It’s Alex Danco’s landmark 10th appearance on Infinite Loops!
He joins the show to discuss his move from Shopify to a16z (where he’ll be building out their editorial operations), the power dynamics between VCs and founders (the kings and priests of our era), communication theory and the power of speechwriting, Reagan’s rhetorical genius, authentic weirdos, America’s hypomanic DNA, the unexpected similarities between American and Chinese culture, and why listeners who haven’t read any recommended books after 10 episodes are wasting their time.
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.
— Jim
Links
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Highlights
VCs as Legitimacy Banks
Alex Danco: “The point of VC is to give founders legitimacy, right? I think of this like the VC firm is the legitimacy bank, and the bank idea is actually I think more accurate than you might think at first glance. Because it’s not like somebody deposits legitimacy and then that legitimacy goes to someone else... The former founders and successors make deposits of legitimacy at the firm, which allow the firm to then originate new legitimacy with founders, right? It is an origination exercise, right, not a transfer exercise of legitimacy from one place to another.
The exercise is basically saying, look, you’re taking people who necessarily are trying to create something implausible, right? They are trying to exploit rips in the fabric of space-time for which they need to make the impossible happen. And to make the impossible happen, it’s like you need a couple of things. One, right, is you need credibility. You need people to listen to you. You need legitimacy. You need the ability to be able to make tough decisions and have people accept the trade-offs that you decide. Two, you need people to be curious about you, right? You need people who say, “Oh, like I’m actually really interested in where this guy or girl is coming from. I will go along with them, right? So I can see where it leads.” I think ultimately legitimacy is fundamentally how you get capitalized. It’s how you basically say, “Okay, we’re gonna frontload all of this potential into something that has a capitalization value today in the form of literal money or in the form of the ability to hire people, in the form of social leadership, in the form of all these things.” Right? So legitimacy is how you get all those things”
The Medium Is the Message
Alex Danco: “The first thing is if you go look at that period of time when there was actually sort of an elite class that was ruling the country, It’s like this was a set of people—for all their faults and weaknesses as a ruling class—did one thing unbelievably well…this is a group of people that had a tremendous culture of being in service of, right?
And the reason why I think this made a big difference was because people back then were really, really good at communicating. Everybody back then was unbelievably good at being heard…And I have a theory here, and the theory is that these people largely communicated, particularly through speeches… the art of the prepared and given speech. [Speech] is a medium that communicates the notion that I am in service to you, right? Speech is a gift, right? A speech is something that is done towards an outward purpose, right? An externally directed purpose. In a way where, you know, yakking on a podcast like we’re doing right now, that’s not the same thing, right?
A speech is something that is listened to, and something that is heard, because it communicates the orientation of being in service of, you know, an external purpose, in a way that other media formats like tweets and videos, I think, and podcasts and other things like that, do not communicate.
So anyway, this is a long roundabout way of saying the medium is the message…”
How Word Gets Spread
Alex Danco: “[In a speech] you’re trying to deliver something whose actual intended primary audience is gonna be fairly small. Right? You know who you’re trying to reach, right? So, Katherine Boyle at Andreessen is very, very good at this. She does speeches on a regular basis that have quite tremendous impact, you know, a long time later, and it’s not because she’s trying to reach a large number of people. It’s because she’s trying to reach a very specific group of people, with what she’s trying to say, and then they, you know, take on their lives of their own from there.
What I would say is, like, the primary audience you’re going to try to reach is going to be very situationally specific. It depends on the opportunity space in front of you. But what is gonna be true about that is that’s how you reach the secondary audience of broadly interested people, right? It’s through that mechanism.”
The Power of Writing
Alex Danco: “…the first really big thing that I want to establish both at Andreessen and also kind of reminding a lot of the startup world why we do this, which is like the point of writing things down is not we’re sharing what our investment thesis is or like, we’re gonna help write down this so that you can know about us. It’s like, no, no, no. The point of it is to give you power. That’s the point. It’s the whole point. It is completely consistent with the role of the firm at large… …when I would read whatever that day’s Paul Graham post or Semil Shah or like Mark Schuster or Fred Wilson, or all the people who were blogging in those days, where you would read it and you would really do the work of understanding and saying like, “Okay, I’m gonna go be able to talk about this in a way that is credible, in a way that is interesting, in a way that creates interest in me.” And it would really work, right? You would cast that spell, and then for 45 minutes people would listen to you. And that’s about how long the spell would work. And I remember realizing it’s like, oh my God, this is the skill, right? What a powerful and interesting skill to be able to wield.”
Reading List
What Works on Wall Street; by Jim O’Shaughnessy
How Music Works; by David Byrne
Breakneck: China’s Quest to Engineer the Future; by Dan Wang
The Hypomanic Edge: The Link Between (A Little) Craziness and (A Lot of) Success in America; John D. Gartner
The Language of Magic; by Toby Chapel
Underwriters of the United States: How Insurance Shaped the American Founding; by Hannah Farber
🤖 Machine-Generated Transcript
Jim O’Shaughnessy: Well, hello everyone. It’s Jim O’Shaughnessy with another Infinite Loops. I have been looking forward to today for a long time. Mr. Alex Danco, this marks your 10th visit to Infinite Loops. You are just shredding all of the other guests. You are the man.
Alex Danco: Thank you.
Jim O’Shaughnessy: But let me give you a little praise before you jump in. Okay? So first off, congrats on the anti-carry version of leaving Shopify. They must’ve been like really bummed out at Spotify when they heard out... Heard that you were like that guy who had seven jobs, the engineer. [laughs]
Alex Danco: Marco Rubio? [laughs]
Jim O’Shaughnessy: [laughs] Yes, little Marco. You pulled your own deal. You are moving over to A16, and you are going to turn your considerable powers at writing and communicating into an engine for them. You are, in my opinion, that rare writer who you don’t just write to comment on the world. You write to re-engineer it and retool it. And that’s essentially what you’re gonna be building over at A16. So welcome back. Tell us about this new opportunity.
Alex Danco: Thank you, thank you. First of all, I like that you’ve shortened A16Z even more to just A16, which I’m going to use from now on. [laughs] A16.
Jim O’Shaughnessy: You’ll know that you’ve made it when it’s just A.
Alex Danco: A. It’s optimized for being early in the phone book, you know? This is how Marc and Ben disrupted Venture. They noticed that VC firms were not in the phone book, so they said, “Not only are we gonna be in the phone book, we’re gonna be on the first page.” That’s how you got DealFlow in 2004.
Jim O’Shaughnessy: [laughs] Well, you know, they’re doing a really interesting job and they seem to understand writing is a power transfer tech basically. Right? And, you know, money, information system, media, like if you’re not down... Everything, in my opinion, is downstream of culture, right? And so tell me about, like what’s the plan? Are you... You’re building a network editorial machine basically over there at A16Z or Zed for you Canadian.
Alex Danco: A16Zed. I have to be an incognito Canadian. We actually don’t have a Toronto office. There’s no office in Canada. The Toronto office is now my basement. [laughs] But my first act of power once I’m able to seize the reins of power is gonna be to open a satellite branch of the American Dynamism Fund in Toronto, co-located next to all of the mining exchanges. So they can be the shortest distance to the copper futures trading. The copper mine penny stocks. Maybe as closely co-located as possible.
Jim O’Shaughnessy: I love it. [laughs]
Alex Danco: Yeah, I’m looking forward to going over. Eric is really putting together a fantastic group of new blood in the room. And he’s not done yet, which is exciting. I’m looking forward to seeing the final form of this team. But no, I’m tremendously excited to get started. I start on Monday, so Jim is catching me on my off week. So I’m blissfully relaxed and uninsured for seven days.
Jim O’Shaughnessy: And unemployed. I think you should make your reach goal to become unemployable like me.
Alex Danco: My reach goal is actually to get promoted from editor at large to Editor XL. That’s what I’m shooting for in my two-year plan. And then the next promotion just writes itself, really. The sky’s the limit actually. There’s just no titling issues with that particular progression. You can just keep adding Xs.
Jim O’Shaughnessy: [laughs] So yeah, we are just to keep doing the Xs. One of the things that like... We’re aligned on so many things, because we also agree that, media, very important if you look at our verticals. Infinite Media, Infinite Books, Infinite Films. And I like this idea. Let’s just jump right into it. I was just having a conversation with my chief of staff yesterday. And I basically joked that we were already in a civil war between elites. But that it’s a bit like the intramural leagues at Notre Dame, right? I don’t know if you’re aware of that, but Notre Dame, big football school, right? But there’s a huge intramural football league at Notre Dame as well for the kids who aren’t as good at football, right? And I wonder what you would think about my thesis that the civil war is already going on, but it’s people who are already elites challenging the dominant elites. And like what do you think? Is that true? Am I wrong?
Alex Danco: No, first of all, is that not how these things always start? It’s always inter-elite skirmishing, right? Every time.
Jim O’Shaughnessy: Yeah. French Revolution, right?
Alex Danco: Exactly. These are, Russian Revolution and all of these things. Right? They always start with very... a bunch of dangerous exiled PhDs who holed up in Bern or wherever they were. I’m really fascinated with the concept of the exiled leadership in some other capital city hanging out and drinking tiny cups of coffee all day and sort of like brooding about their way to get back to the motherland and like get back to start the next glorious revolution or whatever. And I wonder if our version of that now is with everybody online 10 years ago, right? Where the version of hanging out in the other country was just people simmering in various forums, right? Where, you know, the all roads go back to Gamergate if you go back in history as the moment that kind of took everything... put everything on... It’s you know, the joke is like the most consequential words in the English language now are, “it’s about ethics and gaming journalism.” [laughs] That’s where this branch of history branched off from the mother trunk of all possible journeys we’re on. I don’t know where I’m going with this.
Jim O’Shaughnessy: Yeah. No, but honestly, like the way I kind of see it is that there’s kind of a... It’s already emerged what I call the rebel alliance. And it’s kind of aiming to take down or reinvent or radically reinvent industries like media, like publishing, like movies, like TV, like writing, et cetera. And let’s focus on the writing because that’s what you’re so good at, right? Like in an earlier conversation, we had a great chat about Citizen Kane. Do you have a Citizen Kane check for CEOs? Your thesis was basically that many people, their lives run on false premises, right? And how do you take your Citizen Kane thesis and apply it to evaluating founders and CEOs?
Alex Danco: I’ll tell you my version of the Peter Principle, which I think answers your question. So you know the famous Peter Principle, right? People are promoted until they’ve reached the first level of incompetence at which point they stay there. Which is a great story and often probably does happen on the aggregate level within institutions. My issue with the Peter Principle is that often that’s not actually what happens in reality, because you do have... You know, both the Venkatesh Rao three layer system and also the Michael Scott essay I wrote where it’s like, no, no, the capable psychopaths do in fact rise to the top level at which point they exert decisions on the people in the layers below them, right? So the Peter Principle, you know, is not without influence from outside. But what I think does happen, right? Is this idea that like people rise in their careers until they reach a job title where a lie they tell themselves hits resonant frequency. At which point they catastrophically self-destruct without warning, right? And that none of the previous roles would have ever given any indication that this would happen, right? But then suddenly, the self-lie finds its resonant frequency and it becomes that bridge that we all watched the movie of in Physics class, where just suddenly, the bridge goes... you know, it goes like... Yeah, exactly.
And I’ve seen this happen with a few people that I’ve worked for. And yeah. Like, it always kinda goes the same way. So suddenly, people tell a story about themselves that dangerously gets amplified out of control, right? Because they often will have reached a level of seniority where they are now surrounded by people who cannot tell them that they are wrong, right? It’s like, it often... So this is why I was like, the earlier this happens in your career, probably the better off you are. Because if it happens later, you’re more surrounded by an impenetrable circle of yes-men that sort of allow the amplification to go on for too long and allow the total amount of damage to be greater. So, yeah. I would say that when you are looking at people who have real responsibility, whether they are execs or whether they are high-profile investors or anybody else, or big media people, or anybody who’s in a position of great leverage in society, I think... Yeah, I really like... Michael Lewis has a good line about this. He’s like, “I believe wholeheartedly the line that we become the story that we tell about ourselves.” And so whenever people ask me, like, “Hey, like, what’s up with you these days?” I just say, “I’m the happiest I’ve ever been,” and then it becomes true.
Jim O’Shaughnessy: Yeah. That’s a great answer. But I think your thesis is right. I mean, another great example of that, of course, is McNamara during the Vietnam War. Right? He had reached a place where nobody wanted to contradict him. And he kept telling the powers that be, “Hey, we’re winning this thing! We’re winning this thing!” And it was primarily just because—
Alex Danco: We didn’t win.
Jim O’Shaughnessy: No, we didn’t. We lost. [laughs] Spoiler alert! But one of the things that impacted that, in my opinion, was the fact that the flow of information actually... Actual, factual information to him dried up to the point where he was only getting the flow up from yes-men. Right? And so, like, back to applying the Citizen Kane test on founders and CEOs, is there a fix? Is there a way to say, “Uh-oh, he’s about to resonate,” as you put it, and do an intervention?
Alex Danco: Well, inside companies at least, the anecdote or the usual solution, I think, is companies that have cultural safety valves that often take the form of, everybody has to do customer service for one day a month or something like that. Or it could just be like, making a good practice of dealing with all of the people complaining about your product on Twitter or something like that. There are many ways to do it. It is up to you to go to seek reality. It’s not hard to find, right? But it is up to you to have the discipline to do it.
You know, it is very, very, very easy to open the door and find reality if you want to do that, right? You have to want to. And I think the problem, part of the problem, is people who at some level know that they’re getting into one of these amplification cycles really do not want to confront whether that is true, right? So they will create layers of defenses against having to do that, right? Because this is just, it’s only a natural thing to do, right? Is to, you know, say, “I’m feeling guilty or worried about this thing. Okay, well, I’m gonna go project that outwards onto the other things so that I am not guilty of that thing.” Right? It’s a very human thing to do.
Jim O’Shaughnessy: Yeah. But wouldn’t a litmus test be inner-directed versus outer-directed, right? Like one of the things that at least I’ve found in my various careers is that people who are always pointing the finger of blame outward [laughs] generally are people I do not wanna work with. [laughs] And the people who own their mistakes and do it... I mean, I’m also thinking, as I was listening to you, you know Lulu Meservy, right? So, Lulu’s basic thing is that the founder should be the one communicating with the public. You know, word salads, corporate speak, passive voice. Like, all of that is deadly in this modern era. What do you think?
Alex Danco: [sighs] Yeah. So, Lulu’s great. I remember once I was at... I was with her at... Coinbase was having a big event and everybody was there. And we discovered that in the particular Gordian Knot of board seats and roles that she has across various companies, we discover that she is in fact her own great, great boss. [laughs] Because she... It’s like she had a function at Coinbase that effectively reported to Brian. And Tobi is Brian’s board member, and Lulu is Tobi’s board member. So, no conflict of interest, right? [laughs]
So yeah, like, I think the aspect... Lulu’s single most resonant line with me, and she has a lot of good lines, but I think the best one that she says over and over and over again is, “Communication is the founder’s job.” Right? Communication is the founder’s job. That’s it. There’s no arguing with that. You cannot dispute it. Right? Disputing it is a self-defeating process, right? It is undeniably true. And yet everybody wants to do anything but that, right? It’s like it is just so easy to ‘processify’ and to outsource and to try to capitalize in various ways. And it’s like, nope, it’s your job. That’s just the way it is.
And I think in... within big companies there’s, you know, there’s no doubt that this is true. Where it’s more interesting, I think, is in this world that I’m going back to of VC where you have these interesting kind of federations of founders and VCs and other people in the orbit who all have various kinds of power over each other in interesting ways. You know, this is, you know, my usual line how it’s kings and priests, right? The kings and priests have power over each other in different ways, and they both need each other. And they both make each other stronger, the VCs being the priests and the founders being the kings. And the basically, the way that trade works is the founder is the king, but the reason why they are the king is because the priest makes them the king, right? It’s like that’s where the king’s power comes from. And you forget it, right? This is why you... like, again, I think one extreme form of this is, I think, if you take the benchmark stance, which is like VC is... not only should VCs not be founder-friendly, quote-unquote. They shouldn’t even be former founders, all right? That’s not the point. Like, the point is to be financiers, right? And I think that is increasingly I would say a minority position these days as most people have come around to the idea of, like, no, VCs should be former founders. How else are they supposed to listen to your advice, right, and have any kind of empathy, you would think about that? I don’t have a strong take either side. What I do believe though on the benchmark point of view is that, like, the relationship works because you are unequal, right, not because you are equal, right? Like, good relationships are asymmetric. So, yeah, there’s nothing, nothing ruins a relationship more than fairness, right? [laughs]
Jim O’Shaughnessy: But okay, so let’s keep going on it because, you know, in that capacity what you’re building at your new job is essentially... Is it essentially a support mechanism that serves the founder? Is it... what is it?
Alex Danco: So, yes, in the sense that the whole point is to be in service of the founder, right? That’s the point, right? The point of VC is to give founders legitimacy, right? It is to be... it’s... I think of this like the VC firm is the legitimacy bank, and the bank idea is actually I think more accurate than you might think at first glance. Because it’s not like somebody deposits legitimacy and then that legitimacy goes to someone else. It’s like, no, no, no. The partners and other people associated... the former founders and successors make deposits of legitimacy at the firm, which allow the firm to then originate new legitimacy with founders, right? It is an origination exercise, right, not a transfer exercise of legitimacy from one place to another, right? The exercise is basically saying, look, you’re taking people who necessarily are trying to create something implausible, right? They are trying to exploit rips in the fabric of space-time for which they need to make the impossible happen. And to make the impossible happen, it’s like you need a couple of things. One, right, is you need credibility. You need people to listen to you. You need legitimacy. You need the ability to be able to make tough decisions and have people accept the trade-offs that you decide. Two, you need people to be curious about you, right? You need people who say, “Oh, like I’m actually really interested in where this guy or girl is coming from. I will go along with them, right? So I can see where it leads.” I think ultimately legitimacy is fundamentally how you get capitalized, right? It’s how you basically say, “Okay, we’re gonna frontload all of this potential into something that has a capitalization value today in the form of literal money or in the form of the ability to hire people, in the form of social leadership, in the form of all these things.” Right? So legitimacy is how you get all those things. The other way that I kinda think about it, and this is a little bit slightly more tongue-in-cheek version of it, is startups need magic, right? Startups do not work according to the conventional rules of economics, right? They need magic to work. They need founders who are able to cast magic spells. And the way I would define a magic spell is the ability to speak a sequence of words, right, that are the right words that transform them into the magician, right? And then the magic works because the magic is communication, right? So, you know, the classic examples of, you know, the secret of magic is to transform the magician is the words, “I now pronounce you man and wife.” Right? What happens when you speak those words? Those words do not make you married. What... those words make me the person who can marry you. It’s different, right?
And it’s like what happens is me becoming the person doing the magic has the effect of communicating to you a change, right, that is going to change the way that people relate to each other, or a group of individuals turning into a group, or something that was not alive now becoming alive-like, or any number of things. Right? But when you’re a startup, you need to be able to do all kinds of little magical things, right? You need to be able to say, “Hey, I need to turn this deal that is dead into alive, right? Because I need this deal so we can get to our first paying customer, right? I need to inject a certain magical quality into A, B, C, D, E,” right? And so one of the good things that the VC can do is that VCs... they get the... so first of all, the way that you learn magic is through apprenticeships, right? There’s no other way to learn it, right? You learn from other people who have done it before. You learn from other founders. But you can learn from VCs, too, right? There’s a kind of relationship there where there’s a sort of a senior wizard kind of, “I’m giving you the spell book. You now have the... By this funding round, I now wave my magic wand, and you now have a level two ability to cast these spells, you know, young Padawan,” is a real thing, right? When you announce a seed round, it’s like, “Okay, your ability to cast spells just now got increased a little bit.” And the cool thing about this is because spells like that have a very self-realizing potential to them, right? Because, yes, speaking the right words to make a group of people come together into an ordered structure of understanding may, in and of itself, feel like a magic trick. But the consequences of that group of people thinking of itself as an ordered structure can be very real and very economic, and very practically true, right? It’s called now we’re a business that runs. Now we have a deal that is profitable. Now we have an understanding that can be trusted to go do and do the next thing. Now we have an understanding that is... Now we have a relationship that will make the next five sales much easier to pull off, whatever it may be, right? And so I think when you come back to the relationship between the founder and the VC and this idea of saying like, “Hey, fundamentally what you want is to create a world in which founders learn how to do magic, you know, like more quickly and more effectively, and because of you.”
And writing is the free tier of this, right? You do not need to say, “Hey, like the limiting factor towards me helping you how to do magic is I have to write you a check in your bank account.” It’s like, you know, the money is helpful, but you don’t... It’s not a prerequisite. And I remember in the old days, you know, something that had a really big effect on me was when I was doing my startup, I remember very well that like the default state of the world is that nobody listens to you at all, right? Everybody just completely ignores you, and no one takes you seriously. Except there would be one exception to this, which is that when I would read whatever that day’s Paul Graham post or Semil Shah or like Mark Schuster or Fred Wilson, or all the people who were blogging in those days, where you would read it and you would really do the work of understanding and saying like, “Okay, I’m gonna go be able to talk about this in a way that is credible, in a way that is interesting, in a way that creates interest in me.” And it would really work, right? You would cast that spell, and then for 45 minutes people would listen to you. And that’s about how long the spell would work. And I remember realizing it’s like, oh my God, this is the skill, right? What a powerful and interesting skill to be able to wield, and how grateful you are to the people who take the time to write what they are writing for the purpose of giving you power, right? Giving you legitimacy. That’s, I think, the first really big thing that I want to establish both at Andreessen and also kind of reminding a lot of the startup world why we do this, which is like the point of writing things down is not we’re sharing what our investment thesis is or like, we’re gonna help write down this so that you can know about us. It’s like, no, no, no. The point of it is to give you power. That’s the point. It’s the whole point. It is completely consistent with the role of the firm at large, right? Go and do this in a way that is maximally aligned with the purpose of this whole group of people, right? Make the free tier of this... And you know, the more that people have the ability to do that kind of magic, the better the brand halo, the better the influence, the more power the founders will have because of you. And ultimately the gratitude will flow back in ways that, you know, pay for itself many, many, many times over. So that’s the first idea.
The second thing that I really wanna go work on, and this is sort of a what would you like to be different about this world, is I’m gonna go try to make a very conscious effort to bring back some of the lost art and practice of speech writing as a chosen medium that I think is quite underused by people in this world. And it’s their loss, right? I’ll tell you this for a couple reasons. So this is a speech that I will need to deliver to my new colleagues many, many times over the next two weeks. So here it goes, all right?
In tech today, I would say that one of the... There’s two things you can observe. One is a lot of people in the industry are really coming of age as businesses that are actually very necessary for the world to get out of some big problems, right? There are people who are really working, all across the board from all of the different theses of whether you’re building energy or building or materials or, you know, defense even, or everything that is more than just B2B productivity SaaS software, right? All across the whole board you have things where it’s like, hey, these are people who are really working hard in service of the common good, right? Like founders are genuinely working in service of everything else. And yet, I would say despite that, no matter what you say about how purposefully or how diligently or how sincerely we are doing this work, when you say that to the outside world it is mostly received as, “We hate you.” [laughs] Right? There is a broad rejection by various people sort of outside of the Silicon Valley bubble as it resonates as hollow or insincere or fake news, or whatever have you, right? And it is easy to blame a broad conspiracy of media who hates tech and just wants to, you know, silence everything they say. And there have certainly been grains of truth to that over time, I don’t wanna say that that does not happen. But my challenge to this community is like maybe we are simply choosing the wrong medium through which we are communicating what we are doing and why, right? It’s like maybe we are making a bad choice not about what we are saying, but about how we’re saying it.
And what I would say is that like... So that’s the first thing you can observe. The second thing I think you can observe is there’s a tangible nostalgia among the “it’s time to build” set for some period of time that is left nicely undefined, but it’s possibly the ‘20s or the ‘50s or the ‘80s, or like who knows, you know? You don’t need to ask too particularly which time you would like to go back to. ‘Cause it’s not really about going back to something, but it’s like, oh, you know, like there was a time when we built things really well, right? It seemed like we had values and we had goals, and we achieved the goals really well, right? We built well. It’s like, okay, what are some characteristics about that time that we really liked? It’s like I think there are, again, there are two things that are important. The first thing is if you go look at that period of time when there was actually sort of an elite class that was ruling the country, which you can call the WASPs approximately, WASPs+. It’s like this was a set of people for, you know, like for all their faults and weaknesses as a ruling class, did one thing unbelievably well, which was that this is a group of people that had a tremendous culture of being in service of, right? Like, not only literally in terms of like, all the kids were expected to serve their country and go to the army and things like that. But also, you were expected to style yourself and put on all of the trappings of genuinely occupying a social position as being of service. Right? This was a huge part of how you were supposed to carry yourself socially. And the reason why I think this made a big difference was because two, people back then were really, really good at communicating. Right? Everybody back then was unbelievably good at being heard. Right? You go back and read old speeches and memos, it’s like, “Holy shit, this is so much better than what people do and say now in terms of communicating a value and a goal and a reason why we’re doing this and how we’re gonna do it.” It’s like, why is this the case? And I have a theory here, and the theory is that these people largely communicated, particularly through speeches, right, the art of the given, the prepared and given speech, is that this is a medium that communicates the notion that I am in service to you, right? Speech is, a speech is a gift, right? A speech is something that is done towards an outward purpose, right? An externally directed purpose. In a way where, you know, yakking on a podcast like we’re doing right now, which we joke because this is something that we are doing for fun, but is, frankly the way that people communicate these days. Whenever they feel like they have something long form to say, what is it? It’s a dialogue for 90 minutes about whatever. It’s like, yeah, that’s not the same thing, right? Like, a podcast is people talking, right? Like, whereas a speech is something that is listened to, and something that is heard, because it communicates the orientation of being in service of, you know, an external purpose, in a way that other media formats like tweets and videos, I think, and podcasts and other things like that, do not communicate. And in, you know, in eternal, the medium is the message format, it’s like, okay, you could be the most sincere person in the world building a company that is gonna, you know, save everybody’s life. And yet, if you communicate it through a medium that is improperly suited for telling the notion of “I am in service of this,” what you get is, “Oh, MrBeast just made a million blind people see.” And what is heard is, “Oh, he’s being ableist again.” [laughs] Right? Right? It’s like, this is just what happens, right? Whereas, you know, I think if MrBeast or anybody doing this actually, like, sat down and gave a spoken prepared address of, “This is why we are gonna raise a bunch of money and help a bunch of blind people see again through surgeries,” right? It’s like, no, that’s just gonna be received as the actual intended message, right? Which is, “Wow, what a good thing to do,” you know? So anyway, this is a long roundabout way of saying the medium is the message, and if you are genuinely acting in service of some sort of good, but it is not being heard that way, maybe you should select another medium that by its nature communicates in service of, as opposed to using media formats that are, you know, like me, me, me. Right? Like many other of these things are. So, my hope, you know, anyway, to bring this way, way, way back to... That was, I need to work on making that pitch shorter. But, like what I would really like to do is just be like, look, the art and the practice and the habit of sitting down and writing what is it that you have to say, we’re gonna take quite some time and prepare this. Whether you’re a GP or whether you’re a founder raising around, they’re slightly different, but it’s like once a year you should deliver a good speech, and we can help you with this, right? We will help you make it good and say something, and most importantly, be heard actually what you’re trying to say, as opposed to it just bouncing off as some sort of insincere, you know, gamified whatever. And my hope is that this can restore a lot of the gravity and a lot of the sincerity to particularly the fundraising process, which has sort of slipped into this kind of entertainment local maxima. I don’t know if you’ve seen, like, how we have launch videos now that are very over-produced and all whatever. It’s like, listen, I admit that the first few of those were like, “That’s fun. Sure.” Absolutely go do a couple of those. But it’s like, “This can’t be every time, though, if there’s no substance to back this up.” Right? And I think, look, it’s like, if in parallel you actually do the substance, and if you pick a medium that is well-suited for the statement of purpose, you know, and of in service of that you are wishing to convey, then you can actually wrap all of this up in a nicely packageable and shareable format called the launch video or whatever. But you have to have something to back it up, right? And that thing should probably be you addressing a crowd for 20 minutes, right, with prepared remarks, right, about why you’re doing this. Where it’s like, you know, like it’s a little bit of work, but I think it’s gonna go a long way, and I think that this will be a really fun challenge to work on. Because if you can tip perceptions just a little bit towards people kind of mimetically being like, “Oh, like, they had a great speech at their launch announcement, I need to have a great speech for my launch announcement,” or whatever. If you can just get people to, like, kind of flip their orientation towards, like, that sort of competition, then it’s like you could increase the overall level of seriousness and the overall degree to which the good work that these founders are doing actually being heard by the outside world, right, in a very high leverage way, right? A relatively small amount of initial effort, you know, talking a few people in their day-to-day jobs, could result in a massive change in the overall impact of what is actually heard by the outside world about why these founders are doing the work they do. So, end of soliloquy. But that’s the principle.
Jim O’Shaughnessy: Yeah, no, I think it’s fascinating, because as you were outlining your goal for me, I was immediately seeing Winston Churchill. I was immediately seeing Kennedy saying, “America will land a man on the moon” when we had absolutely no technologies in place that allowed for that. And they... I used to love reading great speeches. I mean, of course, Lincoln. But, so, I’m totally—
Alex Danco: Even as cringe as it is to say for a lot of people, like, even Reagan was a phenomenal speech writer. Those are amazing speeches. They’re so good.
Jim O’Shaughnessy: As someone who was a young man when that was happening and was watching him, I...
Alex Danco: How could you not feel like a million bucks listening to those?
Jim O’Shaughnessy: You absolutely did. And where he won and, like, I got the tinglies despite, you know, I wasn’t a huge Reagan fan. But despite it, every time that guy would get up there you just felt, to use your words, like a million bucks. And his genius went far beyond that because he really, he got, his speeches made people not just agree with him but changed their actions. Changed the way they actually did things, right? And, like, he did so many brilliant things like bringing America’s heroes into the State of the Union. And all of the heroes were, you know, Norman Rockwell [laughs] archetypes of the officer who pulled the girl out of the burning building. The nurse who noticed the patient but didn’t have this. But the other thing that he did that was so incredibly brilliant, if you watch all of Reagan’s speeches, right? He never takes credit for himself. He always, in the State of the Union, would go, “The American people have...” And then list all of the achievements [laughs] of his administration.
Alex Danco: [laughs] This is a side quest for a second, but you’ll like this story. So, [laughs] the other day we were over at some friends’ houses for dinner and it was, you know, it was a many bottles of wine kinda dinner. And midway through the dinner, so, this friend is like, “Hey, I have something maybe you can help with. I just remembered the other day that, like, many, many years ago at this Secret Santa, someone gave me, like, a couple of Bitcoin, like, on a thing as a present. Do you think you could help me recover this? Like, it’s in, like, a Coinbase account, I didn’t wanna go through the flow or whatever. Do you think you can help me with this?” I was like, “Yes. How many did you say it was?” And she’s like, “Oh, I think it was, like, two or something.” It’s like, “Let’s go work on this right now.” [laughs] And so, we were like... So, I go in, it’s like, “Okay, let’s figure out how to get the account recovered.” It wasn’t that bad. And over the 10 to 15 minutes of, like, doing the, like, find the account thing, this idea of, like, “Oh, we just found all this money,” became a self-actualized state of reality for a minute, right? It was like, “This is so sick. Are we gonna... We’re gonna split this with you, and we’re gonna do this, and it’s gonna be so great, and we’re gonna do whatever.” And then, over the... upon conclusion of the retrieval exercise, it turned out that it was some amount of money that’s worth about $80 today. [laughs] So, you know, like, in the slow period of deflation after seeing the total, I told them, I was like, “Remember that feeling before we saw the number? That’s what being an American feels like all the time.” [laughs] It’s what America’s about. It’s like, “I made it. We made it. I just need this password to the account and I’m back, baby. I’m back.” [laughs] Where it’s like, that feeling all the time. It’s like, again, like, as Canadians, it’s like you drive across the border into Buffalo or something and it’s just the whole energy of the place just gets dialed up to 12. Where it’s like, “I’m back. I got the password. I got my keys back. I’ve got the account, I’ve got the coins. Let’s go.” [laughs] It’s like, no. It’s time to hit unroll.
Jim O’Shaughnessy: You know, what’s so funny about that, I have a good friend at the Royal Bank of Canada who had a similar dinner many, many, many years ago, which also involved way too many bottles of wine. He got on that jag and he was like, somebody had said, you know, something about... one of the Canadians was like, “Well, you Americans...” Or whatever. And he [laughs], he slammed the table with both of his hands and he goes, “You know what? I think that’s fucking wrong.” He goes, “I love Americans precisely because of the reason you’re criticizing him.” He goes, “Americans love to dream. Americans don’t just dream, they build. You... we’re gonna have a dam? Oh, no, we’re gonna build the biggest fucking dam in the world. We’re gonna have this? No, no, no, it’s gonna be bigger, better, brighter, faster.” And he goes, “We’re not like that here.” [laughs]
Alex Danco: No. So, funny you should say that because... So, Dan Wang’s book, Breakneck, right? Which you may have seen around—
Jim O’Shaughnessy: I’m chatting with him on this very podcast in a couple of weeks.
Alex Danco: Amazing. Okay. So that’s great, like, the first page of his book is, I just got it in the mail. I read the first couple chapters, it’s awesome. But, like, the first page of the book is perfect because it says... I’m paraphrasing here and I’m gonna butcher it because he’s like, “Every time some story comes out in the news about how Americans and Chinese are on some collision course of complete and total clash of values...” He’s like, “I always laugh a little bit because I don’t think there are any two cultures that are more alike than American and Chinese.” Right? It’s like they’re both boorish and optimistic. They’re both, you know, unbelievably plebeian but go-getterish, right? There’s crass, but they’re pragmatic, right? It’s like for all these reasons, right? It’s sort of the triumph of the proletariat. Right? As a mindset... right? Is so like, yes, that’s right. Like, they are both like this, and they are both the exact opposite of, you know, anybody on the continent or whatever, right? It’s, you know, I was reading that. I was like, “You know what? That’s completely fucking right.” [laughs] Yeah.
Jim O’Shaughnessy: Well, and you know, when I was still writing fictional treatments, because I couldn’t do them in reality, ‘cause I was running an asset management company, one of my earliest ones, back in the early ‘80s, when I actually wasn’t even running an asset management company ‘cause I was 22. But anyway, one of the thriller ideas that I had was that it was American policy to keep China Communist, because if they ever became capitalist, they would bury us. [laughs]
Alex Danco: [laughs] Yeah. Yes. And here we are. Now, though, the... now, now at least now I’m in Canada, which gets to be the new non-aligned treatment. [laughs] Between two different sorts of masters of capitalism.
Jim O’Shaughnessy: Well, you know, and I think I might’ve, in one of our earlier chats, brought up this book. The book itself is not great. So, I’m not... Listeners, viewers, I’m not recommending you buy this book. But it’s called The Hypomanic Edge: Why America is Different. And essentially, the thesis of the book is what intrigues me. It basically posits that America is the way it is because look who came here. Where did all of the original people who came, not the Pilgrims but everyone who followed, what type of person, right, is sitting at their home country... Let’s take where my family came from, Ireland, right? Who’s sitting around in Ireland, where they’ve lived for centuries, where they know all of the cultural mores, they have all of their friendships and relationships there, and they’re like, “Nope, fuck it. I’m gonna get on that boat with nothing, and I’m gonna go over and make a fortune in America”? Well, that’s who came here.
Alex Danco: Keep going in the Irish accent. I was enjoying that. [laughs] Yeah.
Jim O’Shaughnessy: I lived in Ireland for the summer when I was a kid. Eight years old. And they called their backyards gardens. And we had a tiny one, ‘cause we lived in this little tiny row house in a town called Waterville. And I walked out into the garden, and there was a kid basically my age across the wall. And he starts talking to me, and I kind of nod my head like this. And then I went back in, and I said, “Mom, you told me they spoke English here.” [laughs]
Alex Danco: Yeah. Right. Ugh, it’s like when I go visit my family in the Gaspé. It’s like, “I cannot understand you people at all.” [laughs] “It’s just too hard.” But, yeah.
Jim O’Shaughnessy: Yeah, but so the thesis, the hypomanic edge, right, is that, that’s the DNA of this country, right? And I would add to that that this is one of the few countries that started as an idea, right? Not as the family that won the battle that installed the king on the throne, but literally an idea. And we also happened to be... just get incredibly lucky to be founded during the Enlightenment and Age of Reason, as opposed to other dominant ideologies and whatnot, when other countries... I look at India, for example. Like socialism was all the rage, man, when they got independence. And so, that’s kind of the way they went.
Alex Danco: I mean, too much Enlightenment, and you get Germany. [laughs] You can have too much.
Jim O’Shaughnessy: [laughs] True. True. But you see the beauty of America is we got it all. We’ve got the Germans, the Irish, the Poles, the... It doesn’t matter. And, like, when you... Another one of my little hobby horses is, you know, everyone’s screaming about diversity, and, but they’re looking at, kinda like your idea, that they’re looking at the wrong format. Like, diversity is absolutely crucial, but it’s gotta be, in my opinion, cognitive diversity. I mean, it doesn’t matter what color, in my opinion, like, I don’t care. I literally don’t care. But are you a good thinker? Are you thinking very differently than the way I think? That’s where I think you can get a synthesis that really is powerful.
Alex Danco: Well, this is where, you know, not in their low form, which we’re, you know, most... Again, like, any kind of joke can be told for a high form or for a low form, right? You kind of discard the low form for a second. But, like, the high form of ethnic jokes contain so much embedded wisdom in them, right? For, like, “Why are these people behaving the way they do?” “Oh, well, it’s this-” Very tidy, wrapped up anecdote, right? It’s like... Something like that that I kind of think about is, if you go back, you know, 100-ish years ago, you know, two, three generations ago for me, and you think, “Okay, this was a time where even though it was at the height or, you know, the beginning of the decline of what you would call high colonialist period, there was a way that stories were told about faraway lands, right, that were full of mystery,” right? You would talk about Persia or Burma or, like, any of these places, right? And they would be told with a really interesting kind of awe and respect, right? Even though it was told by the conquerors, right, by the colonialist oppressors or whatever, of the peoples that they had, you know, subjugated or subdued. It still contained this notion of, like, complete mystery, right? And that mystery created a respect, right? Of like, “Oh, like, you... There is, you know, a thousand years of heritage here that has produced this thing that is partially opaque to us,” right? Its traditions are partially inaccessible. They are partially mysterious, and that mystery has great power, right? And there was a respect for that power, right? That was told in the form of... I don’t know what the good example would be. Like, even if you take a more recent thing, you know, the joke is like, you could never make Aladdin today. It’s like, that movie came out when I was a kid, right? [laughs] It’s not even that long ago, but it’s like, it still contains this notion of this fabulous world beyond the horizon, right? That is beyond your ability to truly understand, and that’s what gave it a kind of historical legitimacy to it. Whereas now, you say, “Oh, no, no. You can’t make movies like that. You can’t do any of these things like that.” You know, because it came from a bad reason, right? It came from a bad place. It came from a bad time. It’s like, the bad setting doesn’t make the respect any less awe-worthy, right? It’s like, you again are throwing the baby out with the bathwater here, right? By discarding it wholesale. And I wonder if there’s gonna be a real resurgence of that. Especially in an AI kinda world, where the amount of mystery in the world is probably gonna go back up. You know, it could be that we are living at the absolute bottom of the trough of amount of mystery in everyday life, and it’s about to start going back up now. Which would be, I think a great outcome, but...
Jim O’Shaughnessy: Yeah. Well, as you’ve said, mystery creates margin. And... But, you know, as I’m listening to you, the power of stories. You’re absolutely right. I was just chatting with my new chief of staff the other day, and we were talking about, you know, Babylonia, right? In ancient Mesopotamia. Like, a confederation of city-states, everyone vying for power. They wanted to be the biggest power in Mesopotamia, and they approached it in Babylonia brilliantly, in my opinion. They’re like, “We think we should be the city-state that rules all of Mesopotamia.” But they found a problem. The problem was, they had a puny god, very puny. In terms of the pantheon, like, he was pond scum to the other gods.
Alex Danco: Real second rate, yeah.
Jim O’Shaughnessy: Real second... Not even second rate. He was like, a fourth or a fifth rate god. And so, they’re like, “Easy. We’ll just rewrite. [laughs] We’re just gonna rewrite. Let’s make Marduk the king of the gods, the creator of the heavens and the earth.” So, they completely rewrote the mythology around their god, and all of a sudden, everyone else in Mesopotamia’s like, “Well, they really do have the most powerful god.”
Alex Danco: Shit. [laughs] I didn’t know you could do that. Hmm. Yeah.
Jim O’Shaughnessy: But let’s bring that back to the idea of speeches and speeches being powerful. What’s the venue? Where do you do that? Where will people take that speech in? Who is that speech aimed at? Is it aimed at a broad audience? Is it aimed at just the people in your company? Walk me through that.
Alex Danco: So, any kind of address can have lots of different audiences, right? Given the format of... You are in one place addressing other people in that physical place, but it is filmed, and then the clips go online, right? Like, that’s a format that works, right? It works particularly when there is a visual cue of there being an audience under your spell, right? Which, you know, is very helpful for the reader through a screen, right? Who gets to see this and gets brought along with the journey. I think truthfully, you don’t necessarily control where it goes or how things get shared around, but I think what is going to be true is the general idea of like, if you wanna reach a large number of people, you write or you address a very small number of people. Right? And the reason why this is, is because...
This is something that, you know, I wrote this in the note that I posted on Twitter when I joined Andreessen, but it’s... Something that all bloggers know is most things that you write that are successful... It’s like, for most people that it reaches, they do not actually read it, right? They are told it by somebody that did read it, right? This is broadly true of most things that travel far, right? The primary way is that, like, there are a small number of people who actually read the thing, and then they retell it to a broad number of people. Because retelling it gives them something, right? They get some sort of benefit out of retelling that thing. And this is... By the way, this is true inside of organizations too, right? It’s like, how many people actually read the budget? You know, this many people. But then they gain power by being able to retell it to the much larger number of people who, you know, don’t read the whole thing, but they wanna know what it is they want to be retold about it, right? And so there is a trade here between the writer and the primary audience, which is, “I’m gonna write you something that you want to retell.” Right? And if that’s true, right? Then you realize quickly that, like, the opposite of successful is writing to reach the broad audience, right? Because then you write something that’s, like, dumbed down and, like, too broad and, like, doesn’t actually cover that much interesting territory or whatever. It’s like, no, no, no.
You’re writing for the people who are going to be the retellers of the thing, and then they will do the job of translating for the specific group of people to help contextualize it and help translate it and help whatever, right? Your job is to write the original kernel of the idea in rich detail, right? That is your job, right? Your job is not... Is to help them do the sort of... What’s the Olympic gym competition I’m thinking of? The one where you do the springboard. What’s the word for that one?
Jim O’Shaughnessy: Vaulting?
Alex Danco: Vaulting. Yeah, yeah, vaulting. Right? Where it’s like, your primary readership is what does the spring... but you have to get them there, right? By doing the writing. Right? And I think a speech is the exact same way, right? It’s like, you’re trying to deliver something whose actual intended primary audience is gonna be fairly small. Right? You know who you’re trying to reach, right? So, Katherine Boyle at Andreessen is very, very good at this, right? She does speeches on a regular basis that have quite tremendous impact, you know, a long time later, and it’s not because she’s trying to reach a large number of people. It’s because she’s trying to reach a very specific group of people, right? With what she’s trying to say, and then they, you know, take on their lives of their own from there. So, that’s generally the... What I would say is, like, the primary audience you’re going to try to reach is going to be very situationally specific. It depends on the opportunity space in front of you, right? But what is gonna be true about that is that, like, that’s how you reach the secondary audience of, like, broadly interested people, right? Is through that mechanism.
Jim O’Shaughnessy: Yeah. And what’s interesting about it too is that it’s, it’s like... That’s not a new approach, right? Like, I owe everything to the books that I wrote. And but then would give the speeches about those books. I mean, I am under no illusion for the number of people who actually read What Works on Wall Street. But it—
Alex Danco: Not the point.
Jim O’Shaughnessy: Yeah, not the point at all, because the way it spread was exactly as you’ve outlined. The real nerdy types read it, and like, I would talk to them. I loved talking to them, and they became ambassadors, and that was the way we managed to grow relatively quickly. Because a bunch of people had read it. And, you know, my editors at McGraw-Hill absolutely hated me because I gave the manuscript to Andrew Barry at Barron’s before the book was published.
Alex Danco: Okay. You’re not supposed to do that.
Jim O’Shaughnessy: And he wrote it, and... No, you’re not supposed to do that. [laughs] But the point was, Barron’s was that small audience I was interested in. Back in the day, back in the ‘90s, Barron’s, if you got the Imprimatur of Barron’s, and you were in finance or asset management, that was the king saying, “This is cool.” And so what happened was, gave it to Andrew. He wrote a big article about it with the findings, right? And I got shouted at by my editors and the publisher at McGraw-Hill for a long time, but then when the book came out, it became a bestseller. Because Barron’s had already... I got the audience that I was interested in. They talked to everybody about it and voila. And so do you... I mean, is there a counter-argument here? Like, if we’re gonna steel man this, what’s the steel man gonna be against this approach?
Alex Danco: This approach being? Well—
Jim O’Shaughnessy: The one you outlined for your test speech. When you go and meet your new teammates and colleagues. Right. So what’s—
Alex Danco: Oh, well I think that the counter-argument to that is, I would say, the way that most people look at digital marketing and communications now, which is, you write things, and then you look and measure, like, inbound traffic to the thing, referral sources. Like, you look at all the conventional ways by which you would say, like, “Is this content successful or not?” And, like, is it written for the largest possible funnel and audience, and things like that. And, you know, like, yeah, the reason to not do that is just like, oh, yeah, like, this is the type of thing that you can do when you have a lot of resources, and what it allows you doing is sort of maximize the opportunity around very mediocre stuff. Right? Where as opposed to the constraint of having one person and no staff is very freeing, because the only thing you can do is just, like, write something that’s good to this many people, and then it goes from there. Right? I think it’s... You know, as I said, yeah, the counter-argument to this is that most people don’t do that. Most people have a way of doing things that either has been optimized through the one, the truly old legacy way, which was, like, there are gatekeepers called publications, right? And if you wanna get anything read, then it needs to be blessed by New York Times or whatever it is. That’s, like, so long ago that it’s not even incumbent anymore. That’s, like, grand legacy or whatever. The incumbent way of doing things is really from sort of the social media era, which is, like, hey, like, everything is optimized around how you think about it getting shared and virally trafficked and things like that. Everything is a post on some sort of social network, you know, like, optimized for that. And the end result of that was basically you got, you know, wave after wave of, like, Huffington Post and Vox and, like, all that stuff.
I remember, like, the single piece of content that’s made me the most mad about anything ever was a Vox summary of, like, Walter Ong and Oral Versus Written Culture, and it was trying to present Vox as being written culture. It’s like, you know, you’re the baddies, right? [laughs] You know that you’re not written culture, right? Do you know this? Or do you have any sense that you are the spoken culture here? But no, there was just completely no understanding and no sense of irony whatsoever.
Jim O’Shaughnessy: The tone deafness of it, though, you’ve gotta kind of give ‘em a doff the cap.
Alex Danco: Oh, just the sheer incredulity of it was, you know, outstanding. So, anyway. Now, I think, you know, again, you’re in... Let’s take a tangent again, but, like, something really interesting that’s happening on the internet right now is... So, you know, anybody who’s been paying attention over the past couple years is like, okay, general understanding that the grand bargain between the big internet giants and individual publishers is over, right? The bargain used to be, we scrape your websites and index everything, but in exchange, we send you content, right? That was the deal that Google had with publishers, right? And publishers went along with this. It was like, “Why would we give, why would we let you crawl our websites for free?” And the answer is, “Well, because we send you traffic.” Right? The more Google knows about you, the more the right kinda people are gonna find you, so everybody got something out of this that worked. Whereas now, it’s like, okay, for an AI language model or something, let’s say, you know, Anthropic or OpenAI or anyone, it’s like, they’re gonna send out crawlers and read everything that you write, but then they’re gonna not send anybody to you, right? They’re just gonna, like, have some sense of what you said and that’s that. They retain all the benefit for themselves, right? So that on the face of it doesn’t work, right? So it’s like, okay, like, we need to find some sort of new bargain.
And one of the companies that’s really, has spoken very strongly about this, and has found a sort of new messianic purpose in this world is one of my favorite little companies, it’s CloudFlare. I don’t know how much you know about this company, right? CloudFlare is sort of like, they’ve had all of these interesting kind of like compounding lives as a web company. They started out using like, basically they’re, they started as a security company, right? It’s like DNS protection. It’s like, hey, you know, they put their server between your server and the web traffic to prevent you from bot attacks and like other things. From there, they said, “Oh, since we have all these servers out there on the edges of the internet, we will also be a CDN, right? We’ll host content closer to the end-users so that it loads faster,” right? And then from there, they’re like, “Oh, also we can do edge compute,” right? If you need to run code closer to the user, it can run on these servers, right? And they’ve gotten better and better and better and better at doing this in a way where it’s like, and it’s secure and it’s safe and it’s fast, and a lot of the sort of like front-end computing in the world is slowly moving onto... You know, they have an amazing technology called Web Workers, which, you know, when Shopify found out about it, went like very all in on, which is very cool, and it’s like, okay, this is great. Anyway, point of this being is that CloudFlare suddenly has this big kind of moat of like, they own all the computers where all of the front-end code is running, which includes where an AI would run a lot of its stuff, right? So then CloudFlare, they, so many people noticed, they’re like, “Hey, you know, like, they could just ban all these bots if they wanted to.” Right? And they said as much. They were like, “You know, a lot of these web crawling things, you know, these AI web crawlers are actually sending no benefit whatsoever to any of our customers. We might turn them off. We might block them, unless, you know, we might give our customers some, a little bit more power over who can crawl their website unless they have something of value to offer back.” And then, so there was a little outcry over this. Everybody was like, “Wait a minute, can CloudFlare just gate keep the whole internet here?” And it’s like, well, they’re smart people, they’re not stupid people. They’re not gonna just like drop a nuclear bomb like for no purpose, right? It’s like, what are you gonna do about this? It’s like, well, since they also have this amazing piece of infrastructure for little AI agents to go talk to each other and work something out, it’s like, hey, well maybe it’s like, if you have a... if you are a publisher and you own some content that is valuable for some reason, let’s say you’re a gossip website and you have the exclusive scoop of something a celebrity did, right? You explicitly have it. What is the right way for some sort of AI, you know, agent or crawler or whatever, to trade for this information? It’s probably to say, “Hey, well, the more novel this content is, the more it is something that I don’t already know, the more valuable it is to me, right?” Maybe I should pay something for it if it actually adds net new information to anything, right? Like suppose there is some bargain that, you know, CloudFlare or other people, I don’t wanna say this is only CloudFlare, but they talk the most about it, right, as this being kind of a statement of purpose through them. They’re like, “Hey, if you actually are contributing things that are net new and interesting and people would... and AI models want to access this, you know, like, they should be able to assess if it’s new. And if it’s new, give me something for it,” right? That could be either large publishers could probably negotiate this themselves, or maybe the long tail of publishers could have CloudFlare negotiate this on behalf or like whatever it is. Who knows what it becomes? But this actually becomes an economic model of the internet where you are not rewarded for saying lots of stuff, or going viral or anything, but actually rewarded for contributing things that actually add something to the collective corpus of language model, which is very interesting and cool and something that like, you know, that I think you would probably like this in this world because it’s like, hey, this is actually like a set of incentives for the first time ever for creating something that is actually valuable or quality, as opposed to any number of other like roads we’ve gone down on to be optimized for. And that’s something to look forward to in the abstract sense, right? And so again, when you talk about like, hey, what gets rewarded because you are telling something that then gets retold to a broader audience, it’s like this is kinda the AI version of that. It’s like where if you write something that is like niche, but importantly niche, and then an AI model says, “Well, this actually helped me because now I know more about some context or more about some particular, and this will help me overall know the corpus of things. I like that. I would like to do the work of secondarily passing this on. Thank you for this.” Like, you know, that’s kind of the, that is, to me is sort of like the human and machine version of something that can work very well together, right? The way that’s better than the sum of its parts.
Jim O’Shaughnessy: Yeah. It reminds me of our chats about maritime and merchant law, right? Like... And so let me put you on the spot. I’m gonna make you the author sketch three first pieces of this new merchant law for the AIs negotiating with each other, you know, trading services in the wild. How’s that maritime merchant law gonna emerge?
Alex Danco: Oh, man. Okay. So like the first thing that you would say is like... the particulars of what you can and can’t do probably emerge out of behavior, right? Over what behavior is broadly wanted versus censured. What you do want though is probably something that looks a lot like the way that smart contracts work now. Where it’s like, it’s just there, right? It’s the... The reason why it has such staying power is not because there is a central arbiter of, “You use this one and not that one.” It’s just like, “Well, this is the copy of the book that exists in the most copies.” [laughs] Right? It’s like common law, kind of. Right? It’s very similar to common law, actually. It’s like, “Hey, well, like, there’s this emergent body of agreement, right? Where, like, we all know that we can trust this thing because everybody else runs this thing.” Right? It’s like basically saying like, “Here is a smart contract that is broadly accepted as a standard, right? And the fact that lots of people use it means I can trust that other people will use it too.” Right? Is like, no, you want something like that where people, bots or whoever it might be, can quickly find conventions, right? It’s like, you know, there’s a principle that we use a lot at Shopify, which originally comes from the Ruby on Rails doctrine, which is that, like, things work really well when they are designed by convention over configuration. Right? Like, conventions are great. Right? Conventions help you snap together a way of working that is gonna respond well to elements in the system changing. Right? As opposed to having to be configured every time. Yeah. I don’t know. Those are the... I don’t know if I answered your question, but that’s how I would start designing the problem. I also have to go re-read that insurance book ‘cause it was so good. The one about maritime insurance and the founding of America.
Jim O’Shaughnessy: Right. You really got me with that when... And that’s why I bring it up, because I really enjoyed that and I actually went and looked into that. And it’s... What I like about it is it’s the classic emergence from below of complex adaptive systems, right? Like, it just emerged. And just as you just put it, “Well, let’s use this one because everyone uses this one and, you know, we all know about it.” Right? So I... And, you know, concurrently we were getting pitched by a founder that really way pre-seed, which is where we’re interested in. That like, “No, I wanna create an internet just for AI.” And I’m like, “Okay. [laughs] What will that internet do?” And one of the things he mentioned was what you just took us through. It will be the one where the AI agency... You know, his pitch basically was, “You’re gonna have an OSV AI agent. You’re gonna probably have verticals... For your various verticals, they’ll have their own AI agents. And, like, they’ll be out looking for really interesting stuff and they’ll be interacting with other AI agents.”
Alex Danco: Yeah, well, what’s a vertical, right? A vertical is just a set of conventions.
Jim O’Shaughnessy: Exactly.
Alex Danco: Right? I think. Right? Like, that’s what a vertical is to me. Yeah, cool. That’s exciting.
Jim O’Shaughnessy: So how did these interact? You had another great insight about what I think you called it your Goth index or your Goth score. [laughs] Where it’s like you... How do you establish, like, one of those for authentically idiosyncratic versus, you know, they’re just LARPers, they’re just aesthetic cosplaying?
Alex Danco: Yeah. Attractive people with heavily vetted idiosyncrasies.
Jim O’Shaughnessy: [laughs] Yes. You know what’s funny about that? My wife and I have been going through these British crime procedurals. And one of the things that is emerging is exactly that. My wife is always like, “You know what I love about the British TV shows? Like, people look like real people. They don’t... Like, they’re not fucking beautiful. They, you know, they look just like... If a cop came to the door and looked like this cop in this thing, you wouldn’t be at all surprised.” And then so we burned through a couple that we really, really loved, Department Q, Unforgotten. And then we got a recommendation from AI for another one that we started. I’m not gonna name that one because I’m about to dump on it. And, like, so we start it, and the first thing that we notice that my wife points out to me as she goes, “Oh, no. They’re all good looking.” [laughs]
Alex Danco: Right. Yeah. Well, the American TV version of the, you know, the inevitable arc of the era of TV is the great irony that... If you remember the TV show Girls? So the great irony of that show is that, like, years later, like, the career that it launched more than any others was Adam Driver’s. [laughs]
Jim O’Shaughnessy: But, I mean, you know, yet another direct comparison. I was a big fan of the British Broadchurch. And then they made it—
Alex Danco: Broadchurch. Yeah, terrible, terrible, disgusting, yeah.
Jim O’Shaughnessy: Then they made it in America.
Alex Danco: Did they? I didn’t know that.
Jim O’Shaughnessy: Oh. If you want to say... Yes.
Alex Danco: Where is it? Like, in Maine or something?
Jim O’Shaughnessy: I don’t even remember. Yeah, somewhere like Maine.
Alex Danco: Where is American Scotland? Is there an American Scotland?
Jim O’Shaughnessy: Yeah, I... That’s a great question. I don’t know. But they populated the remake with beautiful people. And the remake was not nearly as good as the original in Scotland. Another thing that springs to mind is Max Headroom. You’re probably too young.
Alex Danco: I have not ever heard that name.
Jim O’Shaughnessy: But Max Headroom I absolutely fucking adored. And it was a British show, and he was completely [laughs] idiosyncratic and hysterically funny. And then they imported him to America, and what does he end up doing? He ends up pitching Pepsi or Coke or [laughs] whatever, and I’m just like, “Ugh.” Oh, my God. But how do you do... I mean, to keep on the theme, how do you distinguish, like, between that authentic goth idiosyncratic opportunity and the cosplay folks?
Alex Danco: Hmm. What’s the test? That’s a good question. If you had to come up with an acid test that worked every time, what would it be? Hmm. Maybe, maybe, like, the single variable that would be most correlated would just be, like, how much do you post on Instagram? Right? It’s just, like, versus it being some side forum or whatever that has evolved some sort of... Yeah, it’s like... Yeah, maybe it’s just like, does the community self-organize on Instagram, or does the community self-organize in weird forums? [laughs] Yeah. That might be it. That might be it.
Jim O’Shaughnessy: [laughs] That’s perfect, actually. We’re friends with Joel Meyerowitz who is, like, considered the, probably the greatest living street photographer. Even though much of his work is not street, right? And my wife is a very successful street photographer. And so she looks at my Instagram in horror because, like, literally I just, there is no rhyme, reason, or logic to what I put on Instagram. And when Joel and we were together, he looked at me and said, “By the way, I adore your Instagram account.” [laughs] Making my wife a little upset. And so she immediately jumps in with, “Why?” And he goes, “Because there’s just no artifice at all.” Like, he sees something that he likes, he takes a picture of it, and he puts it on Instagram. [laughs]
Alex Danco: Yeah. I went through a phase last year where on Twitter I was just randomly posting photographs I’d taken that I liked. That was a fun time. Maybe that season will come back again. It’s fun to do for a few months. You know?
Jim O’Shaughnessy: Yeah. Right. And it’s just, it’s completely... It violates every rule of Instagram, right? And kind of makes you stand out, I guess. Even though it might sound private.
Alex Danco: Do you know where is... You know what community is really going through this kind of identity crisis right now is Substack.
Jim O’Shaughnessy: Oh, absolutely. Yeah.
Alex Danco: Right, which is going through this interesting growing up period of like, can it gain critical mass and escape velocity above the, you know, rolling boil of people writing essays about essay writing? Right? [laughs] You know?
Jim O’Shaughnessy: Well, let’s talk about that for a minute. You know, oral traditions versus literary traditions, right? Obviously Talk First, what we’re doing right now, I think adds value. Not in the manner that, like, maybe your more formal speech making, which gets translated into writing, et cetera. But, like, if you’re really trying to, like, I know you’re, one of your goals is to transfer the power to the founder, right? At your new job. And so where would you rank kind of the Talk First versus the Write First?
Alex Danco: Okay. So first of all, if you were to place them along a traditional axis of hot and cool media, right? It’s, you know, first thing is that dialogue is cool and monologue is hot, right? Multiple people talking is gonna leave a lot more... Is gonna have the reader do a lot more work of actually populating the message, what they put into it, right? Versus monologue is more of it actually reaches you. I think the point of... I think what podcasts and, like, these sort of longer form conversational formats, what they can do very effectively is, like... Here’s the thing about podcasts, actually. What podcasts have going for them is that they’re easy to consume. Right? They are very easy to consume. They are not challenging, by and large. Right? And because they are a non-challenging format to consume, people can actually tolerate listening to them for a long time. Right? And so many people do. They’re a nice way to pass the time while you’re driving or doing the dishes, whatever. And as a result you get many, many, many shots on goal to invite the listener’s curiosity, right? And say, “Here’s something you should maybe follow up on.” Right? Go, “Go click the link in the show notes to X,” or, “Go look into something later on,” or whatever. You get many, many, many, many, many shots on goal to do that. And the reason why you have many shots on goal is because it asks very little of the reader to have a shot on goal take place. But if that’s all you do, then the potential is wasted. Right? This is like... If any listeners are on their 10th episode of one of these with the two of us, if you followed through on any of our dumb ideas and actually read the books... you probably got a great deal out of these. Whereas if you didn’t do that, it’s like, well, you wasted your goddamn time. [laughs] Stop listening to us. [laughs] If you haven’t read anything we’ve suggested by the 10th episode, what are you doing, man? [laughs] There’s better content out there for you. [laughs]
Jim O’Shaughnessy: [laughs] You know, it’s funny, I was just reading a guy’s thesis that basically he’s trying to make the case that creativity is actually subject to the law of large numbers. And basically saying, “Hey, take as many shots on goal as you possibly can, because that increases your odds of doing that.” But I love that rule, and I’m gonna echo it here. If you are one of the maybe one or two listeners who have made their way through all 10 of my chats with Alex, and you haven’t read the books, or you haven’t taken up these crazy ideas, then you’re doing it wrong.
Alex Danco: No. First of all, add us on Twitter and tell us which category you’re in and whether you regret your life choices. [laughs] Well, you know, on your law of large numbers thing, where it’s like you can have a lot of shots on goal in the creative process. It’s like, while that’s true, I think there’s something else that’s equally true, you know, is the investing maxim, which is there are no bad bets, just bad sizing. Right? It’s like, you have to size positions correctly when something is working, right? In order to actually capitalize on any of the benefit that you’ve gained by having a good idea somewhere. Right? That’s what actually will make returns or not. Right? And I think that’s true creatively also, right? Is like you can try a lot of things, but you have to know where to follow through on something, right? In a way that is actually gonna lead you somewhere that has good results. And yeah, similarly, maybe this is the same thing, which is like, if all you do is listen to podcasts, but you don’t actually size up any of the positions of your attention, then you achieve nothing, right? In the end, right? You get average. You just get average. Which in this case is like, you may as well just consulted the LLM, you know, that the show puts out.
Jim O’Shaughnessy: [laughs] Yes, just see our large language model. You don’t really need to listen to any of this. You’re the too long, didn’t read.
Alex Danco: Have it uploaded into your AirPods Pro 3.
Jim O’Shaughnessy: [laughs] But do it in Spanish, because it’ll translate it for you.
Alex Danco: I love the meme that came out of this. We’re recording this the day after the Apple event, and my favorite meme this time was the... Do you know the picture where it’s like, “Hola. Hello.” Right? And people are like, “Wow, it’s really good.” And they’ll put like, “We’re in conversations with top-tier VCs.” It’ll come out with, “I cold emailed Sequoia.” [laughs] It’s like, wow, it’s pretty good.
Jim O’Shaughnessy: Yeah, I saw that meme, and I did laugh out loud.
Alex Danco: I can’t remember who Tweeted that, but it was very good.
Jim O’Shaughnessy: It’s very, very funny. All right, my friend, we are bumping up against the time.
Alex Danco: Wait, time? Look at it.
Jim O’Shaughnessy: I can’t believe it. Look at that, man.
Alex Danco: As the Car Talk guys would say, “You’ve wasted another perfectly good 90 minutes listening to us.” Unless you followed through and read any of the books, in which case you may well have just found your next great interest or passion in life. So, good for you.
Jim O’Shaughnessy: Yes. And you will soon be challenging Larry Ellison and Elon, right? For world’s richest man. [laughs]
Alex Danco: Or Larry Ellison and the Art of the Blade.
Jim O’Shaughnessy: [laughs] Well, all right, you’ve taken a... Talk about shots on goal. You’ve gotten more inceptions than any other single guest on this podcast, so you get two more. You’re gonna incept... I know you know the rules. We’re giving you the magic mic. You can speak into it, you’re gonna incept all eight billion plus people. Whenever their tomorrow is, they wake up and say, “You know what? Unlike all those other times where I had the great idea.” And this fits perfectly with the podcast. “Unlike all the other times when I listen to these two yahoos talk for like 10 hours straight, this time, this time I’m actually gonna size up my bet.” What two things are you going to incept that will help people?
Alex Danco: Hmm. Okay. You should re... Okay. If you’re interested on the theme that ran through a lot of this is the idea of the magic, magic works because it is communication. Read The Language of Magic by Toby Chapel. This is a book that I read recently that I absolutely loved and that keyed me onto a lot of this. Very interesting guy also. You can look him up. A practitioner of the Left Hand Path, among other things. You can go read that. And then the second thing is... I don’t know, friends. If you’ve made it this far, thank you for listening. You clearly have some sort of brain damage and are not an highly attractive, heavily-vetted idiot person with... Or you’re not a highly attractive person with heavily-vetted idiosyncrasies. You’re a genuine goth like us. So you’ve actually made it to the other side into the post-creative world. Welcome.
Jim O’Shaughnessy: Achievement unlocked.
Alex Danco: We’re glad you’re here. We’re glad you’re here. Come hang out with us. [laughs]
Jim O’Shaughnessy: [laughs] All right, my friend.
Alex Danco: Let’s get out of here.
Jim O’Shaughnessy: As always, I have the best time when I am chatting with you. Congratulations on the new spot. I think you’re gonna do great things there. And until next time, my friend.
Alex Danco: Until next time. I’ll see you at number 11.
Jim O’Shaughnessy: See you at 11.
Alex Danco: Bye.
Jim O’Shaughnessy: Bye.
