School. So if people are interested in this kind of stuff, we talk about that there. So subscribe to Benedict's newsletter at, is that benedictevans.com?

• 2:04:09Benedict Evans?

  Ben dash Evans.

• 2:04:10Balaji Srinivasan?

  Ben dash Evans dot com. Okay, great. And then if you want to check out Network School, come to ns.com.

• 2:04:16Benedict Evans?

  Sure. Benedict Evans dot com is another Benedict Evans.

• 2:04:19Balaji Srinivasan?

  No.

• 2:04:20Benedict Evans?

  Who is a photographer.

• 2:04:21Balaji Srinivasan?

  Really?

• 2:04:22Benedict Evans?

  And so my profile picture is taken by him because I used to get his email. This is obviously, this is obviously this is a blockchain use case. There's a contact form on my website.

• 2:04:29Balaji Srinivasan?

  And he wanted to sell it to you.

• 2:04:30Benedict Evans?

  And I redesigned it. I didn't ask. I redesigned my website recently, so it's clear who I am. But it was quite generic and people would go to the contact form and they would say, "Hey Benedict, we really liked your work photographing Harvey Keitel. Would you like to go to Mexico next week and take pictures of Robert De Niro?" And I would look at it and go forward.

• 2:04:48Balaji Srinivasan?

  That's so funny. Well, you know what's funny? You know what's funny? There's actually probably as maybe even more biology stream of Austin's that are, because there's like 12 people last I checked in like the SF Bay area alone with my first and last name, you know? So just, I feel your pain. Okay, well, this is great. Really great seeing you. Been a while and we should just more.

• 2:05:08Benedict Evans?

  Yeah, great. Thank you.

• 2:05:12Balaji Srinivasan?

  Thanks for listening to this episode of the A16Z Podcast. If you liked this episode, be sure to like, comment, subscribe, leave us a rating or review, and share it with your friends and family. For more episodes, go to YouTube, Apple Podcasts, and Spotify. Follow us on X at A16Z and subscribe to our Substack at A16Z.substack.com. Thanks again for listening and I'll see you in the next episode.

• 2:05:38Erik Torenberg?

  This information is for educational purposes only and is not a recommendation to buy, hold, or sell any investment or financial product. This podcast has been produced by a third party and may include paid promotional advertisements, other company references, and individuals unaffiliated with A16Z. Such advertisements, companies, and individuals are not endorsed by AH Capital Management, LLC, A16Z, or any of its affiliates. Information is from sources deemed reliable on the date of publication, but A16Z does not guarantee its accuracy.