The excellent David C. Wright podcasts me on *Stubborn Attachments*, and on other things

It starts with an extended discussion of Tyrone and more or less ends with a take on the meaning of Straussianism and the Straussian reading of my own books.  (If you read the transcript, the sentence in the middle about my believing in God as a teenager is a transcription error, it will be corrected.)  David is one of the best, and best prepared, interviewers I have interacted with.  Here is the audio and transcript.

Here is one bit from the middle:

David: …should academics or people who seek to influence the world, and according to your value system should they try and boost economic growth more? I’m thinking of in your podcast, you’ve had venture capitalists. I think of these in some ways as public intellectuals who are trying to boost economic growth.

[00:39:12] Tyler: They think very conceptually venture capitalists.

[00:39:14] David: They do.

[00:39:15] Tyler: They’re generalists.

[00:39:15] David: They are. Are they similar to university professors?

[00:39:19] Tyler: Well, they’re much better.

[00:39:20] David: Better at?

[00:39:21] Tyler: Almost everything. They’re smarter than we are. They’re playing with real stakes. They understand more different things, they’re better at judging people, they’ve created better for the world in most cases, and so we should feel ashamed of ourselves if we sit down with venture capitalists.

[00:39:35] David: Yet they don’t win a Nobel Prize, and they can’t become call it historically famous or much less so. Obviously–

[00:39:41] Tyler: I think they will become historically famous.

[00:39:43] David: Do you?

[00:39:43] Tyler: Well, they already. Well, like Mike Moritz or Marc Andreessen or Sam Altman Y Combinator. I think they will go down in history as major figures of great import.

Definitely recommended.

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Tech venture capitalists, and the tech they lead, succeed when they stick to the business they know and not venture into unproven technology. Indeed, Google et al. have learned that it's damn hard to make a reliable car, and they wisely exited that business. Elon Musk is swimming against the current, but I wish him well - he has the weight of tech on his shoulders. The proof that tech deserves Cowen's praises won't be known for awhile, but it will be easily determined. How? By comparing the achievements in tech in China with the achievements in tech in the U.S.

At least with Peter Thiel's technology, China can be more efficient with spying on its own people and others. Shred the Constitution for a buck? How about some renminbi?

1. Thiết bị điện dân dụng chất lượng.
Ảnh: Phạm Trường.

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TC: "Tyler: Well, they already. Well, like Mike Moritz or Marc Andreessen or Sam Altman Y Combinator. I think they will go down in history as major figures of great import." - I think not, I follow tech and never heard of two of these three guys. Vaclav Smil in his outstanding work "Creating the 20th Century" (how the 20th century had strong roots in the 19th century) has a list of inventors that are all but forgotten despite having made fundamental advances. Reginald Aubrey Fessenden anyone? (I had heard of him however, as a student of radio).

Bonus trivia: Smil's book is outstanding, highly recommended. Where else could you learn Fleming's vacuum tube diode almost was made into de Forrest's triode (vacuum tube transistor/amplifier) except for one wire added, that Fleming realized, too late, was obvious, and that both of these devices are based on the Edison effect, named after Thomas Edison who failed to appreciate the significance of this phenomena? Good stuff. A natural corollary of this is that the much vaunted transistor is essentially something invented in the 19th century (recall Shockley et al's transistor was a BJT transistor, which is essentially a solid-state triode in operation). So try and imagine a PC made of vacuum tubes, steampunk style, it can be done!

I just Googled Mike Moritz, and was stunned to find he was a journalist turned venture capitalist and got rich working on Sand Hill Rd (Silicon Valley) and getting first digs in IPOs. This is a genius? I think not. Apparently he caught Steve Jobs eye in the early 1980s while a Time reporter, and later impressed VCs with his 1986 book on Chrysler. Better to be early than smart, or something.

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As for Sam Altman, I vaguely recall an article in the Economist on his incubator, and Wikipedia jogged my memory. He dropped out of Stanford in 2005 at age 20 (a failure or just anxious to get rich?), started an incubator, and in a 2014 blog post said that the total value of all his sponsored companies had surpassed $65B....right. Sounds like Donald Trump bragging about his supposed net worth.

He might be correct. Valuations for non-public companies can stay at whacked out levels for a long time, completely unrelated to any expectation of future cash flows.

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This is a poor attempt to discredit Sam Altman. He is not the founder of the incubator Y Combinator but its president. YC is not just "an incubator" but arugably invented the tech startup incubator concept. They are considered the most elite seed round incubator and are known by anyone familiar with the Silicon Valley tech ecosystem.

If you had done a little more research you'd have seen that the claim of $65B is not so far off. One can argue whether private company valuations are justified but Dropbox, now a public company, has a market cap over $10B. This accounts for a substantial chunk of the quoted number. Other YC companies like Airbnb, Stripe and Reddit are also surely quite valuable despite being private.

Indeed. But why has Tyler even picked Sam Altman, when Y Combinator is Paul Graham's baby.

@Michael D, @stasi - actually both of you are wrong or incomplete. I stopped paying attention to Silicon Valley after I quit working there in the mid 00's, but Wikipedia informs us that Y Combinator was started in 2005 by Paul Graham, Jessica Livingston (is she hot? she has a hot name, oh, ...a mug shot shows she is a cute blonde, not bad), Trevor Blackwell and Robert Tappan Morris (WTF! This is the dude that created the Morris Worm! Served time, and received MIT tenure in 2006, nice). And their companies? Mostly social media junk. But who am I to judge? I'm a nobody, albeit in the 1% with my family wealth (min net worth $10M).

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"the much vaunted transistor is essentially something invented in the 19th century (recall Shockley et al's transistor was a BJT transistor, which is essentially a solid-state triode in operation)"

The entire point of the transistor is that it is solid-state. Of course it does what a triode does, but it can be miniaturized many orders of magnitude further than a vacuum tube triode. Ultimately they are both switches or amplifiers, and switches and amplifiers existed well before either of them.

"So try and imagine a PC made of vacuum tubes, steampunk style, it can be done!"

Of course a computer can be made of vacuum tubes. ENIAC is an example. You don't even need electricity to make a "computer".

But today's microprocessors have billions of transistors. You're not going to make anything comparable with vacuum tubes.

+1, a large part of the value of transistors is derived from their being solid state.

Reference the origin of the term debugging.

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@Whiskey T., @JWatts - you seem to confuse IC with transistor. They are not the same. True, inventors build on the shoulders of giants, but an IC was invented by Kilby and Noyce, more or less simultaneously, with hints of an IC semiconductor transistor in public disclosures by Werner Jacobi (1949) and Geoffrey W.A. Dummer (1952). Shockley et al's invention was not an IC, but simply solid state. It's not at all obvious on how to 'shrink' a BJT discrete transistor like Shockley et al's into something that you can build with semiconductor fab techniques.

Bonus trivia: George and Edvard Scheutz (spanning 1785-1881) actually built and sold (!) Charles Babbage's analytical engine (mechanical PC), and it even had a printer! Way ahead of its time.

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I admire Tyler's humility.

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Literally self-recommending!

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'so we should feel ashamed of ourselves if we sit down with venture capitalists'

Who knew that the German contempt of Finanzkapitalismus and its practitioners was something to be ashamed of?

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When I took college physics, the technology consisted of the slide rule. Yes, we used a slide rule. I kept that thing for years. One summer I worked for a civil engineering firm as a "computer" draftsman. No, we had no computer; rather, I would compute angles, distances, etc. the old fashioned way, with an "adding machine" and the knowledge in my head about geometry (sine, cosine, tangent, etc.). Another summer I worked for a soda bottler doing light accounting. Trucks were loaded in the morning and the number of cases on each truck tabulated. At the end of the day, the guys in the yard would count the cases still on the truck, and send the route salesman up to the office where I would have the salesman "account for" the missing cases, either with cash or charge receipts. I would enter the information on a printed worksheet, tabulate the results on an "adding machine" that operated with a lever on the side, and announce to the salesman if he was "short". I was a kid and these were grown men. It's a miracle none ever punched me out. My experience at that age was far different from that of Brett Kavanaugh.

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Time for some perspective on venture capital... I process data for Venturesource, a subsidiary of DowJones. The database has about 30,000 companies that did a first round of funding from a formal VC organization 1990 or later. After working with this data for more than a decade, I believe it is very close to the universe of venture-funded companies. About 8,500 are still private and in the development stage. Of those that are exited, about 50% shut down worthless. Another 30% were acquired for a value that was not larger than the total amount raised during the startup stage. About 20% exited at values greater than the amount raised. Just under half of these did an IPO, but only 95% of IPOs went public at a value greater than funds raised (yes some IPOs are investment failures). A few are spectacular successes, and everyone knows who they are.

If I could invest in an index fund of all venture-funded companies, value-weight, and pay the standard fees of 2% annually plus 20% carry, I would pass. The risk-return trade-off in the public markets is better.

This is good insight. I have always suspected that the VC industry was driven more by lottery type motivations than actual risked return on capital. Of course that doesn't mean that for people running VC companies it isn't extremely lucrative. One question I have always wondered though - is it a good risked return for the people working in the underlying companies? As an example let's say you are a super smart computer PhD spend you entire 20s working 18 hour days in your start up mostly paid in stock options, that then turn out to be useless. You have perhaps forgone $1m that you could have earned in Microsoft doing 9 to 5. But for every ten people like this there is one getting $20m from their IPO, on a risked return basis it is rational. But what are the actual odds?

Nowadays, when startups might be private for 10 years or forever, I can't see them making a strong case that you should forgo much salary at all.

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Many of the comments aside, was this Tyler restating the old saying about those that can and those that cannot?

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y combinator will not be ranked up there with the cure for cancer.

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They’re smarter than we are. They’re playing with real stakes. They understand more different things, they’re better at judging people,

They are also curious, well-informed and the least opinionated of conversation partners. And, in many cases, strangely humble. It is they, not our artists and politicians, who carry the spirit of the age.

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"David is one of the best, and best prepared, interviewers I have interacted with." Agreed. This was, for the most part, one of the most impressively prepared interviews I've encountered. The first section was great, and I also enjoyed the Straussian readings section. The idea of compound interest ideas was interesting, and if that's in SAs, then I'll have to ask my library to order a copy.

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