The Oracle Of Silicon Valley Shares How to Create More Value Than You Capture | Tim O’Reilly

people are just starved for idealism totally they're starved for values and companies that Express values uh it's it's it's winning you know and so I I think a lot of it is it's just a practical side of it you know you know Google when they were idealistic and expressed their ideals Amazon when they were idealistic and expressed their ideals had enormous loyalty from their staff and they had people who felt Mission driven and and when you lose that you lose something you know how can you not just be become more and more uh dollied you idealism is is a critical part of the human soul welcome to the Eric Reese show I'm your host today one of the most profound thinkers about the relationship of technology and Society someone who has literally been the person selling the picks and shovels to the Gold Rush that is Silicon Valley Tim O'Reilly he is the founder of O'Reilly Med and believe me if there is a technologist or a programmer in your life you go to their bookshelf you will find many of these books with funnyl looking animals on the covers they are ubiquitous in the technology industry as the reference manuals we all need myself included to do any kind of programming or technical work these books are so famous among technologists they're often referred to by the name of the animal on the cover like the famous camel book from my shelf uh but if you want to learn more about python or machine learning or any technical topic there is a funny looking animal with an O'Reilly book but Tim is not just a publisher of technical works that's how he got started but as you'll see in this conversation he is someone who has been a witness but also a participant in the massive changes that technology has driven through business through our society in so many different ways he is the one who popularized many important Concepts in technology from open source software to Web 2.0 the maker movement government as a platform he was very early to the importance of deep Tech you may have heard of O'Reilly alphatech for those who've been around a little while he wrote a book called WTF which stands for what's the future what did you think which is terrific a very important set of ideas about Ai and the development of platforms long before that was the topic that on everybody's mind someone who has had a hand in seeing and shaping the future in this conversation we got into how to build a business with a real ethos what it means to see a business as an ecosystem how to gain competitive Advantage by doing the right thing and so many more topics around AI about regulation and policy and just the role that technology plays in society and can in the future it's absolutely my pleasure to present to you this conversation with Tim Oatley I've started a lot of companies and I've helped a lot more people start companies too and therefore I've had a lot of banks and a lot of bank accounts and so I'm really delighted that this episode is brought to you by Mercury the company I trust for startup banking every every time someone on my team uses their Mercury link debit card I get an email with the details and just that little bit of financial intelligence always in my inbox gives me a much clearer understanding of what we're spending that's what Mercury is like through all its Financial workflows they're all powered by the bank account everything's automatic and for those of us that remember the recent banking crisis Mercury was there for a lot of startups who needed them they've since launched features like Mercury Treasury and Mercury Vault with up to $5 million in FD I insurance through their partner bank and their sweep networks certain conditions must be satisfied for pass through FDIC Insurance to apply apply in minutes at mercury.com and join over 100,000 ambitious startups that trust Mercury to get them performing at their best Mercury the art of simplified finances Mercury is a financial technology company not a bank banking services provided by Choice Financial Group and involve Bank and Trust members FDIC this episode is brought to you by digital ocean the cloud Lov by developers and Founders alike developing and deploying applications can be tough but it doesn't have to be scaling a startup can be a painful road but it doesn't have to be when you have the right Cloud infrastructure you can skip the complexity and focus on what matters most digital ocean offers virtual machines managed kubernetes plus new Solutions like GPU compute with a renewed focus on ensuring excellent performance for users all over the world digital ocean has the essential tools developers need for today's modern applications with the predictable pricing that startups want join the more than 600,000 developers who trust digital ocean today with $200 in free credits and even more exclusive offers just for listeners at do. Eric terms and conditions apply hey Tim thanks for coming on H glad to be here it's great to see really a pleasure to be here with with Tim O'Reilly now I have to say I wanted to you know give you your appropriate title and I was I was looking online people have called you the Oracle of Silicon Valley the Scribe of Silicon Valley I I I stopped looking up to a certain point it was like people felt the need to give you a special a special title to to represent your role in the technology industry do you have a favorite of all these things people call you not really I I think uh I like to say uh my reputation exceeds me you know I I feel like I am definitely someone who uh has Tred a different path than most people in Silicon Valley and I tell people about that and I don't think of myself as an oracle I think of myself really as uh probably more of a voice in the wilderness sometimes that I can definitely relate to I think you know what's cool about your perspective and you know we I've known you many years now is both you know you've you know very focused on ideas really like if if there's anyone who can be called a philosopher in the tech industry you know you you live up to that billing but you've also built O'Reilly media you've you've been a founder and a CEO and you've you've been in the operational trenches of trying to put your ideas into practice and I just feel like that's such an unusual combination So yeah thank you for doing that yeah you're welcome now I don't know if you remember this story so to me let me for those that don't know here's how I met Tim O'Reilly so when I was a programmer you know had the the every programmer ask any programmer you know we all have the O'Reilly media books on our shelves with the animal cover and I had tons of them and when I very very very first started writing about le start up you may not remember this Tim I very first started writing about it I got a summons to come meet you up in Sebastapol where O'Reilly was headquartered which for me was like a very big deal at that time it was before anyone of any significance on planet Earth had said anything to me about Lean Startup somehow Tim knew it was going to be a thing and he asked me to to come up there and we had a conversation and and I felt so validated and seen and appreciated I really was the first sign to me that I was on to something with with L J so first of all thank you for doing that you're very welcome that is kind of what I do I like to find interesting people and and connect them with more possibilities than they might find on their own that was definitely my experience and I wanted to talk to you about it because to me that's just a perfect place to start you have this canny neck for identifying new and interesting things and people ideas that are going to be important you know for technology and for the world you know you were ear Li me starting from Unix you know way way back you know R manuals for Unix I always like to think about the alternate history of what would have happened if you pursued your Frank Herbert uh writing career instead which we can get into but but you know to open source and government as a platform and you know or alphat Tech which people probably don't remember now the idea that deep Tech was going to be really uh really important part of the industry and and I could go on and on about these ideas that you've been uh early to and and been the voice in the wilderness from so Web 2.0 the maker Web 2.0 I was like I'm I'm definitely missing some important ones yeah I want to I want to understand now from your perspec I experienced it as someone who had a new idea that I thought was was worthy of talking about but I want to know from your perspective how do you cultivate this like Network I used to call it O'Reilly radar like almost felt to me like you actually have an early warning system for when something interesting is coming up through the culture through technology how does it work well I think the very first thing that I do uh is I try not to get caught up in the enthusiasms of the moment you know and and that was always the case uh just even from where I lived I was up in Sebastapol two hours from Silicon Valley close enough to see it but seeing it from the cheap seats and effectively able to see patterns where other people got you know caught up in all the details and so that was part of it part of it was also some training I had when I was quite young in general semantics and the whole idea that the map is not the territory you know this idea that you can get caught up in the story that people have fed you about the way the world works when in fact the fundamental entrepreneurial Act is to look at the world aresh and draw a new map uh there a wonderful article I read once by Michael shre where he he basically said you know great entrepreneurs don't find their users they create their users you know the Google created people who expected to be able to find anything at any time you know um Steve Jobs created people who expected to uh you know be able to carry you know the internet in their pocket you know and uh those things weren't obvious but they are obvious if you have a map of the world that you have constructed on your own that takes into account trends that you see you know so a big part of what I do is is a kind of scenario planning you know and you you learn these tools you know when I discovered scenario planning I was like oh this really fits what I do just this idea that you you identify trends that you can see and you draw them out and the trends are vectors they have both you know a direction and a magnitude and and you can kind of follow them and you can look and you can start to place things along these trend lines and you can watch them start to accumulate or not and um so that's a big part of it so for example if you look at my Evolution from thinking about open source through Web 2.0 through uh government as a platform it's really on one trend line you know or clustered around that trend line and that trend line was the rise of the internet and and and you know so like if you you look at I I I started out very early in my career working with uh Berkeley Unix and becoming part of that early Unix Community which was a collaborative Community even in the shadow of um the fact that it was a proprietary license and it was that experience that made me doubt the free software foundation's narrative that it was somehow related to to licenses in a particular legal construct I went wait I've been part of a collaborative community that built this most amazing thing uh for which the gnu system is actually derivative you know which was people just going okay we're sharing stuff for the hell of it and I started thinking about okay this is on this trend line of the rise of networked collaboration more than it is a particular you know uh you know licensing idea that was sort of part of it but you had to draw bigger map even then if even if you were thinking about licenses I go Tim burners Lee put the web in the public domain and yet that was outside the purview of the free software foundations movement because they weren't sort of revolting against copyright uh you know the the Berkeley Unix was just you know and the xwi system which I was also very involved in early on doing documentation for were both just give us credit build on what we did you know and so I went oh there's something else at work and then I kept thinking about that trend line of network collaboration I started to see web services I started to see distributed computation and a lot of what happens is I read something you know like in your case I read your stuff about the Lean Startup and went oh this totally makes sense Bing and uh but in this particular case it was something written by one of my editors Andy orm and he was talking about uh how you know mp3.com versus Napster and and that represented like a very deep paradigm shift and I went oh my God all these things fit together and that's when I started talking about the internet uh the internet operating system was in 2001 that later morphed into Web 2.0 but it was also I was thinking a lot about the transition from again pattern recognition looking at the transition between IBM and Microsoft which was the transition from control of the industry by control over Hardware to control of the industry by control over software and going oh open source and the internet are commoditizing software in the same same way that the PC commoditized Hardware what will become valuable thinking that oh it's going to be data you know and and so I that you know that that was what really led me from open source to Web 2.0 but they're all along this trend line and uh so that's part of it and then the other part is just looking for interesting people you know I think a lot of uh you know uh uh people great investors they're kind of looking for people who will make them a ton of money and and that's never been my uh my model I want people who are fundamentally interesting because they're going to do something that will make the world a better place and also just I guess I'm just uh you know I gave a talk back in uh 2008 I think it was called called why I love hackers you know I've all been very associated with that hacker Community because it's it's these idealists who want to make the world a better place and back in that talk I had just come back from being in in Sicily you know and it's just amazing you know looking at the caves and you know the the the the uh quaries in Syracuse and you think of the early technologists who were kind of inventing this stuff you know that we now take for granted it's completely uninteresting but like structurally all these interesting things you know being invented back then too and the people who invented them were were just trying stuff and and uh a lot of times failing and and I kind of became very interested in failure and that in that talk in 2008 I uh I I quoted this poem of Ras or called the man watching which is about Jacob wrestling with the angel and you know being beaten and knowing he would be beaten but getting strengthened by the fight and that's when I really started giving these talks about work on stuff that matters you know and uh I felt because I felt like a lot of uh a lot of technologists were working on fundamentally trivial uh problems just ones that would make them a ton of money and you know again that was sort of obviously the observation of people like Jeff hammerbacher who said the great minds in my generation are working on figuring out how to get people to click on ads and so I've always been drawn to people who wanted to change the world rather than people who uh you we're just going to make the most money in fact sometimes people I I would meet who would be potentially really good entrepreneurs and I found them distasteful you know so I wouldn't invest yes indeed yes indeed have you been disappointed I feel like so many people who start with that idealism the company that they ultimately wind up creating you know it's like you think about the early idealism of don't be evil or yeah you know these companies that had a real ethos to them has it been depressing to see what they've become uh no uh I mean yes and no I mean in one sense I I think that it is uh you know inevitable you know just like aging is inevitable I think it's also a broad societal problem not the problem with the Technologies you know it's not that you know Larry and Sergey became evil uh it's not that um uh Bezos became evil but they were building companies in a system which demands that people think short term which demands that you sacrifice your values to profit you know and it's a little bit like you're building a machine and it has certain requirements and if you don't think about that up front you know you're just not going to solve the problem and while a lot of people have thought about it you know they're going oh we'll have super voting stock and will give us control but that's kind of the one weird trick the one weird trick to avoid the whole system yeah right and it doesn't work because uh in in fact you're paying your employees in stock which must go up so you buil it's like you bought an SUV you know and you can't just say well I'm gonna not use very much gas because you built one that uses a lot of gas and this is the particular kind of gas that it uses so you know it's not that you know uh Larry and Sergey or Mark or Jeff you maybe at some point they went oh I just want to have a bigger pile than the next guy but you know they're already unthinkably wealthy uh and so it's but it's really that they built a machine where in order to attract the best talent you have to have a rising stock price and therefore that starts to guide all your decisions and self-fulfilling yeah like it becomes a self filling prophecy and it takes a lot of character to resist that and there there are there are the history of companies that have done that you know and there's a wonderful book which you was it you gave it to me you know that the uh uh I forget the name of the author you'll probably remember the guy from Stanford about about the uh the capitalists who uh uh the history of all these companies that started with oh you're thinking about the enlightened capitalist by James OU yeah it's a great great book but also a very depressing book about how many times people have tried to get this right and and screwed it up yeah and you it lasts for a while you know Johnson and Johnson did it for long time and how is it that this company that he kind of celebrates as this company that had these values you they be they suddenly be they became a public company and suddenly they literally rewrote their history wiped out all the training that they had uh given to to build this culture that that put values before uh before profit the one that where where like a division manager could decide to have a aund million recall on andol when there was the the packaging problem and yet after a decade or or or so of being a public company they're involved in the opioid crisis you know it's just like it's that now that's sad but I do think that you know you look at um you know bright spots and and I don't think anything is perfectly bright but I I I remember connecting with SAA and Adela uh you know when I my book came out in 2017 and his book uh uh hit refresh came out about the same time and I went up to interview him and we talked a lot about this notion of value creation and and and you know he had T because he talked in his book about when he took over he realized Microsoft had to go back to its roots it had gone from being a company you know going back to Visual Basic that had enabled other people to do things to being an extractive company that was trying to ring out every last and he said we had to go back to our roots of enabling an ecosystem and so I think a lot about that uh ecosystem value idea uh and I you know for me this sort of a funny personal story about one of the our our sayings that O'Reilly is create more value than you capture and where did that come from uh it was back in 2000 we were having a sort of management Retreat and I happen to tell the story of a couple of Internet billionaires who told me that they started their company with the help of an O'Reilly book and I kind of laughed and said you they got billions we got 35 bucks uh or maybe a few hundred bucks you know if they bought more than one um but that seems like pretty great you know we played a role in making these companies in making this industry and one of my uh senior managers guy named Brian ER and said yeah we create more value than we capture and we went damn that's a great it's a great saying we've used it ever since and and we've tried to live by it and uh so you know a really great example you know we we now you know we morphed O'Reilly we went through I mean if you look at the history of the company many of our of our Innovations came from trying to create value for other people you know why did we uh uh start our conference business it was because we had this bestselling book about the Pearl programming language and sun came out with this big Java conference and went there's no corporate backer for open source software you know let's make a conference for Pearl let's tell everybody how important this is and then it was like wait all of our you know our our books are about things that are free and open source and they don't have this kind of thing so we created the open source Convention of course the whole industry took off and did that but we were really about trying to build new communities when we launched our web 2 Summit it was like how do we re literally our strategy the prior year was was how do we reignite enthusiasm in the computer industry after the.com boss after yeah yeah we were trying to basically we said we still believe in this future we want to tell a story that gets people excited and but and similarly when we we uh you know we started what was originally a joint venture with Pearson called safari books online it was because there were a bunch of startups in in ebooks and I said this is not sustainable for authors and I did the math for the guy over dinner you know I just kind of he you know as as he was sort of explaining his business model and I go this is never going to be more than ancillary and I think you know again back to the trend line think I think ebooks are going to be really important this is in is in 2000 we done our first ebook in 1987 20 years before the kindall and we've been exploring this space for a long time and uh I said this has to be mainstream and it has to have an e economic model that allows authors and Publishers to get paid so that's when we launched this service with a different business model which we evolved and we continued to evolved and we added video and we and a really interesting thing happened in 2016 uh end of 2016 we introduced this uh uh live online training and it was a very very powerful successful feature for us and there are two things that were really important about it uh one was contrary to the normal narrative that you focus exclusively on your users in in a way the Innovation here came because the problem we were trying to solve was how did we make more money for our authors because we saw that as ourselves as at the fulcrum of this interdependent system because if there was not uh you know if the you know as the publishing was becoming a smaller and smaller Market we had to find new ways for authors to monetize their expertise and conferences you know the economics were such that you we couldn't really afford to pay people we said okay in this model we can afford to pay people and so it was sort of that's I think where I really started getting super clear about this this you know the tech companies in some sense are at a fulcrum between their suppliers and their consumers and uh so we started we don't normally use that language with tech companies I think is interesting yeah even though that's been the the history of business is full of of power Dynamic relationships between suppliers and Distributors yeah and and and you know if you look at Ben Thompson's work on internet aggregators his whole point is you know the aggregators get to commoditize their suppliers and that's exactly what you've seen with Google and Amazon and that sort of really struck me because of my experience at O'Reilly that that's a de facto sign of too much Market power if you can commoditize your suppliers then uh you know you're clearly too big too powerful so let me take you back to that ethos because to me I remember when you first wrote wrote the essay about creating more value than you capture and on the one hand it seemed like something so obvious it was like I can't believe somebody had to write this down but to me that's like that's ultimately that's the the greatest sign of of a of a truly great essay is that it it brings to your mind it catalyzes for you something that you thought everybody to know and you give it a name yeah and in the years since I I reflected on it a lot because I've met so many companies that clearly didn't get the memo yeah that are so busy trying to capture value they're actually destroying the engine that generates the value that could create the broadly shared Prosperity that they could be the the epicenter about so you talked a bit about kind of the distinction between an extractive or exploitative business model or or ethos and then the cor this more creating value I don't know what you like I don't know generative is the right word something a different ethos like what just walk me through a little bit how you think about the two sides of that coin and you know how how people who are who have a choice in the matter should be thinking about what they want to do well I think uh first of all there's a long-term perspective uh which is that if you want to survive over the long term you have to create a sort of a balanced ecosystem one that you know uh leaves enough for everybody you know to to to prosper and I'd watched obviously first as Microsoft kind of took all the value I still remember Walt Mossberg told me years ago about a conversation he had with Steve Balmer when he was the CEO of Microsoft he said Steve if you would just dial back the greed only 5% you know your problems would go away you know it's just that that last little bit and uh and I I I think you know for a long time google really threaded the needle but I think they they've kind of started to lose the plot Amazon completely lost the plot with the introduction of their ad business you know in the recent research I've been doing at U uh University College London you know we discovered you know that you know the TP the ads are now a third of the most clicked on uh pro products because of course they're given top billing where they're most likely to be clicked on and the products that are advertised are are generally uh 30% worse by Amazon's own metrics the metric we used was okay if they've built all these algorithms to figure out what's the best combination of price uh user ratings and other factors the organic rankings represent their best judgment about what's best and then you can look at the distance between the the advertised products organiz um sort of um organic ranking and then their placement yeah in ad so that's a that's that's a perfect illustration because you're you're literally when people talk about extractive yeah practices or extracting a rent I mean there that's literally you are um I wouldn't say stealing maybe too strong of a word how would you describe it like you're you're taking value away from your own customer for yourself that's right and these products are objectively worse by Amazon's metric and 177% more expensive on average so Amazon is really betraying their customers and so in that case it's I think that's a pretty clear uh uh case and it's interesting because my my colleagues on the the the the papers that I was writing were all like we got to get this before regulators and I'm like no I gotta get this in front of Andy jasse you know and I sent it to Andy and he said he would read it but has not got back to me yeah that's but but you know but I do know that sometimes the things I have done in that regard have made a difference and I do see companies that are still trying to you know fight the good fight but I think even apart from the purely extractive I think that we have to come to grips with the fact that uh internet platforms knowledge platforms and looking forward to the age of generative AI these are platforms with enormous power that must be dealt with responsibly you know so a good example is uh first of all I I considered Google's original design to be really a masterpiece of of Market design where you had organic search plus advertising and they were they were complimentary you know and that's that's like classic economics you know they literally had running an invisible hand uh that was for an unpriced Market which was an incredible breakthrough in Market coordination and uh and that's organic search results and they go but still people might want to you know raise the visibility of something because of an economic incentive and we'll give them a space to do that but then they start gradually to to put them you know overlay the the the uh the the priced Market which is I think less efficient and less user Centric and and replace the organic results and I tried to show them you know they're kind of like well we're still trying to evaluate the quality and we're trying to you know they're not as bad as am but I I showed U Danny Sullivan who replaced Matt Cuts as the you know Google search spokesperson Google spam and search spokesperson and uh I showed him a search for buy tires and I said look at the marking Market shaping power of how you arrange the results on the screen uh you know I I I you know a lot of times all I have to do is just you know you use the product and you notice things if you have this point of view you can't un see them you know so I go I'm looking for a local tire place and I go bang and I get pet boys and I get you know I get all these people who are big National chains who have lots of money to advertise and they fill the first screen and now there's no organic results at all have to screen scroll down three or four screen FS on my laptop and further on my phone to get to the the map that shows the local tire Merchants I go I don't know if if that's you know how influential that is haven't measured it you know we measured it for Amazon we see that there is still there is really an impact to that green placement but go wow you know we care about small businesses in this country I thought and here's Google with this enormous power to shape the attention of their users away from them towards National Brands who are willing to pay or willing and able to pay and I consider that a less efficient less competitive market and Google should really care about that in the long term because eventually if oh yeah it's a short-term long-term thing that's it's ultimately going to destroy their own business yeah I it actually undermines their own even if you just think about it in purely self-interested terms you're undermining your own Market power yeah and if you drive all the local competitors out of business then you just hand power to a small number of Monopoly National chains who now you have to negotiate with yeah and this is I think very uh clear in in the case of you know generative AI you know Google's been moving in the direction of just saying well it's better for the user to uh just get the answer and not to have to go to a web page and the thing I think about that is that's absolutely true but if you have the ecosystem perspective you go it's better for the user to do this so how do we still make sure that the supplier of the information gets paid and you know so and Google's done that some you know like you look at song lyrics they made a five-year license with one company go oh that's a retreat from the efficiency of their old model what they should have done is say we're going to take the lurc from whoever has the top search ranking which would have preserve the competitive interests of everybody or we're going to do you know we're going to round robin them or whatever there was a variety of ways that they could have you know paid people on the basis of this incredible collective intelligence engine that they built but instead they went back to the old easy way of well we'll just make a license ing deal with one company will'll probably make one where it's the best deal for us and not necessarily the best for the user and certainly not the best for the supplier and take away those incentives and now you look at what's happening with generative Ai and they're hoovering up all kinds of content uh and and while they're using you know rag you know retrieval augmented generation to kind of say well we kind of got this information from these sites with summaries there not really an incentive for somebody to click through often and they're not saying well we ought to pay people whereas at O'Reilly we're doing that too with our content on the O'Reilly platform but we're making this huge investment to be able to to actually tie it into our compensation system saying yeah we gave a summary and it came from these you know information in these three books and here's how we're going to allocate the the payment because we're going to continue to pay people when we create these derivative works not just kind of go well we sucked it in and now we can make a product that do that substitutes for what those authors have done because we know that if those authors stop producing eventually we will have to do it all and we don't have that capability and so that's where I think that that companies need to think about the long term which is who is going to provide what you are the gatekeeper for if you basically have a Relentless you know acquisition of all the value for yourself now in the case of Amazon they're kind of going well it just prices will go up and there'll still be people and you know who will be willing to provide but you know yeah anyway it's certainly a far cry from your margin is my opportunity and the idea that the way you keep your company strong is to always be on the side of your key customers and I might even go so far as to say stakeholders I don't know that they would use that language and I think what's really interesting about what you're saying the pattern that I've seen in these examples that you're giving is that there's this short-term benefit to being extractive that gives you this like short-term juice boost but you because you neglect the ecosystem perspective you you neglect the long-term consequences you actually hollow out your business you make it more vulnerable to competition and you look at I mean Google is a perfect example I I can remember that feeling of Google being Invincible they just they had such the perfect business no one could ever assale them because you know Customer Loyalty was so high they had the best results but now not only do they not have that loyalty the product like is just manifestly not good for all the reasons you're talking about and it's not like you don't need some esoteric academic study to determine this just anyone can run any search for any topic you want and you get all sponsored results and I am old enough to remember when Larry and Sergey used to write those rant posts about how Yahoo and excite and other search engines were all sponsored results and there was no real it's like the people that work there have they not read those essays so to me it's like such a powerful example of how these incentives that we're running companies under inevitably seem to drive them into this mediocre state which then makes them more vulnerable and therefore less valuable so it's actually like an error in thinking yeah and it's sort of in some ways I was just thinking as you're talking values are a kind of map of the world a map of what you think matters and you know if your value is just making money for yourself that shows in your product ultimately and and you your if your map of the world says we have to create value for everybody you're going to make different product decisions and I think that's the central uh you know challenge I think and you asked me earlier am I depressed and and and I I I'll go back to that you know um a poem what we fight with is so small and when we win it makes us small you know I you know it's a big thing to try to get people to change their values to change you know we have this sort of extractive culture you know you look at everything from you big Tech is is only one example look at climate change you know uh our whole society has to change and so I'd rather fight that big thing and fight it you know both through what I write about and what I talk about out in the world but also just through the way I run my own business one thing that I remember from the debate I remember even when you wrote you know to work on things that matter there was kind of people who who I think deliberately misunderstand ideas like that to saying oh you're saying everyone should run a nonprofit or be an activist or go into politics like what one thing so striking to me about the stories that you're telling is that in every one of these cases there's this like Nexus of the thing which is the most long-term thinking thing the thing which is actually the most favorable to customers and our others you know the other parts of our ecosystem like more more more more favorable to others and also on the surface it's the harder solution like making a great product is actually really really hard and when given the opportunity I think human nature is to kind of take shortcuts and to be lazy about it and and I think there's this interesting thing where people don't appreciate until you really get in the trenches trying to build a company if you if you have the ambition to build a great company how much you have to provide that support for people in the organization to make the more difficult choice to do the right thing not be not just because it's the right thing to do for moral reasons but because that ultimately is the source of greatness like that that is your ultimate competitive advantage to be a more trusted counterparty to be someone who actually has a reputation for building things that people care about so going back to the idea that you should try to create more value than you capture to me what's really interesting about that is not only is a good advice for Founders but it also it's really interesting to me you were able to build a company with that as its ethos and I wonder if you talk a little bit about from a kind of operation point of view from the point of view like managing people and and driving a company how do you instill an ethos like that and have it stick you know I I think um we were fortunate in in a certain sense in being not in the hurly Burly of you know the worst rush you know competitive Rush that a lot of companies feel you know where it's it's like uh you know you have to win or you die you know and so we could choose uh just it was just more easier and more natural you know we were not in the in the mainstream you know this used to be the the basic business pattern you know people did a thing they did it well and I think it's really the financialization of our industry over the last you know few decades that has totally corrupted companies uh so I don't know I I think you know being a private company really helps um you know people don't come you know expecting to get super rich and so therefore they don't make the decisions that you make when that's your your primary overriding goal and uh you know I think you know I people came because they were drawn by the values and that the a lot of the the public the public work that we did beyond our actual business you know told this story which we then felt like we had to live up to you know I'm all always been a fan of the end of H Kurt vet's mother night where the you know character who was uh you know a propagandist for the Nazis while secretly being an agent for the for the West uh was um you know is judged afterwards and vaget says you are what you pretend to be so you better watch what you pretend and I always thought well that works both directions if you pretend to be better than you are that's that's a really uh good thing you know the fact that Google said don't be evil until 2019 when they took it off the name PR they took it off I know it's so sad you know which was was really you know that matters you know so if you espouse your values publicly that helps a lot because it's so easy to talk yourself out of them you know you know I and I've actually seen you know one of my one of the tools that I have found really effective is getting people to do the right thing for the wrong reasons and one of the things that has surprised me is how often I'll be in a meeting you know working with a company talking to a product manager you know in the trenches somewhere with with a company debating whether to do the right thing or not and anything that gives like there's usually one person the torch Bearer for the company's Soul you know there's one person there at least in the meeting who's like look we really got to do the right thing it's going to be better for the company in the long run we're all shareholders here right and you want to give that person as many tools as possible I've been amazed how astonishingly powerful it is they can say look if it ever got out that we didn't do this you know we'd be we'd be you know pillared in the Press because we've said that we have this ethos we know if we fail to live up to what we said then that's going to cause a problem and then people are like oh yeah good point like we don't want to do it because it's the right thing but because it might be potentially embarrassing to not do the right thing okay you know we'll go along with it so I'm curious like what are other tools like that that you found effective either in your own company or the companies you know have been around like what what empowers people to actually make the right call even when it's difficult well I think uh whe when people care themselves about the values uh you know it's not something you can impose uh I do think you know I think back to my early the way I used to hire people you know in the early days of the company I would just sort of talk about my values and what I hope to do and why and and I could watch how PE if people were lit up by that then that was gave them a big mark on hiring whereas people who I could tell didn't really get it and didn't respond to it weren't a fit you know so some of it's just you know you you look for people who uh you know have those kinds of values I think is part of it uh I think there's also um but a big part of it is is you know our self-image as individuals and our self-image as a company is something of a habit uh you know it's it's it's it's created through lots of small decisions that uh you know people make and again it can lead you astray you I've had many battles inside the company with people who uh who have their own idea about well these are our values it might be something as little as well what are our products how are our products designed you know we used I remember used to have a you know these battles with our production Department because they you know were very concerned about you know uh little niceties of of punctuation and we're like but you're breaking the code in the examples you know it's like you know like that's more important you know and we have that battle because that their value was around the thing that they added the typ yeah you know and uh you know this there little cases like that where you have these collisions uh and you have to kind of work that through um but I think I guess a lot of it is is just uh if you you know you you you have to just continue to express your values in a way that inspires people and uh I don't really have any other magic toolkit I don't think it's that you put in place uh incentives because when you put in place incentives they're almost always wrong you know yeah they're fundamentally distortionary yeah you know because you you you think it's one thing and then people start chasing it and then the world changes around you and and you're still pursuing the thing that you you know got got told will make your bonus you so you want people who who who who intelligently grasp the values and apply them in new contexts and you give people a lot those people a lot of autonomy this episode is brought to you by my longtime friends at Neo forj the graph database and analytics leader graph databases are based on the idea that relationships are everywhere they help us understand the world around us it's how our brains work how the world works and how data should work as the digital expression of our world graph is different relationships are the heart of graph databases they find hidden patterns across billions of data connections deeply easily and quickly it's why Neo forj is used by more than 75 of the Fortune 100 to solve problems such as curing cancer going to Mars investigative journalism and hundreds of other use cases knowledge graphs have emerged as a central part of the generative AI stack Gartner calls them the missing link between data and AI adding a Knowledge Graph to your AI applications leads to more accurate and complete results accelerated development and explainable AI decisions all on the foundation of an Enterprise strength Cloud database go to nefor j.com to learn more I have to ask you with Dune like thrust back into the popular culture what's that been like for you any thoughts about about the new movies and about the fact that like at This Moment In Time Dune is like right back front and center you know it's funny because of course I have not read Dune for probably 30 years I I I reread it once I think after doing the book but I have not you know and I went back and I reread the chunk of my book that was about Dune uh when Jason um interviewed me for the Dune pod a couple years ago when the first movie came out uh and it was amazing how much I'd forgotten I was like whoa I interviewed Albert Lord I'd totally forgotten that how cool is that and there were parts of it I remembered so but but jumping uh just to you know there's been a couple of other things people have asked me to write introductions to books and so on uh and and you know try to get access to you to reprint some of my essays because I did two books I did not only did I do the original book but uh which is called Frank Herbert but I also did a book called the maker of Dune which was a collection of Frank's essays that's you like we listed as co-authors because it included a lot of interviews that I did which I had the rights to and uh it's been interesting to come back and watch the critiques of of Frank it's also bit you know just you know people I I certainly don't get uh where he was coming from in the way that it seemed very clear to me at the time again I I I should go back and read the book and see if I just missed some of the subtext uh you know there's just a whole set of essays about uh you know how he's you know kind of in some sense praising this sort of colonialist you know narrative and I'm like dude where do you get that that's not the book I read oh yeah definely definitely not but anyway it just it does remind us how each generation reads A Thing through the lens of totally oh my God I mean the idea of colonialism is like so different now than it is than it would have been in his time and like his kind of more subtle subversion of it I could see how that might actually go over people's heads now yeah I I think about yeah I think about that a lot with literature I read a lot of of books that you know were once incredibly popular and later or not and I you know for example in the Victorian literature you know there's a one of one of Anthony trp's books is called can you forgive her and it's really a Proto feminist novel you know it's basically posing the question uh you know here's this woman and instead of marrying the guy who will you know raise her place in society she marries an upand cominging politician who's sort of you know kind of from the whatever and you know she's she's making the choice for very different reasons than the traditional choices and the title is can you forgive her you know for making this choice and you go that's that was pretty subversive at the time you know and you look back on it and go well no you know oh my God so supportive or or the Mill On The Floss where you know this this sort of you know class violating love affair and at the end you know George Elliott just has to kill them off in a flood you know because he can't [Laughter] actually you know so you watch people struggling with the bounds of their current mil and I give them a lot of credit for that you know but anyway back back to the movie I I I I I I thought Jessica was was the big fly in the ointment for the first movie I you know I love the character of Jessica she was a very strong character she's also kind of a central mover in the narrative because oh yeah she violates the you know she stands against the Ben ofer in having Paul in the first place you know as a son I mean in some ways it's her it's her act that sets the entire Plot In Motion that's right and and so but also she's just such a badass you know totally such a bad and then in the movie that you when they have her like she's just so sniveling in fear outside when they're doing the gum Jabar and then she's you know on in the ornithopter you know in the sandstorm she's like reciting the litany against fear like she's she's petrified you know and you know I go God this that's as if you know you had Obi-Wan Kenobi sniveling with fear when they entered the well hopefully you haven't seen the Obi-Wan Kenobi show then no I have not don't if you have that concern definitely don't but but you know so anyway and then in the second movie they kind of had her go all in on being the Ben aerate schemer so it's sort of like yeah that's a shame I guess I just felt like that was my one beef I thought and you know I understood like why they made the the changes that they made uh you know with with making the you know externalizing the you know the stuff that in the book is often Paul's inner monologue you know where he's struggling with things you go so they externalize it with channy and the different you know sex in the you know different factions in the fine and I I go that that was clever you know so I I guess I I when I when I watch movies that are based on books I love particularly books that I loved as a kid I don't mind that they changed them as long as they changed them in the direction that they were going you know like a good example of that two good examples of that um uh one was when Brad Bird made John Carter of Mars and he turned John Carter who was this sort of very principled Southern gentleman you know kind of this very 19 you know 11 romantic hero you know into this world weary you know cynic I go you just totally changed the character of this you know character that I grew up with and you no you can't do that whereas when they made Captain America the the the the the movie from the comic books they made him much faster and stronger than he was in the in the comic book but the character was fundamentally the same so it was just inflation superhero okay you know so it's just kind of interesting particularly when you think about the things that are kind of your childhood uh you know uh influences what did you like about it as a kid well in general for me there was a a kind of sense of in science fiction that I loved that was it saying something about that you could matter you know and this was clarist in in books like uh uh Highlands have space suit will travel but and all of his his juvenal in in in fact but also in you know very clearly in in books like Dune you you have a teenager you know Andre Norton's the time Trader you know you have a teenager who suddenly gets swept up in these events and discovers you know depths of potential and character and you know and that's what I thought George Lucas did so well in the original uh you know Star Wars he really captured that exact kind of narrative Arc with Luke Skywalker here's this kid he's stuck somewhere and then suddenly he's he's dragged into this much Wilder wider world where he has a chance of influence and I think of that as a sort of and I actually wrote about that in my book about Frank Herbert which is that this is a kind of you know it's a version of the hero's journey you know and it's a version that I always loved about science fiction Grant was that it said in comic books too you particularly the Marvel comic books you know like Peter Parker gets bitten by a spider and suddenly he has these new powers and he has to come to grips with them and you know you know here you're you're a nerdy kid you know and uh don't I know this is like meet and drink to you you know like I'll never forget discovering the internet and feeling like I got bit by the spider I mean that's really what it like to me like all of a sudden I have literally been given magic powers you know the depths of which I can't possibly understand but it was you know it really it felt so real and I you obviously very much primed by by you know whole childhood of those stories to to see it that way I can't help just because we've been talk talking about um you know these Founders and building these companies like they also kind of have that experience like you've been around this long enough you've seen multiple people go from just a random kid with an idea to you know a master of the universe and a shaper of of society like you know and wealthy and Powerful beyond their wildest imaginings like you've yeah it's so sad how many of them though have have not taken the with great power comes great responsibility message from that well well or the message of Dune it's funny we we were talking about that because like the the people who read those books non-ironically and didn't pick up on the danger of it I feel like are actually living the hell of it right now that's right yeah they they they basically think oh man I'm so rich and successful I must be right you oops Yeah yeah I always try to remind people that like the Ancients warned us about demagogy not because it doesn't work it's dangerous because it does work yeah that's so people say like oh well you got to hand it to him you know yeah sure he's evil or bad or whatever but it sure is successful it's like no that's not a compliment that's the danger they've been trying to warn us about for thousands of years here we are we like reversed it and turned them into cele that's exactly what Frank was trying to do yeah yeah know I think I feel like talking about like what what are the lessons of that fiction for our time that's got to be one of them that somehow like we as a society have like lost this concept we missed the the subtlety here it's very telling that's a really good observation yeah okay so so taking us back to we're talking about working on about stuff that matters and you know create more value than you capture and and that you know those were such formative essays and concepts for me so first of all thank you for for being such a consistent voice for that can I can I read you something that that uh sure you're okay now you said that I want to make clear that work on stuff that matters does not mean focusing on nonprofit work causes or other forms of dogism nonprofit projects often do matter a great deal and people with tech skills can make important contributions but it's essential to get beyond that narrow box and then you said we need to build an economy in which the important things are paid for in self-sustaining ways rather than as Charities to be funded out of the goodness of our hearts yeah and that that really stuck with me and I just wonder if you would would talk a little bit about what was your motivation in in saying that and just how do you I think a lot of people would find it confusing to see to to consider for-profit companies like vehicles of social change and we so much associate do gooders you know with with the nonprofit sector like yeah tell me well that's that's one of the reasons why I uh loved things like the open source movement and the early web you know um Larry and Sergey really weren't you know like today's entrepreneurs like Jesus we can get filthy rich and that's sort of the primary overlay they were like hey we have this new way to find do search and we think we can create access to all the world's information and isn't that amazing you know so they were they were trying to do work that mattered and even you know even Mark when he started Facebook you know certainly the very early stages it was sort of a dating app whatever but then he kind of developed you know a somewhat idealistic narrative that we're GNA try to connect the world and make people um you know communicate with each other better and of course that's really the issue that I think we have to struggle with is why do these idealistic dreams go sideways and I I do think that that's um you know that's a whole other conversation but you have to at least start with the stuff that you are doing uh will have a positive impact and and as I I think I wrote in one of my pieces you want to be doing things that were worth doing even if you don't win oh yeah and that's a big that's a that's a that's a critical concept you know it goes back to that RKA poem that we talked about but it's also just that you know the world moves forward failure by failure not just success by success you know and you look at people who tried things and they didn't work but then the next person who came along uh uh you know learned from it built on it and then you you you you go forward and you know I was really at that time when I was I I wrote that piece it was really around it was it was the period when there were people making all these really stupid social media apps throwing sheep you know whatever it was the equivalent of the board ape era of of social media oh yeah you and and you know there were some people who were working on you know crypto with the idea of making serious change and there were a bunch of people were making totally trivial useless stuff just because they thought they could make money out it in fact then they did make a bunch of money out it and that's that's shameful you know it's a kind of grift I remember a financial reporter called me about the GameStop phenomenon during the pandemic and they wanted my comment and I said they said what's you know what's the problem with this and I said oh the problem is actually very simple the problem is you have a lot of people who are making a lot of money without doing anything they're not making anything they're just making money yeah and the reporter was like no it's like that's not what I'm calling for comment about he's like wouldn't that describe like half of our financialized and I'm like and the answer is yes yes that's why because they were like why are people upset about this this is like a real deep Finance reporter was like this is not news this is not new people do this it's like people might not have realized it before but people are upset and they have a right to be upset and they their intuition is right that people should make money because they created value not just because they moved some you know not just because they were able to capture value that somebody else created and the rep could hand it the other side of of capturing value that you didn't create is that you took it from from someone who did create it you know directly or indirectly yeah but ultimately it goes back to well where it come from and and all this is very very relevant today you know in this generative AI question you know where uh the companies are being very evasive about what they're training on you know I just watched an interview with Mira morati and the interviewer was asking her uh you know did you train on YouTube yoube content she like we trained on publicly available content yeah including YouTube or not yeah exactly yeah you know and and you kind of go well yeah so you basically they were talking specifically about Sora and and so you kind of go well they did in some sense appropriate all this quote raw material that's just lying around but in the course of that you know they're sweeping up potentially a lot of people's livelihoods and you know similarly you know I think about uh you know the increasing use of you know in in search of of AI generated summaries of the news articles and that's very different than the original web where yeah we we we we read your your document in order to create this search index and the output is a product that helps people find your and go to your site right and now we're creating a product that that makes it so that people don't have to go to your site so right there you kind of go okay that's appropriation now once you've created you know it's just write in copyright law you can you can you know of course you can read anything it's the outputs that you have to question and if the outputs are a a a substitute then that's that's infringing and so but they don't want to have to pay for this and and the question is well if they don't want to have to pay for and they'll say oh well this is it would just be too expensive I go well that means you have a shitty business model you know if you can't afford to pay for your raw materials and you can only get succeed if you to world is worse off totally incompatible with the idea that AGI will be the most valuable technology in history and that this company's going to be worth 10 trillion dollars yeah then probably can afford it well and well again that's a different kind of grift because it's like can we get our our our 10 trillion dollars in the derivatives Market effectively of of stock price rather than in the fundamental Market of of actually the economics of the business you which is why you have two-thirds of businesses going public today are losing money but they can get money from the you know from from dumb investors it's one of the I mean it's it's literally time travel Financial value transported from the future into the present it's a it's a really cool magic trick so so and but I think your point is not just about generative AI but really about extractive exploitative versus generative gener maybe I have to use a different word now but like value creating business model there really is a difference and what's interesting to me I I've been part of a lot of these policy conversations about generative Ai and I have my own personal view which is we should have a universal licensing regime paired with a you know a sovereign wealth fund and a Ubi and like really because it required the collective output of all Humanity like our our Collective creative output literally is what is necessary to create these Technologies and everyone should have a stake in their financial outcome but and I'm sure we could R I'm sure you have your own solution I have a bit more Market focused view which is that there are technologies that allow you to allocate value I mean oh yeah so amazing is these these systems are really good at algorithmic allocation you know they're great advanced in that and for example in in the search example I'm giving you you know Google knows exactly where the content for the summaries is coming from they're using rag they're literally retrievable augmented generation they're basically doing traditional search and then having it summarize the top results so they know exactly where their content came from and yeah and if they were they were motivated to share the prosperity they could they could if if if they if they could say oh we're not sending you traffic and if we're not sending you traffic because um you know it's unmonetized search maybe that's okay because people or them your knowledge is out there or whatever and you just want credit or whatever and we've given you credit um but if if if you know you were counting on monetizing it then we should and we're monetizing it instead we need to share that monetization with you and and you know there's there's no reason why they could not do an algorithmic you know round robin that says okay we got it from these Source that's what we're doing at O'Reilly as we're building you know summaries and other kinds of derivatives work always attribution with a Shar yeah or or um you know we're basically still saying oh we we're able to trace it back to an author's work or a set of different you know products books or videos whatever and then allocate proportionally the kind of payments that we would have made for the original work I remember we did that at IMVU too for virtual virtual Goods we would calculate the electron cost of the thing and allocated it among all the many creators who were were there but this see so this is a really interesting conversation because the policy side of this is fascinating and what should the regulation be obviously the the Press is being totally dominated by this conversation of regulating AI or not but to me there's it we we're skipping over a much more interesting question which which is when I talk to Founders especially people in in Executives at companies board members they're so focused naturally on what they're allowed to do the presumption is that if something is legal it's worth doing and otherwise not and we're skipping over what I think is the far more fundamental question of what ought we to want to do as companies like yes you maybe it's true that you can get away with being exploitative but should you want to do that and curious when people ask you for advice on that point like how do you how do you help them understand that not only is it like morally right I mean think think it's basically immoral to run an extractive business model I wouldn't sleep bow at night if that was my business but in addition to having these like ethical virtues to it there's also like a a competitive advantage to it like ultimately companies that destroy their own source of trustworthiness collapse yeah it's not just a source of trustworthiness you know we've already seen you know sort of worries about model collapse because you know you're getting AI generated content ingested and you get this copy machine effect where it all just gets watered down you so you go wow you you need people to continue to create content you need humans yeah to make the content and so if you're not GNA reward humans and all and you're going to incentivize them to create bunch of AI generated direct you know uh you know again we already see I mean Google is having to do search updates because uh people are doing new effectively new kinds of SEO attacks you know just generating endless amounts of content and you know and it's it's you what Corey Dro calls in ification you know you read these articles and they're so clearly AI generated and it's just like clearly they're just trying to make a bunch of pages that they can put ads on and you know Google quite rightly is kind of going well this is bad not just for the user it's bad for us and I think that it's bad for us is fairly critical you know you know I think we talked earlier about you know my you know conversations with Amazon about this you know when you totally you data you have them dead to rights right yeah when you recommend worse products that cost more you think your users won't eventually notice you know and if you basically uh start taxing your uh your vendors more heavily uh don't you think that they will notice and look for Alternatives and the first crack in your Market power they'll desert you uh you know and that's where it makes it very easy you know if Regulators go oh yeah we're going to basically say we're GNA Outlaw Amazon's most favored nation clause which is one of the things they've gotten away with that you have to give us the best price you give anywhere uh you know what will happen is people will go well Amazon makes us pay more for visibility so our prices are going to be higher there and we'll give lower prices somewhere else where we don't have to pay for visibility and uh you know and all of a sudden the whole basically badly designed broken machine starts to Creek and and so I I think that there's a lot of of business models that are they're just bad and and eventually it catches up with you and the problem with our uh you know our economy is that for in so many cases you can you know I use the analogy in one piece I wrote it's a little bit like you you can you can take your money your take home your winnings when the horse is in a horse race around around the first term you know and you don't have to wait till the race is over and uh you know it used to be you had to wait for an IPO and and you know so I I think things like uh you know you know allowing uh you know employees and Founders to cash out uh you know prematurely is you know it it certainly feels great for Founders but I'm not sure it's really good for the long-term health of businesses because you get these inflated valuations and this this really strong incentive to inflate the valuation by whatever means possible and get out before people figure it out we certainly have seen a lot of that a lot of that lately and and it was interesting because when you were telling the story about that research you did about Amazon that you know the rest of the team that worked with you on the research wanted to go straight to the regulators and you wanted to go straight to Amazon like that that to me like that really encapsulates a lot of the difference in the way that you've approached trying to solve these problems be a good faith interlocutor of these powerful people well own say that I also believe that while there are cynical evil people in business there are a lot of of people who are fundamentally idealistic but they're very able to talk themselves out of their idealism you know I always think I forget which of the Jane Austin Books it's in but in the beginning of one of her novels uh there's a a scene where uh this guy has you know his father you know um you know it says he has to give his uh you know his his he he's remarried but he his first wife who died he wants to give their now I forget exactly what the setup is but he asked the son who inherits because of the inheritance rules that the the or maybe it's the nephew whatever who inherits you have to actually you know take care of my my do my my my ex my wife and and daughters right and then there this whole scene where the guy his wife and his you know family talk him out of his intention to do well by them and he he kind of whittles down what he's really gonna give them and they're very subtle about it they're not like they're not like oh yeah be be mean they're just like what about this what about this yeah you know it's that kind of um uh it's not small-mindedness it's small moral of of and the expediency anyway you know I think we we we I think we both you know believe very strongly in the long term and you know there's a lot of other areas in which this is you know is is also relevant you know if you look at at Government Services uh there's a bunch of well-meaning people and but they're not thinking enough about the long term you know there's a lot of people who for example uh this is particularly extreme California I think uh where this performative legislation actually I guess it's true all over you know it's just like this legislation is not designed to do anything except signal uh something that will help me get reelected and they don't even think about this is the subject of my wife's work they don't even think about well how would this thing be implemented and if it were implemented would it work yeah no it's a the the the institutional crisis of these kind of flabby like lack of moral character in institutions with short are just like addicted to their own short-term self-perpetuating like that is really not limited to to The for-profit Domain at all I mean we've seen the simultaneous collapse of government institutions of unions of hotels of you know of of newspaper journalism is you know had had this terrible moral collapse you see political parties beinging completely ineffective and it's like you have a a wide range of institutional types in for-profit nonprofit government public sector private sector all kind of going through a similar kind of existential crisis at the same time you got to say well this is not caused by bad meaning people or some incompetent executive like we tend to focus our fire on this particular person or this sector of this person but I feel like what I've appreciated about your work over all these years is your ability to kind of zoom out and see the social like the societal wide issue the the Deep the Deep rot at the core you know the the the moral principle which is being neglected which explains so many things that we're seeing at the at the surface I want to do a quick lightning round if you if you're willing because as I was as I was prep you know we've had so many great conversations over the years and I've read so much of your work and I got so many O'Reilly books all over my house and so so I I was like I know I know Tim's work pretty well but I was I was preparing and I I just it really struck me as I was going through you know essay after essay after essay over all these years you have an incredible knack for these aphorisms that just encapsulate a concept so succinctly and we've already talked about so many and OB you got got your buzzword and keywords that you're really good at like Web 2.0 and government as a platform but you also and of course create more value than you capture we talked about um about work on things that matters but I just like I had a list of them can I just ask you about them real quick and then I want to ask you about like how do you come up with these things that are so catchy I just do do a quick lighting round of a couple of them just because there's no way we could get into each of these topics in the depth it deserves they really struck me okay all right so a recent one which I think is so important is that you can't regulate what you can't understand yeah I use this one all the time what does that mean well well I I think it was uh I I I first started talking about it as a result of this work I was doing looking at you know the inchid ification of of Internet services and you know we all remember what they looked like back when we first were delighted by them it wasn't that long ago yeah it wasn't that long ago and then we we're aware of what they're like now but we can't actually kind of point to anything when did it change you know like when did that suddenly happen like this and you know and I found various kinds of breadcrumb trails over the years some SEO guy has you know here's 10 years of of the evolution of of of Google's ad display or whatever but that got me on this whole path towards thinking about you know a disclosure as something that ought to be there you know I can look back and I can I can look at at Google's financials from 2004 when they went public and Google's financials today and there kind of a through line but you can't look at well what was Google's ad load you know or even how many years how did the algorithm change yeah how did the algorith and so there's a there's a there's a sense that I came to that it was just that uh you know if we had a magic wand you know exposing the internals of these companies would really help and and of course it's very hard to do that retroactively but part of what I got excited about is looking forward with all these uh the AI uh regulation front and center for everybody and all these companies new and also in the stage when they're they're trying to attract users by doing you know good work this is a great time to get a baseline of what good looks like and is there a a way to uh uh to regulate but how did I actually write that piece you know you can't regulate what you don't understand it's kind of funny because what happened was as this so often the case some external stimulus like somebody asked me to give a talk or uh you know uh in this case our marketing department said can you write something about Ai and I said I'm not sure that I have anything to say that I haven't already said and they were like oh please you know we love it if you'd write something new and so I sit down and somehow it just popped into my head uh the analogy to accounting you know the fact that that you here's this a key analogy this set of practices that were originally developed in the double entry accounting it developed you know uh you know 7 or 800 years ago and became the fabric of of how we manage businesses now for all the things that you know uh it doesn't work entirely there's a lot of alisation still but the accounting standards and auditing are based on some system that companies actually themselves use to basically manage and regulate themselves and I said oh that's what we need for AI we need disclosure of what are you actually doing to manage the system you know and you read the the you know the accounts it's like we do red teaming you know well what does red team does that mean can you imagine if that was your financial report just said we do exactly you know we we we we stress test our financials you know and red teaming typically consists of people coming up with a list it's kind of like early search you early search Sergey had a list of searches that he did and said this this one sucks you know fix it you know I I wish we could run that I bet if you ran that list against Google today it would do horrible sadly yeah and and and you know but you red teaming today is just some list of things that they're worried about and of course they they worry about the wrong things and we haven't really built the practice but over time they will actually get pretty good at figuring out but we ought to know what that is got to know yeah well and and I think it's a before you can make any kind of intelligent bands or or like prescriptive coercive regulations you need more State capacity to understand what you're what you're talking about so I think that's that's that's critically important all right next one I love this one you talked about how we're suffering from a deficit of idealism I love that ter of I I I don't think I I had thought of that as a a bumper sticker but I guess I could see that um yeah I just um I all I can say is uh you know I grew up in a household where my father used to borrow money so he could meet his charitable obligations you know he believed he had the tithe and sometimes he couldn't do it so he would he would go to the debt Market to to to give money away and you know that's just like that's a strong set of values you and and uh a kind of idealism about what our role is in this world that I I just embi from an early age and I I I I'm just and I I guess but I've also seen that just from like when I first gave that talk I think in 2008 which morphed in it was called why I love hackers the original talk but one where I recited that real poem uh but then when Jen came up to me afterwards and said I want to talk like that but for entrepreneurs and that that became work on stuff that matters and uh but I was I really kind of saw through as I was giving that talk how people are just starved for idealism totally they're starved for values and companies that Express values uh it's it's it's winning you know and so I I think a lot of it is it's just a practical side of it you know you know Google when they were idealistic and expressed their ideals Amazon when they were idealistic and expressed their ideals had enormous loyalty from their staff and they had people who driven and and when you lose that you lose something you know how can you not just be become more and more uh dollied and and you know idealism is is a critical part of the human soul yeah it's very strange I feel like to talk about these spiritual topics as sources of business Advantage but that's what we're talking about I think I I really believe that I mean these companies are alive their superorganisms with their own soul and their own ethos and their own moral compass and people feel something deep when they connect with them as customers as investors as employees as whatever like any relationship we have with them it's incredibly powerful and it requires that authentic commitment to something idealistic and the second you lose it it's like it's like the Flow State in a human being extremely difficult to get into very easy to lose yeah there's another element just that's I I I love this is slightly uh is a related concept but I got this from a book called air guitar by an art critic Named Dave hickey uh and he wrote an essay which is very influential for me called the birth of the big beautiful Art Market and it was about how uh Harley Earl who was the VP of marketing for General Motors turned the automobile Market from into what he called an art Market which is a market in which things are sold on the basis of what they mean rather than what they do and you know you know his description the whole ladder of that GM introduced sure was a brilliant Innovation different cars meant something different about your status and whatever and he had this whole product ladder where the product wasn't that different but it meant something different and as soon as I read that I went oh that was what Steve Jobs did to the computer industry you know we all remember if you were around the PC era you know when it was like how how how many megabytes of memory you had or kilobytes in originally how big was your disc uh you know how fast was your process ER and that was the marketing and then Steve comes along and says you know think different you know what color is your iMac 1984 ad you know having a Mac means something and Apple has ridden that to enormous Heights you know and that's it's not exactly the same as idealism but you know you're making meaning for people meaning and IDE meaning is and ideals are are deeply intertwined yeah okay AI is a mirror not a master well that one really can't I just trying to describe uh what I I see out there you know people have this notion that uh you know AI you know controls us you know you just think about bias in Ai and and you know you know like yes you have let's just say you know you have an AI hiring engine and it's going to make all these bad decisions and and and it's like bad AI you know have to fix it and in reality what's the AI doing it's trained on actual practices you know so you know like if you went and looked in the in in the mirror and you said wow these clothes look terrible on me you would say fix the mirror you you'd say the clothes look terrible you know and I kind of go you know we should be going and looking at all these AI algorithmic results that we don't like and go wow those values look really shitty on us you know how are we going to change ourselves what is it why what was it trained on it it just goes back to your algorithmic allocation thing like it could actually tell us exactly where the mistakes are exactly you know and I kind of go yeah if if if it show if you know some sentencing algorithm is bad they go great you know let's not just fix the freaking algorithm let's fix the S the sentencing the actual sentencing practices that we train that algorithm on and I just don't see people taking that next step no no it it reminds me actually utterly bizarre to me see if you got by this analogy it reminds me of the Innocence Project um realizing that there would be this brief window of time technologically where you could use DNA evidence to prove that there were systematic injustices in the criminal justice system and how people have taken that as like a thing about DNA evidence and how important it is rather than as an indicator that like there was only this brief window of time to get this perfect beautiful x-ray of exactly what's going on and find all the practices that that have to be fixed seem the same error yeah and so I just that one I I I don't think it was a Terri I think it's an important concept but I don't think it was terribly successful because I don't think people have really ever gotten the implications yet yeah that's fair okay you got time for a couple more sure okay generosity is at the beginning of prosperity well I've been a big believer in uh kind of the value The Innovation you get from other people and some of this maybe came from um you know uh you know open source software but I probably had that value before you just think about everything you read that become part of who you are as Elizabeth uh uh Barett Browning said what I do and what I dream include thee as the wine must Taste of its own grapes you know she was talking about her her husband but she could have been talking about all the books she'd read you and uh um you know but it was really you know came from you know my interactions of I I think of people who were mentors to me in in Open Source Early on Bob schler at The X window system you know we we were basically taking their documentation uh and enhancing it and then reselling it and and a lot of people were like you have to be giving it away and I go well then we don't have a business model to do that so we won't actually create the value I went to Bob and I said you how do you feel about this he said no that's what I want you to do you know we we we we we gave some reference software and reference documentation and we want everybody to build on it and we just gave it away you know the same thing that I talked to Kirk mcusic at at UC Berkeley and he's like yeah you know uh we're just asking for credit but we want people to build on our stuff and that was a very different than the um and then Tim beros Lee putting the web into the public domain so I I I I just sort of embi that early in my you know Computer Career and then you look back and of course you read how um you know the original fyman architecture was put into the public domain you know and you kind of go this whole industry that we uh and you know the internet protocols all these things were were this incredible underpinning I was actually just the other day there was a uh um a piece in Bloomberg by Tyler cow about the you know reflecting on a recent Harvard study that you know came up with a calculation that the economic value of Open Source software is about 8.8 trillion dollars you know I I haven't read the methodology but you know it's certainly a lot but this is not just um you know I I I you know literature is a big part of my my life and how I think and I is's a wonderful passage in Le misera which of course is an incredibly Humane novel about you know kind of the inequality and The Human Condition and and and the need to sort of lift people up and you know but after after valan has you know you know escaped from prison he stole these candlesticks and the and the uh the old ABY you know says No No I gave them to him and then he goes and he becomes this industrialist and and it's this wonderful passage about how you know every in the places where he worked everyone became more prosperous it was not a single house that was not better off and you know that's how people used to think about business it was a force you know at least ideally it was a you know there were always the avaricious but it was this notion that it was a an engine of prosperity and we still have that even in the notion of you know even in the 21st century or 20th century you know neoliberal economics it's still positioned as an engine of prosperity uh it's just you know the difference between the you know again this great quote from uh uset so many years ago I don't know whoever said it originally but it's one of those uset sigs the difference between theory and practice is always greater in practice than it is in theory I remember that one very well yeah okay uh the metaverse is not a place well yeah that was sort of an observation that I made uh because it's it always struck me and this is even back when the internet was first happening I kind of talked about for example you know this was still when people didn't even back in the early you know 90s people didn't really Gro what was different about the internet and the information I kind of said you know Google doesn't happen you know and it was I literally had I think I forget what year it was but a debate with Richard stallman about how uh you know I said look if even if you gave if Amazon gave away their source code and you had it you wouldn't have Amazon because it's not actually you know and he's like well it doesn't run on my machine so it doesn't matter morally you know I know and you're missing the whole point you know this there's a new paradigm happening where these things are happening in the space between you know the internet happens between my browser and someone else's server you know and it's it's this shared space and then if you just look at the way to think properly think about the metaverse you know the metaverse is just it's it's sort of a maybe a more Vivid version of of the uh of the internet but I I always sort of thought that it actually you know there was sort of a way that it was sort of they were trying to um imagine it as out of out of gaming when I thought destination the place you would go right that it should be imagined out of uh communication m-h and uh you know and the example I think I gave in in that piece that I wrote was of um you know my uh my wife and I would basically do morning exercises with a friend who had a pelaton subscription and she would basically you know play the these exercise videos you know like you know okay you know I know 20 minute abs with Robin and you know whatever strength training with rad you know and we would do every every morning we would do a half hour with ad or Robin and so we have these virtual people who are you know just video they're not avatars who are leading Us in two different locations through an exercise routine I go why is that not the metaverse and oh oh it is yeah yeah I thought well that's more metaverse than you know going into some dumb place where where where people are cartoon avatars and uh and so I I guess I just still think that that and I I love what Phil lean was doing uh you know where he was sort of saying how how do we get more aliveness into into zoom and more interactivity so I think that there's still H some potential there uh that got lost because and I think it got lost because I don't think the metaverse was ever actually a thing uh it was it was a ploy to convince people that there was some future value that Facebook should be uh given now it was it was effectively a a mind hack on the financial system rather than a real technology that they were trying to okay drive forward here's one that's very near and dear to my heart focusing Less on shareholders might just save the world well you know the original notion of shareholder value goes back to Milton freedman's 1981 I think it was was it 81 uh piece uh where he said well you know uh the only responsibility of a business is to make money for shareholders yeah and um he was kind of speaking out against corporate responsibility one of the things a lot of people don't know was that was an essay uh in the same uh magazine I think it was in time uh where they were making a big deal about Rachel Carson Silent Spring so he was lit literally arguing against uh oh no no sorry I take you back it wasn't Rachel Carson it was Ralph nater unsafe unsafe at any speed yeah yeah it was a big Ralph nater thing and uh leaving aside that uh uh that side of it the um you know the fundamental notion that if you you know give more money to shareholders they will pass it on was kind of like worth you know maybe it was maybe Freeman you know might have been right but in practice he wasn't back to the difference between theory and practice yeah very I don't I don't fault him for uh you know saying hey you know you know the man because they were they were worried about the managers would you know appropriate the money that that that should be going to the shareholders and they'd spend on the things that they cared about rather than things that the owners would care about and so it ought to be given to the owners and I go well but in practice it didn't work out that way and the real problem of course is when you know Jensen and meckling you know s of said well the way to get shareholder value is to align you know um executive compensation with uh uh with shareholders by giving them stock grants and at that point you built a machine in which everybody on the inside profited by doing the wrong thing yeah yeah you it has a gravitational pull all of its own people can't can't believe me when I tell them that that stock stock BuyBacks were illegal until like 1983 or I can't remember the year now yeah very recent Innovation yeah yeah it's yeah it was considered stock manipulation and and and and that whole yeah anyway all right last one a Marketplace is a lot like an ecosystem it has to be circular well I think that's just a a I guess I've always maybe this goes back to Dune uh and uh it's influen on my thinking you know that that this uh idea that ecosystems matter you know I guess that's probably where I first encountered I was 14 years old and then of course you know reading Stuart brand later and and U you know really getting into that that sense of of we live in an ecosystem but you know it's obvious that that businesses also have ecosystems they have competitors they have common cells they have you know um you know various kinds of dependencies they have parasites you know and uh you know so so symes yeah yeah so thinking about what happens in ecosystems for example when you know an apex predator becomes too powerful it takes out uh uhh everything else and then it dies off and uh you know whenever whenever uh um it gets out of balance uh everyone suffers and so I guess I would just say that I just always think that way about business as well you have to think about not just your users you have to think about your suppliers you have to think about your employees you have to think about your Society because we are in meshed in an ecosystem it's a very holistic way of looking at business I've always appreciated Tim thank you so much for doing this it was really a pleasure to have this conversation always always amazing to talk to you yeah yeah and I just I want to say thank you you know obviously for your leadership and and so much that you've given to the community over so many years but also just for your humanism you know you can be the Oracle of Silicon Valley but to me you're the humanist of Silicon Valley stand for very human very human values in in our whole industry and it's had a huge impact on me and on so many people so just wanted to say thank you so much really pleasure to have you on you've been listening to the Eric Reese show special thanks to the sponsors for this episode digital ocean Mercury and Neo forj the Eric re show is produced by Jordan Bornstein and Kiki garway research by Tom white and Melanie rehack visual design by reform Collective title theme by DB music I'm your host Eric Reese thanks for listening and watching see you next time