Mark Daniel is the co-founder and managing partner of the investment firm Digital XYZ, whose portfolio extends across accelerated computing, gaming, crypto, social networking, AI, extended reality, cybersecurity, creator tools, spatial computing, and immersive learning.
Back in 2013, he was also one of the very first recipients of a Thiel Fellowship.
This was a fun one. Mark joins the show to discusxs why podcasts are dangerous (😬), why content creators should have a 10-post limit, how he identifies kaleidoscopic aliens to invest in, and MUCH more.
I hope you enjoy this conversation as much as I did. We’ve shared some highlights below, together with links & a full transcript. As always, if you like what you hear/read, please leave a comment or drop us a review on your provider of choice.
Links
Our Substack is growing! Subscribe below for more brain-tickling content designed to make you go, "Hmm that’s interesting!
Highlights
Content Creators Should Have a Ten-Post Limit
“And to be clear, I'm very pro-ingestion of new information, but I think that maybe each person who creates content on the internet should be limited to 10 posts. I don't believe that someone has more than 10 things to say. You can't make 600 videos on working out, but that's the business model the internet pushes you to do. There's not 30 different bicep workouts that you need to record, right? There's probably one, right? So I think finding the very best thing and ingesting that one thing very carefully is incredibly productive. Anything that's derivative of that, I don't think is productive. My personal information diet consists of reading things that are timeless, very, very, very old, and then things that are very, very, very, very new. “
Personal Growth is Simple, So Why is it So Hard?
“Like marriage, health, building a business, building a great portfolio. All of those things are quite simple and quite hard. Whenever I find myself trying to over complicate something, it's usually because I know what the answer is. I don't want to accept what the answer is, because it's going to require me to sweat. It is always the guy who's out of shape who's asking about push-up variations in the gym. It's always the guy who can't do one push up, he's like, "But do I put my hands here? And then do I do a jumping push-up? Or do I do underhand?" It's like, "No. Just keep going until you can't anymore" and I think that that tends to be correct in every stream of your life that's worth developing. You just have to do the simple, hard thing 90% of the days each year and then do it for 10 years and then look up and see where you're at, and that tends to work out pretty well.”
How to Find a Kaleidoscopic Alien
“I think with the best founders that we meet, we always are looking for these people that we call kaleidoscopic aliens. They've had some bizarre set of life experiences that have shown them the fourth dimension, and they also can thrive in the most adverse and ambiguous environment, which is outer space. And when you find these people, you often find them coupled to these highly irrational obsessions at a pre-commercial point in time. And then the cosmic pendulum is always swinging, and it looks like they've somehow picked the right thing that was very insightful and very premeditated. But, it's actually just a result of the cosmic pendulum swinging, and they haven't moved at all and they've been irrationally obsessed with this thing for six or seven or eight years. And then magic happens. And we're always looking for that. We're always looking for those types of earned insights.”
“Would I Beg Them For a Job?”
Mark: “When we think about making an investment, there's this visceral feeling that is more powerful than all of our strategies and frameworks, which is that if I wasn't building our firm, would I go and beg the founder for a job?”
Jim: “I love that.”
Mark: “Hundreds of questions that are baked into that question, and I have never had a counterfactual on that. So if the answer is no, I would not beg them for a job. The company, the investments never worked. If the answer is yes, there's all of these things that could be problematic. The market's too small, they're co-founders leaving, whatever the fuck it is. But if I would go and beg them on my hands and knees for a job, they've always done well.”
Books & Articles Mentioned
How to Be Successful; by Jim O’Shaughnessy
How to Win Friends and Influence People; by Dale Carnegie
Transcript
Jim O’Shaughnessy:
Well, hello, everyone. It's Jim O'Shaughnessy with another Infinite Loops. I have a very special guest today, and I told him I would do this, so I'm going to lead with it. My guest, Mark Daniel, the managing partner of Digital.xyz, which is a multistage Metaverse investment company looking at accelerating computing, gaming, crypto, AI, immersive learning, also a 2013 Thiel Fellow, which we'll talk about. But he told me something as we were chatting before recording and that was, he thinks podcasts could potentially be dangerous. Which I can hardly wait to hear why. Mark, welcome. I ambushed you there. I started with the thing I promised I would.
Mark Daniel:
Thank you. Thank you for having me. Well, I think that, and this is somewhat, I guess, relevant to my story as well, what I've always been most passionate about is how culture and technology co-evolve, right? Culture being the set of stories that we live in, technology influences those stories and creates new ones more than anything else. And when you think about that helix, that loop, I think that's the most powerful force in human history. I think there's probably a analysis paralysis that affects a lot of people. And I think that this probably started with Tim Ferriss maybe 10, 15 years ago now, who I think produced so much great value for people. But then it went too far, where people can't have a morning now because they're too worried about their morning routine. I think on a more serious note, if you think about having voices in your head, you have literally now invited voices into your head.
If you think about some of these biblical ideas, and if you think about this idea of Luciferian intellect, that the devil is beautiful, not ugly, and the way he might work inside of you is in ways that make you feel quite good. And then you think about the idea that, for two or three hours a day, for the first time in human history, you are listening to people telling you, essentially, how to live your life and how to spend your very scarce time, and you could spend years and years of your life just listening to people telling you how to live. Maybe that's not the best thing. And this is literally the first time in history because of headphones. This is literally in the last 10, 15 years where two, three, four hours a day of just passive time, you're ingesting ideology around how to live your life. And I don't think that's necessarily good for people.
Jim O’Shaughnessy:
There is so much of that which I actually agree with, says the guy who hosts a podcast with more than 250 episodes. I am very, very bearish on what we used to call listicles prescriptions. "This is how you must conduct yourself if you wish to be," fill in the blank, right? "If you want to make money, you've got to do these 10 things. Number seven will shock you." The more I would see those things, about seven years ago, they got really popular around 2017, 2018, I just literally would break out in hives whenever... And in fact, I did a thread on Twitter saying, " For fuck's sake, don't listen to me." Because one of the things that I see there, is you can have even two honest-minded parties. Let's stipulate that the person making that list honestly, actually thinks that he or she is helping people by doing so. No other agenda, they actually do believe that.
Also, the person reading that list, same thing. Their agenda is, "I want to level up, I want to do better. I understand my weaknesses, I understand my strengths. That's a big assumption, but I really want to do it." Even then, I think you're right about the idea that ideas live rent-free in a lot of heads. And the classic interpretation, like schizophrenia for example. I have a theory that schizophrenia is potentially filter failure, and it's just that the brains of people who suffer from schizophrenia don't have the filters that the rest of us have. I remember when I was doing a deep dive on neuroscience. The number of data points or visual, auditory, whatever type of stimuli that hit us every second is massive, and our brains filter it out to just the stuff that we think is very, very important.
Without that filter, you squander your attention, to your point. And so I guess my question to follow would be, I have an answer for your complaint. I read transcripts of podcasts that I'm interested in. Very different way of coming into your perception. How about you? Do you think that I'm just doing a half measure there, or elaborate?
Mark Daniel:
I think there's a few ideas here. And to be clear, I'm very pro-ingestion of new information, but I think that maybe each person who creates content on the internet should be limited to 10 posts. I don't believe that someone has more than 10 things to say. You can't make 600 videos on working out, but that's the business model the internet pushes you to do. There's not 30 different bicep workouts that you need to record, right? There's probably one, right? So I think finding the very best thing and ingesting that one thing very carefully is incredibly productive. Anything that's derivative of that, I don't think is productive. My personal information diet consists of reading things that are timeless, very, very, very old, and then things that are very, very, very, very new. And things that are usually written from a position that's not particularly commercial. So I'm much more interested in reading an actual research paper and then trying to look through the 70 pages of citations and infer what I think about that, versus the kind of blog post on the research paper, if that makes sense?
Jim O’Shaughnessy:
It does. And I think that one of the things that ... It's difficult for me, because like anything, I'm not deterministic, I'm much more probabilistic in the way I think about things. And this idea that it's a yes/no, black/white, zero/100 ... I think most things live in the middle. And the idea that I'm very, very bullish on is the nature of what I call the human colossus, which is first off, the internet, and then our ability to connect with others no matter where they are. We have a thing we call the great reshuffle at OSV, where we say all the old models are collapsing and just people have habituated their go-to playbooks. And right now we're at the part of the great reshuffle where they're just really beginning to notice these playbooks aren't working anymore. And in fact, not only are they not working, they now almost appear like a joke. I always make fun of the World Economic Forum and Klaus, who I often say reminds me of even a campier version of Dr. Evil. And literally he doesn't know that. And so, they're using these tone-deaf campaigns on the internet that they're spending a shit-ton of money on. And really they don't understand that all they're doing is feeding the meme makers and everything else.
I definitely think though, that on the one hand, the benefit of someone who is a true creative ... When I was a kid in the '80s or ... I wasn't a kid, it was between age 20 and 30. But, if you were a great writer or you had a great idea or you had any of that, there was just no way for you to literally get that out there to even a small audience, frankly, because unless you were an academic and you had the avenue of writing a paper or a study or whatever, you had to go through a series of gatekeepers that were basically, in my view there to reinforce the existing narrative and not highlight the things that were brand new.
It's one of the reasons why I love Robert Anton Wilson so much, was I learned so much about that counterculture when I was in single digits as a kid, that literally figured out or tried to figure out ways to get those ideas out there. But, it's like mimeographs and if you weren't in San Francisco for the Summer of Love in 1967, man, you didn't know anything about it. So is it a question mark that you think that we've just let the pendulum go too far? Or are you more precise in your analysis of this than I might be?
Mark Daniel:
I think one of the super skills of the future, or even of the present, is just going to be figuring out how to ignore the vast majority of things that are created. So I think there's probably two things of modernity that are remarkably unique. One is that you have access to all the world's information in your pocket. Two is that you can walk up to any major airport in the world and be anywhere else in the world in 24 hours. And neither one of those features would [inaudible 00:33:18] who's lived through human history, have been able to conceive. Now, if those things are not placed on top of the correct value system, they actually become corrosive, not productive, because wanderlust, whether it's in love or location or in focus, ends up being usually quite corrosive. But, if you understand how to ignore the vast majority of things, obviously the permission-less nature of the internet is very advantageous.
But, I don't see many people who come up with that degree of focus. And I think that on the life advice stuff, on the career advice stuff, on anything that's advice driven, I think mostly the answer is simple and hard and people want complex and easy. And podcasts are great for complex and easy, but the answers are usually simple and hard and you just have to do the work. So I don't know where we'll land, but I think for the people who have the right set of values, this is going to be a golden age in the next 20 or 30 years of them being able to create. And then I think there's going to be this really big stratification, where you see more and more people who are continuously lost and induce themselves into this almost mildly schizophrenic lifestyle.
Jim O’Shaughnessy:
Yeah. And just let's drill down on that, because I agree. And the ability to ignore, I love that framing, because that's right, in my opinion. I think that the ability to ignore almost everything, honestly. It's like I'm a big fan of Twitter, because I honestly think that it could grow into a global intelligence network. And it's had its ups and downs, and I was a big fan of that when Jack ran it. And I didn't get all hysterical when Elon bought it. But, one of the things that I do notice there is those spud-up time cycles. If you were an Orwell fan, the two-minute hate, like, who's "it" today? As my friend Alex Danko loves to point out, "Who's "it" on Twitter?" And you just don't want to be "it," ever.
But, you see these things have been sped up, the flywheel happened so fast. And then it's kind of like, "Oh, no. No. No. We're doing the new, new, new, new, new thing today." And that just destroys all of your intellectual calories. Thinking is hard, and you have to become a cognitive miser, in my opinion, especially with this onslaught of everything, the new thing of the day. Most of it's worthless, but I want you to keep going with your, "some of the answers are simple and straightforward." Give me a couple examples of what you mean.
Mark Daniel:
Like marriage, health, building a business, building a great portfolio. All of those things are quite simple and quite hard. Whenever I find myself trying to over complicate something, it's usually because I know what the answer is. I don't want to accept what the answer is, because it's going to require me to sweat. It is always the guy who's out of shape who's asking about push-up variations in the gym. It's always the guy who can't do one push up, he's like, "But do I put my hands here? And then do I do a jumping push-up? Or do I do underhand?" It's like, "No. Just keep going until you can't anymore" and I think that that tends to be correct in every stream of your life that's worth developing. You just have to do the simple, hard thing 90% of the days each year and then do it for 10 years and then look up and see where you're at, and that tends to work out pretty well. That's really, honestly, the only thing that I've seen work out well. That's not luck driven.
Jim O’Shaughnessy:
We could not be more aligned on that advice. I love the Dao de Jing. I've been reading it all my adult life. Finally began to understand it when I was in my mid-fifties. I'm not terribly quick. But-
Mark Daniel:
You just made a great point. The completion porn is really challenging also. So it's like, I think it's much better to watch the 10 greatest films 10 times, than to watch 100 films once. And again, that's just not the way that our culture is set up today.
Jim O’Shaughnessy:
And I wonder, honestly, whether our culture ever was set up that way? I'm sure you're familiar with some of the speculation about why we developed language. And I came across an academic paper that I thought was really funny, but they were serious. And it was, we developed language to gossip, because we were living in hunter-gatherer tribes, and you want to fit in before you can stand out. And if you can't say, "Fucking Grog over there is a layabout. He's not pulling his share of the work here," You would only have a physical altercation that you could express that with. And that language allowed us to just take the temperature of the room with all of our other tribe mates. "Hey, what do you think about Grogg over there?" So I definitely think it's built into our human OS to enjoy diversions, so to speak.
Mark Daniel:
Absolutely. Yeah. But, spiritual diversions would've been quite rare. And the explosion of choice that we have is very recent, and the explosion of media is even more recent. If you were born 100 years ago and you were fortunate enough to be literate, which globally would've been rare, you wouldn't have had 1,000 books that you could have read. You sure as hell would not have had Instagram and TikTok and television. So your choices were much more constrained.
Jim O’Shaughnessy:
Indeed, they were. But I was going to demonstrate or illustrate with a different story, your point. I can always tell, whenever I put anything up online about the Dao de Jing, I have a universal rule. Anyone who comes back to me and says, "Which translation should I read?", A, is not going to ever read it seriously. And, B, if they do read it, they're not going to understand it.
Mark Daniel:
Yeah. It's funny.
Jim O’Shaughnessy:
So I think that has been a message of mine from our earlier conversations and why I wanted to have you on, was I have a different context than you. I was born in 1960, you're much younger. But, my context saw that shift from where you really wanted to get deep domain knowledge. And we were chatting before we began the recording about how this world unfairly treats people like me well. And by that I mean I have deep domain knowledge on asset management, specifically quantitative, algorithmic investment management. The rest of my domain knowledge varies, but usually just enough to be dangerous.
And so if you're facile and you can sort of talk about anything, this type of environment favors you. And if you're not, it doesn't, until it does though. Because that's what I want to ask you next. Your company Digital.xyz, essentially you're looking for diamonds in the rough. And I'm sure that a few of those, I'm going to ask for your definition of how you find that, and what you call a diamond in the rough? But, I'm sure that one of the things is they're doing something that the vast majority of people would neither take the time, nor the effort to really become expert at. Am I in the right ballpark?
Mark Daniel:
Yeah. Yeah. Absolutely. I think with the best founders that we meet, we always are looking for these people that we call kaleidoscopic aliens. They've had some bizarre set of life experiences that have shown them the fourth dimension, and they also can thrive in the most adverse and ambiguous environment, which is outer space. And when you find these people, you often find them coupled to these highly irrational obsessions at a pre-commercial point in time. And then the cosmic pendulum is always swinging, and it looks like they've somehow picked the right thing that was very insightful and very premeditated. But, it's actually just a result of the cosmic pendulum swinging, and they haven't moved at all and they've been irrationally obsessed with this thing for six or seven or eight years. And then magic happens. And we're always looking for that. We're always looking for those types of earned insights.
And the thing that you said about these cultural relevancy cycles being so compressed, is incredibly astute, because I think when you look at really young founders, they're often now getting robbed of their calligraphy. So when you think about, could Jobs have done Apple without the calligraphy years, if from 16 you feel like you need to be X, Y or Z, you might not have the time to putter around, or feel like you have the time to putter around and explore your passions as much as maybe someone would have before there was the startup culture or founder culture that became in vogue. So this is something we think about a lot.
Jim O’Shaughnessy:
Yeah. Literally the ideas that I ultimately put into practice with my companies, O'Shaughnessy Capital and O'Shaughnessy Asset Management, literally were generated, because I had the luxury and privilege of sitting alone in a room for basically three years, reading everything I could, because I loved the stock market, because it seemed to me to be this ultimate puzzle and kind of the Olympics of business. And because I did have all of these different interests that's perfect for the stock market. But then as I was looking at it, I'm like, "Okay. So most of what people are saying is just pure horse-shit. How can I get to first principles and how to approach it?" But, that took me more than three years, alone, in a room, reading physical things that I had to go to a library to get. And this is actually making me think about it for the first time in this connection. I just wonder, is that even possible with young people today? Because I was in my early twenties when I did that.
Mark Daniel:
I think it's possible, it's just challenging. But, because of the flattening of the world, where everyone is discoverable ... Can we find 12 people a year where that is the case? Absolutely. And I think the best young founders today are better than ever before, because they started being incredibly commercial and creative at a very young age. And they had these weird ... When you think about from my generation and before me, I was born in '94, you would've a lemonade stand. I remember when I was eight or nine years old, I was selling Palm Pilots in my little neighborhood in Tennessee, these stupid things.
You have kids today where they're building whole worlds at 12 on Roblox. And it goes from being pre-commercial, "Let me build a cool universe for my friends," to making millions of dollars by the time they're 16. We've invested in someone who's building essentially the LVMH of Roblox, and he just started as an incredible UGC user-generated content creator on Roblox and Minecraft when he was 13, 14. He's already making millions of dollars. Clearly we're in the wrong business. But, for the best kids, they're better than ever. But, for how many people are able to break out of these algorithms? Very few.
Jim O’Shaughnessy:
Yeah. That is something that I have pondered a lot. Our very own CTO here, O'Shaughnessy Ventures is still not legal to drink. And he started when he was, I think single digits, taking apart phones, making them better, finding the spyware. And I would say to him, "Misha, why'd you do that?" And he goes, "I just was so curious," and that speaks to your obsession. He was obsessed with trying to figure this out. And so I definitely agree, obsession. I was obsessed in terms of trying to find the answer. Misha was certainly obsessed. But, I think you're absolutely right. Today both men and women are starting a lot younger. And do you use that as a filter when you're trying to find these kaleidoscope aliens?
Mark Daniel:
Well, I think when we were setting up our business, one of the things that we really spent a long time studying is just the history of iconic companies. And I think when you look at the history of iconic companies, maybe the most important takeaway is that they're overwhelmingly idiosyncratic. And if that's the case, whenever you get into really tight playbooks as a venture capitalists, you're in trouble, because there's a very quick and easy counterfactual, that if you actually know the history of iconic businesses that you could pull. So I think that it's amazing when we find someone who's able to contribute at that level from a very young age. But, there's just as many examples of people who've done something completely different. They were complete failures at age 30, who then start an iconic business. And what we've seen is that even in these career paths, they tend to be extraordinarily nonlinear. In wealth creation they tend to be extraordinarily nonlinear.
And there's a lot of these yardsticks that end up not really mattering how successful you're at 20, 30, 40, 50. It doesn't really matter. And if you even take a Buffett, most of his financial success was created at an age where many of his contemporaries would've closed shop, retired. So we don't really worry about how old someone is. We love it when we meet young people. I think the thing that is amazing about young people is that they're squarely on Plan A of their life. And the optimism of someone who's on Plan A is infectious. It's something that I'm always chasing. But that optimism and that energy and that freedom to just focus on one thing is remarkable.
But I would say that's probably the only thing that we look at uniquely with young people. And then I think just they have this openness around what's possible. So there's a lot of calcifications that we have intellectually that we have to fight, just because a little bit older, where a 15-year-old doesn't even see the lines that we see. They're much more fluid in the way that their mind can dance. So I think that's the other benefit of talking to a lot of young people.
Jim O’Shaughnessy:
Yeah. And one of the things that we're doing at my company is ... You know what ur patterns are, right?
Mark Daniel:
Yeah.
Jim O’Shaughnessy:
Yeah. So that genius 20-year-old who's our CTO, I've asked to build out AI agents that go searching for ur patterns. And I love your idea. By the way, we're doing something very similar, where we're taking every iconic company from the past and we're going all the way back, even including the South Sea Trading Company, that Isaac Newton lost a fortune in. It was iconic. It was so iconic that ... Can you even imagine what I often see the people slaying in crypto or whatever online. And just imagine how incredible the [inaudible 00:51:00] to get into the South Sea Trading Company would've been.
Mark Daniel:
Absolutely.
Jim O’Shaughnessy:
But, literally they do. It's like the notion of the Hero's journey. Campbell's classic story. When I first read about it, and I read him ... By the way, hint for all of our listeners and viewers, watch his video interview ... Here's one, I'm going to contradict myself, but thank you Walt Whitman. Do I contradict myself? Of course I do. I contain multitudes. Don't read his books. They're pretty boring and dry as dust. Watch his interviews with Bill Moyers on PBS, because he's really good in those. But when I was reading the first book, I'm like, "Wait a minute." So there's an underlying pattern to these stories that we all love. And then the minute you start seeing it, your reticular activating system gets activated and you just start seeing hero's journeys everywhere.
But, it is a fact. If you look at the stories that are the most popular ... And I know stories are very important to you, because they create the culture in which we live. They're the operating system of culture. What you do find are underlying patterns, ur patterns, primitive patterns, that if you can unlock those and you're in that business ... You're in the film producing business, which we are. You're in the book producing business, which we are, they can be very, very valuable. Do you concur with that or am I just a crazy old guy here?
Mark Daniel:
No. Absolutely. I think there's only a handful, maybe a dozen stories that exists in all of human interaction, in all of human life. And I think that there's very few people today who lack training of the head, and there's many who lack training of the heart. And sometimes the only way to understand those half dozen to dozen stories is actually have life in your life. And I always tell young people that I meet in Silicon Valley, "Do not delay life. No matter what you do, do not delay life, because a lot of the things that you learn in life are going to help you build your vision and manifest your vision." So I completely agree with you studying those dozen stories, understanding them intimately, also earning that wisdom. Anytime you haven't earned the wisdom that you espouse, you have to be a little bit wary of where is it coming from and how well do you actually know it? All of those things I think are really important in business.
Jim O’Shaughnessy:
Yeah. I agree. And that goes back to your earlier point about things being simple, but not easy. You're absolutely bang on about most things. You want to have a great life, pretty simple stuff. Get enough sleep, eat the right types of foods, exercise. Everybody wants a hack. And yeah, there is the easiest hack in the world. Just do three of five things, and you know what? Your life's going to turn out pretty well. And yet nobody is interested in that at all.
And successful investing, super easy. Super easy. And yet super hard to get anyone to do it that way. It's like the new, new thing yet again. And I like this theme, because I haven't thought about it enough, and so you've given me a really cool thing to really contemplate for a long time. On the one hand, there is a huge universe of knowledge around a lot of things, investing, how to live a successful life, how to have a successful marriage. These things that are basically basic to us as humans. And yet, and yet, all of that gets ignored. All of that is like, "Oh, if it was that easy, everybody would do it." No fucking way. Actually the opposite. "Oh, why would I ever do that? That's too simple." And what are your ... ? How do you solve for that?
Mark Daniel:
I don't know if it was Bezos or Bill Gates, but it stuck with me. One of them was having a conversation with Warren Buffett. They're like, "Warren, your strategy is so simple. Why doesn't it get competed away? Why doesn't everyone do this?" And Warren says, "Because no one wants to get rich slowly." And when I look at the first decade of my career, all of my most successful contemporaries follow the exact same path, where the long way was the short way. Now that 10 years have passed, they just have kept doing the same thing. I think, for me, with what we're building with Digital, the means are the ends. And I think if you can find whatever in your life where you will feel like the means are the ends, you're very happy to get rich slowly, because you just want to keep doing the same thing, and then the timelines don't really matter.
So that's how I manage it in my own life. I just have a life that's full of things that I would keep doing forever. And I think if you can get to that point, you have won the great game. And if you don't get to that point where you're spending your life doing the things that you authentically love, no matter what other points of validation you have, you've lost the great game, because the whole point, if you can get post-just-survival, which has been most of history, is just trying to survive. So that's how I manage it in my own life.
Jim O’Shaughnessy:
And as do I. And I'm interested, you have LPs. Right?
Mark Daniel:
Yeah.
Jim O’Shaughnessy:
So I don't have any LPs. Our venture arm is no LPs. I'm the only LP. And one of the things that I noticed was it really did give us a fairly large advantage in that we've made a bunch of investments that I would've never made if I had to try to justify them to an LP. How do you deal with that tension with your LPs?
Mark Daniel:
I think for us, it's actually been really productive, because it creates ... When you're risking your own money, there's maybe a certain amount of leniency that you have in the way that you follow your frameworks or strategies when you are risking someone else's money and you really are connected to, I think there's this very nonchalant attitude that a lot of asset managers have and investors have of, oh, well, these people will give us cash and whatever, and if the returns are great, great, if they aren't, who cares? It'll be 10 years from now. We do not believe in that at all. I think that as people who've had to make our own money, when someone goes and trusts us with their capital, we take that extremely, extremely seriously. If you are working with a foundation or an endowment and you really connect to, well, where's this money coming from, we take that really seriously.
So I think about every single investment we make, having to go and walk someone through exactly why we're taking their very scarce resource that they've trusted us with and we're putting it into this opportunity. And I love having that accountability. I think it long-term will make me a much more rigorous and much more disciplined steward of capital.
So I haven't bristled at that yet, but of course there's times where we see something that's crazy, where the just creative fun side of me would love to be able to invest in it. And it's not to say that I wouldn't personally invest in it, but investments that we're doing out of our firm look at it specific way, and it's a way that our LPs are aligned in having us invest, and we respect that.
Jim O’Shaughnessy:
Yeah. I was in-artful in the way I asked the question, because what I actually meant was the reverse. With many, many LPs under that rubric of what's going on now? What's the hot thing now? How do you deal with their impatience, if you will? Or are you lucky enough to have been able to select LPs that do not demonstrate any of those kind of hyperbolic discounting things?
Mark Daniel:
Mostly the latter. I think we've been really thoughtful. I was able to start our business with a great mentor, and one of the things that he shared with me when we were getting set up, is just the same way that you're really thoughtful about the founders you partner with, you need to be just as thoughtful about the LPs that you partner with. And we really try to exclusively have LPs who are aligned with our vision and our values and can be really scalable and durable relationships as our firm and our business grows over the next few decades. And they can have some type of strategic value also. They can really contribute to the conversation that's happening within our community.
And I think with those types of people, they're very aligned to, well, what are we building together over literally the next 50 years? I want this to be my last job. I'm 30, hopefully I can do it decently well until I'm 80. So it's never about this one investment or this one fund even. It's about what's the trajectory of the firm for 40 or 50 years. I think that's where the conversation tends to sit at with many of our LPs.
Of course, every three years, every four years, there's some craze technically that people get really excited about and usually that excitement is warranted. But what we've seen going through this just a few times in my career is that if you could hold back for maybe the first two years after it's on the cover of the New York Times, you'll be able to make much better investments, because a lot of the first things, the most obvious ideas would've been tried. Maybe you would miss one or two iconic companies that were front-runners.
But there's many things where you're like, oh, okay. I mean, crypto is a great example of this. You think about all the things that were tried in '20 and '21 and then stable coins, which no one was that excited about or very few people were excited about. Stable coins ended up being the really durable use-case that has really wrecked over the net the last two years. I think AI we'll see something similar and that will continue. So we love to follow.
And I think this is where the discipline comes in. How can you tenaciously follow a technical boom, but that doesn't mean your capital should follow it. And being able to separate the intellectual exercise of staying current technologically from the exercise of actually allocating capital against a trend, are two very different things.
Jim O’Shaughnessy:
Amen, is all I can say. I totally agree with you. And one of the error patterns that I have seen emerge is there is a very specific cycle to new things coming on the scene and humans reacting to them. So much so that I say markets change millisecond by millisecond. Human behavior barely budges millennia by millennia. Your last sustainable edge is arbitrage in human nature.
And then just to pick an example out of the air. At the turn of the 20th century, there were hundreds of car companies in America, hundreds. Obviously, we know that went down to... I mean, how many do we actually have in the United States right now? But it shrank rapidly as all of the Cambrian-like explosion of new things, I mentioned the South Sea Trading Company. It's really fun to go back and look in the newspapers of the era, because all of the permutations that people were raising money on, it was all just bullshit. For a immensely profitable enterprise which has not yet been discovered and people are pouring money into it.
And what's interesting is not the grift on top, it's the way people respond to it. When the culture is awash in mania for, fill in the blank, and it's changed dramatically throughout the years. Railroads, same mania that we have going on right now for AI, same thing. Everything, same. And they're like, no, railroads were completely different. No, exactly the same. Tons of railroad companies, most of them failed, most of them fucked everything up. And then the few that did had a brief period of time where they did really, really super well and then got replaced.
What are you seeing now that you're like, okay, I think the mania is subsiding. You mentioned crypto already. Anything else that's on your radar as like, okay, it's seeming to settle down a little bit, but here's where we really think there's going to be legs?
Mark Daniel:
Well, I think that we focus on can we discover the most gifted people in the world? Can we credibly assess if what they're doing is going to be successful? Can we convince them to work with us and then can we support them if we have convinced them to work with us? We find that that alone takes 25 hours a day, right? We're always behind on that job. If we then had a lot of time to think about what the world needs outside of that, we would likely just try to start the company ourselves, which we've done before and we'll do in the future. But we try to really avoid thinking thematically.
There's this great chart that shows the last 20 years of venture capital. What VCs think is going to be the hottest company, not once has turned into the most iconic company star that year, not once. So we look at that chart every day, literally, and it's a reminder on why themes are so dangerous. Now, that's not to say that we don't have ideas.
That's not to say that we don't have hunches of what might be more likely to succeed than other things, but we really spend most of our time trying to assess is, does the founder who's going to have infinitely more context than we have, is the founder approaching this in the right way? I will say personally, what I'm really excited about is just how all of these new technologies are going to combine. So there's a lot of, I think, combinatorial possibilities that will happen in the next five or 10 years that we couldn't imagine, and that's going to create new technologies, that's going to create new product experiences, that's going to even create new business models that we might not be familiar with. So I'm really excited to be open-minded about that.
Jim O’Shaughnessy:
And again, we are so simpatico. That's the way we look at the world. The combinatorial potential is the greatest I've ever seen in my lifetime, and not only in my lifetime, man. I mean, when you go back and you look at the history, I mean, it's overused, and so I try to use it less, but we literally are living at one of the coolest times in human history, in my opinion, because of the combination potential. For example, AI combined with virtual reality is going to do... The quarterback for the Washington football team. What do they call him now? The Commanders, right?
Mark Daniel:
Yeah, the Commanders.
Jim O’Shaughnessy:
Yeah. Okay. I can't remember the new name, but I was interested where I saw he does his training, he's a rookie, he does all of his training in VR with the help of AI as well. And I'm like, yes, here we go. This is very cool because this is showing in a medium that most people understand, that's another thing that I've had to conclude. I'm not a sports guy, at all.
Mark Daniel:
Neither am I. Yeah.
Jim O’Shaughnessy:
To me it's sports ball. And I even developed an internal algorithm for how to deal with drivers when I was on the road a lot, because the only thing they ever wanted to talk about was sports. And so I'm like, okay, so I'm going to develop a way to do this.
Mark Daniel:
I just found out Tom Brady retired, so I'm way behind.
Jim O’Shaughnessy:
Well, you're not behind me, because my question would be, who's Tom Brady?
Mark Daniel:
Right. Right. Exactly.
Jim O’Shaughnessy:
But you do got to give in if you really want to communicate clearly with something that has a lot of mind-share with a lot of people. And this is that algorithm that I developed for talking with drivers, taxi drivers, Uber drivers, etc. And it's like I would get in the car and they would say, how you doing? Where are you from? And then, yeah, I'm from New York. Oh, what do you think of the Yankees? I have no idea. I don't. I don't think about the Yankees. I don't know anything about the Yankees, but that one was met with sullen silence or in some cases, hostility.
So what I would do then is just say, well, it really depends on what team shows up on the field. And then the guy would go, oh man, you are so right. And then it's a simple algorithm, just feedback whatever he says to him. So if he-
Mark Daniel:
It the rule for life.
Jim O’Shaughnessy:
It really is, right? I forever, for 25 years, would not read, How to Win Friends and Influence People by Dale Carnegie, because it was such a fucking cheesy title that I was just like, I am not going to read that. I'm just not going to read that. And then I finally read it because so many people told me, you really got to, because he says a lot of things in there-
Mark Daniel:
That saves a lot of time.
Jim O’Shaughnessy:
Yeah, exactly. Could have saved me a ton of time. But anyway, so feedback to them, what they say just in a slightly different format. And I'm not kidding you, I had one driver get out and take a selfie with me because, and I said, why do you want to do that? And, Mark, he said to me, I want to show people that I've finally met somebody who truly understand sports.
Mark Daniel:
Amazing. That's amazing. That's amazing. It's so true. It's so true.
Jim O’Shaughnessy:
Yeah, because it's like when people come and I get asked for my advice a lot, I do not know why, because it's probably horrible advice. But the fact that one of the things that I've noticed is that when people, many people, not all people obviously, but when many people ask me for advice, what they're really asking me for is agreeing with them.
Mark Daniel:
Yes.
Jim O’Shaughnessy:
They don't want advice-
Mark Daniel:
They want permission.
Jim O’Shaughnessy:
They want permission, exactly. Very, very different things, right?
Mark Daniel:
Yeah.
Jim O’Shaughnessy:
And I don't know why, I have suspicions, but I don't know why, but if you try to categorize me socially or politically or anything like that, I'm very hard to do, because I have certain positions that people would call me a communist for. I have other positions that people would say, you're an anarcho. I actually got called an anarcho-capitalist by somebody once.
Mark Daniel:
I don't even know what that is, but it sounds good. Capitalist, half anarcho-capitalist, whatever floats your boat.
Jim O’Shaughnessy:
Right. But the idea is very straightforward that most of the time, like I was saying the one thing that I do have that I'm maybe even kind of obsessed and pathological about, is just I am extremely anti-authoritarian. And even if the authority is right, I hate authoritarians of any side of the political spectrum, I just hate those types of people. And so to the point where I did stupid things.
Like when my first child was coming along, we talked about it before we started recording, I had finally convinced myself through looking into the literature and looking at the data and everything, this is 1985, so this is a different world. Nobody wore seatbelts back then. And so going into the birth of my son in 1985, I'd finally convinced myself through the data that yes, it really does make a difference for me to wear a seatbelt. I was still living in Minnesota at the time, and then fucking Minnesota passed a mandatory seatbelt.
Mark Daniel:
You didn't want to do it.
Jim O’Shaughnessy:
It wasn't that I just didn't want to do it. I didn't do it. I stopped wearing my seatbelt for nine months until my wife just looked at me and she goes, you are fucking insane. You were the one who convinced me that I should do it, right?
Mark Daniel:
Yeah.
Jim O’Shaughnessy:
And so look, I recognize that it's probably cost me more in life than it has helped me, but I just hate being told what to do. And maybe that's some secondary and tertiary benefits that I haven't even thought about, maybe that's why I hate those lists. Maybe that's why I hate the, 10 things you've got to do for your morning routine. Number seven will shock you. I hate that shit.
Mark Daniel:
Let's do the opposite.
Jim O’Shaughnessy:
Yeah.
Mark Daniel:
They're like, wake up, have a cup of coffee, take a shower. You're like, I'm not doing any of that. I'm drinking bourbon sitting in the bath.
Jim O’Shaughnessy:
And sometimes, literally, I did that when you still had to go to a physical store and buy CDs of music. I love music. I'm not a huge country fan. I'm open to it, it's not that I just universally and blanketly say it's bad. I haven't found my vibe there yet. But the way I got that way I think was I used to go into Tower Records and literally buy 50 CDs at random. At random, just so that I could discover music. And now I think that that instinct, that maximization of an objective function, has gone haywire. There are way too many things now, so now I'm focusing on the idea that if you are an incredible curator with good taste, the world is your oyster in the next 10 to 20 years. Do you agree?
Mark Daniel:
Absolutely. I mean, there's times where the ocean's created, in which case you need water bottles. Then when you have a bunch of water bottles, you need a new ocean. This is definitely the era of water bottles and curation. And I agree with you, but there's a lot of curators out there. I think that even within the curated set, you run into the same thing.
I'm really curious to ask you about your anti-authoritarian thing. How deeply do you hold that belief? Is there any belief that you have that you'd be willing to die for? Or is there any belief that you have where you'd be willing to have some type of real bodily harm?
Jim O’Shaughnessy:
Belief. Yeah. No, I actually have to think about that. I would instantly die for my children, my grandchildren, like if there was-
Mark Daniel:
If I-
Jim O’Shaughnessy:
Yeah, no, I know. I understand. When you ask the question, that's why I said, belief. I always joke that I subscribe to the George S. Patton idea that let's let the other poor dumb bastards die on their hills, and we're not going to do that.
So God, I think I would die for the belief that if you're going to try to make me live my life on my knees, I would rather be a free man than living as a slave. That one I'd probably die for. And I'd probably die, and it's so easy to play these mind games, because you never know until that scary shit actually happens to you. And I've had enough scary in real world happen to me that I can make this somewhat credibly, but with a huge pinch of salt. And I think I would go, if it was a trolley problem and I had to die so that everyone else didn't have to live enslaved, I think I'd die for that.
Mark Daniel:
Yeah.
Jim O’Shaughnessy:
That's the only one that I can actually think of that springs to mind. What about you?
Mark Daniel:
I don't know. I don't know. I mean, I think it's an interesting question because when you think about the kind of, most people answer some along these similar lines, which is like, no, there's nothing I would die for. Yet they in a way, give up their life and their energy on very silly beliefs all day long. So imagine you're in an era of very impassioned positions on hills that no one would actually die on, what a waste of life that is and life's very short. So see that a lot. That's on the mind literally this week because recording this the day after the inauguration, and I have plenty of friends who are overjoyed. I have plenty of friends who are devastated. And I feel like for the last 10 years I've been very neutral for the most part.
So anyways, that's a few thoughts, but I don't know if there's anything that I would voluntarily commit Seppuku over right now at this point in my life. My kids, of course, but that's a very different question, like a pure-
Jim O’Shaughnessy:
Very.
Mark Daniel:
I don't think I'm at that point in my life on anything where I'd be willing to throw myself off the bridge for it.
Jim O’Shaughnessy:
And I think the reason that I'm that way too is that I think probably most of my deepest held beliefs are wrong. And by that I mean all of us. I'm not just saying, Jim. I'm saying that if you and I could jump into a time machine and go back, and we had already been able to identify, let's say the 50 most enlightened, smartest, most knowledgeable, wise humans in the world from 500 years ago, and we went back to them and we interrogated them on their absolute beliefs, only a madman is 100% sure. And I think that most of the things those people 500 years ago, the smartest most switched on humans on the planet, most of what they believed was absolutely wrong.
And so I'm a huge David Deutsch fan as I think you know, and one of the ways that he really, I call it getting Deutsch pilled, was he makes the very subtle and yet really profound argument that the problem with static societies is they think they know everything already. They think that they have the answer. So if you're going to use a metaphor, they're Sparta, they're not Athens, right? They are this is the way you raise a warrior. This is the way you raise a woman, et cetera. And we do not deviate. You are punished for deviation. You're exiled or you're killed.
And so for the most part, that isn't true at all. Like Deutsch has this very clever way of getting it across. He's like, Hey, what were the most brilliant physicists saying about quantum physics and the internet in 1900, the year 1900? And he's like, they weren't saying anything about it because neither one of them existed. So I am always steeped very deeply in the idea that even as advanced as we are, we probably don't know half a 1% about nothing. And that life is this continual generation builds upon generation, and yes, there is cultural evolution, in my opinion, cumulative cultural evolution. That is definitely a thing, but you got to leave room for error correction. And how shitty would you feel saying, yes, I will be the one who hangs for this. And just as the rope drops, you see a thing on whatever, a screen that is like that idea was completely wrong.
Mark Daniel:
Yeah. What I think you're saying is because you do have this... Or what I would ask you is how do you hold both these things simultaneously if you do have this belief that on your deepest held beliefs, millennia to millennia, people don't change, life doesn't change. But those are the very macro things in life. The micro things you have very high degree of intellectual dexterity and a very high degree of acceptance that you're going to be disproven at some point. And I think I probably mirror that. I think that the things that are really going to make a difference on my deathbed have not changed over the course of human history, and I spend most of my time trying to get those things right.
And then the things that are the micro, one of my mentors gave me something I think about all the time, which is to not get in the thick of thin things you have a high degree of dexterity on. Seems like a good model.
Jim O’Shaughnessy:
Yeah. It's worked so well so far. I am always quite willing to... I am passionate about unlearning things.
Mark Daniel:
Absolutely. Me too.
Jim O’Shaughnessy:
Because what happens is, if you don't learn how to unlearn, you just-
Mark Daniel:
What's the biggest thing you've unlearned in the last year?
Jim O’Shaughnessy:
The biggest thing that I have unlearned in the last year is that... Wow, you should have a podcast. It's a shame you're so opposed to them.
Mark Daniel:
Maybe we can do a co-host day sometime.
Jim O’Shaughnessy:
We should. We should, because that's a fucking great question, and I don't want to be glib and just say an easy thing. So let's come back to that. What is-
Mark Daniel:
I'll give you mine if you want.
Jim O’Shaughnessy:
What's that?
Mark Daniel:
I'll give you mine if you want.
Jim O’Shaughnessy:
I would love it.
Mark Daniel:
It was my one tweet of the year, which was vices that look like virtues are more dangerous than vices that look like vices.
Jim O’Shaughnessy:
Oh, I love that.
Mark Daniel:
It has really helped me a lot. I had all these vices that actually looked like virtues, but they weren't helping me. And I was like, well, my vices that looked like vices were actually less corrosive than my vices that looked like virtues, because no one corrects the vices that look like virtues, they support them.
Jim O’Shaughnessy:
Of course. Oh, I love that.
Mark Daniel:
Because listening to podcasts is a great example of this.
Jim O’Shaughnessy:
Yes. So I'll be Howard Beale. For those who don't know who that is, that's the news anchor in a movie from I think 1970 or early 70s, where he loses his mind. But actually what happens is he becomes sane and he's like, "I'm mad as hell and I'm not going to take it anymore. Turn off the TV. Turn off it. It's ruining you. It's ruining your mind." And of course he's entirely correct. But then the way markets work, which it just works on so many different levels, of course, they're all aghast and horrified when they see this, oh, the poor man, we got to get him help and all this. But then Faye Dunaway, who plays the kind of the new model network executive, she's like, "Did you notice the ratings for that show?"
Mark Daniel:
Yeah, it's funny. It's funny.
Jim O’Shaughnessy:
Have you seen Network?
Mark Daniel:
No, I haven't.
Jim O’Shaughnessy:
Highly recommended it. If you can avoid, it's obviously antiquated and dated because of when it was made, but oh my God, it so nails this everyone is horrified by what he's doing. Then they're like, “but wait a minute, that's getting really great ratings." And then of course it just builds from there. He becomes the biggest star on TV and they add all of these things that are just pure bullshit, and he just gets more and more popular. I won't spoil the ending.
Mark Daniel:
I love that.
Jim O’Shaughnessy:
But it's awesome. It is awesome.
Mark Daniel:
You know the other thing that I think all self-help people, advice people, podcasts hosts, whatever creators should have to do? I think there should be some type of life audit that they have that's on their profile so you can see how well their life has gone. Right? And by the way, this is nothing new. There's so many philosophers who lived a horrifically bad, bleak life. And if you could just see, if could see the man behind the name, you'd be like, "Oh, well, why would I ever take advice from you?" You know what I mean? You live in a barn with goats. Right? And I think the same thing's true today.
Jim O’Shaughnessy:
Totally true. Except I would push back on that and I would push back because sometimes I always try to divorce the person from the idea because I used to have this idea, I always joke about how I have a tweet prevention team to make sure that I can't get canceled because one idea that I had was I was going to take really, really great quotes from horrible, horrible people.
Mark Daniel:
I love that.
Jim O’Shaughnessy:
And it started out with one I had from Goering, the heir to the Reich of [inaudible 01:28:53], and he said, I can't even remember the quote now, but it was a really sensible quote, kind of, " Get a good night's sleep and..."
Mark Daniel:
Yeah. That'd be a great coffee table book.
Jim O’Shaughnessy:
Yeah. Think so.
Mark Daniel:
I'll do [inaudible 01:29:07] We should make it a coffee table book. And then we should also make it a children's book. It's advice from monsters.
Jim O’Shaughnessy:
Good advice from bad monsters.
Mark Daniel:
Right.
Jim O’Shaughnessy:
I love it. Yeah. So that's actually, I'm going to write that down. We maybe do that.
Mark Daniel:
You should do that.
Jim O’Shaughnessy:
We have a publishing company now.
Mark Daniel:
I know
Jim O’Shaughnessy:
So I can do that.
Mark Daniel:
You're the guy.
Jim O’Shaughnessy:
Good advice from monsters. I love it. But I mean, that title right there really illustrates my point. It's really easy. Again, we fall into these super easy reactionary modes, right? Like argument ad hominem, oldest trick in the book. Right? You hate. Well, you mentioned the election yesterday. Trump personifies this. Right? Lots of reasons, very easy to hate that guy.
And so rather than look at what he's saying or doing or enacting or anything, that's how you get these derangement syndromes. Right? And Elon has one. Jobs, interestingly enough, this is interesting now that I'm just thinking about this. Some of the most impactful people in history have the syndrome. Right? Jobs, they said he had a reality distortion field. I don't know if that's true. Maybe it's just that you found what he was saying so either offensive-
Mark Daniel:
A distortion field to you. Right. But not to him.
Jim O’Shaughnessy:
Yeah. Right.
Mark Daniel:
I mean, look, there's a lot here. There's a lot here. There's a whole separate conversation. I think that the war between good and evil is above all of us, and you don't know how fragile that line is for you. And for a lot of these monsters, first of all, we have to admit that they are highly productive people.
Jim O’Shaughnessy:
Yes.
Mark Daniel:
Right? They knew how to get stuff done. Right? Of we'll get BMW. They're very efficient. But where does that kind of exit, how different does the exit look on the highway of evil and good? And at what point does that happen and how susceptible are you yourself to it? And you might be more susceptible than you think. I've definitely found this. I think that we're all hanging on by a thread, and it's important to have empathy for people who, clearly, there's people who are remarkable agents of evil. Right? But there's a lot of people where the ball broke the wrong way and they fell. And I think that's a far greater number than the obvious kind of warlords of history.
Jim O’Shaughnessy:
I think that that is an incredibly good thesis that should be explored. Because as I was listening to you, I was thinking about, you had asked me what did I unlearn last year, and I have that running in the back of my head as I'm listening. And one thing that I unlearned it, but when I was younger, I was a real proselytizer. My way of algorithmic investing using factors.
Right? When I was writing early books about that, the only other people writing about that were academics. Right? And it was brand new, and I was almost like a southern preacher. This is the only way to salvation. And then heaven has lots of doors, I think. And as I grew older, one of the things that I really did understand better was the fragility of all humans, not just you and me. And you've got to understand that it is true about you as well.
Mark Daniel:
Of course.
Jim O’Shaughnessy:
Right? If you take those big five tests, I score super low on empathy. And-
Mark Daniel:
Me too. I am actually genetically predisposed to low empathy.
Jim O’Shaughnessy:
As am I.
Mark Daniel:
Unfortunately.
Jim O’Shaughnessy:
As am I.
Mark Daniel:
Right.
Jim O’Shaughnessy:
And but when I saw it, I was offended. And so we had taken these tests to see how the team dynamics and all that, mostly bullshit to be honest.
Mark Daniel:
I was in second percentile I think, second bottom.
Jim O’Shaughnessy:
I was too.
Mark Daniel:
Yeah.
Jim O’Shaughnessy:
No wonder we like each other so much.
Mark Daniel:
I know, exactly.
Jim O’Shaughnessy:
Anyway, I got offended because there was a woman facilitating all these tests. Right? And I called her and I went like, "What the fuck, man? Why do people come to me with all of their problems if I score so low on empathy?" And she laughed and she goes, "Jim, the absolute best psychologists and psychiatrists score super low on empathy." Then I thought about it for a minute, and I'm like, of course they do, because we don't take it onto our own feeling self.
Mark Daniel:
No. Right. That'd be terrible. Imagine if you're a psychiatrist and you're sitting there thinking, "I completely understand why you did that." Yore like, "No."
Jim O’Shaughnessy:
You couldn't.
Mark Daniel:
Yeah, it'd be terrible.
Jim O’Shaughnessy:
You'd be done. I mean, because literally, you could not withstand that, I don't think. Right?
Mark Daniel:
I'm going to use this the next time someone throws my lack of empathy at me. I'm going to pull this out.
Jim O’Shaughnessy:
Yeah, you got to. Because the minute she said that to me, I'm like, "Oh."
Mark Daniel:
That's why you love me.
Jim O’Shaughnessy:
Exactly. Because that makes just so much sense to me. And the other thing that I do believe back to simple things, right? Oh, and this might be something that I've really unlearned.
Mark Daniel:
Yeah.
Jim O’Shaughnessy:
I used to think that to be a really super good investor, you had to not only be internally dispassionate, you had to express this passion publicly as well. And I think I'm unlearning that because I think if you really want to ignite the imagination of others, you can't do it from a dispassionate, " Well, you might really want to consider that AI is the most human friendly technology of today." And I have all these studies for why that is the case.
Mark Daniel:
Super lame. Yeah.
Jim O’Shaughnessy:
Super lame.
Mark Daniel:
There's also, there's the great saying that there's a lot of right pessimists and rich optimists. In the venture capital business, it's certainly true. Imagine being a pessimistic venture capitalist, which I know a lot of.
Jim O’Shaughnessy:
Yeah, exactly. Well, see that's-
Mark Daniel:
Your advice might be miserable.
Jim O’Shaughnessy:
Yeah. I mean, that's also, we reoriented everything we do on the venture side because I found the traditional side. I just was fucking bored and not interested at all. And so I start looking at what really got me excited. And I looked at all the investments it did, whether they worked or not, right? But what I found was what I loved was the pre, pre, pre seed, with people saying, "Are you out of your fucking mind giving money to that person?" That's where all the fun is, in my opinion.
Mark Daniel:
Yeah. When we think about making an investment, there's this visceral feeling that is more powerful than all of our strategies and frameworks, which is that if I wasn't building our firm, would I go and beg the founder for a job?
Jim O’Shaughnessy:
I love that.
Mark Daniel:
Hundreds of questions that are baked into that question, and I have never had a counterfactual on that. So if the answer is no, I would not beg them for a job. The company, the investments never worked. If the answer is yes, there's all of these things that could be problematic. The market's too small, they're co-founders leaving, whatever the fuck it is. But if I would go and beg them on my hands and knees for a job, they've always done well.
Jim O’Shaughnessy:
I love that as a forcing function because you know what? It's transferable.
Mark Daniel:
Yes.
Jim O’Shaughnessy:
I have found, so for example, I'm writing a, I've had an idea for a fiction book since 1992. And it would be way too long to tell you the story, so we'll do that next time. But one of the things that I started noticing is I would tell people about the idea and the only this one, because you know me, I yap.
Mark Daniel:
Yeah.
Jim O’Shaughnessy:
And I will yap to anyone about anything that I'm fascinated in. And one of the things that I noticed is this story that I'm actually going to write this year, by the way, it's an [inaudible] thriller to be honest.
Mark Daniel:
I love that.
Jim O’Shaughnessy:
But one thing distinguished it from everything else. Everyone I told about idea, I've told some very famous movie directors about this idea, and each of them said, " If you write that as a screenplay, I will sign the option today."
Mark Daniel:
Amazing.
Jim O’Shaughnessy:
Right? And then my friends who are writers when I tell them about it and tell them I'm going to be experimenting with a writer's room, they are fighting tooth and nail to get into that writer's room. So wow. What a great... Maybe we'll say this will be the world's shortest podcast, and we'll just put this little segment. Because that is like, I'm kidding. No, no. Nice try, Mark. We're part-
Mark Daniel:
Part one of four. There's a lot. Yeah, there's a lot. There's a lot there and that's literally in every creative genre. Pharrell has something about this where he is like, if you play someone your record and they pick up their phone, you don't have a hit record. And it's very-
Jim O’Shaughnessy:
That's right.
Mark Daniel:
... extremely visceral. And you need that.
Jim O’Shaughnessy:
And the point is though, back to podcasts, and here's a challenge. To me at least, none of this was planned.
Mark Daniel:
Right.
Jim O’Shaughnessy:
Right? I mean, I do my homework and I have the basic information, and I've talked to you in the past, and I know you and everything, but the conversation that we ended up having was not planned in any way. I think there's a ton of alpha in it, honestly. I'm going to use several. I mean, like what we just covered.
Mark Daniel:
Yeah, me too.
Jim O’Shaughnessy:
So that's a podcast you actually do want to listen to, right?
Mark Daniel:
It is. Yeah, it is. I mean, I'll listen to this one.
Jim O’Shaughnessy:
And I'll break.
Mark Daniel:
I mean, I like your podcast. I love Patrick's podcast. That one's very professional for me, which is great. I think he has probably the best just pound for pound learn from the World's Great Investors podcast probably today. So there's a handful that I love, but those are very, they're very work-oriented at this point. You know what I mean?
Jim O’Shaughnessy:
Right.
Mark Daniel:
I need to stay current with ideas. But the how to do a shoulder press? I'm past that.
Jim O’Shaughnessy:
Well, there's a movie, My Dinner with Andre, and that's what I based this podcast format on. Have you ever seen it?
Mark Daniel:
No.
Jim O’Shaughnessy:
It's an old movie. It was made in 1981. So I was 21 when I saw it. I just discovered it's... The full movie is available on-
Mark Daniel:
Oh, Louis Malle, one of my favorite directors.
Jim O’Shaughnessy:
No, no, this is Wallace Shawn.
Mark Daniel:
It's... Right. But the direct, so you want to hear a crazy story?
Jim O’Shaughnessy:
Sure.
Mark Daniel:
Okay. So Louis Malle, we... Okay. So we started this community called Cafe Saturn eight years ago, and the basic idea was that the future would be genreless and that people were very creatively isolated and they should meet people from other genres so they could create things in combination. And the reason-
Jim O’Shaughnessy:
I totally agree with that, by the way.
Mark Daniel:
So the reason it's called Cafe Saturn is we want to take Cafe Flore in the 60s in Paris and transport to the year 3000. And the story that instigated this was Louis Malle was an incredible French director. He's 24 years old, he's shot this film called Elevator to the Gallows, which is one of my favorite films ever. And he directed this, My Dinner with Andre movie. And he's in this cafe in Paris, and all the celebrities are there, and Hemingway is in one table, and Brigitte Bardot is in another table, and Miles Davis is there. And Miles Davis-
Jim O’Shaughnessy:
Wow.
Mark Daniel:
Miles is the coolest person to ever live, and especially at that point in his life. So Louis Malle-
Jim O’Shaughnessy:
Totally true.
Mark Daniel:
... walks up and he is like, "Miles, Miles, Miles." And Miles Davis is not someone you walk up to. He's like, "Miles, you have to watch my film. You have to score it." Right? So he sees him there three days in Rome, begs him, and then finally Miles is like, "Fuck you, kid. I'll come and do it. Let me watch it." The greatest video I've ever seen is Miles Davis is watching Elevator to The Gallows, and he has a cigarette and his trumpet, and he improvises and plays it live. And it becomes the greatest film soundtrack, I think, in the history of cinema.
Jim O’Shaughnessy:
Oh my-
Mark Daniel:
And Elevator to Gallows is an amazing, amazing, amazing, amazing film.
Jim O’Shaughnessy:
I mean, right? I mean.
Mark Daniel:
This was his first movie.
Jim O’Shaughnessy:
How cool. I've never heard of that movie. I'm watching it hopefully later today.
Mark Daniel:
You'd love it.
Jim O’Shaughnessy:
I love Miles Davis. So but yeah, so this podcast was meant to be My Dinner with Andre. It was meant to be you're just eavesdropping on a really interesting conversation. And to me, that was what I was trying to get done here. And again, this is maybe my anti-authority. I really hate being categorized.
Mark Daniel:
A hundred percent.
Jim O’Shaughnessy:
And stay in your lane. And fuck you, I'm going to change lanes. I'm going to drive this way over all the fucking lanes.
Mark Daniel:
You're lane-less.
Jim O’Shaughnessy:
I am. And so the idea of this was very much personified in that movie where it's just this wild conversation. As a matter of fact, before recording this, I was asking our AI to take me through all of the most interesting philosophical points in the movie. And then it came time to chat with you. This is far, far more interesting, so. But yeah, that kind of podcast that you can't categorize. Right? You mentioned my son, Patrick. You know what's funny is the other thing that it illustrates is Patrick did that just for shits and giggles.
Mark Daniel:
Yeah. Yeah.
Jim O’Shaughnessy:
He was working for me at OSAM at the time. He came into my office and was like, "Hey, would you mind if I tried to do a podcast?" And I'm like, "Why? Why would you ever do a podcast?" And he's like, "Just because I think it would be interesting and I think I could learn things." And this was at the beginning of crypto. Right? And so that's what made him. Right? His first series called Hash Power, where he was talking to all these guys who are super famous now, who back then, nobody knew who they were.
Mark Daniel:
Of curse.
Jim O’Shaughnessy:
And so they all said to Patrick, "Sure, I'll talk to you about crypto."
Mark Daniel:
Of course. Like, "Hold on, someone interested in this?"
Jim O’Shaughnessy:
Yeah. And so but he was done purely experimentally. And then he's like came in after doing, I don't know, I can't remember 12 episodes or something. And he's like, "Hey, I'm going to keep doing this if that's cool with you." And I'm like, "That's absolutely cool with me." And then he never-
Mark Daniel:
Like, "Why are you telling me this about your podcast. Get back to work."
Jim O’Shaughnessy:
Exactly. And so everyone else comes in after they hear that and they're like, "Oh, he's letting him do it because he's his son. And I'm like... So a bunch of other people came in and said, "Hey, I want to experiment with podcasting too." And I'm like, "Knock yourself out." And can you take a guess? How many actually did podcast?
Mark Daniel:
How many?
Jim O’Shaughnessy:
Zero.
Mark Daniel:
Zero. Yeah. Well, it's not like people think it's a very easy thing. It's not. And to do it consistently is incredibly hard. And to, as a host, to be able to essentially maintain a consistent energy and a consistent tone and a consistent presence week after week, month after month, year after year, it's very hard. People look at Joe Rogan and think he just sits there and talks to people all day, and what a great job. No, not at all.
Jim O’Shaughnessy:
Totally, I totally agree with that. And my assistant, who I call my nanny, literally, she knows what I'm doing better than I do.
Mark Daniel:
I tried to hire Au pair for myself when I was 23, and they're like, "How old's your kid?" I'm like, "23. It's me." Like, "Sir, this isn't what you think it is." I'm like, "All right, whatever."
Jim O’Shaughnessy:
So my nanny would always book me back to catch up on podcasts and things, and finally I'm like, "Ena, do you not understand that this is a performance and that you need time both to prepare, but to also decompress from it?"
Mark Daniel:
Right.
Jim O’Shaughnessy:
And she's like, "Oh, that's bullshit. Yeah, I know you can do it. You're a gas bag. Just go on." I'm like, "No, it doesn't work like that."
Mark Daniel:
You're not respecting the talent. And she's like, who's the talent? She's like... You're like, "Me."
Jim O’Shaughnessy:
Right. You're the talent, Jim, I think not.
Mark Daniel:
Right. Just like Van Halen.
Jim O’Shaughnessy:
Well, that's the other thing, man. If you would've said before he rose to prominence, right? Like Eddie Van Halen, man, you got to check this guy out. Most people would come back to you and were like, "Come on. You can't be serious." And my nanny, I'm getting the hook. She knows that I go on and on, so she hooks me.
Mark Daniel:
[inaudible 01:49:14]
Jim O’Shaughnessy:
She hooks me via text. This has been awesome. I'm going to have you back on. You can't escape without the final question.
Mark Daniel:
Oh, okay. Here we go.
Jim O’Shaughnessy:
The final question is, we're going to make you the emperor of the world. You cannot kill anyone. You cannot put anyone in a reeducation camp. That's a nod to my anti-authoritarianism. But what you can do is we're going to give you a magical microphone and you could say two things into that microphone. And the next morning, whenever the morning is for the eight billion people on the planet, everyone on the planet's going to wake up and say, I just had two of the greatest ideas. And unlike all the other times, I'm going to actually take action against both of these idea. What are you going to incept in the world's population?
Mark Daniel:
I think I would try to incept, and I'll share kind of the story with you. When I was 14 and the backstory is, I've always loved hotels, and in my next life, I'll definitely own hotels and operate hotels. But that's a money losing endeavor, so I need to make some more money first. And when I was 14, I had this realization that life is like, you're at this incredible six-star hotel, and the pools are amazing and the towels are perfect, and the restaurant is fantastic.
Not only is it fantastic, but your childhood favorite snack just happens to be on the menu and your best friend is there and everything else. And you get back from breakfast and it's 10:30 AM and you get a phone call and they're like, "Jim, do you have a car picking you up at noon?" I'm like, "What do you mean?" I'm like, "Do you have a car picking you up at noon when you're checking out?" And you're like, "I just got here."
I think that's what life is. And I would encourage people to take advantage of their full stay at the hotel and really wring the towel out and understand that they're living in the greatest era of human history by a very, very, very, very wide margin. And to not kind of get trapped in these three-sided prisons, prisons with three walls that they trap themselves into, and to just enjoy it and savor it because it's very brief. And that's the only thing that I would hope more people would feel or see if I was the emperor, is just to wake up to the beauty of what they have. And hopefully they would do that. That's it.
Jim O’Shaughnessy:
I love that. It's really hard to come up with an escape plan if you don't know you're in a prison.
Mark Daniel:
Yeah.
Jim O’Shaughnessy:
And so many people are in mental prisons of their own construction. And so I love that bit of advice. We should all live our life that way, because you're right. The phone call for your car coming.
Mark Daniel:
Coming. It's coming.
Jim O’Shaughnessy:
Memento mori. Memento mori
Mark Daniel:
Eat the snacks in the mini bars. Do it all.
Jim O’Shaughnessy:
I love it. I love it. This has been absolutely a delight for me. I'm going to definitely have you back on because this is kind of the essence of what I'm going for with this podcast.
Share this post