Unleashing Curiosity w/ Rohit Krishnan (Ep.136) | Infinite Loops

Check out the full Infinite Loops podcast show notes: Rohit Krishnan — Unleashing Curiosity (EP.136)

About The Podcast Host

Jim O’Shaughnessy is the Chairman and Co-Chief Investment Officer of O’Shaughnessy Asset Management (OSAM).

Jim is the author of four books on investing, and his book 'What Works on Wall Street' is a BusinessWeek and New York Times Business bestseller. Jim is the former Chairman of the Board of the Chamber Music Society of Lincoln Center and currently serves as the Chairman of the Capital Campaign for CMS.

This Week's Podcast Guest

Rohit Krishnan (@krishnanrohit) is a VC and essayist who writes fascinating, thought-provoking essays on complexity, progress, innovation and technology. Check out his newsletter here!

Podcast Summary

Rohit is a VC and essayist who writes fascinating, thought-provoking essays on complexity, progress, innovation and technology. Rohit joins the show for a second time to discuss the lessons learned from the FTX meltdown, why there isn’t a philosophy of business, creating an AI picture book, and a whole lot more.

Key Takeaways

"I never thought I would see the day when having good manners would be an asymmetric opportunity" - Jim
Don't let anyone push you into a decision you don't want to make
The ability to deconstruct narratives is a superpower
Capitalism is the only belief system that promises to raise the poor and destitute out of their conditions, and has successfully done so
We never knew that we wanted 2-day delivery from Amazon, but the opportunity was there, and now consumers and Amazon are better off, in that circumstance
"Desire is the force behind every exchange, be it money or information. Coin is massed attention, cash is emotional need" - Howard Bloom
For the first time in human history, we are able to communicate with technology in our own language
Curiosity is what pushes us to pursue endeavors. Ability is what stops us. If we remove constraints, we can pursue more things
Innovation can be looked at as a function of energy, materials, and knowledge. If we push all of these boundaries forward, innovation will increase
Everything around you was built by people just like you

Intro

"Like all fortunes, Shadow: opaque on arrival, inevitable in retrospect." - American Gods, Season 2 Episode 1

The Role of Venture Capital in the FTX scandal

Jim and Rohit discuss how it was possible that venture capitalists not know about the fraud?
What can other venture capitalists learn about the scandal to avoid future mistakes?
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” John Ray III, the same CEO who oversaw Enron's bankruptcy.
The most basic red flags were overlooked:
FTX had no board, no CFO - Even Theranos had a board!
Prager Metis, FTX's auditors, are based in the metaverse
Sam Bankman-Fried has significant hubris - he was playing League Of Legends while meeting with investors
Even Bernie Madoff pretended to pay attention to his "investors"
"I never thought I would see the day when having good manners would be an asymmetric opportunity"
"Don't let anyone push you into a decision you don't want to make"
Everyone is running on human operating systems, which introduces bias and a myriad of other flaws in judgement
Humans also tend to copy what others are doing (FOMO) and also always need to know "why" something is happening
Narrative follows price, not the other way around
People come up with stories to describe and rationalize why something happened

How To Deconstruct Narratives

Did SBF ever believe in FTX?

As a relatively smart guy, one would expect a con job to be run a bit more smoothly at least?
Rohit thinks SBF/FTX scandal is hubris gone awry
The ability to deconstruct narratives is a superpower
SBF never had the chance to learn in real time because his ego was being constantly elevated.
Jim's experience as an investor in the public equity markets taught him that in order to survive one needs to be able to say "I don't know"
Advice for young people: "If you are ever believe you are right and the market is wrong, you are wrong. The market is never wrong."
Your success is never all your own, your failures are never all your own
You could have been correct in your thesis, but the timing could be wrong
In work and life, be yourself. You can learn from the ideas of others, but your approach and the way you do things needs to be tailored to yourself

Is There a Philosophy of Business?

Jim and Rohit discuss a book called The Genius of the Beast: A Radical Re-Vision of Capitalism, written by Howard Bloom. Some main points from the book:
Capitalism offers more to believe in than all of the religions
Capitalism is the only belief system that promises to raise the poor and destitute out of their conditions, and has successfully done so
Everything springs out of human desire. If you pay attention to how people feel, you will find the right answer
Markets are created by humans - they are also prone to human bias
People spend a third of their life working, yet we frequently don't question why we are doing something
Business is the only way that scales information, products, services and makes them available to consume
Jim and Rohit discuss that there would not be an Infinite Loops podcast without business (podcast recording software, a microphone, telecommunications, etc.)

Separation of Markets Vs Business

Markets are a way to create impersonal, trust-based mechanisms to trade with each other
Markets and money are information that we trade with each other
The want landscape in our head has different desires - we never knew that we wanted 2 day delivery from Amazon, but now we love it
Businesses can identify desires and create a business around it
Even from an individual point of view, there are many reasons we pursue work. It could be fascination, desire for status, or a whole host of other reasons.
Yet many people consumed by the compensation
All the old models are collapsing. Those that are aware of this trend are at an advantage
"Desire is the force behind every exchange, be it money or information. Coin is massed attention, cash is emotional need" - Howard Bloom
The period between the WW2 and the 1970's in the United States was an anomaly
In the early 1950's, we produced 86% of all cars sold worldwide. Not because we were so great, but because there was no manufacturing capacity left in other countries at the end of WW2
Accumulation of wealth and investment is a privilege. It is effectively time travel. It requires a theory of the world of tomorrow, things that exist only in imagination

Looking Positively to the Future

Jim references the book The Beginning of Infinity: Explanations That Transform The World, written by David Deutsch
Everything you see around started in a human mind
"We choose to go the moon...not because it are easy, but because it is hard" JFK
As our technological sophistication increases, new innovations become more difficult
The only guide we have is desire and curiosity

Artificial Intelligence

Generative Artificial Intelligence will be a tool in helping us think of new things
Artificial Intelligence is also very effective at working with numbers, something that humans have trouble with
For the foreseeable future, sentient AI is a pipe dream
The only way we can move forward is to create and experiment
For the first time in human history, we are able to communicate with technology in our own language. We do not need to learn coding, we can speak to them in human language and get feedback

Creative Applications of Artificial Intelligence

Rohit is using Stability.AI to create a storybook for his son
We are unprepared for the increase in creative and innovative endeavors
Humans are the creative spark. If we give them the tools, they will create new things
"Curiosity is what pushes us to pursue endeavors. Ability is what stops us. If we remove constraints, we can pursue more things"

Creating positive stories about the Future

Tinkered Thinking Infinite Loops Podcast: Advertise to all of the positive emotions
We need more stories about the optimism of future
Jim is starting Infinite Films, which will create positive stories
It is easy to delude ourselves and think we know everything that is needed to know
Pessimism becomes realism
Why is literature so pessimistic? All of the best books are pessimistic
Innovation can be looked at as a function of energy, materials, and knowledge. If we push all of these boundaries forward, innovation will increase
Don't be afraid to be proven wrong
Curiosity is a driver of progress
Use curiosity as a driver and pursue what you are passionate about
Digital networks and communities will become increasingly important

Rounding out the podcast

Atheism requires even more belief that religion. Do you have proof that God doesn't exist?
Organized religion oppressed people
Net experimentation is good - now we have GTP-3 and other emerging technologies
Be kind - don't get caught up on negative emotion. Kind and nice are not the same thing
Everyone should try and create something - push the boundaries of what you want to achieve. Everything around you was built by people just like you