Possible: Netflix co-founder Reed Hastings: stories, schools, superpowers

0:00 In the nineteen eighties I was in the AI wave that was expert systems and they were public companies and the fifth generation and the Japanese were gonna be this big threat and you know, and that AI didn't work. But this one is. Anything that lives in the emotional realm will be impacted not as much by AI because we humans react to these things emotionally. And so again, I think we'll not watch robots playing basketball. STEM practically took over Stanford University. And now maybe what we'll see is a rotation. you know, back to the humanities into um understanding combination of uh history and literature. If I had a three year old today, I would be like doubling down on the emotional skills.

0:44 In twenty years robots will do maybe one percent of the plumbing. At most. Reed Hastings is the co founder and former C of Netflix. The company that helped define The streaming error. In doing so.

0:57 Rewired how two billlion people Spend their evenings. Under his leadership. Netflix launched streaming. pioneered the original content model.

1:08 With house of cards. When global. In a hundred and ninety countries. And produce some of the most watched programming. in T V history.

1:16 He ran it. For twenty five years. But Reed's ambitions have always extended well beyond entertainment. He served on the boards of Microsoft and Meta. He's currently on the boards of Bloomberg and Anthropic. He's given hundreds of millions of dollars to education reform, and he holds a master's degree in artificial intelligence from Stanford from nineteen eighty eight, before most of us had AI on our radar. Today we're asking. What does someone with that vantage point? Across entertainment.

1:43 Technology. AI safety. And the long mark. Of institutional change. Actually think is happening.

1:51 Right now. Where? Is the leverage. What are we getting wrong? And what would it look like? For this moment.

1:58 To go genuinely well. For humanity. This is a conversation about technology. А за сивілізачну левер. about whether the people building AI and the people governing it

2:09 Are asking the right questions. About what entertainment can teach us about human nature. And what human nature can teach us about AI. And about what it means to have spent thirty five years. Watching technology reshape the world.

2:22 And to still believe. The best is ahead. And now. To our conversation. With Reed Hastings.

2:29 Read Awesome as usual. I thought we'd start with something a little light for both of us, so I'll answer this too, but we'll start with you. In various weird ways we get mistaken for each other. What was one of the funny ways that comes to mind for you about being mistaken for me? And then I will I will also answer that question. Uh Read Aub and Reed Hastings both in deck. So I get introduced sometimes to conferences and someone's done the quick chat GPT and they, you know, do it on Read or Read H or something and they to call me the founder of LinkedIn. And I'm very excited because that's a hell of a business. Well and and similarly,'cause Netflix is a hell of a business.

3:03 I think the last one that I got and is out of, you know, many, many Was Oh my God, that Wednesday show is awesome. You guys have done such a great job, which I'm now passing along to. It is an awesome show. But you know, like that kind of thing. And You know. We've been doing this for a while, so when we get the emails we just have forward'em to each other.

3:22 Exactly. Alright, well people confuse you guys, but let's see if you guys confuse yourselves with each other. So I'm gonna say a quote and you guys are gonna tell me who said it. Shout it out. Most entrepreneurial ideas will sound crazy, stupid, and uneconomic, and then they'll turn out to be right. I think that's me. I would totally disagree. Those turn out to be wrong. That's the whole point of the contrarian thesis. And then occasionally they're right. Yes. But they they sound stupid.

3:57 Read it! No, I did not. Um I'm sure that's a misquote. Okay, let's let's hit it from the top. But uh the quote is you gotta have a contrarian thesis that everyone else thinks you're stupid, basically. And that it turns out to be right, which is rare. The whole point is that most of the time the entrepreneurs fail because the idea doesn't work. Oh god, I love they're so similar that they're confusing each other's quotes. All right. The future isn't something that experts and regulators can meticulously design. It's something that society explores and discovers collectively. Boring. So that means me and Attacker. That was a good thing. Blooring is frequently how Reed uh talks to me, but you know, it's the details. The entertainment part of Netflix, the key to that was always n not that I am, but always trying to be thrilling.

4:53 And boring is the only thing in that day. There you go. All right. Stone Age, Bronze Age, Iron Age. We define entire epics of humanity by the technology that they use. Read Hastings. All right, we got that. Alright, two more. We are homo techne. When we cross the river, we are deepening our understanding of technology and ourselves. That was Reed Hoffman.

5:17 And last one. Companies rarely die from moving too fast, and they frequently die from moving too slowly. That was Reed Hastings, but I feel like you've said sure similar stuff. Such similar stuff. No, let's go. Thank you. Who's the better investor?

5:38 Who's more entertaining? All right, there you go. Well, it turns out that operating personality's really different from allocating capital personality. So operating personality, you're like a dog with a bone, you never give up on a problem. You just work it, you work it. And investing personality, staying very broad, not falling in love with an idea, you know, cutting your losses and moving on. And like when I tried investing, I just fell in love with all the entrepreneurs and kept giving'em money and not have org out. Um and when we tried operating, you know, we quickly found the right guy in Jeff to operate for'em who was an amazing operator.

6:16 Fair enough. Rita, I'll turn it over to you. So Uh, you were CO of Netflix for twenty five years. And then when you hand it over the role, January twenty twenty Three. What happened the next day?

6:30 What did you what did you then go do? My schedule evaporated, so you know, I uh first of all it was a secret And second, you know, had a whole bunch of work meetings. a bunch of internal and external things. You know, first couple days it was just like be at home and shock and and yeah, a lot of calls and just people saying, Congratulations, kind of nice, uh sweet things.

6:58 Um And Then you know, I said, Well I've always wanted to ski a lot and I've only been able to ski five or ten days a year. uh'cause of work. So I'm gonna take February and March and you know, ski my brains out. So mostly that's what I did. Uh and that was a super fun

7:17 release and fulfillment, but it wasn't really plan. Um and it gave space. you know, really to the the company and you kind of in many cases it's good to have the C the ex CEO not be itching to like call in to make decisions. How about lunch, Ted? Greg, let's talk about strategy and so the episode of Love Is Blind was terrible. So I was able to just enjoy myself and and uh yeah focus on uh well snowboarding, but Was there anything that you found surprising that you missed?

7:51 No, the huge surprise is how much I was okay with moving on. I thought I would like Miss everything you know,'cause it was my whole entire life. I loved every second of it and what I was just realized I had done everything I wanted, I had, you know, done this huge global roll out. I had lived on an airplane around the world and Every week in you know Seoul or Mumbai or Berlin and it was incredibly fun and exciting. But I didn't need any more of it. Um and so I was super surprised that I didn't

8:24 Like yearn to get back in the saddle. aspects you miss and the people I missed. But uh you know, I stayed I've stayed in touch with them on sort of a personal basis. So it's surprisingly easy. And'cause I certainly have heard of people who have a very hard time with it. We've certainly see some CEOs who stepped away and then had to go right back because they missed it so much. Even in your former industry.

8:51 But beyond Netflix, you've been on the boards of Meta, Bloomberg, so many influential companies, and these companies were some tech, some less, different business models, different industries. Like what did you learn from being on the board of such diverse companies, obviously in addition to Netflix about the AI and media ecosystem? Well the lucky break of my professional life in that way was that in the two thousand and five Uh, Microsoft was looking to get someone from tech on the board. And but they have conflict rules, so they couldn't have the head of Cisco on the board. And so they started going down the list, you know, of tech people, and after a year they had gotten down uh to the head of a domestic DVD rental service, uh Reed Hastings, for an interview. Um and so I was like, you want to interview me? Um and then uh went up and uh met with Steve Bomber and Bill Gates and we really hit it off and a little while after that they put me on the board of directors of the Microsoft Corporation, which you know was a million times larger than Netflix at that time.

9:59 Uh and super global and super long term in their thinking. So the stuff I got out of it was amazing. Because they were willing to work on projects for things ten years ahead. And like I had never been able to do that because we the company didn't have enough a profit stream to do that kind of thing. And so it was uh such incredible uh learning for me. Then later as social became really important, uh I thought, oh, you know, I'm kinda old, I should really get much closer to this. This is gonna transform Netflix, like it'd transform photos and things. So I got on the board of Facebook.

10:34 And Mark Zuckerberg was very open in the company and I tried to do what I could to help and I certainly learned a ton about social, but then it turned out that social really had very little to do with movies and T V shows. And so it wasn't like this huge transformation of the rest of the universe like in the way that say AI is. So those were two long term born assignments I did and I learned a lot on. And I certainly encourage all the CEOs I know to do one or two other companies, hopefully big companies where they can learn from. And then I got on the Bloomberg board really is a favorite of my friend Mike Bloomberg, who's an incredible philanthropist. He's been number one the last two years of most giving uh in the U.S. And uh just a great human being and a great philanthropist. So that's been a favor and fun. And then I'm on the board right now of Anthropic as well as Netflix. And on Netflix, uh it's pretty passive because Um the CEOs trust me and I trust them and so it's just kinda easy. But Anthropic is really exciting and intense, and you know, I've really come to appreciate uh the team, the mission.

11:40 Um and it's neat to have a seat kind of on the on the front edge of what they're doing. Absolutely. Well, one of the things some people know, but very early days in LinkedIn, I wrote to you asking you to join the board'cause you're one of the top board picks for Uh Silicon Valley intelligent people. But I wanna go back to the Microsoft. So

12:02 So you were there before me. I joined in twenty seventeen. Um Actually called you and as usual couldn't got advice on the stuff. W what do you think speaking of long projectories You know, Saka has done a great job. Uh Microsoft.

12:16 What do you think the the things were the the were the right setup for Satya doing that, how much of that's You know, kind of Satcha's own brand of things and how much of that's kind of the the patterns of work that were already present at Microsoft. Well let's think about

12:35 Why is Microsoft Ten, fifteen times more valuable than when he started? Mm. Um you know the profit stream has continued to grow, but then it grew a lot before that under Steve Bomber. Um and so Office has stayed a very strong franchise and they have uh withstood you know some erosion from Google, but there was no wholesale change. Okay. So they kinda won the office wars and they've made office good enough that, you know, fewer people are switching, so they stabilized that.

13:06 Windows didn't particularly get stabilized, you know, Apple in particular has continued to grow. uh in the face of of Apple. Search has continued uh Google search has continued to grow. So Bing and all those and Windows and Bing, you know, haven't really delivered. Azure has delivered in a big way. It's delivered in a big way because of the AI workload. Okay, that's the big validating workload. So then that comes back to Satya made one incredibly ballsy, insightful decision, which is to invest in open AI back in twenty eighteen. I thought you were going to say buy LinkedIn, but that's okay. So you know, he bet big on AI and that catapulted them both reputationally and in terms of other a little bit on the pro and then the Azure business. So it was the workload that then has grown Azure into a monster and a big success.

13:58 Uh which because Amazon had the e g had their own first their first party workload plus all the early adopters. Yes. Okay. So it was really hard for Azure for a while. Early adopters like Netflix. That's right. So where such it gets incredible. He also, uh internally, you know, he just got people talking and working together. Uh more than Steve had been able to do. But that I mean again, IBM was a nice place to work, but they just didn't take any product bets that really delivered. Yes. And Satya took a huge product that that did deliver. So talking about AI, everyone is talking about AI, and you have also joined the public conversation. Where do you think people are Asking the wrong questions, maybe having the wrong answers, or like what is part of the discourse of AI that you think is totally missing that people should be talking about more? Well I'm not sure if whether AGI comes in eighteen months or six years really is gonna make much difference. So I think we should just sort of say

14:58 You know, it's coming fast and w how do we want society to be what do we imagine in ten or twenty years? You know, sort of Get over the idea of like the the the intensity of of how fast it's happening to it's here. And what will we do and how does it work and Um, you know, how would the legal profession work? Like

15:19 As an example in education, people say, Oh, it doesn't change at all and you know, look at how medicine has changed from fifty years ago. Educators are, you know, recalcitrant'cause they don't want to change. But if you look at the practice of law, like you know, pleading before the Supreme Court. It's identical to a hundred years ago. And we're sort of proud of that, right? So I imagine things like that, you know, a briefing before a Supreme Court will actually work identically in twenty years when AI It's is

15:48 Fully ubiquitous. Right. Now the briefs will get AI edited and improved and the research will be a little faster, but you know, it's kinda like in the noise. in the way that today Lexus Dexis is or or or word for legal briefs. So some uh areas of the economy have a huge change, some areas not so much. So I I think again there's so much focus on

16:11 you know, is the current version of quad code, you know, this or that, m you know, as opposed to okay It's gonna happen and the robot side, the humanoid robots gonna happen. So then what will soci society B in ten to twenty years. Well, you're saying if so, education, medicine, law, those are either sort of highly regulated industries or industries with big unions. Like do you think that's why they might be affected less and others will be affected more? Or to Actually throw your question back at you. Do you think there's a profession that will be the most affected by by AI, whether it's in three years or ten?

16:47 Well I was gonna say least affected I think will be entertainment. Like you're not gonna watch a basketball game of robots. Right. March madness is not gonna be taken over by the way. And that uh draws us in. So most like a percentage reduction in employment. One theory would be software engineers, because everyone's working really hard on uh kind of automated software development. But there's a substantial chance that while many companies will have reduced software engineering employment, there will be many other opportunities for more software. And so that kind of elastic response is well, it's what we've seen in radiology, which is an interesting example because radiology is image processing, computers and AI are much better than humans at, and have been now for several years. Okay, and so you can now go into an M R I center uh and if yourself pay three hundred bucks and get an MRI.

17:42 It's dramatically down in pricing and so people are getting many more scans and they're being read by AI with a radiologist approving them. So I had thought four years ago gonna be devastation in radiology. It's gonna be the first, you know, I professional. That's right. Obvious. Well, we have a shortage now. We have thirty five thousand radiologists who need about forty thousand. Wages are high. And so it's a good example of it's easy to get focused on, you know, the disaster case with You know, Armageddon. We love movies about Armageddon. We have them in our religions. You know, it's like we love disaster. So we're drawn to these scenarios of AI wiping out things. Okay. And again, hasn't happened in radiology. Maybe it will eventually, but not in the last five years.

18:29 So I gonna my hunch is that many professions will be resilient and that there's m certainly much more demand for health care. So now is there much more demand for legal services? Maybe I mean poor people are definitely underlawyered, that could take it advantage of a lot. Um so maybe there will be a whole uh elastic response there and and we'll see. But if I had to guess, it might be lawyers as the kind of most affected because it's very verbal um and it's somewhat formulaic. Not as much as writing software. But some more formulate. Okay.

19:04 Well, and also if we thought about Like what would be an increase in productivity if you had actually people shifting from legal work, which is generally transactional costs on things are happening to actually production of things. That would actually in fact be a general positive thing in society. And I say this as a Child of two lawyers.

19:23 Actually think it would be a good thing. If the work Shifted more towards How do we build more products and services? What are the ways that we create entertainment, create other work.

19:33 You know other kinds of things versus Versus The transactional cost. Which is legitimately there on a number of things, but they increased link transactional costs that's illegal.

19:43 Well I think where we both are is no one quite knows exactly, right, which fields uh will be. But what I think we both see is an era of great promise. Um that the next twenty years will be super exciting and I think it will usher in this era of abundance. Through both scenarios, which is again you've got the white collar symbolic processing stuff that's getting pioneered now. uh like lawyering, writing software. And then we've got the Android uh humanoid robots. Coming uh at some pace.

20:17 So one of the things that you know obviously a lot of discussion of AI is on question is, is there safety issues? And you know, the safety issues range, you know, we've been in these conversations anything from Various smart people being, you know As you were referring to earlier.

20:33 You know, apocalypse doomsayers. You know, whether it's it's it's it's terminated scenarios, whether it's jobs, et cetera. So what do you think the right way of trying to navigate The Development.

20:47 Of All of these What we both agree are amazing future capabilities. Medicine.

20:56 Application of software engineering, a whole bunch of other things. And navigating the safety. How much of that should be technic? Right. Constitutional AI, et cetera. How much of that should be Incentives, how much of that should be regulatory. What what's what's what are the guideposts that you'd throw out there as to or principles

21:13 by which people should think about how to navigate Both keeping up our speed. in building AI for all the good things and also navigating safety. Well in the safety we can break it down in a couple categories. So there's the super disaster sky net y case where like AI takes over. So soon to be a Netflix film New Year's. Yeah, and we, you know, absolutely have to prevent it. It's not something that's gonna happen in the short term. But the danger is that we could slide into it um as these things take care of more and more of our life. So I think because the downside or recovery from that, because we don't have time travel, you know, is extremely hard. That's when we have to

21:55 Think about even if it was low probability, sort of like massive nuclear war. We have to do some stuff about it to prevent it. uh because it's would be so uh disastrous. Okay, so that's the kind of uh mass nuclear war equivalent case that um that they take over. Then the other case is you know, North Korean soldiers use it to design a virus and you know, a lot of people die. So Think of it as in the hands of the wrong people, it's very powerful, uh one scenario sort of combined with synthetic biology. Um another scenario is cracking into other computer systems. So

22:33 Uh it turns out AI is very good at breaking in finding bugs in open source things through code analysis or finding bugs through closed things by probing in the way that national security agencies do today, uh but instead now it's in the hands of, you know, terrorists or or other people. So again, think of it Those are two specific examples of bad people using AI as a powerful tool to do very bad things. And so there we've got to make sure that the whole industry does tech prevention that it's hard to do.

23:08 Now right now there's sort of everyone is doing that because they don't want to see these scenarios, but you could imagine that it might need to be regulated over time to insist. That all of the sufficiently powerful AI systems protect. against these kind of scenarios and probably they w some of them will happen and then we'll set up a protection regimen afterwards. to prevent that kind of thing. But no one of them is gonna like destroy all humanity at once like massive nuclear war might. All right, we're gonna go from nuclear war to AI writing. So which some people think of nuclear war, but it's so the New York Times recently ran a blind test and eighty six thousand people took it, and I don't know if you saw the results, but they were showing folks snippets of AI writing versus human writing.

23:57 And 54% of people preferred the AI writing. And so some people argued like that was short firm, that wasn't novels, like that's what AI is particularly good at. Other people were so devastated that more people preferred the AI writing. Like what do you think that, like what does this mean? Does this mean that most writing is gonna become AI in the future? Or like what are the implications of a test like this where regular people preferred the AI writing? You know, I think short form writing on a specific topic is uh very different writing a story and uh d developing character and a character arc and a conflict and a resolution. Um just look at how Shakespeare still has a huge impact, uh, you know, and it was four hundred years ago. Yeah. And no one's been quite as good as him. at a certain broad range of things. So I think it's a extremely rare talent.

24:49 um of of the very high end AI. But like average writing is I don't think the way to analyze it. And I'm not surprised that the AI is better than the average writer today. Right, fair enough. And so thinking about like thinking about all these creative revolutions, it's like you were there for DVD to streaming, and now obviously lots of people their concern about AI is The entertainment industry. So forget the tools that people use, whether we'll, you know, use AI for editing or scripting or whatever, but the actual stories that are being told. Like do you think the AI era ushers in new stories or different people who are telling these stories? Like what will the effects be? Well, in people have been talking about democratization of film for fifty years. And so like the early wave of democratization was in the nineties when you could take it with digital instead of celluloid film. Sure. And so you could do more takes and the cost of filmmaking was going to come down and that was going to democratize film.

25:45 Um and you know it really didn't change except we got you know bigger budgets, higher special effects. Uh we did reuse more, yeah. So it turned out that the constraint really wasn't the film cause. There's lots of student films produced today, produced back then. And they just don't break through and uh take our recent success with K pop demon hunters. I mean, you know, in some ways, I have a w a ten year old, an eight year old, and a five year old. I certainly know about it. It's like our twenty eighth animated film. Right. Okay. You know, it's like even for us, it's really really hard. And God knows we want to repeat K pop. But you know, other than we'll do the sequel, but other than it's like

26:25 So w I mean we are really working hard but think of it as It's a very subtle set of high end things. So I it'll help a little, particularly in T V when you gotta do a lot of episodes and You know, it'll help a little bit in the scripting. Uh where it'll help particularly is then a script to screen. Okay. So you've got a big crowd shot. You know, and like the you know, in big stadium.

26:49 Okay, that might be, you know, a very expensive VR shot now, special effect shot, but you know, it now it'll be AI and that'll be lower cost. So the mechanical parts or industrial parts will be lower cost. But the backbone, the story and then the uh back to the basketball example. So we don't want to watch robots. I think we're gonna want people will pay for real actors. Absolutely. Um and people they recognize in that way. So but we'll see. I mean you know, there's definitely a threat of short form, you know, does do young people only go on TikTok. Okay, and never, you know, watch a podcast uh or a Netflix, we'll see. I mean we'll also see Val Kilmer has a new film out and he's been dead for several years and so AI Val Val Kilmer will see if that's a success or there. Re recovering past IP and extending it.

27:44 Yeah. And by the way. People will watch robots, one of the great Netflix Love Death and Robots series. Right. You know, et cetera. So like there are It's what do you watch robots doing is the interesting question. Now

27:56 Where do you think are some of the interesting more Side effects like Obviously You know, if you came to me today and said, Hey, AI will be Have a will will help us improve identification of

28:11 potential hits early that's like seems unlikely unless there's some Like analysis of major data streams that You know, the humans don't do yet. But what are some of the more like side cases of how AI comes into this? You know, it could be You know, also like, you know, and I discuss the content with. I mean like

28:31 What are some of the things that kind of Not just reinventing the process, but thinking about AI at the corner cases or AI at a corner case that may become big. Is there any of that that you've had Musings on yet? We haven't found, say, the equivalent of sports betting. So sports betting is a whole kind of value emotional engagement layer.

28:50 on top of sports. It's not really AI enabled, and kind of nothing to do with AI, but we're always with entertainment looking for things that What's a layer of conversation, what's a layer of engagement. um you know that enriches the experience. Um so you know, maybe AI will improve that, but It's n uh not obvious what that will be and to some part.

29:15 The beauty of a show or a movie is that it is, you know, kinda self contained and you know that it's it's this W you know it's been more than a hundred years we've had films. And so it's like a novel where the novel as an art form has really stayed constant. And so there's something about, you know, the size and the capability that people are used to it. Sure there's short stories and sure there's epics. But like almost all the business is novels and the what people read. And I think there's a lot of that with film and T V series that they're not artifacts, they're really reflections. of st human attention span and stories. I feel like people have been complaining forever about you know, you have one superhero movie hit and then you have twenty five more superhero or like Barbie hits and then all of a sudden you have toys like toy

30:05 stories. Like you're not we're not getting sort of the diversity of hits because people are looking at an algorithm or they're well, you know, you gotta put this star with this story and then and so you don't maybe get a K pop demon hunters, which like you said was the 28th and no one could predict it. Obviously we're in sort of the the time of heated rivalry when no one could have predicted that. Do you think AI will will flatten things? Like will AI lead to people just, you know, betting on past success because the algorithm told it to, and so they'll take less chances, or that's already happening? Like how does AI affect it from a data perspective? You know, very very little. We're really predicting for a kind of that human conflict and something. You know, you want something that's both familiar but also fresh. So those are are tensions. In terms of like over sequelization, you look at the amount of new content that Netflix is producing, that's really gone away. Um in other words, sure we'll have some sequels. And think of season two of Wednesday was uh you know season three, et cetera. So that's always been a part of the business. It's very enjoyable for people because it's a story they already know and you see more of it. But you don't want it to be the only thing. And that's certainly not true today. Today we have an incredible set of uh new films coming out all the time.

31:19 Yeah. And do you like how well do you think Netflix can predict A hit. Like sometimes things come by surprise, but you're like, No, no, no, we got it. We know or you're like we sometimes we don't. Yeah, it's a mix of both. Okay. Um so uh season twos we have much more uh sure. You have more data there. All right, fair enough. Um one of the many smart things that Ted Sarandos uh said is that There's a much better business in

31:45 uh increasing the upside, the quality, the volume of the reception reception of content by ten percent. than cutting cost by fifty percent. It was a way of kinda lensing to why is AI potentially really amazing.

32:01 What are the kinds of things in terms of thinking about How AI can be additive. that you think that the entertainment industry should be thinking about broadly Given obviously there's a lot of concerns and uncertainty around it. You know, in entertainment there'll be a lot of work on special effects and sort of things that didn't fit into budget.

32:21 Uh before can now be done. Uh you know, using AI. Um so that's a good example. But more or less I think anything that lives in the emotional realm will be impacted not as much by AI because we humans react to these things emotionally. And so again, I think we'll not watch robots playing basketball. And so it's the easiest example for people to get that things that are emotionally sti pleasure, emotional stimulation, will still do. So you know You like to give and get real flowers, not fake flowers. So it's like I don't think that's changing just because of AI. So where AI is very good is that thinking and logic like

33:03 Coding. Wow. It's really breaking too. So I think there's just think of it as tremendous excitement in medicine, in biology, in things that are very factual, logical, hard. Um complex. And things that are emotional, you know, will be it's not that it won't eventually be able to add value, but that's certainly not the big thrust of the AI world. Alright, this is something I'm very excited to talk about. You and I share a deep passion for education and

33:33 I feel like education is like at the center of AI. It's like, is it gonna usher in a new era where everyone has amazing tutors and education is supercharged? Or our public school students especially perhaps just gonna have AI slop constantly. Like as a philanthropist who's invested a lot here and sort of studied the education, especially in the United States. How do you think AI is gonna affect education? Well, there's two kind of big questions, which is one, what are we educating kids for? What kind of society are we educating them for? What skills should they have? So the kind of goal state

34:09 Uh you know, in the past was Uh pass a lot of AP exams. Sure. Um and that's probably not the right goal state for the future world. So there's a big discussion to have, which is What are the skills that you're trying to target for your kids? And then second is implementation, which is can we use AI tutors to whatever we decide is important to teach more of that to make teachers' lives better, to have kids learn more.

34:37 Um so they're two different discussions that get kind of mushed together. I would say on the second, like how to teach more, then there's some relatively clear path of doing, you know, different kinds of AI tutors and you know, just like we're gonna have AI doctor, AI lawyer, they'll be AI teacher. And that will come along. And it'll be it'll be easier in private schools, it'll be easier in charter schools, it'll be harder in in school district schools because of all the regulations they have. It'll be easier outside of the US where they're more willing to to do some of these things. So you know that will happen. It's unclear the first question, which is what's what if you have a three year old or a five year old

35:20 What do you want them to learn? The hard skills like w that we used to value STEM. Mm-hmm. Okay, that's probably like coding. Like we know, we spent twenty five years saying learn to code, learn to code. Oops. You know, don't learn to code, don't learn to code. So it's probably true that like all the hard facts of, you know, biology, chemistry, physics will be extremely specialized and not

35:46 Necessary general knowledge. Um and probably not that valuable, let's say, if you had a AP result in this. The things that are more emotional how you read people, how you work with them. Um uh probably are quite valuable because they're much harder for the computers to do and and humans

36:07 uh like doing them with other humans more often. So I think we'll see a kind of shift of the value, you know, STEM practically took over Stanford University. Okay. And now maybe what we'll see is a rotation You know, back to the humanities into um understanding combination of uh history and literature, but also kind of the the physiology of the brain and um you know how we interact with each other. If I had a three year old today I would be like doubling down on the emotional skills. There's some great middle schools. One's a charter school Valor, another's a private school flourish, and you know, they really focus like in seventh grade on these emotional circles where you sit around and talk about your feelings. And because they feel like this kind of skill, knowing yourself.

36:56 Interact with other human beings is gonna be the thing that sustains those kids you know through their working life. Do you I feel like when people talk about AI in education Alpha School always comes up. We had McKenzie on the pod a few months ago, and I feel like some people are like uh the criticism is like they're not even using the cutting edge AI. Other people say, look at their test scores, they're doing you know twice as well as anyone else. Some people complain about equity, you know, four forty thousand dollars a year.

37:24 The thing is. Sixty thousand. It's fantastic. If you can afford it, go. So why do you like the thing I love about it is actually less about the AI, but more just about the like giving agency to kids, focusing on other things. Like what do you why do you think Alpha School is so great? Well it starts with McKinsey Joe's philosophy that the kids have to love school and they love vacation. So the number one goal is the kids don't want to go on vacation, they want to stay in school because they love it so much. Then they start from okay. If we want them to love it and we need them to know the basic stuff to do well on tests, what are we gonna do? And so they do two hours on software a day where you know it's relatively practice and drilling and these kinds of things, but they have a coach really motivating and helping Um and then they get the reward for that is they get to spend the rest of the day doing stuff they want. Either a set of the schools do are for athletes and people for sports, or they spend the rest of the afternoon doing like watching TED Talks and talking about'em or a range of things. Um, but I would say they're kind of like the Tesla Roadster.

38:27 That was the first Tesla over a hundred thousand dollars sports car specialist thing. But it set electric cards as the aspiration. And they were cool because the first electric car was this You know extremely fast accelerating thing. So that's Alpha School is our Tesla roadster for AI schools. And you think it can be done.

38:50 We we can go down the cost chain and we can do it at a lower amount. I love it. So Uh yeah, there'll be more and more innovation at that end. So Reid, we talked about education and how there's enormous opportunity for change. Alpha School, which is operating within the United States. How is education gonna change outside the United States with AI? Well I think what we'll see is tremendous flourishing of AI teacher.

39:15 in an international situation. So we have pretty good teachers in the US and pretty high satisfaction and rich countries generally, Uh but in lower income countries the education budget might be three hundred dollars per kid per year and the class size might be fifty to seventy kids, and there's just not a lot of learning going on. And I think the combination of a Starlink on every school and tablet for every child and then really good AI software will close the gap. So think of uh the way mobile phones are ubiquitous in the developing world. I think AI learning will be ubiquitous. And that will help that they'll leapfrog the advanced countries.

39:55 Close the gap. that we've seen historically. Um and in places they may leapfrog. I feel like lately there's been like breathless articles everywhere about how one laptop per child was the hope and then it was really a failure and we put so much money into it and it didn't work. And then other people are saying like, Well, that's really nice that you want that, but you know, the cost of compute is too much. Like What would you say to those people who think that like we've heard tech solutions in education before, but it's not gonna happen this time. Yeah, there's always the crash dream phenomena. Uh like you know, in the nineteen eighties I was in the AI wave that was expert systems and they were public companies and the fifth generation and the Japanese were gonna be this big threat and you know, and that AI didn't work.

40:39 But this one is. So just think just because it failed before it was too early doesn't mean it won't work. So I think the one tablet per child around the world is very scalable, builds on the mobile phone platforms. Um and it is some of the same ideas that one laptop per child had, but that was just twenty years too early. Yep. And I assume you think the cost of compute is just gonna go through through the floor and so that it won't be a barrier to entry for folks in the developing world. Um that's right. The costs are really driven off the phone market. So you know, we have eight hundred dollar phones in the US, but in most of the world, you know, there's fifty dollar phones um are quite usable.

41:19 Um and so think of it as fifty dollar phone and a Starlink per school. Um and some solar panels, you know, uh so it it's very scalable. Fantastic. So one of the things that you said earlier which I I completely agree with and one of the things I think I would partially reframe

41:36 And it's kinda a question leading into education. I think our Human skills. Um Yeah, can I have a collaborate. getting in humanity, understanding these things I do think will amplify up.

41:51 And the skill of learning coding. obviously goes away'cause it's like oh this does the code. But I think the various two things that I think will still be pretty deep in what we're doing is one is a good systematic understanding of what truth in the world is around so like biology, physics, chemistry, et cetera. Because that kind of iteration of understanding the nature of the world we're in.

42:13 I think has pretty familiar scientific thinking. Is it like the patterns of thinking I think are important. The patterns of strategy are important. And I think actually even coding will go that way because part of the thing is Is while people say, Well, should I study should I stop studying computer science? Like, Well no, you should study computer science, not coding.

42:32 Right. More of the kind of the thinking about the The system or the pattern of it. In terms of how we operate. And I think that will become more general. I'm curious what you

42:42 Think of my Modest reframing of your earlier Statement. I think I'd just study math. Um you know, if you want to get to like it. So you know

42:57 Whether it's a Algebra I mean there's so many interesting things in math. If you want to help people like kind of learn abstraction or search for truth. Um Yeah, look, there's gonna be some role for science and a few people will be drawn to it. But think of the last twenty years. We've been as a society stem, stem, stem, learn to code, stem, stem, stem. So I just think that as everyone sees that coding is overdone

43:25 Uh my guess is we'll see that STEM is overdone. Um and the kinds of things that you do with a biology background will be done so much better and faster by AI that it'll be hard to compete for jobs in that space. So shifting to another thread. One of the things I think AI will do

43:44 is it will break us a little bit of the industrial model. Which is the industrial model tends to be the You know, go to high school, go to college, learn, now go work. And learning then Now work. And I think ongoing learning.

43:57 Do you think that will also be part of not just like I have this one learning period, but it's like I'm constantly interweaving Learning with what I'm doing. Absolutely. So you know

44:10 Trying to think through the ongoing skill acquisition, you know, by by learning things has Probably you know been important for a long time because the stuff you learned in high school b changes so much. And the knowledge in the field changes so much? Um and that's only gonna continue.

44:27 So certainly learning will need to be for people who w wanna make a living intellectually constant. But I don't think that's a it's like a more of the past because that's been true for a while. It's just gonna be even more true. uh you know in the in this new world. So we learned earlier that you were the one that said Stone Age, Bronze Age, Iron Age, we define entire epics of humanity by the technology that they use. And so we're entering the AI age.

44:54 Do you think even more than previous ages? That now If you are left out of AIH, either personally or sort of as a country. Like that that now is the time that some folks might actually fall behind and there's gonna be a bigger divergence between those who embrace the IA AI age and those who fall behind. Well I don't know that just embracing it like if you're a small country in Europe that has a glorious past, I don't think it's whether you embrace it or not that it's going to change the outcome. I mean, you know you gotta try to figure out a strategy because

45:28 um you know and it's gonna be dominated, you know, by China and the US. Okay, how does the middle powers like Canada, you know, thrive? Um and I think we owe, you know, uh we're part of that uh thinking and solution to be able to build a world that we all want to live in. And so what would you do for these middle powers? Like they don't want to live in a world where it's just the Chin just China and the US. I don't know that they have much of a choice. Yeah. So I think it's I mean

45:59 what they're doing is linking up together. You know, and I think that probably makes sense. Um and certainly, you know, they'll embrace using, you know, American AI because they'll they'll need to. And you know, maybe they will be able to get some local things going or they'll do it by treaty where the you know where they get they're not gonna get shut off. Right. But think of it as AI is going to accentuate income gaps both in the US. And between the US and other countries. Um so you know, it's going to create tensions just like it does in one society, it does between societies. I do think that one of the things and I think you would agree that That

46:40 That actually having an active AI strategy for the countries for the industries, et cetera, is actually in fact really important. Um Mm. I think it's less important to be going

46:52 It isn't that You know, so called digital sovereignty isn't also important. But the most important thing is to actually be modernizing your your kind of industry, your countries, your

47:06 Because It's a little bit like the industrial revolution. Like one of the things I put in superagency is that You know. England.

47:14 quarter the population of France. Tenth the population in China. multicentry injuries, yeah, and did not invent the industrial revolution. But multi-century's empire. because they embraced the industrial revolution most robustly early.

47:27 Would you also think that when you get to thinking about this from a countries or indust or industries or companies perspective that they should adopt that same thing of like We have to have an active strategy in being there early. Well your example's interesting. So you said the UK which led industrialization, so that that's kind of the equivalent of America today, right? Um so you didn't really phrase it as, you know, what should Argentina do w about industrialization, which is a very hard challenge because the UK did everything in its power to keep Argentina from being able to industrialize to maintain their strength of their power. So if you are a middle power like

48:07 Argentina should you s have an industrialization policy? Sure, probably that makes sense. Will it work? Not clear at all. because the power imbalance in the UK was so high. So They would they were laws preventing, you know, looms and various things from being in India. So the cotton, you know, from India had to come and then get processed in the UK and they enforce those laws with their military. So I

48:33 You know, it sounds all great that uh Belgium should have uh you know an AI policy. And Estonia is a small country that's done a lot on say digital ID and do good government tech. Um so I I guess that's better than not doing it. But I don't know that it's actually much of an answer for a middle of our country. I mean I think the challenges for a middle power country are quite substantial and I I don't have a good solution, but I think you know, in them linking up and and doing things and Working well, and I hope that the US

49:06 as the Western leader of that is, you know, embracing in a very in a very important way, you know, which is not the current America First policy, but I think It's much more in our long term interest to have the long and strong allies. So earlier you said that you think AI is gonna usher in this great era of abundance and you know, whether it's ten years or twenty years, you know, when when sort of AGI gets here. Like what are the things that need to happen for that to be true? Are there conditions that need to be met now for that to happen? And Did you mean just in the US in terms of the abundance or could it be global abundance too?

49:43 Depends kind of how the IP is shared or the rewards of it, but I think it will be pretty global. So just like you saw in the industrialization, it it really did lift all boats. You know, it it's at a different level than in the host country. But uh so let's take nuclear fusion, you know, and if we uh can actually make it work, you know, which will be assisted by AI, um you know, then we've got a tremendous energy source. If through it we're able to bring down the cost of solar, you know, or uh invent new types of batteries and storage. You know, it could really revolutionize um energy usage and production, which then brings us to you know age of abundance. In early in early nuclear we were a little bit naive and we thought electricity would be too cheap to meter. Okay. So you know, we're probably not gonna get to that. Um But

50:36 You know, that's the kinds of thinking for abundance that we want to do. So if you think about housing and you know it's very expensive to build. What if it was robots building it, you know, twenty four hours a day? So then you got okay, you've got carpenters not working, so that's a negative, but you've got, you know, low cost, very custom, beautiful housing. So that would be, you know, another example. Um so you know I think in each industry we're going to see much lower costs um for doing things and then incredible amounts of inventive energy because maybe we don't need to build a house that way. Maybe you just print it, you know, in some giant three D printer.

51:13 So there'll there'll be both tech revolution in that way. Which Again, would be like nuclear fusion. Yeah. I'm gonna shift to one other zone of subject'cause I think What do you think are Why is so much of this innovation happen in Silicon Valley?

51:31 What are the things that make Silicon Valley kind of a unique creator of these kinds of technologies. Why is it half of a Nasdaq is within Thirty miles of where we're currently sitting. Well I think if you look at the s financial city of London or you look at New York or you look at Detroit for cars.

51:50 Um this is not something specific about tech. Um you get very positive reinforcement when you've got a whole lot of talented people that can switch jobs. uh not have to move. And then they move the ideas. So in the US we don't have very high protection against the ideas walking out the door. So it makes it can be very hard for a given company because they feel like oh my secret spread, but it makes it very productive for the economy and for the ecosystem that those ideas do spread. So I think of it as liquidity in employees changing is probably the key ingredient.

52:28 Which is A combination of Things like LinkedIn of I wish we had non nonemployer based healthcare. Um so if you had it, you know, in some other ways that employer based it, you to have more liquidity. The less we do non competes, the better is one of the things I think that the Biden FTC had right. Making it easier to compete with existing companies by eliminating noncompes. So those are the that liquidity of movement I think is the most important thing.

52:58 Yeah. Questions. A last question before we get to rapid fire. on jobs is obviously the general discourse is loss of jobs, you know, and kind of other sorts of issues, but There's way insufficient discussion on wages.

53:14 Because even though In fact. You know, the action fact I think there will be a lot of creation of jobs, a lot of transformation of jobs and so forth. But w will happen, a little bit like the earlier comment in radiology, is there will be a Okay, which of these jobs are super valuable?

53:30 compensation goes up, which of these jobs become less valuable, compensation goes down. Have you had any thoughts because you're a systems thinker on the wages effects? What countries, companies, industries, but specifically also individuals should be doing in kind of navigating What will be happening within wages. Well let's see you describe as some jobs as valuable, but like you know teachers are very valuable and not paid very much. Yes. So I don't think pay follows value very much. It follows shortages in demand and supply.

54:01 Okay. So the question is for wages, what jobs will be sh in shortage? And I think it's all those jobs that are emotional that computers are not very good at, because we'll have a lot of need in those. And the jobs that are more administrative, you know, those are gonna have lower wages because you're competing with computer uh who c who could do that job. Um so again it's really where AI does the job well. Mm-hmm. And where it's super hard for uh the AI to do, it'll be you know continued high wages.

54:39 I feel like a lot of people are telling people that the solution to that is trades. Everyone's like, Oh, become a plumber, HVAC, electrician, because those are in shortage right now. Obviously like the big question there is like how soon robots will catch up. Like w what do you like it matters if that's gonna be five years or twenty years or forty years in terms of people getting wage premiums from the trades. Like what what would you tell people in that respect? Okay, so let's look at electric cars. So two thousand and seven we had self-driving sorry, I should say self-driving cars. Two thousand seven was the DARPA challenge and it was like it actually did work in self driving cars in a limited lab. And now, twenty years from now, it

55:17 Pretty much works. Okay. Uh but the percentage of miles uh driven self driven by the machines by high end Teslas and by Waymo's It's gotta be less than one percent of global miles. That's after twenty years. So we're not even to the stage of that DARPA challenge. That is, we don't have a demonstration in the home, okay, that can do all these things. So think of it as in twenty years, robots will do maybe one percent of the plumbing. At most. Right. Okay. So it just takes a super long time to build, deploy, and then to get them to be lower cost, higher safety than others. But I think over fifty years it will happen.

55:58 So that's still gonna be a a great deal for the next twenty years, uh if we're talking plumbing specifically. Thanks. So now rapid fire, unless there's another question. Is there a movie, song, or book? That fills you with optimism for the future.

56:14 There's a cool movie I watched recently, The Queen of Chess, and it's about a Eastern European 1980s who guy family who raises his three daughters to get out of poverty via chess. And they all three become grandmasters and get to a middle class or better living through this uh dedication. And so Uh it's a situation where there's no reason they should have had hope being a nineteen eighties, you know, Romania, uh and yet they did. And they work towards a future that has been great. Uh so it's a I love a documentary like that. All right, I gotta check that out. What is a question that you wish people would ask you more often? I think people focus a lot on business success, which I've been, you know, super fortunate on

56:59 And less on joy. Um, what gives you joy, how do you increase joy in your life? All right. How do you increase joy in your life? Let's hear it. I would say the I'm trying to do more on the mindfulness and on the appreciation, noticing much of my work life was relatively frantic. Uh, kind of lots of email short burst stuff. And I think I could have integrated more mindfulness into that busy time. But certainly now that I'm retired I can.

57:31 Love it. So where do you see progress or momentum outside of your industry? Let's call that tech entertainment. That inspires you. Um definitely medical work. I mean the the amount of improvement in Cancer therapies, health, understanding insulin resistance. I mean it goes on and on. What we're slowly learning of the brain of the body and then the brain's, you know, even slower, but making some progress on that.

57:59 Alright, our final question. Can you leave us with a final thought on what is possible to achieve in the next fifteen years if everything breaks humanity's way? And what's the first step to get there? Well, if everything breaks human humanity's way, it's because AI has unleashed human flourishing And we find the political mechanisms to share that.

58:21 across within our country, across different income groups and then between countries, the world as a whole is Uh enhanced. And a first step for that would be to realize how interconnected we are between people in our country and then between countries and trying to get away from win-lose. Um to win win.

58:42 Totally. Amen. Thanks so much. Reed, always a pleasure. Indeed.

58:47 Possible. is produced by Pallet Media. It's hosted by Arifinger and me, Reed Hoffman. Our showrunner is Sean Young. Possible.

58:55 Is produced by Tanasi Delos, Katie Sanders. Spencer Strassmore. Imuzu. Trent Barbosa and Tafadwa. Nimorundwe special thanks to Surya, Yalamanchili, Sayida Sabieva.

59:06 You and Alice. Greg Biotto, Parth Patille. I'm Ben Rallis.

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