All-In Summit: Bill Gurley presents 2,851 Miles
Chapters
0:0 2,851 Miles24:44 In conversation with Bill Gurley
00:00:00.000 | I'm Bill Gurley.
00:00:01.260 | I got to Silicon Valley in about 1997
00:00:04.360 | and was fortunate enough to become a venture capitalist in '98.
00:00:07.800 | And the entire first year of my career,
00:00:11.240 | I had zero interest in interacting with any form of government.
00:00:15.380 | It didn't seem necessary for what I was trying to do.
00:00:17.960 | I was working with founders and software and technology.
00:00:21.640 | I didn't see what it would bring me.
00:00:23.980 | Until one day, where I ran into an issue, which I'll tell you about later,
00:00:27.680 | that required me to understand what was going on in Washington.
00:00:32.000 | So I checked in with a few advisors.
00:00:34.020 | They introduced me to this lawyer in DC.
00:00:36.840 | Turns out, DC lawyers do a lot of things that aren't lawyering.
00:00:40.440 | (Laughter)
00:00:42.180 | And he listened to what I had to say, "I'll call you back."
00:00:44.980 | He calls me back, he says, "Bill, I got exactly what you need.
00:00:47.920 | I found a congressman on the committee that matters to what you're talking about,
00:00:51.720 | and I can set up a meeting."
00:00:53.000 | I go, "Great, I'll fly out."
00:00:54.320 | He goes, "No, no, no, don't fly out. He's coming to you."
00:00:57.040 | I go, "Really? That's pretty nice."
00:00:58.800 | He goes, "Do you have a conference room?"
00:01:01.040 | I said, "I'm a venture capitalist. We have lots of conference rooms."
00:01:04.320 | So he said, "I need you to get some people together, and here's the catch.
00:01:08.160 | They need to bring $5,000 each."
00:01:10.340 | (Laughter)
00:01:12.460 | Hung up the phone.
00:01:13.920 | Started thinking, "All right, I got six people.
00:01:16.160 | We got board members, CEO, $5,000, $30,000.
00:01:19.220 | He's calling me back next week. How's it going?
00:01:21.460 | Great, I got six people, $5,000, ready to go."
00:01:23.680 | He goes, "Most of these meetings have 10 to 12 people."
00:01:26.640 | I said, "Shit!
00:01:28.080 | Now I'm inviting people that don't even have anything to do with this thing
00:01:31.520 | and having to help them out.
00:01:32.880 | I'm up to 60K, I hang up."
00:01:34.240 | He called me back a week later, he goes, "Bill, how's it going?"
00:01:37.200 | I go, "Shit, I got 12 people.
00:01:39.120 | Everybody's got a check, we're ready to go.
00:01:41.440 | I'm losing interest at this point."
00:01:43.360 | He goes, "Do they have spouses?"
00:01:46.560 | I'm like, "What kind of question is this? Do they have spouses?"
00:01:49.760 | He goes, "Yeah, let's have their spouses write $5,000 each."
00:01:54.080 | I go, "Our conference room's not big enough for the spouses."
00:01:56.560 | He goes, "They don't have to come."
00:01:58.240 | (Laughter)
00:01:59.760 | This is a true story, by the way, true story.
00:02:02.720 | And it would go on to happen two more times in my life,
00:02:05.280 | and then I stopped meeting with congressmen.
00:02:07.440 | (Laughter)
00:02:08.720 | (Applause)
00:02:10.720 | The reason that I needed to engage relates to this company.
00:02:16.720 | My fourth VC investment was in a company called Tropos Networks.
00:02:20.480 | We had industrial-grade mesh Wi-Fi,
00:02:22.720 | you could mount it on a telephone pole and bathe a city in Wi-Fi broadband.
00:02:28.640 | It was awesome.
00:02:29.680 | We were so excited about it, we were changing the world, it was disruptive.
00:02:33.280 | Google got excited about it, Earthlink got excited about it.
00:02:36.320 | But the customer I loved the most that got excited about were mayors.
00:02:39.680 | There were hundreds of mayors all over the country
00:02:41.920 | that wanted to provide free Wi-Fi service across their downtown area.
00:02:46.480 | It would help with public safety, economic development,
00:02:49.200 | and of course, digital divide.
00:02:50.960 | So we were so thrilled, I was so pumped, I was sure we had a winner here.
00:02:55.760 | And then one day, these two people got excited,
00:02:58.560 | which turned out not to be a good thing.
00:03:00.720 | This is Mayor Street of Philadelphia and his CIO, Diana Neff.
00:03:06.000 | They got just as excited as I did.
00:03:08.080 | They were idealistic, they were, you know, optimistic,
00:03:13.520 | maybe they were quixotic, maybe I was too.
00:03:16.720 | Because the next thing that happened is what caused me to get that meeting.
00:03:20.320 | You can't read this, but it says, "Lobbyists try to kill Philly wireless plan."
00:03:24.960 | And in the article, it says,
00:03:26.160 | "Philly's plan to offer an inexpensive wireless internet service,
00:03:29.040 | the most ambitious yet, collided with commercial interest."
00:03:33.920 | Collided with commercial interest.
00:03:35.680 | There were no voters or citizens up in arms about this.
00:03:38.960 | Commercial interest.
00:03:40.720 | How many of you, I know this is a younger crowd,
00:03:42.320 | how many of you are old enough to remember Schoolhouse Rock?
00:03:45.760 | Awesome.
00:03:46.720 | So, like you, I learned about how Congress works
00:03:50.400 | by ABC Saturday morning television.
00:03:53.840 | And they told us, there's a phrase in this, I looked up the script,
00:03:58.080 | it said, "Some folks back home want it all."
00:04:00.160 | So they called their local congressman,
00:04:02.240 | implying that the people that have the need are the citizens
00:04:06.240 | and the people that write the law, the congressman.
00:04:08.480 | Imagine how surprised I was when I read this.
00:04:11.920 | "Philadelphia was embarking on the research phase of the project
00:04:14.720 | when Verizon successfully pushed a bill through the state legislature."
00:04:19.120 | Verizon's writing legislation?
00:04:21.840 | How does that work?
00:04:23.040 | (Laughter)
00:04:26.320 | Now, it turns out, this wasn't even our biggest problem
00:04:29.360 | because another company's headquartered in Philadelphia named Comcast.
00:04:34.560 | They had put a bill on Governor Rindle's desk,
00:04:37.200 | proposal drafted by lobbyists for the telecommunications companies.
00:04:41.520 | This isn't what I learned on Schoolhouse Rock.
00:04:44.000 | (Laughter)
00:04:50.480 | The governor whose bill that was on the desk of is Ed Rindle.
00:04:53.600 | He's on the right.
00:04:54.960 | Before he was governor, he was mayor of Philadelphia.
00:04:58.720 | The gentleman in the middle is named Michael Nutter.
00:05:00.960 | He would go on to replace Street and was a longtime council member.
00:05:03.920 | But the guy on the left was the real nemesis.
00:05:06.960 | This is David Cohen, chief lobbyist for Comcast.
00:05:11.440 | Now, David Cohen is to corporate lobbying what Bob Marley is to reggae.
00:05:15.920 | He's like - (Laughter)
00:05:18.080 | There's no second.
00:05:21.200 | The New York Times did a profile of him called "Comcast Real Repairman,"
00:05:26.560 | in which they say he's the most important executive in the whole company,
00:05:29.760 | and I fundamentally believe that.
00:05:32.320 | It also says he's probably one of the most savvy corporate political operatives
00:05:36.080 | in the history of US business.
00:05:38.240 | The article on the right from the "Enquirer"
00:05:40.480 | calls him "Philadelphia's most powerful unelected official."
00:05:45.040 | I don't even know how you can put those words together.
00:05:47.440 | (Laughter)
00:05:49.760 | So here we are, in our little conference room
00:05:53.280 | with our spousal-enhanced checkbooks,
00:05:56.560 | and this is like a second grader challenging Michael Jordan
00:06:00.720 | to a game of one-on-one for money.
00:06:02.960 | Like, we were pissing in the ocean.
00:06:05.120 | We had no chance. No chance.
00:06:09.840 | Now guess who offers city-wide Wi-Fi?
00:06:12.880 | That one's easy.
00:06:16.160 | AT&T would join this fight.
00:06:17.760 | Within two years, they would outlaw municipal broadband in over 22 states.
00:06:22.480 | They'd just write it into the books
00:06:24.320 | and just took the power of these local decision-makers away from them,
00:06:31.040 | all in the interest of the commercial interest, not the citizen.
00:06:36.880 | I want to talk about another piece of telecom legislation.
00:06:39.680 | My partnership back in those days invested in telecom equipment,
00:06:43.680 | and so we were very interested in the Telecommunications Act of 1996.
00:06:48.320 | This was heralded as the most important telecommunications reform in 62 years.
00:06:54.080 | Now this one's simple.
00:06:55.360 | I'm just going to use the headlines from Wikipedia.
00:06:59.040 | The Telecommunications Act of 1996 had two goals,
00:07:02.960 | to promote competition
00:07:05.680 | and to encourage the rapid development of new technologies.
00:07:09.600 | Let's see how things went.
00:07:11.600 | (Laughter)
00:07:14.560 | In 1996, the top four had 48% market share.
00:07:20.800 | Four or five years later, after this heralded legislation,
00:07:25.520 | they're up to 85%.
00:07:28.160 | That didn't work.
00:07:29.600 | (Laughter)
00:07:31.600 | Let's check in on the second one.
00:07:34.480 | Were they promoting innovation?
00:07:36.240 | This is a chart of VC dollars into telecom equipment.
00:07:40.480 | This used to be 15% of what VCs did.
00:07:45.440 | Within 10 years, it had gone below 1%,
00:07:48.160 | and a year later, the NVCA stopped tracking it.
00:07:50.960 | Now, if you want to talk to one of the expert VCs
00:07:54.720 | in telecommunications equipment,
00:07:57.200 | it'll be easy to do because they're retired.
00:08:00.160 | (Laughter)
00:08:02.160 | This market's gone.
00:08:03.600 | There is no more innovation in telecom equipment.
00:08:06.720 | So what happens here?
00:08:08.160 | How can you possibly have a super important bill
00:08:12.400 | signed by and implemented by one of the most heralded presidents
00:08:16.160 | in our generation that doesn't just fail?
00:08:20.240 | Failing would be things stay the same,
00:08:22.720 | and you don't accomplish the goal.
00:08:24.400 | This did even worse.
00:08:26.480 | It created the opposite thing of what it was supposed to go do.
00:08:31.600 | Let me introduce you to George Stigler.
00:08:33.760 | He's the 1982 Nobel Prize winner in economics
00:08:37.680 | and the father of regulatory capture.
00:08:40.880 | This is his most famous quote.
00:08:42.480 | "As a rule, regulation is acquired by the industry
00:08:45.440 | and is designed and operated primarily for its benefit."
00:08:49.120 | I like to say regulation is the friend of the incumbent.
00:08:53.040 | Quick audience, interaction moment.
00:08:55.280 | That's the one thing I want you to take away.
00:08:57.440 | So on the count of three, scream,
00:08:59.120 | "Regulation is the friend of the incumbent."
00:09:01.280 | One, two, three.
00:09:03.120 | (Audience) Regulation is the friend of the incumbent.
00:09:06.160 | Yes! Amen!
00:09:09.120 | All right.
00:09:10.160 | (Applause)
00:09:14.800 | So this is the only slide I have with bullets
00:09:17.840 | because this is going to be a two-minute regulatory capture 101,
00:09:22.960 | all from George Stigler's notes.
00:09:25.200 | The first thing he says,
00:09:26.240 | "In regulatory capture, special interest is prioritized
00:09:29.440 | over the general interest of the public."
00:09:31.520 | Sound familiar from my other stories?
00:09:33.600 | Leading to a net loss for society.
00:09:36.720 | A net loss for society, that's important.
00:09:40.160 | The two mechanisms they usually use is the second bullet,
00:09:44.960 | limited market entry and price protection or even price increases,
00:09:49.680 | which I'll show you more of.
00:09:51.280 | And then the mechanisms of influence are money,
00:09:54.560 | made worse by Citizens United,
00:09:56.880 | exposure, just time around people,
00:10:00.000 | and then three, revolving doors.
00:10:02.720 | This is super important, and I'll show you one great example of that.
00:10:06.080 | That's people moving in and out.
00:10:08.400 | When they interviewed Christie on the pod the other day,
00:10:10.640 | they were talking about this in the military.
00:10:14.000 | All right.
00:10:14.640 | This is a piece of Morgan Stanley research from 1999.
00:10:19.040 | Someone took the time to go study five pieces of major US legislation
00:10:23.440 | that had happened over the years
00:10:24.960 | and how the incumbent stocks did after the legislation.
00:10:29.680 | And let's just steal a few sentences from this.
00:10:33.360 | "Conclude that landmark regulatory action
00:10:35.520 | is a tendency to improve returns
00:10:37.600 | for the largest players in the targeted industry.
00:10:40.480 | Long-term investors should consider capitalizing
00:10:43.120 | on any temporary weakness caused by market reaction to regulation.
00:10:46.800 | Many attempts to increase competition
00:10:48.640 | or improve customer experience have failed.
00:10:51.920 | This is reinforcing what Stigler taught us."
00:10:54.560 | Here's a very simple, quick one.
00:10:56.640 | Number of new banks in the US, 2009, nothing.
00:11:01.040 | Dodd-Frank.
00:11:02.880 | Like, that's what happens.
00:11:04.880 | All right.
00:11:05.600 | Two really good stories.
00:11:06.880 | You might not even believe them because they're so outlandish.
00:11:11.440 | Does everyone know who Epic is?
00:11:14.240 | It's hard to know because they're not public.
00:11:16.080 | It's a very large private company in Wisconsin
00:11:19.040 | that is the largest player in medical EHR software,
00:11:22.720 | medical records.
00:11:23.760 | And this is their CEO, Judith Faulkner.
00:11:26.560 | Now, in-- get the year right-- 2009,
00:11:31.440 | Obama put her on his health IT council.
00:11:35.040 | She was the only corporate representative.
00:11:37.760 | Should not surprise you that she's a major donor to Obama.
00:11:43.040 | Now, Obama passed the American Recovery Act.
00:11:46.560 | That was his big piece of stimulus,
00:11:48.400 | kind of like Biden's Inflation Act that happened recently.
00:11:52.000 | And tucked underneath that, easy to hide in this big bill,
00:11:55.760 | is an act that was-- the acronym's HITECH.
00:11:58.240 | It's this Health Information Technology thing.
00:12:00.800 | And then they created an agency called ONC that oversaw it.
00:12:04.320 | Now, this is the part you're not going to believe.
00:12:07.840 | They came up with a brilliant idea.
00:12:09.840 | I have to assume she helped encourage this.
00:12:14.480 | Doctors would receive $44,000 each if they bought software.
00:12:23.440 | $38 billion.
00:12:25.080 | This is true.
00:12:25.680 | You can look it up.
00:12:26.520 | I'm not making it up.
00:12:27.840 | $44,000, give it to a doctor, implement some software.
00:12:31.640 | Many of you run companies.
00:12:32.720 | That'd be pretty cool, right?
00:12:33.920 | The government passed a law.
00:12:35.080 | If they buy your software, they get money.
00:12:37.160 | Make it a lot easier.
00:12:41.320 | Now, you may be thinking, are doctors needy?
00:12:44.840 | But here's the catch.
00:12:46.080 | Remember, this happened because of the mortgage meltdown.
00:12:49.000 | Doctors own multiple homes, so they have multiple mortgages.
00:12:51.600 | So they--
00:12:52.080 | [LAUGHTER]
00:12:56.760 | They probably needed the assistance.
00:12:58.680 | Now, there's two more things about this act
00:13:01.040 | that are also unbelievable.
00:13:02.240 | First, there's a flaw.
00:13:04.560 | If someone said, yeah, I'm going to pay people to buy software,
00:13:07.560 | most people would be like, well, you're
00:13:08.880 | going to have a problem.
00:13:09.520 | They're going to buy it, and they're not
00:13:10.360 | going to use it, right?
00:13:11.280 | Well, they thought of that.
00:13:12.720 | So guess what?
00:13:14.280 | The second phase, doctors got paid $17,000 more
00:13:19.200 | to prove they were using it.
00:13:21.160 | It was called meaningful use, plastered all over the website
00:13:24.360 | of all the HR vendors at the time.
00:13:26.880 | It gets even better.
00:13:30.080 | So the ONC decided the threshold of features
00:13:37.240 | you would need for your software to comply with this mandate.
00:13:42.240 | And I'm assuming they kind of took Epic's feature set
00:13:46.200 | and plowed it into this spreadsheet.
00:13:48.520 | But they got the Department of Justice
00:13:51.760 | to enforce people that didn't have the feature set that
00:13:55.200 | were getting the payments.
00:13:57.240 | And you had three record fines, $155 million, $57 million,
00:14:03.520 | $145 million against the lesser competitors of Epic.
00:14:08.040 | Unreal.
00:14:09.840 | If you've studied the innovators' dilemma,
00:14:12.080 | the way startups disrupt is they come in
00:14:14.520 | with lower feature products, but a feature that really matters
00:14:17.840 | to the customer, and a simpler product, and they move up.
00:14:22.000 | They put a brick wall there, so you couldn't come up.
00:14:26.160 | It's just amazing.
00:14:28.400 | Obama, in an interview with Ezra Klein,
00:14:30.440 | said this was the most disappointing part
00:14:32.720 | of Obamacare.
00:14:34.000 | I mean, I think if any of us were
00:14:35.860 | in the room when they scratched this thing out,
00:14:38.320 | I could have told them it would have failed.
00:14:40.240 | I mean, paying people to do stuff is just--
00:14:42.200 | it's not going to work.
00:14:43.440 | Now, you may ask, am I unhappy with Judith?
00:14:47.640 | I'm disgusted with it.
00:14:49.280 | But if I were a judge in the Olympic regulatory capture
00:14:55.520 | competition, I'm giving her a 10.
00:14:57.760 | [LAUGHTER]
00:14:59.240 | [APPLAUSE]
00:15:02.320 | This is fantastic.
00:15:04.120 | Fantastic.
00:15:06.720 | All right, one more.
00:15:07.480 | Revolving doors.
00:15:08.280 | This is one more.
00:15:09.320 | So many of you know what this is.
00:15:11.560 | This is a COVID rapid antigen test.
00:15:16.120 | Now, this is based on a very simple piece of technology--
00:15:19.320 | hopefully, David will confirm this when he comes back up--
00:15:23.280 | called a lateral flow assay.
00:15:25.240 | Now, this technology was developed 80 years ago in 1943,
00:15:30.160 | and it's a complete commodity.
00:15:32.040 | The packaging almost doesn't matter.
00:15:33.880 | You could probably use the strip without it.
00:15:36.080 | Now, before I tell you what happened in the US,
00:15:38.280 | let me tell you what happened in Europe.
00:15:40.120 | Germany leaned heavily into rapid tests.
00:15:43.000 | They got their scientists together,
00:15:45.120 | and they evaluated 122 different vendors
00:15:50.680 | and validated 96 of them.
00:15:53.080 | Here they are on the right.
00:15:54.440 | 96 different vendors that they OKed.
00:15:58.160 | And as a result, in the German market,
00:16:00.840 | you could buy five tests for 3.75 or 75 euro cents a test.
00:16:07.280 | UK leaned in as well.
00:16:08.600 | They got them in such numbers and so cheap
00:16:11.280 | they distributed them to people's homes.
00:16:14.320 | So what was going on in the US?
00:16:16.160 | Around that time, the New York Times
00:16:19.080 | did an article like, here's what's
00:16:21.640 | going on with antigen tests.
00:16:22.880 | First of all, they fought them forever,
00:16:24.760 | and I think that may be captured as well,
00:16:26.680 | because the hospitals were making a ton of money on PCR
00:16:29.280 | tests.
00:16:29.920 | I think they made as much money as they did on vaccines.
00:16:33.080 | But that's another story.
00:16:35.040 | Here it says, all the manufacturings
00:16:37.280 | are ramping up production, but right now they're hard to find.
00:16:40.560 | And then it lists which tests are available,
00:16:42.920 | and they only list three vendors-- Abbott, Ellumi,
00:16:47.120 | and Quidel.
00:16:48.280 | Three vendors.
00:16:49.360 | Now, you can play along on your phone
00:16:52.600 | if you want to go on LinkedIn.
00:16:53.880 | This guy's name is Timothy Stenzel.
00:16:55.760 | Now, he works for the FDA, and he
00:17:01.800 | runs the group that oversees which antigen test gets
00:17:04.520 | approved.
00:17:05.440 | I know this because he would write scathing letters
00:17:08.240 | to the ones he rejected that you can also look up online.
00:17:12.360 | Now, guess what?
00:17:14.640 | You're not going to be surprised.
00:17:18.520 | Five years at Quidel, four years at Abbott.
00:17:24.880 | It gets worse.
00:17:33.560 | President Biden decided finally to lean into antigen tests
00:17:36.920 | and authorized $2 billion to go purchase tests.
00:17:39.920 | He should have gone to Germany and bought them out
00:17:42.000 | of the stores, but instead--
00:17:43.680 | [LAUGHTER]
00:17:45.120 | [APPLAUSE]
00:17:48.600 | [APPLAUSE]
00:17:51.560 | But instead, he bought them from these guys.
00:17:54.400 | Now, I don't know if you've ever used this test.
00:17:56.920 | All that packaging is complete and utter bullshit
00:17:59.240 | and unnecessary.
00:17:59.960 | That popsicle stick thing, like, everyone else
00:18:02.920 | uses the lateral flow SA plastic thing
00:18:04.920 | that you can buy super cheap.
00:18:06.120 | This was over-engineered.
00:18:09.360 | And then I get really pissed, because the Wall Street
00:18:12.720 | Journal wrote an article that was
00:18:15.360 | a victory lap for Abbott's antigen test execution
00:18:20.800 | and how well they did in the market.
00:18:22.840 | And I've never met Brianna or Peter,
00:18:24.720 | but I hope they get to watch this,
00:18:26.480 | because the first thing they should have done in the article
00:18:29.120 | is put a big picture of Timothy Stenzel,
00:18:32.000 | because that's why this thing worked.
00:18:34.800 | And they write the eye-catching card on a lollipop stick
00:18:40.240 | as if, oh, it was so cute, everyone bought it.
00:18:42.840 | Like, if you tried to sell that thing in Germany,
00:18:49.760 | how many would sell?
00:18:51.320 | Zero.
00:18:52.560 | Like, at $12 a test.
00:18:54.120 | Yesterday, just for kicks, kind of, I went online.
00:18:57.600 | This is Walgreens and CVS antigen tests.
00:19:01.080 | There's seven tests.
00:19:01.880 | They're all exactly $23.99.
00:19:04.400 | What is that?
00:19:05.320 | That's not a marketplace.
00:19:06.580 | That's not open competition.
00:19:09.100 | I also went on Boots, the famous UK.
00:19:12.240 | The tests are about $1.50, $1.60 per, today.
00:19:16.240 | So you have a 6x differential in these tests today.
00:19:18.680 | And by the way, I'm not even talking about the fact
00:19:22.040 | that our citizenry may have been much enhanced
00:19:25.840 | by having rapid tests at a much lower price
00:19:29.160 | if they were treated as the commodity they were.
00:19:31.960 | Of course, they weren't.
00:19:33.160 | Now, Washington's got its eyes on Silicon Valley,
00:19:36.880 | and it's from both sides.
00:19:38.280 | We've got Lindsey Graham.
00:19:39.320 | We've got Elizabeth Warren.
00:19:40.920 | There's an article here that says,
00:19:42.520 | Major E. Green agrees with AOC, breaking up big tech.
00:19:46.680 | And you say, why?
00:19:47.880 | Why are they so interested in tech?
00:19:50.120 | This is a poll of voters.
00:19:51.360 | Voters don't care.
00:19:52.440 | Voters are more worried about the industries
00:19:54.480 | where there's a lot of regulatory capture,
00:19:56.720 | but they want to come after tech.
00:19:58.120 | I think I know why.
00:19:59.680 | I think they want them in the system, like the military,
00:20:02.480 | like finance, like telecom.
00:20:04.600 | They want them in the system because there's money.
00:20:07.560 | Now, if Elizabeth Warren attacks big tech,
00:20:10.640 | you think they might go fund the competitor.
00:20:13.160 | And you probably can't read this, but this is open secret.
00:20:15.800 | Spend time on open secrets.
00:20:17.680 | Four of the top 10 contributors to Elizabeth Warren
00:20:20.400 | are Alphabet, Apple, Microsoft, Amazon.
00:20:23.360 | You attack them, they have to come to you.
00:20:26.640 | Some of our peers in Silicon Valley
00:20:29.040 | seem to want them to come, too.
00:20:30.360 | I think they've read Stigler.
00:20:31.960 | Circle, please regulate us.
00:20:36.360 | Brian's on later, so this is risky.
00:20:38.600 | The more regulation--
00:20:40.000 | [APPLAUSE]
00:20:43.400 | I think he's right, by the way.
00:20:47.520 | The more regulation, the better for Coinbase.
00:20:50.160 | That's exactly what Stigler would say.
00:20:54.280 | Mark Zuckerberg needs, wants, and must have regulation.
00:20:58.880 | I get it, Mark.
00:21:02.320 | And Sam's just getting started.
00:21:04.200 | He wants regulation, too.
00:21:05.960 | [APPLAUSE]
00:21:08.240 | Now--
00:21:08.760 | [APPLAUSE]
00:21:11.720 | There's a really scary thing in this AI space.
00:21:18.800 | The incumbents that are running to meet with all the government
00:21:23.000 | are spreading something that I don't think is accurate or fair.
00:21:26.240 | They're spreading a negative open source message.
00:21:29.600 | And I think it's precisely because they
00:21:31.640 | know it's their biggest threat.
00:21:33.200 | And I think what Matt has done with LamaTube
00:21:36.760 | is actually super interesting.
00:21:38.320 | All right, I'm going to wrap up with three things, three
00:21:41.680 | takeaways.
00:21:42.320 | First, I'm not convinced we're very good at regulation.
00:21:45.360 | All four of the stories I told you were failures.
00:21:48.200 | Like, they were a net loss for society, as Stigler says.
00:21:51.960 | There's a picture of Patrick Monaghan,
00:21:54.200 | who was one of the best senators I think we've ever had.
00:21:57.520 | He kept a picture of a pen behind his desk as a reminder.
00:22:01.080 | He felt like Congress should have
00:22:03.520 | to have something similar to the Hippocratic Oath
00:22:06.200 | that doctors have.
00:22:07.440 | First, do no harm.
00:22:09.000 | And the reason he has that point of view
00:22:10.680 | is he feels personally responsible for the homeless
00:22:13.120 | situation in America.
00:22:14.800 | He signed an act with JFK in 1963
00:22:18.120 | that shut down the mental health institutions.
00:22:20.560 | It had a second piece that was supposed to prop something up.
00:22:23.360 | This happens with policy.
00:22:25.400 | Second part didn't happen, emptied out the mental health.
00:22:28.240 | And when everyone talks about the homeless problem,
00:22:30.320 | they should read this interview with him
00:22:32.040 | because they don't go back and talk about this issue.
00:22:34.360 | But it's very relevant.
00:22:35.880 | So I don't think we're very good at it.
00:22:37.520 | That's the first thing.
00:22:39.080 | Second, I think regulatory capture
00:22:41.920 | gives capitalism a bad name.
00:22:43.800 | A couple of people yesterday said,
00:22:45.200 | oh, we've got to fix capitalism.
00:22:46.720 | I think where capitalism's broken
00:22:48.440 | is where the capture's the highest, right?
00:22:50.520 | Like I just showed you some examples.
00:22:52.080 | [APPLAUSE]
00:22:55.120 | You've seen these charts of price across time.
00:22:58.640 | And the highly competitive products
00:23:00.400 | coming out of Silicon Valley are dropping like crazy.
00:23:03.280 | It's health care and education and those kind of things
00:23:06.920 | where you have price increases.
00:23:08.640 | Lastly, one of my favorite authors
00:23:10.640 | is Matt Ridley, and these two books
00:23:13.520 | really cover the span of human time.
00:23:16.560 | And he talks about how three things-- technology, commerce,
00:23:21.160 | and the sharing of ideas--
00:23:23.880 | leads to prosperity for people, leads to increases
00:23:27.680 | in standard of living.
00:23:29.160 | And my big fear is that regulation
00:23:32.360 | is the opposite of this.
00:23:33.840 | It's a blocker to innovation.
00:23:35.520 | So if you care about prosperity and you kill innovation,
00:23:40.280 | you're going to kill prosperity from my point of view.
00:23:43.640 | So in closing, the reason I picked this title
00:23:46.880 | is Silicon Valley's 2,851 miles away from Washington.
00:23:52.400 | And as these people put their eyes toward this,
00:23:55.280 | I would state the following.
00:23:57.080 | The reason Silicon Valley's been so successful
00:23:59.720 | is because it's so fucking far away from Washington, DC.
00:24:03.120 | [APPLAUSE]
00:24:04.600 | Thank you.
00:24:05.600 | [APPLAUSE]
00:24:08.080 | Are we talking?
00:24:24.080 | Are we doing it?
00:24:25.080 | OK.
00:24:25.580 | We're doing it.
00:24:26.580 | [APPLAUSE]
00:24:29.060 | Ladies and gentlemen, Bill fucking Gurley.
00:24:40.580 | [APPLAUSE]
00:24:42.540 | Well--
00:24:44.540 | That was it.
00:24:45.100 | Highlight.
00:24:45.980 | I think we know the best--
00:24:47.700 | Let's all go home.
00:24:48.740 | I think the best talk in the history of all in.
00:24:51.940 | [APPLAUSE]
00:24:53.900 | Boom.
00:24:55.900 | And we need to get it out there immediately
00:24:59.460 | so it can start going viral.
00:25:00.780 | And I think it will go very viral.
00:25:02.500 | Yeah.
00:25:03.000 | [INAUDIBLE]
00:25:04.940 | [LAUGHTER]
00:25:06.700 | Well, you know, I'm just a guy with some experiences.
00:25:10.020 | And I put it together in a deck.
00:25:12.180 | And if you take from it whatever you get,
00:25:14.700 | that's where it's going to go.
00:25:15.940 | I just think the regulatory capture is bad.
00:25:18.340 | So whenever you have it, you've got to run far, far away
00:25:22.340 | from it.
00:25:23.020 | Basically, this is what we do at Poker.
00:25:25.140 | All day.
00:25:26.180 | Gurley, you put a pin in it.
00:25:29.300 | What's the solution?
00:25:30.220 | What can we do?
00:25:30.900 | I figured you'd go there.
00:25:31.980 | Yeah.
00:25:32.480 | [LAUGHTER]
00:25:34.140 | You know, the first thing--
00:25:35.300 | Is politics an answer?
00:25:36.300 | Yeah.
00:25:37.980 | The thing that's actionable, from my point of view,
00:25:40.420 | is just massive transparency.
00:25:42.340 | So I'd love to see what OpenSecrets does
00:25:45.500 | be kind of mandated and way more transparent.
00:25:49.060 | Like, the minute a check lands, everyone knows.
00:25:52.460 | Put it on Twitter.
00:25:53.260 | Yeah.
00:25:53.540 | Exit.
00:25:54.060 | Yeah, whatever, right?
00:25:55.180 | Expose the hell out of it.
00:25:56.580 | Because there's a lot of--
00:25:57.980 | those meetings I had don't show up as tropos.
00:26:00.780 | They show up as all those people.
00:26:02.980 | There's a lot of obfuscation that's out there.
00:26:06.180 | I think that one's potentially solvable.
00:26:09.060 | That was really the only thing I thought
00:26:10.660 | blockchain could handle.
00:26:11.740 | But anyway, that's just a side.
00:26:13.140 | [LAUGHTER]
00:26:15.820 | It gets trickier--
00:26:16.620 | Poor Brian was watching you, by the way.
00:26:18.340 | It gets trickier after that.
00:26:20.060 | One, you guys talked about, Christy,
00:26:23.860 | with this when you're talking about the military industrial
00:26:26.360 | complex.
00:26:26.860 | This rotating door thing is a massive problem.
00:26:29.820 | If you study, there are tons and tons
00:26:32.420 | of senators, presidential candidates,
00:26:34.500 | that are in the Senate.
00:26:35.940 | They're out for two years.
00:26:37.380 | And then they come back with $12 million in their pocket.
00:26:40.660 | And that's happening all over Washington all the time.
00:26:44.260 | And I don't know how--
00:26:45.420 | and Christy said it's impossible,
00:26:47.220 | because they'd have to vote to stop this on their own.
00:26:50.340 | And I think Citizens United should go away.
00:26:53.220 | But it requires--
00:26:54.540 | [APPLAUSE]
00:26:56.900 | It requires the same vote.
00:26:59.380 | And Gurley, is the existing regulatory capture,
00:27:01.580 | like entropy, it only goes in one direction?
00:27:04.140 | Or is it feasible to unwind?
00:27:06.300 | It feels that way.
00:27:07.140 | I mean, one of the candidates you had on, or maybe two,
00:27:09.980 | were talking about shutting down stuff.
00:27:11.900 | That ONC got shut down, which is actually
00:27:14.220 | kind of unusual and nice.
00:27:16.020 | But yeah, I don't know.
00:27:18.180 | I don't know.
00:27:19.020 | I don't see-- there have been attempts
00:27:21.420 | with certain presidents well in the past of deregulating.
00:27:27.740 | But even if that's done by the regulators,
00:27:30.700 | I'm not even sure that will--
00:27:33.500 | How much of-- oh, go ahead, Zach.
00:27:35.820 | I was going to say, on AI, I think
00:27:38.780 | that what was discussed at that hearing that Sam Altman
00:27:43.580 | testified at, I think it's an existential threat
00:27:45.540 | to Silicon Valley.
00:27:46.260 | Because what Sam proposed was, well, we
00:27:50.060 | should have a new regulatory agency,
00:27:52.220 | kind of like the Atomic Energy Commission.
00:27:54.340 | And we should have standards before AI software
00:27:57.100 | can get released and it gets vetted.
00:27:59.100 | And we'll help you write the standards.
00:28:01.180 | You remember all this?
00:28:02.500 | And the reaction--
00:28:03.980 | With pleasure.
00:28:04.580 | And the reaction of the politicians--
00:28:06.220 | I remember all these senators were saying, wow,
00:28:08.500 | this is such a nice young man.
00:28:11.540 | This is not like the other tech CEOs
00:28:13.660 | who've been testifying up here, basically defying us.
00:28:17.940 | How do we work with this person?
00:28:19.340 | And they were saying all these nice things about him.
00:28:21.260 | But the reason why I think this is an existential threat
00:28:23.580 | is because the cutting edge of all software development
00:28:26.820 | right now is AI.
00:28:27.900 | You look at what every software company is doing,
00:28:30.740 | AI is now part of their roadmaps.
00:28:33.100 | So if you subject AI to regulation,
00:28:36.820 | you're basically turning software
00:28:39.500 | into the next big pharma or into the next military industrial
00:28:42.900 | complex.
00:28:44.060 | Washington will run the software industry.
00:28:46.380 | And everything we do in terms of funding
00:28:49.500 | these little startups, these companies with fresh ideas,
00:28:53.500 | it'll just be over.
00:28:54.340 | The government's going to do a code review.
00:28:56.100 | There's no VC industry.
00:28:56.980 | Well, that's similar to what happened with that--
00:28:59.060 | there was an Excel spreadsheet in that EHR example
00:29:02.500 | of the features you had to have in your product.
00:29:05.900 | Can you imagine the government mandating
00:29:08.460 | features of a software product?
00:29:09.780 | I got some product managers going to Washington,
00:29:11.780 | getting approval for what they add to the product.
00:29:15.020 | Another answer might be just to your original question, Dave,
00:29:19.580 | is just awareness.
00:29:20.460 | So getting people more aware and hopefully
00:29:22.300 | this kind of thing can help.
00:29:24.260 | I think knowing what committees your legislators are on
00:29:28.340 | and when they're traveling to visit other states
00:29:31.220 | and other companies and stuff that
00:29:33.140 | have nothing to do with your local situation
00:29:36.860 | they're supposed to be looking after, that'd be helpful.
00:29:39.380 | But once again, the people that would choose--
00:29:41.340 | I think it's just the nature--
00:29:42.540 | --to mandate this are the ones doing it.
00:29:45.140 | Is it just the nature of government
00:29:46.740 | that it has to scale with time?
00:29:49.860 | Because we all think about the government
00:29:51.820 | sitting outside of a market.
00:29:53.380 | But the government is a player in the market.
00:29:55.220 | They consume capital and they distribute capital.
00:29:57.700 | And the US federal government now
00:29:59.260 | is the largest consumer and distributor
00:30:00.940 | of capital in the history of humankind,
00:30:02.860 | of our civilization.
00:30:04.100 | I fear-- and you had Dalio's charts of decline--
00:30:07.820 | I fear that this is one of those things
00:30:10.900 | that causes the decline.
00:30:12.580 | And I fear that democracy and capitalism
00:30:16.020 | will kill each other over time for this very reason.
00:30:20.540 | I might point that we study the UK a little bit more.
00:30:23.340 | They've kind of gone longer than most societies do.
00:30:27.260 | They have some clever policies like losing party
00:30:29.660 | pays, which causes 1/10 of the litigation that we have.
00:30:35.180 | And so I wonder if there's something
00:30:36.940 | to learn from our previous ancestors.
00:30:40.900 | The thing when you dip your toe into that world that
00:30:43.380 | is shocking is how low the threshold is of the dollars
00:30:48.740 | it takes to actually influence hundreds of billions of dollars
00:30:53.260 | of laws getting written.
00:30:54.260 | And that's where you also see some of this wrong-mindedness.
00:30:58.180 | Because you can get any Tom, Dick, and Harry
00:31:00.260 | to cobble together enough money to get
00:31:02.500 | in front of that senator or that congressperson.
00:31:04.740 | And all of a sudden, you see it reflected in law.
00:31:06.740 | It's shocking, actually.
00:31:08.500 | I was talking-- some of you know David Crane, who's
00:31:12.860 | an operative in California helping people
00:31:15.220 | try and get things done.
00:31:16.260 | And I asked him about this.
00:31:18.020 | And he said the one thing you have to keep in mind
00:31:20.700 | is the duration of how long that person's going to be there.
00:31:25.300 | So if someone from Silicon Valley has a problem,
00:31:27.260 | they run to Washington.
00:31:28.740 | And they think-- they get one meeting.
00:31:30.460 | But are they coming back?
00:31:32.500 | The teachers union is going to be there for 100 years.
00:31:36.660 | So if you cozy up to them, it's forever.
00:31:40.380 | It's forever money.
00:31:41.620 | Yeah.
00:31:42.980 | Why do you do this, personally?
00:31:44.980 | Why do I do this?
00:31:46.420 | Just frustrated.
00:31:47.580 | Like, just--
00:31:48.620 | [LAUGHTER]
00:31:49.780 | You're mad as hell.
00:31:50.580 | [APPLAUSE]
00:31:53.220 | Andrew's a powerful--
00:31:54.980 | I mean, you know, you've worked on this for a while,
00:31:57.660 | this presentation.
00:31:58.980 | I saw an early draft.
00:31:59.940 | It was clearly coming together.
00:32:01.220 | It's something you've been thinking about a long time.
00:32:02.460 | A long time.
00:32:03.380 | I've kept notes on it for 15 years
00:32:06.180 | every time I see something, I write it down.
00:32:07.980 | Yeah.
00:32:08.460 | And you're at a point in your life now where--
00:32:10.340 | Oh, that's true.
00:32:11.060 | Yeah.
00:32:11.380 | Yeah, like, I probably can't get a meeting in Washington.
00:32:13.860 | [LAUGHTER]
00:32:15.740 | I mean--
00:32:17.940 | I have trouble with investment banks also.
00:32:19.900 | [LAUGHTER]
00:32:22.700 | You saw the guys before talking about energy.
00:32:26.940 | It's a huge industry.
00:32:27.900 | There's enormous amounts of regulatory capture
00:32:30.620 | and lots of manipulation of laws in that sector.
00:32:36.460 | From that perspective and that lens,
00:32:38.140 | are you pro-fusion and the possibilities of fusion?
00:32:41.300 | Not less, but less technologically, more--
00:32:43.260 | Yeah, well, not just fusion, but fission.
00:32:45.820 | I just retweeted something like an hour ago.
00:32:47.940 | Apparently, they're going to--
00:32:49.340 | one of the plant-- one of the fission plants that's
00:32:52.300 | been shut down in America, they just voted to reinstate,
00:32:56.100 | which is a great--
00:32:58.020 | Progress.
00:32:58.740 | --great progress.
00:32:59.460 | They turned around the anti-nuclear sentiment
00:33:01.340 | in what, five years, it seems like?
00:33:02.860 | Hopefully, but it's a long way to go,
00:33:04.420 | because one of the reasons fission's so expensive
00:33:07.260 | in the US and way more expensive than China
00:33:09.220 | is the regulatory burden--
00:33:10.540 | Exactly.
00:33:11.040 | --that we have.
00:33:11.660 | China's building 400 nuclear fission power plants right now.
00:33:14.580 | That's their plan.
00:33:15.540 | That's their 20-year plan.
00:33:16.140 | And it's not just in China.
00:33:17.260 | And if you look at the antigen testing,
00:33:20.260 | imagine with the complexity of--
00:33:22.460 | Well, no, but this is what I want to ask you.
00:33:24.340 | It's like, you know, these large energy generators,
00:33:26.860 | the existing utilities, what is their
00:33:29.340 | incentive to not try to pull a Comcast when they see Bob
00:33:33.260 | and David close to the finish line?
00:33:35.020 | Oh, you have to imagine that the oil and gas industry's
00:33:38.660 | been doing that this whole way.
00:33:41.140 | I would assume--
00:33:41.820 | For traditional nuclear, yeah.
00:33:42.860 | Yeah, for traditional nuclear.
00:33:44.140 | Yeah, so I would--
00:33:44.900 | This time, we'll see them coming.
00:33:46.860 | I wonder-- and I say this with a lot of need to tell you--
00:33:49.620 | I wonder if you could use open source around fission
00:33:53.980 | to try and lower the cost of building it
00:33:56.740 | and try and get more consistency--
00:33:58.980 | Well, the big Achilles heel in energy,
00:34:00.780 | as an example, where it's impossible to capture
00:34:03.340 | regulatorily, is that the big opening they left
00:34:05.980 | is that every individual here can become their own utility.
00:34:08.780 | And they're subject to no oversight.
00:34:11.020 | And so the real question is, to your point,
00:34:12.820 | if an open source or some very small modular reactor
00:34:16.300 | can be put in the hands of every individual,
00:34:18.300 | and then they can make an individual decision,
00:34:19.920 | that's very hard to regulate.
00:34:21.120 | But in the solar market, which I know you've
00:34:23.000 | spent a lot of time in, the rules on whether or not
00:34:26.380 | you can run power back in and at what rate
00:34:30.740 | are arbitrary across the entire country.
00:34:34.540 | Guys, I know I speak for everyone
00:34:37.700 | when I say that this has been an unbelievable highlight
00:34:39.980 | and a real treat.
00:34:40.980 | Bill, thank you so much for doing this.
00:34:42.620 | Thanks, everyone.
00:34:43.380 | [APPLAUSE]
00:34:45.380 | Bill, do it.
00:34:46.380 | Wow.
00:34:51.880 | Wow.
00:34:54.380 | [MUSIC PLAYING]
00:34:57.380 | [MUSIC PLAYING]
00:35:01.380 | [MUSIC PLAYING]
00:35:05.380 | [MUSIC PLAYING]
00:35:08.380 | What your winner slide? What your winner slide?
00:35:25.460 | Festives are gone.
00:35:26.500 | What your winner slide? What your winner slide?
00:35:46.500 | We need to get merch. Festives are back.
00:36:00.100 | (upbeat music)