Ep. 90 Transcript: Erik Torenberg on Realignments in Tech, Media, and Education
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90_comp_torenberg_transcript
Marshall Kosloff: Erik Torenberg, Welcome to the realignment.
Erik Torenberg: It's a pleasure to be here. Big fan of the show.Â
Marshall Kosloff: Thanks. It's been months since we first made the pitch, but this is finally all together. I'm not working with you and On-Deck, Saagar's coming in with the podcast here. So that's the way things work here. But look, you've got a really interesting background. You're a venture capitalist. You're the founder of On-Deck, which we'll get into a bit later. And before that you were an early stage employee at tech companies. So the first thing anyone from the audience is going to want to hear from you is what are your thoughts from the tech industry's perspective and what happened last week? Obviously we're not looking to have you get into the politics of it. We don't want you to play-I don't even know how to say- we don't need you to get into Jack Dorsey's head. Let's talk about the deeper structure of what's going on here because something fascinating has been happening on Twitter. For a lot of our listeners, who probably haven't seen this, there is this big debate by people like Balaji Srinivasan -who's come on the show- and Naval Ravikant, talking about how from now on tech is going to [00:01:00] decentralize because of what happened. We're going to see different countries come up with their own versions of Twitter. Individual users are going to create their own servers to host their own social media platforms. It's all confusing. So what do you think about all of this?
Erik Torenberg: It's interesting. There was this response to Twitter and Facebook banning accounts, which was, "it's not censorship, you can just create your own app." And then there was this response to Google and Apple banning apps which was, "it's not censorship, just create your own operating system." And then Amazon bands web hosting, and people are like "it's not censorship create your own..". You know what, your own internet? JUst so you can send a tweet? I saw a tweet version of that argument going around. And it's just funny how sort of the goalposts keep shifting. To zoom out here a little bit, the first era of the internet was an incredibly idealistic time. Everything was going to be more democratic because we started with open-protocols, but what happened in the two thousands was companies like Google, Apple, Amazon, Facebook built products that outpaced the [00:02:00] capabilities of open protocols and everything became centralized again. And it was decentralized prior. The good news, and the reason why we didn't care too much, was that billions of people got access to amazing technologies. A lot of them for free. The bad news is that Fang, or GAFA, became our new overlords.
Marshall Kosloff: Hmm so its Facebook, Amazon, Netflix, Google, all of those.
Erik Torenberg: You couldn't really leave Facebook and Twitter and start your own new one because they control all of our data. You couldn't just transport your friends list or your follower graph. And if you did start at a new app like Parlor AWS might ban you. So fast forward a few years to 2016 and a decentralized crypto movement emerges. Bitcoin started before that, but we're talking about a decentralized internet and the ethos of crypto movement was that governments and corporations were too powerful. We're getting too centralized and we needed to change from "don't be evil," which was Google's motto their ethics, [00:03:00] to "can't be evil" to literally "don't have the power to take down people because their views." And in the crypto movement, people first focused on the money use case because you saw countries like Venezuela and others that were just inflating their currency. And so Bitcoin, as a store of value solved a real problem, it served a real use case. The decentralized internet was still hypothetical because as many complaints as there have been about censorship, it hasn't been a huge issue and centralized services just work way better. And so the only reason why you switched to decentralization is if you were solving for the censorship use case and that wasn't existential. But what we saw in the past week was coordinated efforts, across every level of the stack to ban not just a person, but an entire app. So now the stakes of creating decentralized internet at every level of stack have never been higher and I'm starting to see a lot more focus in my groups of people, from [00:04:00] people who want to build decentralize layers of the internet. It started with social media. I'm more excited about this bottoms-up approach than a tops-down approach via regulation because our political system doesn't really have the political will nor the technical competence to regulate effectively. The concern is that you might regulate in a way that makes incumbents actually stronger. What we've seen in the past is that the bottoms up approach has typically been better. Microsoft disrupted IBM, the next wave of tech giants disrupted Microsoft and hopefully decentralized companies will disrupt Google and Facebook.
Saagar Enjeti: What I love about what you're saying, Erik is that they're still an optimistic, free market case of what you're making, because currently the discourse within the American political is "it's over, just go build your own" is like basically a meme. And to the extent it is. But you're actually talking about building something new that is technically possible, like technologically possible, in [00:05:00] terms of decentralization. The question I have for you is decentralization the only way forward? Because we're also seeing these emergence of paid, I don't want to call them walled communities, but like semi-walled communities and like curated communities where people are having conversation and basically entrance of social, which is like this interesting fusion of the old, all-open social media. And then also not fully decentralized. Is that what the future looks like? So from your perspective, somebody actually involved in this industry, maybe even funding the next competitor building. Give us some sense of the trajectory of the different ways they could look. It could look fully decentralized. It could look somewhere in the middle or is there even a free market answer to Twitter or Facebook, etc?
Erik Torenberg: I think there's a free market answer. I think it's going to take awhile. It's not tomorrow. It's not next year. It might not even be two years from now. It's going to take awhile. There was this tweet from my friend Connor who runs Roam, [00:06:00] which is a great note taking app, where he said that the scariest words in the English language were "Balaji was right." And he was right about COVID when everyone was going crazy. And he's been talking about the need to decentralized for a long time. And he was right about that. I think we're going to see a hybrid approach, I think, in the interim. I'm very pessimistic as it relates to this idea of, 'are we going to have unity?' I think basically the internet is going to bifurcate. We're going to have a blue internet and we're gonna have a red internet. And the problem is that the internet right now is so blue that if the red internet starts to get off the ground and it gets off the ground in an unsavory way, the blue internet is going to block it. I think we're going to see parallel basically like a right wing version or conservative version of nearly every blue company. I think some of those are going to get off the ground, be really powerful. I think some of those might get banned and thus you need the decentralized version in order to get that to happen. So I think we're going to see a hybrid. I think the [00:07:00] sort of centralized approach, but just of a right-wing version. They wouldn't call it that perhaps, but just a different version exist. BUt medium to long-term we're going to have to move decentralized if you want to remove all choke points in the system. Because if we're seeing what we saw with Parlor extend to other apps... They're changing their rules on the fly; that's what's most concerning about this is that there's no set constitution that they have to abide by as a private company outside of what our actual constitution allows them to do. And they're just sort of responding to sentiment and pressure within their own companies.
Marshall Kosloff: I just want to bring a degree of optimism into the conversation because we did want to have you on for optimistic reasons. I don't agree with the red state or red Twitter, blue Twitter take in the long-term. In the short term there is definitely a lot of money for anyone who's libertarian, [00:08:00] and to the right of that, trying to say, "Twitter is horrible. It's bad. I'm going to create the operationally right version of that." It will have different degrees of moderation / censorship, depending on your perspective on that topic, if it's going to have different approaches to what's the terms of service, all those bigger things. But that being said, when you're thinking as a venture capitalist, Erik, if I were pitching you this service, I think the key question you'd be answering is what's the problem that any user of the incumbent service is actually trying to solve? And let's be frank for a second. 99.99% of conservatives on Twitter and on Facebook are having a totally fun time. The funniest cases that I see, and this is definitely happening within my own family, not to call anyone out too hard, but I have a relative who has sub 300 followers on Twitter who just quit the app because they're afraid that "Jack is going to come for them." I can guarantee you very few things, but [00:09:00] Jack Dorsey is not coming for post 60 year old boomer with 300 followers who are mostly anonymous accounts. So from my perspective, it doesn't seem like post the next six months, because the next six months are going to be full of all forms of overreach, all this craziness and every level of our policy. But I just don't see a world in July, 2021, where Twitter is still not usable enough to the point where there isn't gonna be that big of an opportunity for people. How do you think about that as a venture capitalist?
Erik Torenberg: Well there's this interesting thing called Robert Conquests Law, the second law, which states that if a company or organization isn't explicitly it ends up being Left. And the inverse of that is if a company is not explicitly Left, it ends up being labeled as Right. And so I think we're seeing this with Substack, right? Mean the joke this past week was like, 'is Donald Trump going to get a Substack now?' [That'd be incredible]. [00:10:00] And so if a company doesn't go to where the furthest people want it to go, it's going to be labeled as Right. And I think we're going to see a lot of companies that, you know, they're classical Liberal. They don't want to be Right, but they're going to be classified as Right if they don't go all the way. I think, as a venture capitalist, going back to Saagar's point a little bit, I think private communities are going to be enormous and that's what On-Deck is, and we'll get to it in a bit. But I think people are, I mean, even before all of this, were retreating from the public sphere a bit. People joke that Twitter is a library inside of a civil war. Like our public platforms have just gotten too chaotic and people have been searching for people who think like that, for people who they can resonate with and not have to deal with and not be called all these sorts of names by the other side. So I'm very excited about the [00:11:00] emergence of private paid communities that are un-bundling a certain audience or a certain interest group that is underserved by our public platforms and I am looking to invest in them.
Saagar Enjeti: This is what I'm really fascinated by. And I actually heard you say this elsewhere, and I want to tease it out here. It is about what we have lost from public communication and what we have lost from people thinking out loud, so to speak, as in it's extraordinarily valuable, actually to hear people think out loud and say controversial opinions and have it all spill out into the public discourse and have somebody else jump in and says, 'have you thought about this?' And this is something which very much typified Twitter, I would say five or six years ago, when I started getting really into the platform. Now as it's been mass adoption or has begun more of a civil war, so to speak, in the political moment it's frankly become a lot more anidine. And the most interesting conversations that I have on a daily day basis are in private group chats. [00:12:00] And this is what I heard you talk about which is that we're gleaning so much information from our friends, which used to be at least in a semi-public or public environment completely, which is now just retreated. What do you think that's cost us as a society? I don't want to make it a generic cancel culture take, but you're like, look like toxicity and caustic discourse has made it so that people don't want to think out loud and that's a problem. And I think we should talk about it.
Erik Torenberg: The saddest part is we'll never know what we're losing. It's impossible to quantify. Marc Andreessen, for example, somebody who used to tweet all the time and share all these interesting insights and so many people learn from them. Then he totally retreated. He is a hundred percent off Twitter. He has the same conversations, but in private, but so many more people would be learning if it were in public, but just the cost doesn't make sense for him anymore. And there are hundreds of people for whom that is the case. So the amount that people could learn, could be inspired, could [00:13:00] build on top of each other is so much. And we can't calculate it. Steven Johnson in his book, "Where Good Ideas Come From;" the TLDR of that book is it comes from a marketplace of ideas. It comes from a very dense group of people who are sharing ideas, building on top of their ideas, building on top of the hunches, are the words he used. And it's really sad. That basically what we see in the last six years is the group that has the power is censoring the group that does not. That has flipped. It was the Right who used to have a lot of the cultural power and they were censoring a lot. Now it is the opposite in certain circles. I even saw Noam Chomsky, who I believe has supported extreme communist revolutions- I say that to say, he's so far left wing- even he is saying, 'Hey, we shouldn't be censoring free speech is our device. We, the left, have been the advocates of free speech for so long.' [00:14:00] I saw a great tweet that said, 'If Noam Chomsky is telling you to ease up on your censorship, that's like Snoop Dog telling somebody to ease up on smoking weed. As in, ease up on yout leftism.
Marshall Kosloff: So the last thing here that I want to get at is what is the line between censorship and moderation? So once again, we'll bring it to On-Deck for a second. On-Deck is communities of people that are working in different verticals. So for example, people who are interested in climate tech, people who are interested in podcasting- where I work-, people who are writers, founders, etc. However, on the Slack channel of the group, if someone started cursing, bringing in bad vibes, not even breaking the law. Because people will always make the exception of 'no, look, if you like threaten violence, obviously you'll get kicked from somebody,' it's not censorship, but there is such a thing as bad vibes. There could be a world where I could be on the On-Deck founders fellowship, Slack, [00:15:00] and you frankly, as a moderator, who's curating a community, have to remove me because I'm bringing the wrong perspective, not even perspective, just the wrong vibe into it. So how is someone who's organizing communities of people? How do you advise thinking that? Because the Parlor situation is complicated and Saagar and I will do a more dedicated episode about it. But the one thing that I do think happened here is Parlor did not think hard enough about this question of what is the difference between censorship about people's views, which are not inherently harmful, and the idea that you don't want to have a toxic dumpster fire that no one wants to hang out in. I know plenty of right-wing friends, some of the most right wing people I know who said, 'Oh yeah, I left Parlor because it was a dumpster fire.' So how can people who are building communities on these private, smaller degrees think about that?
Erik Torenberg: I think you want to plan as much as possible, or be explicit as much as possible, in your code of conduct what you will take and what you will not take. And you want to screen [00:16:00] early on for it. So if say, 'Hey, we're going to invite speakers and we're not going to cancel them for XYZ reason.' You should say that to your community members when you're interviewing them. And they are on board with that, maybe even have them do a pledge or something, then you have an explicit agreement. I think what's challenging, and you can't plan for everything, is when you don't plan for stuff and you have misaligned expectations and now you're at the whim of your users. So I try to be as explicit as possible, early on so that you prepare for it. A good example here is Substack. They released to a post a few weeks ago where they basically said, 'Hey, we're going to have a-and I liked this approach, too- we're gonna have a Federalist approach. We're going to enable writers and the mini communities that we have to set their own rules. We're not going to set them from the top.' They did this preemptively because they know that something is going to come up and they can now point to their [00:17:00] rules as opposed to where Twitter and some of these other places are, which is they're making up rules on the spot. And that's when you really lose trust.
Marshall Kosloff: Totally. So last thing before we get to present day. I love this story. Your previous first company, before Product Hunt, before Village Global was wrapped. It was and correct me if I'm wrong, like Chat Roulette esc beatboxing. Not beatboxing, rap battles. That'd be the lamest beatboxing for the lamest company ever. But what was so interesting is. Obviously no offense, it didn't quite work out, but what's crazy is when I heard you talking about it on a recent podcast appearance, you think about this and you're like, wait a second, before Tik Tok became an actual company, it was musically, which was frankly, I think a lamer idea than rap battles, not that rap battles are lame. A lame idea from my perspective is lip sinking. And it obviously didn't work out, but once you took that platform and attach Tik Toks algorithm to it, it became the biggest thing [00:18:00] ever separate from the geopolitical debate there. So how is you look at that space? Do you just think about that experience? And that's a combination of you enter a market too early, the world, obviously wasn't there in 2012, there was no magical algorithm to fix those issues. How do you just think about that space?
Erik Torenberg: There's a few things there. Marc Andreessen has this line where he says 'there are no dumb ideas, only ideas that are too early.' Of course there are some dumb ideas, but the ideas that people ridiculed in the internet bubble in '99 or early two thousands, like pets.com , web van, or home grocers.
Marshall Kosloff: I was a home grocer house. That was my thing!
Erik Torenberg: Exactly. These were massive failures. Today, they're all unicorns. So similarly, RAP? didn't work out, but interactive social video. We were all also experimenting with sort of patronage models at the time. It, was just too early. It was earlier than Twitch [00:19:00] even. But then of course Musically and Tik Tok. In terms of how to think about when you might be too early, these are hard to predict, but my line here is if you're younger in your career and you're starting a company, you want to take more market risk than execution risk. When you're older and you're more experienced and you know how to build company, you know how to build teams, and you can raise a lot of money, then you want to take execution risk. I .E. do something that if you execute you know will work. But when you're younger or when you're less experienced and don't really have unfair advantages, you want to have the arbitrage of willing to do things that other people think are dumb or think are too early or think are not ready yet. And sometimes that gets you into this, 'hey, you're building VR and it's way too early and it's been too early for 30 years now.' But sometimes you get into Bitcoin or you get into crypto, and you start Coinbase and you are multibillionaires. That's some of my advice there.
Saagar Enjeti: Yeah, I think that's amazing. I guess this gets to what you're [00:20:00] doing right now, because I'm fascinated by the backstory of this company and heard you talk about it previously, which is On-Deck. And you were saying this is not the way that you're supposed to start a company and fitting with our realignment thesis, tease that out a little bit. Which is that, look, a lot of our listeners may not even have any experience starting a company; many of them are just outside looking in on venture capital. What is the traditional way that you're supposed to start a business, then talk to us about how you started that business within this funding model and like why it's exciting, where it's taking us and what that actually means in terms of a disruption, in terms of how companies themselves get formed.
Erik Torenberg: A big realignment that happened in how startups get off the ground is that it used to be the case where before AWS and before all these tools, it was really hard to build the technology. You needed to raise money in order to even see if something would work. [00:21:00] The biggest question investors would ask is, 'could this be built?' and really important people to build the company were technical people. Paul Graham had this arbitrage opportunity in 2005 where he identified that he could teach young technical people how to do business and that they could build enormous companies. And he was right. It has led to Dropbox, Air BnB, massive companies. What's changed over the past decade or so, is that the cost of getting a company off the ground decreased rapidly. Everyone could ship minimum viable product or a beta or an early version of it for free or on there without raising money. And so now the question became not, 'can they build it,' but will people come, will users come? Can they hire a team? And so what happened was that the arbitrage was no longer the tech co-founder to teach them how to [00:22:00] do business, but it actually flipped into now it's the business founder or the person who understands a deep domain, I should say. Insurance healthcare, because software ate the world. Marc Andreessen's famous line, it ate a lot of the things that everyone uses: social networks, search engines. It is a lot of our public infrastructure. And now it's eating all these different domains. It's eating FinTech, it's eating healthcare, it's even real estate, education. A lot of these like highly regulated spaces that require a lot of expertise. And so now the archetype, and this relates to On-Deck, the archetype of a founder is somebody who has that domain expertise. That's the scarcity now and can build, with no code and other tools can get something off the ground. That relates to On-Deck because On-Deck basically started out as something of a founder school. It started as a community for people. It was like a [00:23:00] Y-Combinator before people had companies. And so we would take a lot of these people who always wanted to start a company, but never knew exactly how or never thought that they could because they weren't technical. We would either A. Pair them with technical people, or B. Help them get the tools that they need to get an early version off the ground.
But to answer your specific question of how we got the company off the ground, it was a side project. Because you can get things off the ground cheaper, you also don't necessarily need to be full-time on them to make it work. It was a side project. I wasn't, full-time on it for a couple of years.
It emerged out of a community, an organic community. We're seeing that a lot more now where people use products that also emerged out of a side project that started to get momentum. And then when it did they triple down on it. But yeah, that would have been inconceivable in the past.
Marshall Kosloff: A quick side note that I want to hit, because I love the example of the late 1990s period where the [00:24:00] infrastructure wasn't built, because it brings up the famous British railways example, which I'm pretty sure you probably know Erik. Which is people look at the.com bust in 2000, say, wow, pets.com. There's actually five different pets websites. So there was a real genuine example of a bubble there. But you had Expedia, all these companies that just weren't ready for primetime, everyone IPO'd too early, it didn't work, etc. And you could just look at that detail and say, wow, what a terrible failure. All of these resources were misallocated. We don't like venture capital. But what ended up happening is all of the services and all the companies that were actually supported during that period, in effect, we built the modern infrastructure that the next wave of tech was supported on. So the reason why Google was able to build the way it built, the reason why Facebook is able to build the way it built, the reason why the cost of running a server was able to collapse was the infrastructure was still there.
And the example historically that people bring up is during the 1840s in the United Kingdom, there was this railway boom, where everyone was obsessed with over-investing in railway. [00:25:00] Huge bubble. It burst. It's a total disaster. If you've got it on the railway stocks, but at the same time afterwards, the British had an amazing railway system, which helped fuel the industrial revolution.
So as you look at those historical examples, how do you think about, cause once again, this is something we're interested at the realignment. How do you think about the interplay of history and business and politics, but as the more you dive into this stuff, the more you realize it's really tied together.
Erik Torenberg: You're absolutely right. And it's interesting because in 2016/2017 we had this ICO boom. Where all these crypto...
Marshall Kosloff: What is an ICO? You are basically our first crypto sector guest, other than Balaji, so you're going to have to do a lot of editorializing on everything.
Erik Torenberg: An ICO is an initial coin offering. It was a way for people, think of it like crowdfunding, for people who got crypto rich. It was a way for people to diversify their crypto assets without having to pay taxes on them. That's sort of one way of positioning it. What happened was tens or [00:26:00] hundreds of millions of dollars, maybe billions, a lot of money was raised and put into crypto projects when it was just off of white paper.
Hey, Bitcoin is now worth a trillion dollars off a white paper. Maybe these projects could be too. And as you can imagine, it attracted 1% of the diehards and 99% of the scammers. A lot of people lost a lot of money; a lot of projects didn't end up working out.
What I hope there, to your example, and Carlotta Perez has some great stuff on the cycles of infrastructure, is that what we get there as well? It's a lot of failed projects. It'll be a lot of infrastructure that has been layered. Such that, five years from now, 10 years from now, there's not just a boom on the currency side but, on the true decentralized internet. On the browser level and for social media perspective, just on every layer of the stack.
So yeah [00:27:00] these things are all connected and it goes back to the saddest words in language being Balaji was right. What Balaji is most influenced by is the sovereign individual. Which is this sort of idea, a book, and the main thesis is that the individual, because of technology, people are going to become a lot more mobile and people are going to become able to defend themselves a lot more and protect their money, protect their identity. And what's going to happen as a result of that is that governments, politicans will compete over their citizens, treat them like customers instead of citizens.
When you treat someone like a customer, you have to serve them, you have to offer a better product. Because you now have the threat of exit, right? We've had the threat of voice, i.e. voting, but exit has been hard.  It's hard to move. It's hard to coordinate with people. And so the cost of coordination [00:28:00] has gone down.
And again a couple years ago, Balaji was talking about this. He was talking about moving to Austin. Everyone thought he was crazy. People still think he's crazy and he is a little bit crazy. But you see this right now with Miami. You see a mayor of Miami going on Twitter.
His literal question was, how can I help? That's how low the bar was to get a Keifer boy and a number of people to move. Of course there are better attacks like tax incentives in Miami. I'm sure that helps a lot. We saw, I forget which politician, but someone San Francisco say an expletive to Elon Musk. That lost Elon Musk and he went to Austin.
So we're going to start to see people become a lot more mobile, be able to coordinate governments start to compete. As we think about being good investors, thinking about what startups are going to emerge, you have to think about how it fits in with where trends are going.
[00:29:00] Saagar Enjeti: I'm glad you brought that up, Erik. It's a very interesting phenomenon. It's also been a light in terms of the Twitter discourse. I want to interrogate it from the perspective of maybe some of our listeners who like they see what's going on with the mayor of Miami and they're like, you have our mayor, who's like outwardly soliciting, like a bunch of like rich dudes who are online in our city. And almost every time that this type of thing works out you have politicians who make deals with these rich people and you give them tax breaks, or you write some like fake thing into the tax code. And you end up with Foxconn like in Wisconsin, which is like a fake factory and was supposed to deliver these tens of thousands of jobs and GDP.
And it turns out just a bunch of people got rich, state regulators, and this Taiwanese company. What do you think prevents that from happening with the end state of the sovereign individual thesis? Cause like when you say it, sounds great, you're like, yeah, everybody has to compete against one another. In practice, what does it look like? Amazon HQ2. And everybody's just throwing [00:30:00] as much tax dollars on the floor as they possibly can with no real indication that is going to like come crawling back. What do you think about that?
Erik Torenberg: I think both things can be true. I think net positive it can be better off for any city to get these people. I don't know the exact stat, but I think it's something like, in California, or maybe it's San Francisco, like 0.1% of the population is responsible for 40% of the tax dollars.I think both things can be true in the sense that do I think these people are going to get enormous tax breaks and it's going to be a race to the bottom. Yes. Do I think that they will still contribute meaningfully tax revenue and just talent coming and other sort of positive externalities? Yes, but I think broadly I'm less excited or less a believer that there's going to be all these new hubs that emerge or the next Silicon Valley.
And more than just that everything goes remote or I should say a lot goes remote and people live on the internet. [00:31:00] It is a little bit the rat race to the bottom in the sense that they're gonna compete over who can offer the best tax haven and other things, but also they're going to be forced to run their organizations like businesses.
So they're going to be forced to restructure, to be a lot more innovative, to be a lot more effective. The best ones are going to be super lean and provide their citizens better services as a result. So I think there's reason to both be pessimistic and optimistic as a result of that thesis.
Marshall Kosloff: There's so much there, man. And I want to tie this back to the conversation we're going to have about higher education in a second, but can you talk about how you conceive of citizenship? Because there's just going to be a bunch of people who are basically going to say, we're not customers of government. We're citizens of government, right?
Like what differentiates government from a business is that A. government is not a business. The job of a [00:32:00] governor is not to manage a profit and loss statement. It isn't to give a direct return to shareholders it's to take a society, take a community, and basically provide the best outcome for the most amount of people or some combination thereof.
So how do we balance that? Because my problem with what you're saying. Because I understand the trend, that's driving it. As I'm concerned, there could be a degree of inevitablism in this space that could reflect the way our debate about globalization. So for example, past 30, 40 years, we all like, we went to school, we're living on the internet, recording this podcast online.
We're really benefiting from this globalization phenomenon. That system was really great for us, but a lot of people who are a bit older than us, we don't have to take personal responsibility for this. But people who look like us talk like us come from the same background said, 'globalization is inevitable. We have to do NAFTA. We have to let China into the world trade organization. We have to do X, Y, and Z thing. And anyone who doesn't accept that reality just doesn't [00:33:00] understand trends. They don't understand the free market.' Etc. Now we can agree that the trend online is just there. Obviously that's true, but it's very hard to make the case.
And I'm sure you're probably going to run into this with your portfolio companies. It will be harder for you to tell people, no, you have to live within 20 miles of me given this dynamic. That's definitely true. But at the same time, there are a bunch of public policy choices that we could make if we assume this is inevitable, could end up way biting us in the ass. So for example, if we just think it's inevitable, but this isn't going to happen, we couldn't have an honest conversation about exit taxes. So for example, if you let's say you're from New Jersey, so let's say you've been in New Jersey, your entire life.
 You've paid taxes. You did all these different things. You were supported by public infrastructure. You were supported. You went to university of Michigan. So to a certain degree, obviously you're paying out of state, but there was some degree of support from the [00:34:00] state. How do we balance that?
Because I think it's, I'm not a communist. I'm not a socialist. I don't think it's cool to say Erik, you're moving. We're going to take all your money. But there is a dynamic there that if we don't have the conversation, now it is going to end in punitive. It is going to end in reactionary politics.
So that's a lot there, but how do you just think about the overall dynamic?
Erik Torenberg: Okay there's sort of two things that I think it's worth separating out. One is people talk about the economic effects what's happening when they talk about globalization and people being left behind and how that leads to polarization.
I, and I think there's certainly trade offs there. A lot of people get ahead, especially globally and some people get left behind. I think it's probably economically net positive, but we have to do something for the people that we've got left behind. I'm less sympathetic to that as the cause all of our polarization problems, because I think a lot of our polarization problems are actually the elites arguing amongst each other. It's people who go to Harvard and Yale. It's the 1% versus point 0.01%. What I'm more sympathetic to is this idea that , Patrick Deneen's argument of why liberalism fails, which is basically that it becomes a victim of [00:35:00] its own success. That if we all start to view each other as customers. Effectively, that means that we all view each other as independent. We don't, as a customer, you don't owe the business anything.
And I think what that leads to is no more dependence on people and invest in no loyalty and thus, we just increasingly become atomized and fragmented and individualized and that explains a lot of our loneliness or anxiety or just loss of community.
So I think we do have to straddle this line of citizenship, of customer versus citizenship. Customer in the sense of, 'Hey clean the poop off by street, right?' But citizenship in that, we are part of a community and we should take care of each other.
And there's this, I can't forget who, who has this distinction between the somewheres and the anywheres. [David Goodhart]. And so I think, I don't think economically, I don't think exit taxes is the way to do it. I think that's only going to accelerate the [00:36:00] sovereign individual.
Like I think it's more hearts and minds. And I think the challenge with San Francisco is that San Francisco is in a tough place, in California more broadly, where the people that are funding it, they're calling extractors and exploiters. Zuckerberg's seventy-five million dollar donation to a hospital, I think is like the biggest one.
And because he had his name on it, they call them extractor. You're not going to win hearts and minds by demonizing rich people. And thinking that we're in this sort of conflict theory that, when someone gets rich or company gets rich, it's at my expense and going back to crypto for a second.
One of the things I'm really interested in crypto has this idea of tokenization. Let me zoom out for a second. When the corporation was invented, the big innovation there was instead of one person owning or the entire company, you now had hundreds of employees who could have shared upside in the company's success.
And that's just transformational. So is that one person getting rich? You have hundreds or thousands of people getting rich? Crypto wants to do is also give the users a upside in the company. [00:37:00] And so when we think about Facebook and Twitter, these are data products, right? If you go on there, you have a big following, you have helped add value to that product.
You've added data to it, and you don't see any of the economic gains from it directly. But maybe you should. And not from a top down regulatory perspective, unless it's like you let people transfer API keys, but more from ' they should incentivize you to want to contribute more.' Reward you from contributing to the network and imagine how much more people would have appreciation for these companies.
When they got rich too, or they saw shared upside in that. And we do have it a little bit, like right now it's too indirect. Like it goes to taxes, which then goes to their services. But they don't connect it to, 'Hey, Jeff Bezos, whoever, helped pay for the service that I use,' that they're outside with a guillotine at Jeff Bezos house thinking that he took money from them. So I more like to tie it, whether it's tokens and that's something that crypto is thinking, or if there is some version of UBI in the future that it's tied to the stock market, because we want to have a greater [00:38:00] appreciation for how wealth is created.
We want to put people on the same side, instead of thinking that there's this sort of a zero sum, relationship.
Saagar Enjeti: Yeah, I think aligning the incentives is the most important thing. And it's interesting, you're talking about citizenship and customers. One of the areas where the customers, aka people, have been completely failed here and where you're really focused on is higher education.
And this is something you're working directly to disrupt. Let's talk here just terms. I'm sure most of the people here who are listening to this podcast are not satisfied with the higher education system or with their own student debt or with their own having gone through the system, just lay it out on a macro level.
What can actually be done about it from your perspective, a more like free market perspective and what have been the structural problems as to actually doing anything up until now?
Marshall Kosloff: Quick thing. Before you answer those, can you just define the problem in higher education from your perspective? Because that's where the debate comes in from the start, but [00:39:00] so can you define the problem and then get to Saagar's?
Erik Torenberg: There are multiple problems. The ones I like to focus on is that it's too expensive and it is just and the expenses are rising. It doesn't prepare people effectively for the labor market. And so it's not serving as one of its value props and it is too monopolistic and basically serves as a cartel that affects competitors from entering. So too expensive, not helping people get jobs as efficiently, and it's a monopoly.
Saagar Enjeti: Okay. So what caused those problems? What is the cause of those problems and what's your solution and what are other
Erik Torenberg: solutions?
 I'll start with the getting jobs. We have a problem where basically what happened was credential inflation.
Everyone thought that in order to get a great job, you had to go to college, but there weren't enough great jobs that required college degrees to serve everyone going to college. 50% of employed college graduates got jobs that required a college degree. And only [00:40:00] 37% take jobs that required even a high school degree.
So just to paint a visual, there were a hundred thousand people in 2010 who took a bachelor's degree who became janitors. There were over 5,000 with a master's degree who became janitors, obviously you don't need to go to college to become a janitor. And so we've told people that college is this insurance that you need to do it in order to get a great job.
And what happens is we're not having enough great jobs to overcome it. And because there's not enough interlocking between what people are learning and what the job market is requiring. And so we're starting to see the unbundling. If you think of college as a bundle it's education, it's network , and it's credential.
We unbundled the education, a decade ago with with MOOCs with online courses. But you still left the network and the credential What we're starting to see is , we'll get to COVID in a second, but is job specific courses. My friend Scott Belsky calls this edu-deployment.
[00:41:00] Which is combining the education and employment into one. So you're starting to see things like Lambda school, which helped people learn how to code and then get them a job. It Is rise of bootcamps. And you're starting to see that for not just code, but a bunch of other sectors learn how to do sales, learn how to do growth, learn how to do marketing, learn how to do skills that employers want.
And I imagine pretty soon we're going to see Facebook or Google or Walmart start to have their own bootcamps or build their own pipeline where people can say, 'Hey, if I can get into Harvard or Stanford, I'll go there. But if I'm going to some tier three university I might as well just go to Walmart because I could just go to Walmart-U and I can guarantee that I'll get a job.' I can get the liberal arts on the side. So we're starting to see a great unbundling. But we're realizing is that the unbundling by itself didn't work .Like MOOCs didn't work because completion rates weren't high enough. And you wanted to go to parties. College has bundled a bunch of other stuff too.
It's social life. It's coming of age. It's relationships. And so the winners are going to [00:42:00] be people that rebundl e the uses of college. And so we started On-Deck has started on the career elements. But I could see us over time or pretty soon doing a liberal arts component or even a school of life component.
So that we could start to just rebundle some of the things that people get in their college experience, do it for and do it for a fraction of the cost.
Marshall Kosloff: I want to know how you solve a problem that comes up whenever people are talking about credentialing and I call this the HR problem.
In the sense that if you apply for any job, we could talk as much as we want about how college doesn't necessarily indicate education. There could be. You did some interesting writing about how as schools eliminate testing requirements for the SAT there's a possibility that could actually weaken the degree as a credential because there would just be no metrics that anyone could assert from the outside, etc etc.
All those ideas are important. They matter. What always stops me is that if you look at [00:43:00] a marketing firm in the middle of the country somewhere totally random. At the end of the day, if I apply for a job and I have a degree from a university and there's a person who doesn't have a degree, but has taken various MOOCs ,has thought about problems in different ways, has a really great Twitter account., I am still probably going to get chosen under this scenario. Because the HR manager, who's a 30 something person who is busy doesn't have time to think about the big debates and is always just going to choose the credential. So within that dynamic, how do we think about solving that bottleneck? Because that bottleneck doesn't exist at Google.
Because there are various cultural reasons why that's just not there. And, in tech there's, it's certainly cool. Navarro had this great tweet where he said, 'the smartest thing you should do in tech is you should get into Stanford university and immediately drop out so that everyone knows you got into Stanford.'
So you're smart. You were a hard worker in high school, but you don't have to actually pay any money for it. [00:44:00] That doesn't exist in the middle. It doesn't exist in bottom and it doesn't exist in most of corporate America. So how do you think about solving that basic HR credential practice? I know you've written a lot about peer-to-peer credentials, different things like that.
Erik Torenberg: That was my tweet actually. I said, 'Harvard,' maybe Navarro did it too. Me, Navarro, same thing. Love that you brought up credentials because I mentioned the education has been unbundled. The network is starting to be unbundled. The credential is really the last thing that's just so hard to muddle and it's so powerful. And we saw this with COVID. When, before COVID, you could tell the story of all the sort of bundle and things that were happening at college. And that's why it's worth a quarter million dollars or more. But in the era of COVID where everyone had to sit home, there was no networking.
It's literally zoom university. And you're still, it's still the same price. You're still paying a quarter million dollars for a piece of paper because you'd actually probably rather watch YouTube of the best professor in the world than the one that you happen to have and their talks are free.
And so that is shown, I'm really just paying for this piece of [00:45:00] paper. And the piece of paper is valuable. Like we have to bow down to it. But what we started to see over the past few years is just stabs at it. It's like Craigslist, the unbundling of Craigslist happened by death by a thousand cuts by thousands of companies taking, a bundling, like little elements of it.
And we're starting to see it in credentials, Get Hub with coding, for example. Behance with design and it's not going to be for every single one, but we're starting to see unbundling for skill-specific one's. And I think that's pretty powerful, but what I'm most excited about is peer-to-peer credentials, because when people make hires today, they'll look at school, but the biggest thing they look at is references.
If you get a bad reference from someone, boom, you're out. If you get a great reference from someone who they trust, you're in. And there's this trope that Silicon Valley only funds the Stanford kids. But if I were to ask you, either of you, which person under 25 is going to be the next big thing in tech or in media, I would much rather follow that person [00:46:00] than someone who tells me that they went to Harvard or Stanford.
And yet that information is not legible. It's not on the internet. It's not explicit. I don't want to go through the thousand people that you follow on Twitter. I want to say, who are the people that you really believe in? And so I have a vision I want to see, I want to build it, or I want to see someone else build a peer-to-peer credential platform where people can say, 'Hey, this is my person. I want to bet on this person that my reputation,' but also maybe there's some social or actual physical currency speculation that you can do that would incentivize you to identify really talented people early on.
And this as well with ISA, income share agreements/grants, a little bit. Because right now people are paying this upfront fee, huge fee to go to college and then hoping they get a job afterwards. But you can imagine a crowdfunding, for people who know what they want to do is say, Hey, instead of like, why don't can I just raise money for this right now?
And it doesn't have to be venture capital. It could just be an income share agreement where I pursued this art project or pursue this podcast or pursue this [00:47:00] tie to the greater economy. There's just so many more ways. To make money on the internet. We need to make more ways to raise money on the internet and to signal value of who's really impressive on the internet.
So again, this is not going to happen tomorrow. It's not going to happen next year. It's going to be death by a thousand paper cuts, but over the next decade, I think the fine university, the best universities will be fine.
Marshall Kosloff: If you get into Harvard and you can pay for it. You should probably still go. No, one's saying don't do that.
Erik Torenberg: Yeah. Yeah. But if you're thinking of doing art history a some tier three school and you think you'll get an amazing job after that, maybe just talk to some people, think about it, think about some other things you can do.
If you do go to a tier three school, maybe you learn how to code. But yeah, I'm very excited for credential to be unbundled.
Marshall Kosloff: So then the last question on this topic is what do you think about the people who are getting screwed over by the current system? Because everything we're talking about peer to peer credentials, great idea.
As you said yourself, you're thinking about building this. You want someone to build it, so that's not coming into the table for [00:48:00] awhile. What do you think about something like student loan forgiveness? What do you think about the role that government plays in this? Because the example I always think up is.
After the great recession, a bunch of States cut funding for higher education. So what that meant is in their States, if you were an in-state tuition attendee, which I did at university of Oregon, you actually had to pay a lot more money. So as I think about this whole debate about the future and technology, I think at a baseline level, you probably could just restore higher education funding to what it was in 2007. I'm pretty sure in a lot of States post COVID, you're going to see a lot of cuts to higher education further. So how do you think about the balance between people who are in the current system or have graduated and are screwed especially if they didn't graduate, because that's the worst position to be in.
It really sucks if you went to school, you didn't get a degree because no one cares about half degrees and you have all this debt, or you're someone who's about to go to college next year and you're thinking peer-to-peer is great. Or Senator Erik could just either make it so that my [00:49:00] student loans are discharged in bankruptcy, or we could raise the amount of money the state puts into a state university, even if it's a second or third tier, because we get dunk on the third tier state schools or third tier private, actually skip the third tier private universities never go to them, but there's a world where a random, third tier state school, if it's cheap enough, makes a lot of sense for you.
How do you think about that?
Erik Torenberg: Yeah, I I don't know enough about student loan forgiveness, because I think it's unfair to a lot of people who've paid their student loans. And I don't know how to reconcile that and what to do there. I do know that we need to make sure that this doesn't happen for the next generation.
And so what the government can do, and I don't mean to be glib, but stop making it so difficult to innovate for us to lower the costs. Healthcare, housing and education are the industries that costs have been rising dramatically, where in many other sectors where government isn't involved or isn't serving as blocker costs have gone down.
And so you're asking why is this the case in education? There isn't innovation in [00:50:00] education. We were talking about Facebook and Apple and all these other companies being monopolies, but they get disrupted every 40 years organically because a government gets out of the way. On the university level, the last entrance into the top 10, or even top 50, I believe it Stanford and it was founded over a hundred years ago.
 The reason why is because they choose who can be an actual university. There's an accreditation process, which has a good intent. i.e. we don't want to see Trump university or all these crazy,
Marshall Kosloff: This is the most political statement we'll get from you for the entire episode.
Erik Torenberg: Crazy things. But you are making it so difficult for well-meaning entrepreneurs who are very talented to, to create competitors. And what happens is regulatory capture it's in their interest, not to let competitors in so they can continue to rake in the profits and why disrupt yourself if no one else is going to disrupt you? And the accreditation process is something that I think if that were changed, we would see a lot more competition in education.
[00:51:00] And what we talked about when, a monopoly doesn't care, because it doesn't have to. When you have competition, it filters out and the best ones rise to the top and the customer gets the best experience. The students would have better experience. But that also happens in healthcare and housing In housing, we have a massive structural shortage, right?
For the last 20 years we've seen go down from 11 million units to 7 million units. There's something like 17 million people who can't afford housing. And in healthcare, nearly half of Americans have $2,000 in liquid assets, you have deductibles or something like $1500, $1,600. So any healthcare issue means you're basically financially ruined.
And what we were talking about earlier when software ate the world, the best entrepreneurs often go to the place that has the least red tape. Now it's changing because we've already covered a lot of that. But if you make it easier to innovate in education, healthcare, and housing, you lower the cost and have a better product. And then the next generation doesn't get into debt or it doesn't have to get wiped out by these three. This isn't happening anytime soon. There's no no [00:52:00] political will to make it happen. So I think we need to do it from a cultural perspective.
We need to lessen the pressure go to college. If it's not the right thing for you. And we need to teach people to be more mindful with their expenses and put more pressure on governments to to innovate on this stuff. Eventually I know that's not a short term answer and it's not a one size fits all approach, but it's going to take a number of things..
Saagar Enjeti: It definitely is. This is about as libertarian as I allow on the podcast
Marshall Kosloff: I want
Erik Torenberg: to make clear. I'm not a libertarian. I'm sympathetic with their ideas. They always lose and there's structural reasons why they lose. Live and let live is not an inspiring enough philosophy as opposed to win and help win.
Or if your whole ideology is nonaggression and someone is aggressive towards you're going to lose. I am a believer , furthermore, in state capacity and in Tyler's idea of state capacity. Tom Cohen. And what I would like to see is the state working in conjunction with the free market and [00:53:00] private enterprises to to give the best solution. Because there certainly are externalities that the markets just don't take into account or market failures that they just don't have ways to solve for. And so a symbiosis is where I stand there.
Saagar Enjeti: The last thing I want to get with you is media, because obviously this is where we are at a lot of the same dynamics.
Also apply to what you're talking about. It's a pretty rigid industry. It's rigid in terms of how it functions on television, cable television and more highly regulated, large behemoth, corporate monopolies. But then we also have this things like this, tens of thousands of people are going to listen to this, or whenever I do Rising, a lot of people will still watch that. On the alternative and on the margins, there are things that an emerging, which tell us something is going on here. From your perspective, where do you see that going? Because I'm of two minds, which is that of one mind, Ben Smith at the New York times wrote a great cameo where he was talking about how the future celebrity in America is not like a [00:54:00] celebrity to everyone outside of people in the movie business.
They're a celebrity to you. As in most of the time, I walk down the street and nobody knows who I am. But every once in a while, like once a week or so, somebody says, 'Oh my God, I love your show.' And it's that's really interesting. So like to every, maybe like one out of 2000 people, you're someone who they really like what you do now.
That's great from a subscription model and all that stuff. But in terms of wide culture and appeal, that actually has a lot of downstream effects. So how do you see the future of that industry? Whether consolidation is even possible and just like broadly, societaly, what that means for all of us, whenever it comes to media?
Erik Torenberg: So the broader trend here is basically that it's got the cost of creating media and of distributing media is lower than it's ever been and is basically going to zero eventually. And so what that means is that you can find someone who speaks exactly to you. There's no sort of compromising.
 There's [00:55:00] riches in niches is, as the saying goes. Kevin Kelly, The Wired founder, had this phrase where he said, if you have a thousand true fans, where if you have a thousand people paying you a hundred dollars a month, you can make a living as a creator.
Le iong has his idea of two hundred fans where you could have a hundred people paying you a thousand dollars a year. And it really just goes to show that as we talking about earlier, the future is these private niche communities that can form the most customized to what you want. I think we're only going to continue to see that.
I think we still need to increase the ways by which these creators can monetize. And the ways by which they can raise money and not just have a cash relationship, but also have an equity relationship. So I think we're going to see the un-bundling of creators, especially from media organizations, that if they're creating undue value, they're going to say, 'Hey, I'm not paid enough by this organization. I'm going to unbundle.' And then after recreate some elements, if they're entrepreneurial, of [00:56:00] what this organization served to me. But what we're going to see basically is whoever creates the value is going to find a way to capture the value.
Whoever is responsible for user demand and user loyalty is going to find a way to better, reorient the value chain such that value creation and value capture are more aligned. So that's where I think about in the business perspective. And I think it turns out people have wanted to hear from individuals more than they wanted to hear from institutions. Just decades ago, it was just harder for an individual to 1. Get an audience, and then 2. Recreate the functionality that the institution gave them. But this is goes back to the sovereign individual point where we're now it's easier and that will exist.
So that's the business side. On the cultural side, as we mentioned, people talk a lot about, fake news. When we had three channels, It's not that everyone agreed all the time, but everyone had the same coordinates by which they could even have a disagreement.
Now, everyone is watching [00:57:00] different coordinates, so they can't even have a conversation. They can't even agree on what happened. Let alone agree on an interpretation of what that means or where that's going. And I think that's only going to continue. With these content creators who are really reality entrepreneurs that are offering you the version of reality that you can opt into.
In a COVID era, like no one knows who to trust anymore, what institutions to trust, people are desperate for having a reality that makes sense to them. So I think it's only going to get tricky. My friend calls this "kaleidoscope theory." Which is this idea that culture fragments into thousands of shards, each culture plays out its own fantasies alongside the other cultures. The result is that skyrocketing innovation at the cost of shared alignment on anything. And it's a trade off that could make sense as long as it doesn't lead to complete chaos.
 Hardcore TBD on the complete chaos at this point.
Saagar Enjeti: This week is going to tell me that kaleidoscope theory [00:58:00] is bad.
Erik Torenberg: There's this great quote somewhere. It was like, is all this stuff going to make us happy? And the person who called this innovation and the personal response said, " you'll be unhappy, but you'll be unhappy in new and creative ways." What about shared reality?
Not just shared coordinates, shared reality. Didn't we have it? And it's unclear. You could answer it, no, we had a shared myth where everyone is under the same delusions, but this goes back to the Martin Gurri's Revolt of the Public. In the information age, you can't keep up the delusions anymore.
You can't control the narrative. There's all these competing narratives, all of which have shards of truth to them. The more information there is, the more arguments over what's true. So I don't see alignment happening on broad scale ways, but I do see people finding their own private communities to speak to them and find meaning to them and what really we need to figure out and help them find meaning is how to make these interoperable.
How to make them so they don't cause conflict among each other, but other common enemies, maybe, the joke is an [00:59:00] alien invasion or something. Other things that they can cohere around, even if they have different senses of of reality, that's our big challenge.
Marshall Kosloff: No, and I love that you brought that up because the weakest area in the creator economy, because of the niche dynamic, is just the echo chamber. We had Eric Weinstein on the podcast last episode. It's not exactly easy to argue with Eric, so I will argue with him now that he's not here. He's talking about the alternate media of places like the IDW.
The reason why it's not a true challenger to the mainstream media is it's just an echo chamber that only speaks to itself. There's only so many times that you could bring the same set of people on the same podcast to bring the same conversations in the same topic, you only get so ingroup. And in many ways, the dynamics of the creator economy with the whole idea of get your top 5% to 7% of people to pay. Get your top most intense listeners engaged that will not encourage you to balance the art of how do we speak to new audiences?
How do we have our private community, but how do we also to your point, inter-operate?
Erik Torenberg: It's interesting when we only [01:00:00] had three channels, there was this one echo chamber. And what happened is you now have a lot of these others. And they certainly don't talk to each other or as much as they should per your point on the IDW.
I think Eric Weinstein would say, 'Hey, I'd be willing to go on any other show, I've just been iced out.' And sometimes people talking about the filter bubble problem as though it's the worst thing that's possible, although in my opinion, what's worse is just total ideological uniformity.
And so I've learned to maybe celebrate the fact that there even exists different bubbles because didn't necessarily used to. And especially in the censorship world, you can imagine a world where they're snuffed out. Like China doesn't have ideological, filter moments.
Marshall Kosloff: So nearing the end of this, what I have to ask is you have done multiple podcasts in terms of hosting them or here I'm really enjoying talking to you. We get constant comments from our listeners about how do I start a podcast? How do I start a newsletter? You also [01:01:00] have an excellent Substack. This is also something you and I are thinking about and working on at On-Deck.
So we're asking this to basically every creator we bring on. How would you advise people think about building in this new media space, especially if they're new? Because my last bit on this here is that I'm incredibly frustrated by the fact that too often, the people who succeed in these new creator economy spaces are people who are already big somewhere else.
So for example, Stirred that comes from the On-Deck space when they do this really cool pre-subscribed drop. So it said, who are people who people would pay money to if they left their existing institution? That's really exciting. There could be a world where you could see that leading to a lot of interesting new voices, but all it really meant is that the top four or five writers were at the New York times.
So there are people who've been blown up over 10 years. The New York times is a massive audience. If the New York times is seeking to compete for the top people, if Barstool is trying to get the collar daddy types to stay and not leave, what they will tell people is we will get a [01:02:00] billion people to see your face. Saagar and Jedi, I work at big media Corp. Want to be effing famous? I will make you effing famous. You don't have to just have your 15 minutes. That's always going to be the bit that works there. So as you're answering this question, just think about what is the 20 year old, and you know who you are because you DM and email us a lot, who is just a random college kid who isn't going to a named school who wants to build, but isn't going to have the New York times or Rising, or the Realignment or On-Deck to back them up when they start.
Erik Torenberg: Â Just as inspiration for that kid that 20 year old kid. Check out this history, a YouTube channel called What If All This Tea, we can put it in the show notes.
It's just a sophomore at college who's built up this business on teaching people how to do or just teach people history, just explaining his passion to people. And he's not the best historian of the world, but he's super dynamic as a speaker and he can break down really complicated concepts.
And and one thing I would tell that person is, look for role [01:03:00] models, look for examples of people who are doing what you want to do and see how you can bring your own spin to it. The other thing I'd say is if we were talking about MOOCs earlier, the reason they didn't work, people didn't complete their courses, is because they didn't have accountability.
And so what we're doing at on-deck is combining the benefits of MOOCs, which is, learn at your own time, pay a hundredth of the price. But combining also the benefits of college, which is accountability. Like you have to do this thing or you will suffer public shame. And you've set a goal to it.
So we have our fellowships that combined those elements. Marshall you're helping us lead the podcast fellowship. We have the writing fellowship and with the service, it's not just accountability, but constant feedback. And so I think in the same way that you go to either have a personal trainer or you go to a bootcamp to make sure you get your workout in for many people, join a program like that.
If you wanna get a newsletter off the ground, or if you wanna get a podcast off the ground, you to go from zero to one, or you want to go from one to 10, whether it's On-Deck or something else, be part of a community that you either make, or you join. Of people who are [01:04:00] going to push you explicitly, directly, but also indirectly just by their example.
I love going to bootcamp. Seeing people just run faster than me on the treadmill or whatever it is and I gotta go faster. Yeah, I would look at what examples exist out there for inspiration. And then I would I would join and be part of be part of a community.
Marshall Kosloff: So last question, this is totally random. Serious, everyone. I cannot recommend Erik's podcast enough. My favorite episode you did recently was about the past present and future of the MBA with the head of IMG Academy, which we could have another period someday when you talk about your nascent NBA career.
Cause I think that's, I think that's, I think that's really interesting and just really compelling on the ambition side there. But you mentioned this idea of what would it look like if the NBA or other leagues were set up, so that players actually owned equity in the teams in the league because that's an application of the idea that we're looking at with the creator. Because the key thing of the creator economy, what matters there is that value is [01:05:00] moving from technology to brand. Down to the actual person. So Saagar with Rising, it used to be 30 years ago the value was first with the cable network, the actual distribution of the cable cord across the entire world, the satellites, that's a billion dollar business. Then as that gets cheaper over time, it's all about the brand. It's the Hill versus Fox versus the Washington Examiner, etc. But now it's basically you. Now it's basically can Saagar get people on Patrion or Super Cast or any of these cool new programs. Can he sell out on cameo, all those sorts of things. So you applied that idea a tiny bit to the NBA. I want you just to expand on it for a second, because it shows that you have a pretty expansive dynamic thought here, but it's also an illustration of the fact that as we're thinking of what skills can you develop as a podcaster, it's the ability to bring in different concepts and apply them to different areas that you wouldn't have thought of before.
What MarshallErik Torenberg: Â is talking about is about my NBA career is that LeBron called me at about joining the Lakers. And I told him I'm too [01:06:00] busy with On-Deck, maybe next year. I want to be a coach at one point. But this is really fascinating because if you take, one thing from this podcast, as it relates to creators, it's this idea that whoever captures user demand or customer demand is going to capture the value.
And a lot of our industries: music , books, others , there've been these middlemen that have taken too much of a cut and it didn't accurately reflect the value creation, we've even seen in tech. Founders used to get really terrible terms from VCs. And now VCs are the joke, the meme among VCs is they always say, how can I help you?
When actually it didn't used to be the case. VCs treated founders like shit, but founders they get the customer, they could have customer demand. And so they are in charge and now every year they're getting increasingly better evaluations, just more and more leverage. And we see that it hasn't fully happened in music yet, but it's going to happen.
It doesn't happen because record labels own catalogs. And more artists are going to be in control of a catalog. Whoever controls customer [01:07:00] value is going to capture it. And anytime there's the talent or the stars, they should be over time, they will increasingly become owners.
And so we see this in athletics too. Michael Jordan, he made way less money than he should have made based on how important he was. And so we see Mike Conley getting a $150 million contract or whatever. The players are getting just more and more leverage, but they're using it on salary negotiations they're not using it as far as I'm concerned, or as far as I know, on ownership itself its on equity in the business.
And imagine, if Lebron James said, 'Hey, I'm going to start a new league where the players own a majority share of the equity.' Yeah, in this sort of the thought experiment and he could bring, a few other players with him and now restructure the entire thing. Now, LeBron probably doesn't want to build a new NBA from scratch.
What he would do it, maybe that threat would bring the NBA back to the table, say, okay, we'll give you anything. If you stayed and actually the most interesting business person here, this is a bit subculture, but is LaVar Ball is about [01:08:00] that because he's doing it both on the league level, I think in sort of his minor league experiment, which was very interesting.
But he's also doing it on the Shoes level. Because who made more money off of Jordan's, him or Nike or whoever? Yeah, exactly. Whereas like Jordan should be making way more money.
Marshall Kosloff: He's the silhouette.
Erik Torenberg: That's the most individual thing ever the capacity to provide supplyand this is the great realignment. This is what Ben Thompson at the Striker he talks about. Whereas controlling supply used to be the most important thing. Because distribution was limited. And so what happened was with the internet distribution became unlimited. Now anybody could reach anybody, at any time.
And what was the scarcity was now distribution who can control demand. And so that is realigned so many different industries, and they're still early in their realignment. But if you look at any industry and you look at who [01:09:00] owns the customer demand here? That person or that group should have equity, should have ownership in the underlying asset.
And should share the majority of the profits that come from it. And so in the NBA and in other industries, we're still early on it and it's going to be exciting to see.Â
Saagar Enjeti: Such an important concept. That's literally where the world is trending. So I'm glad that we got to highlight here, Erik.
Thank you for joining us, man. This has been just amazing conversation. I think it's been very useful. For me particularly, I hope for everybody out there just for somebody who's operating in this space and literally actively participating in those realignments to break that down here. So thank you for joining us, man.
I really appreciate it.
Thanks. Absolutely!