The Exchanges

Q I have a question here. Some countries have a trade surplus. Some have a deficit. Fewer have a surplus, more have a deficit. What happens if this continues 10 years, 20 years down the line?

A Well, one answer potentially is nothing. You know, it depends. There's nothing inherently sustainable or unsustainable about deficits and surpluses. There are reasons why certain places might want to be spending more than they are producing. The canonical example you'd have is a society where you say you have a lot of younger people, it's relatively under-invested infrastructure, a lot of growth potential, maybe it's poor or less technologically developed. That's a kind of place where you would expect that the needs of the people to invest and grow rapidly And their future productive potential are such that it makes sense for people in the rest of the world to invest there, uh, you know, lend them money, export, you know, advanced machinery, things like that, and they could have persistent trade deficits for a while and grow rapidly, and that'd be beneficial for everyone. Um, the flip side is you can imagine a society sort of in the opposite situation, maybe it's older, uh, already at the technological frontier, there's less growth potential, they have already advanced goods, and maybe they would be exporting.

AI assessment note: “Well, one answer potentially is nothing. You know, it depends.”

Q I heard or read a very interesting story of how you met your wife. Would you like to start with that?

A I'm Bolivian. I was at Harvard getting my business school degree, and I decided I wanted to go work outside the US. The US felt too competitive. It's large, but very competitive. And I said, I want a country that's large, I want there not to be a lot of competition, and I want there to be beautiful people, because I'm, um, I wanted to get married. Brazil. Top of the list. So I get a job offer with the number one private equity group in Brazil, the three G guys. They own Anheuser-Busch, they own Burger King, they're an amazing group of people. But they made a condition for my hiring, which is I learned Portuguese. And I said, will you pay for it? And they said, of course. So I call my Brazilian friends and says, find me a beautiful, smart Brazilian PhD or master's students and tell her I will pay her to talk to me.

AI assessment note: “find me a beautiful, smart Brazilian PhD or master's students”

Q 30. Everyone's looking to invest in the market, trade the market, start a business, Building something from the bottom up. So we are speaking to them. So most of today is around that. Can we start with a little bit about you and how your own journey began from Queens to Wall Street? Maybe like a, how do you describe your story in your words? Your story, your origin story.

A Well, um, you know, I was born in Queens, New York, as you know, one of the, one of what are called the outer boroughs, uh, middle-class upbringing. Uh, neither parent, uh, went to college. Um, but my father was a very intelligent man and, and, and an accountant. And I think he did His job well. And so we lived a, uh, comfortable middle-class, uh, existence. Um, I went to the public schools of New York at a time when you could get a good education in the public schools of New York. Uh, and I think I got one. Uh, and, uh, oddly enough, uh, uh, Ended up taking courses in business law and then accounting in high school and really connected with accounting with the orderliness and the symmetry. Uh, it, it just clicked for me. So I decided to go to a business school. I applied to Wharton as the best business school for undergraduates in America. Uh, I was told I wouldn't get in, but I did. Uh, went to Wharton as an accounting student, switched my major to finance. Uh, uh, then went on to get a, an MBA in accounting from the University of Chicago business school. Uh, and, uh, between years of business school, I had a job in the investment research department of Citibank. Liked it, went back. That's my, that's my background.

AI assessment note: “I was born in Queens, New York... went to Wharton... That's my background.”

Q deal, but the reason why you're not the gift city stuff and all is that because, uh, unless you have greater capital account convertibility, it's very hard for any gift city thing to really prosper, right? For example, what's going on? I mean, I know, uh, uh, today directly, which is that for a family office, if they want to take money out of this country, it's extremely difficult today.

A I'll tell you what's happening. The government came up with a structure called FIF. Family investment fund. So what ODI restricts you, ODI allows for a company to take out four times their net worth and invest outside. ODI does not allow you to invest in public market equity, nor does it allow you to invest in real estate. The government came up with a structure called FIF, which was meant to allow both of these. Not in the structure of a joint venture, because nobody can buy five percent of Apple or 10% of Apple, but do minority investments. I think the problem today is GIFT is regulated by IFSC, and there is RBI. For somebody to transfer money, say from Bangalore or Bombay into GIFT, they have to go via the RBI, because it's like a different geography, and I don't, I think somewhere those two bodies are not Meeting eye to eye.

AI assessment note: “I think somewhere those two bodies are not Meeting eye to eye.”

Q Can you tell us a bit about Opendoor? We were discussing earlier, but it's interesting.

A Yeah, it's in the news right now because it's become a meme stock that's like growing really well, but, um, I still fundamentally believe in the mission. So I think unlike other countries in the world, Where a transaction cost for buying or selling a home is one percent or lower. In the US, it's six percent. Which means when you're trying to sell a home, agents take six percent of the commission. And that's crazy. Residential real estate is the second largest asset class in this country. And there's a six percent tax for doing that. Which is just mind-boggling to me as like, uh, someone looking at the space. And so the company was founded by four founders, uh, Keetra Boy, Eric, uh, JD, and Ian. And their model was, We will buy our home unseen. So every home that's bought and sold in the country is on a register called the MLS. And so using machine learning, they said, hey, we could figure out what the true value of this home is. So you enter an address, answer a few questions, and we give you an all cash offer to buy the home in one minute, which is very different than you having to stage your home and list your home and pay an agent a transaction fee. In one minute you get that

AI assessment note: “their model was, We will buy our home unseen. So every home that's bought”

Q So you moved out when you were how young, from Chennai?

A No, no, I was born in the U.S. Born and brought up there. So I grew up in Wisconsin. Um, I went to college in New York. Uh, that's kind of where I started drinking Starbucks coffee because it was available and kind of, you know, it was never for enjoyment, it was just to have something to stay awake. So I was there for four years, studied finance, moved to San Francisco. Uh, and I was there when specialty coffee was really taking off and becoming the mainstream coffee culture. Then I started, uh, going to these coffee shops. I started understanding that coffee could be more than a functional beverage. Where it comes from, how it's roasted, how it's brewed, can open up a wide variety of flavor. Then I started, uh, roasting coffee as a hobby. But I did that for a number of years, uh, worked in, uh, finance.

AI assessment note: “No, no, I was born in the U.S. Born and brought up there.”

Q And you moved from Infosys, you retired first, and then Aadhaar came your way?

A No, what happened was in 2009, in 2008, I wrote a book called Imagining India. So sort of projecting how India could be in, in the framework of ideas. Why ideas matter and stuff like that. And among the ideas in that book was, you know, digital ID and so on. So, at the same time, the government was planning a digital ID program, and they had got cabinet approval for that project. And, uh, I was, uh, I had a chance to take up that role. So, and then my Infosys co-founders were very kind and said, yeah, you can go and do some national service. So that's how I ended up in Delhi in July of 2009 to build India's digital program, ID program.

AI assessment note: “No, what happened was in 2009, in 2008, I wrote a book”

Q Explain Brandeel. New guy has 300,000 followers on social media. Moves to Bombay. How much does a brand deal pay?

A Okay, so I, I'll tell you brand names and what paid me. The first brand deal was ever 70,000 rupees from Upgrad. That was upfront. They paid me, they were like, put up a story, tell our courses are there in digital marketing and content. They paid 70,000 rupees. That 70,000 gave me money to come to Bombay. Then while in 10 days I was living in a hotel, during those 10 days, I got a deal from KEI Wires, Pink Insurance and Amazon sellers. How I got this? I started DMing them on Instagram, and asked them that, hey, I can do this, this, this. Started telling them concepts of what I can do with them. Together, these three brands paid me around nine lakhs. That nine lakhs became my six-month runway in Bombay.

AI assessment note: “The first brand deal was ever 70,000 rupees from Upgrad.”

Q Before we go into this a little bit deeper, what is the AIF? What is cat one, cat two, cat three? Who can take that like very quickly?

A The government didn't know how to regulate all of this. So in 96, they started something called domestic venture capital fund regulations. Everybody was classified under that. Whether you were private equity, real estate, or venture capital. And they realized that there was a crappy way to deal with the complexity of these many asset classes. Because now you're asking us to break it down. The government hadn't figured that they needed to be broken down. So, in 2012, they revised it and called these regulations AIF regulations. Alternative Investment Fund regulations. So basically now they can regulate as basis what kind of risk we take. So cat one cannot invest in certain securities like debt, et cetera, public markets, cat two can, and cat three is only public markets.

AI assessment note: “called these regulations AIF regulations... cat one cannot invest... cat two can, and cat three”

Q Is there an unsaid understanding? Say China has a tariff, say China has a trade surplus with America. Over the long term, is there an under, is there an unsaid understanding that China will buy, say, American treasury, for example, or invest a part of the money back into America?

A I think for now, I would say largely yes, because I think it's both push and pull. One is, I think Chinese do find Uh, the US dollar to be still a safe assets, and it's deep enough that we can deploy our capital into. But at the same time, it's also because there's a lack of alternative. I mean, in a way, this is related to what we discussed in a different session about RMB internationalization. Because by that time, even, even though we're not happy enough with the US dollar as a, uh, a, a, a, a, a, a restoration of value, there's really no other alternative we can put the money into. Of course, gold is one possibility, but the market is not deep or large enough.

AI assessment note: “I think for now, I would say largely yes, because I think it's both push and pull.”

Q China has capital controls. So does India, where I come from. I personally believe that long term, if we didn't have capital controls, more money would actually flow in and less would flow out. Uh, how is it in China? Do you feel that way? Do you think capital controls are a good thing or money should be more fungible?

A Uh, as a market economist, I don't think capital control is a good thing, but then going back to what you have said, I think I, I, I, I think in the very, very long term, depending on how you define long term, I think, yes, probably removing capital control, there will be more money flowing in than flowing out. But in the very short term, this is where I think policymakers are most concerned, uh, in almost all countries. I think they're concerned with, uh, a short-term outflow, and that's going to create, uh, really drastic shocks to, uh, the financial stability. And then we have experienced that or witnessed that in the Asian financial crisis and in some other episodes of history. So I think that is where, uh, the central bankers and the policymakers in China are putting more attention to. And that's sort of explaining why China's, Unwilling to or hesitant in removing capital control completely. I think China is going towards the right direction, but at a slower pace than the rest of the world is hoping for.

AI assessment note: “as a market economist, I don't think capital control is a good thing”

Q Can you elaborate, elaborate? What does the government have to do?

A Well, I think a couple of things. One is in general, people believe that the central government really cares about the GDP growth. And back in the past decade, from 2009 through 20 20, uh, real estate investment is the best way to boost the short term economic growth. So I think whenever there is a slowdown in the economy, uh, coming down from the central government down to the local government, they all want to sell more houses, build more houses. So that's going to push up the economic growth. At the same time, which I think will be a more complex issue in India is, uh, land sales have become the, the biggest contribution to fiscal revenues to many local governments in China. So of course, local governments have the incentive of pushing up the housing prices eventually in order to sell more lands at higher prices. So those two forces work together to ensure people really believe there's no way the government is willing to let down The housing prices. And I think that is that a guarantee from the government is reinforcing people's already strong expectation, as you described in India, about housing prices will never fall. Of course, that's the purpose of my book. Once it starts turning, it turns very badly. Yeah.

AI assessment note: “real estate investment is the best way to boost the short term economic growth”

Q How, how is Bolivia, Martin, to live in? How is Brazil? How is Bolivia? I've never been to either of these countries. How is life like there?

A Very different. So Bolivia in the eighties, Santa Cruz de la Sierra in the eighties, was a tough place. I mean, America is freaking out about five percent inflation. In the eighties, we had 35,000 percent inflation. We had, in a ten-year period, we had 11 presidents. We had three coup d'etats. Uh, drug violence. Uh, it was a very, very tough place to, to, to grow up. Bolivia is a, is a divided country, um, very unequal country, uh, but one with natural beauty, gorgeous people, but my experience growing up in the eighties was, was an experience of living in chaos. Uh, Brazil, which I arrived in my twenties, um, soon followed my, my beautiful Portuguese teacher who became eventually my wife three years later, uh, is a happy place. Maybe that also has to do with me becoming happy. It's not just Daniela. Brazil has a happy vibe. I like to say the United States is like a salad bowl. They're all here, but they are Irish American, Indian American. In Brazilian, we, and I say we because I became, I identify as Brazilian. I became a Brazilian citizen. I dream in Portuguese. It's more of a soup. All the vegetables kind of fused together.

AI assessment note: “my experience growing up in the eighties was, was an experience of living in chaos.”

Q 39. Let me keep it for a few more months. So quickly, we have two new friends on the table. I'm going to give you guys some time to introduce yourself. Maybe Florian, you would like to go first?

A Sure. Um, so first of all, thank you for inviting me for dinner. Um, I'm Florian Brandt, um, started out, uh, as an entrepreneur, I guess, many moons ago, probably like, 15 years ago. Um, and due to, I guess, very personal experiences, uh, with seeing friends and family members developing very severe mental health disorders and not finding The help or healing that they were looking for started a mental health, um, drug development company, a biotech company, uh, Atai Life Sciences in 2017, 20 18, uh, with a goal to really make a true leap forward for mental health patients, uh, that, uh, often, um, to today's medication that is available, um, also therapy don't, um, respond very well.

AI assessment note: “I'm Florian Brandt, um, started out, uh, as an entrepreneur”

Q Wouldn't you benefit from calling it junk so you have a higher Margin because more people would stay out of it?

A Yes, if they listened to me, if I was that influential, but, and, and that's the right kind of, kind of, uh, counter thinking, but, On the other hand, a big part of our business now is making loans to companies that need what we call rescue loans. They don't like to be associated with the word distress. So we're more likely to get their business if we call it opportunistic. So, uh, you know, in the performing credit area, we lend money to companies that the world thinks has a, let's say three, four, five, six percent of not paying us. Probably three, four, five, six percent probability of not paying us. We lend them money if we think it's one or two percent. So if the world thinks they're five percent likely to not pay us, and we conclude that they're only two percent likely to not pay us, then the world requires them to pay an, a rate of interest which is commensurate with their five percent probability of non-payment, which means if we're right, and it's only two, we're getting something for nothing. And that thing is called excess return. So, So that's what we do. That's the essence of lending money. I mean, why would you lend money to a company that has a non-zero probability of paying you back? And the answer, Mike Milken's answer was you can demand the rate of interest, which is compensatory or more than compensatory. And when you get, when you get payment in life for doi…

AI assessment note: “Yes, if they listened to me, if I was that influential, but”

Q You spent a fair amount of time at Nestle. Do you see that business model of a large FMCG company selling across the world? Do you think that's breaking? You see a lot of the multiples companies in FMCG are getting, coming down. They've been historically very expensive. Is the consumer moving to independent brands from large conglomerates?

A Not really. I think you see that movement began quite some time ago. It started for value at a point of time when it moved to these private labels in the case of some of the larger locations. But in the case of India, for example, Amul was a big breakthrough in milk, right? So you got brands that came up locally, but it's not as though the multinational brands aren't strong and High quality with high perceived advantages. The only difference is, In the emerging markets years back, if you were a global multinational brand, you had a halo of which you didn't feel you could get domestically. That certainly has changed. And Amul is an example of that high quality product, whether it's powder or yogurt or desserts or ghee or anything else today, Amul has a product that is as good as anybody else's. And I think that change Definitely leads to a lower dominance level for multinationals. But otherwise, the idea of a global company which has global standards, but locally executed with great delivery, it's still a very popular model. The issue of earning multiples and share pricing coming down, that's a whole other thing. I think there's a lot going on in the markets where people are putting money into new technologies, new industries, AI, finance, There's a lot of stuff going on, and rotating out is certain. What happens invariably in these markets is when there's, you know, friction, o…

AI assessment note: “Not really. I think you see that movement began quite some time ago.”

Q Where are they now? What do they do?

A They, they still live in Southampton, where I was born. They are retired. Um, they're spending time with their, well, they keep busy, but they spend time with their grandkids when they can. They just, um, they just, uh, our, our two girls actually were in, uh, in Bangalore this week with Akshala's mum and dad for half term, and then they just got back. But my parents came to surprise them at the airport, so they've been having a nice time, the four of them over the weekend. No, so they still live in the town where I was born and grew up. My dad was a GP, family doctor. My mum was a pharmacist. And, you know, I've, I've spoken about this and, you know, they were very much my inspiration for wanting to go into politics. You might think that's a bit odd given that they, ah, they're medical. But I, I worked for them. And I worked mainly for my mom in the shop in the back. And so I'd be doing making up all the medicines and cleaning things. I do all the accounts as well in the bookkeeping and that got me into business side of things, but, and then I would deliver the medicines. So I'd be on my bike and then in the evenings you'd go around and then I'd drop them off for the patients that couldn't come in and pick them up. And then later, you know, I learned to drive. I did it that way. But the, I was really struck because they've been doing the same thing in the same place, 30 years,…

AI assessment note: “They, they still live in Southampton, where I was born. They are retired.”

Q What, what has stayed with you? That book is a little old now. What has stayed relevant from then to today?

A I think the main point of Sapiens, which is as relevant today as ever, is that, ah, history is shaped by the human imagination, by fiction, and not just by truth, that humans control the world because we know how to cooperate better than any other animal on the planet, and cooperation relies on storytelling. That so much of the world is run on fiction, is fueled by fiction. It's most obvious in the case of religion, but even if you look at something like the economy, um, corporations, money, all of these things are stories that we invented. They did, they, they don't have an objective existence outside our imagination. I think this was the most important message of, of Sapiens. Trying to understand history as the product of the human imagination and of human fictions. And, um, it's even more true today, I would say, than it was 1015 years ago when I, when I wrote Sapiens.

AI assessment note: “the main point of Sapiens, which is as relevant today as ever, is that”

Q Isn't the book respected in the manner that it is because of the finality of the book and the fact that it is not dynamic? And when I read the book or I read an interpretation of the book, and you will, does, we read the same thing? If the book were to change...

A No, because people constantly reinterpret it. You look at Judaism or Christianity of today, Christianity of today, completely different from what they were a thousand years ago or 2000 years ago. Because as, as, as the world changes, as human relations change, people reinterpret the book, sometimes in extreme ways. You know, you read Jesus talking with people about compassion and love. If somebody slaps you, give them your, your other cheek. How did they interpret it to build the inquisition, to burn people alive, just because they didn't believe in this, in the exact same way that I believe, about the religion of love? They didn't just burn Jews and atheists, they burned other Christians. And how is it possible that, yes, you and I, we both believe in the religion of love and compassion, but because it's a little bit different, your interpretation than mine, then I will burn you, and I can find a way to base what I do on what Jesus said.

AI assessment note: “No, because people constantly reinterpret it.”

Q Interesting. Uh, your story after McKinsey, we didn't get there. How did you get to hear from there?

A I think, ah, I was a part of the cohort of branding. There was a lot of infrastructural things happening in India at that time, right? We had Jio and Airtel and Xiaomi and iPhones and Samsung putting phones and internet in people's hands. We had Amazon Flipkart, Facebook, Google giving, you know, giving us ability to, you know, market products and store them. Uh, and we had a consumer base that was truly changing because of Virat and Ranveer at that time with beards and expression, right? So masculine trends were really taking off in terms of In terms of styling. And hair removal was going from cheek to chin, and ankle to thigh waxing, and cheek to chin shaving to like, whole body hair removal. So, there was infrastructure, there was distribution, and then there was consumer, which was changing. So, for us, I think, there's a whole host of brands. So, Boat, Mama Earth, Plum, Bombay Shaving Company, all of us was a part of that. Ten-year up here. Now, all 10, 12, eight-year-old businesses today.

AI assessment note: “So, Boat, Mama Earth, Plum, Bombay Shaving Company, all of us was a part”

Q Is that because? Foreign investment and privatization was not allowed here like it was there, or what was it?

A Yeah, so much more, much more freedom for foreign capital to do what you want, and also for people to do what you want. I think that this is one of the things that for me, what does capitalism mean? And what is the difference between capitalism and other forms? For me, capitalism is about giving people as much economic freedom as possible. So Singapore was doing that. China, in fact, Had already started doing that. India was still very much a socialist country. The first sign of opening up in India happened, in fact, in the early 19 eighties. Uh, you know, people would, uh, usually associate India's opening up in 1991, right? When the big reforms took place with Narasimha Rao, Manmohan Singh. But there was also a phase in the, in the, in the eighties, when the first phase of opening up in India happened. The peak of Indian socialism was 19 seventies, when Everything was virtually controlled by the government, and then India ran into a financial crisis in the early 19 eighties, and under partly the pressure from the IMF, the India began to gradually open up, ah, but, ah, yeah, the 19 nineties was when the real opening happened, but Singapore, China were well on their way of becoming more economically free countries, and Singapore was already a big success story.

AI assessment note: “Yeah, so much more, much more freedom for foreign capital to do what you want”

Q So you started school here. Where in America?

A In Westchester County, New York, about an hour of New York at a wonderful school called Hackley School. And then I went to Brown University and studied engineering at Brown University. And then I was going to an engineering management program and I met a commodity trader, a woman in New York City who I completely fell in love with. And I had to find a job in New York City, and the only jobs available in New York City were investment banking jobs, and so that's how I got to Allen & Company that you just talked about, and I worked at Allen & Company for, I think it was like eight years or so, um, and one of my clients there was a gentleman named Barry Diller, who's this legendary, um, uh, figure in media and, and then, uh, very much And it, within the internet, and I, he was a client of mine, and I remember, like, my intention was to stay at Allen & Company forever. It is a great family-run business. Uh, really look out for your clients. You know, it's not the kind of investment bank that's looking for fees. They want to help you build a business, so I thought I was going to be there forever. But then I saw Barry, I say, if, if, if I ever get a chance to work for that guy, I'll take it in a second.

AI assessment note: “In Westchester County, New York, about an hour of New York at a wonderful school”

Q Ultimately, so much will come down to taste, right? In this world.

A Well, listen, taste, convenience, price, right? I mean, you and I may be lucky enough where taste is the overriding factor, but there may be context for you, right? If you're, um, coming to San Francisco and it's midweek, you may want a cheap, decent place close to the Uber offices, right? And that's a different context than if you are going to Go to Napa for the weekend where you want an experience either for yourself or yourself and friends or loved ones. So I do think that it's not as simple in terms of taste. It's based on the context of what the, what, what you're, um, what you're solving for, you know, your objective function. And your objective function is going to change, uh, based on the context of what the goal of that trip is.

AI assessment note: “So I do think that it's not as simple in terms of taste.”

Q Is there an arbitrage there because you're Drivers are not essentially employees. Is there a labor cost arbitrage? Because they're gig workers, they run their own cars, they don't need to be paid benefits, insurance.

A Yeah, there's, there's a trade-off there, right, which is we can't tell our drivers when and when to work, right? So imagine if Starbucks is hiring a barista, they don't go to the barista, hey, show up whenever you want to, and you know, we'll pay you however much a Starbucks barista makes per hour. So, You could call it a labor arbitrage. I, I call it a trade-off, which is the driver and the courier can decide when and where they want to work. That creates cost for us. We then have to build liquidity of, of, of supply and demand, and sometimes we will Use incentives and or algorithms. For example, surge are circumstances when, ah, when demand exceeds supply, and in those cases we have to actually raise prices for that demand in order to attract enough drivers to get out into the market to pick out, to pick up everyone, you know, arriving at seven p.m. on a Thursday night at the airport. Or, you know, when, when, uh, the Warriors, uh, game is, is done.

AI assessment note: “You could call it a labor arbitrage. I, I call it a trade-off”

Q Yeah. So what's the next big disruption here?

A It's a great question because, you know, the internet, it's going to be tough to find one that's going to be as big as the internet was a disruption to entertainment, like it was to many things. Right. Um, I think it's going to likely to be less likely to be in distribution and be in creativity. And, you know, some AI, certainly part of it, virtual production, certainly part of it, uh, the way people can create, uh, will, can take things to a whole different level than they were, you know, every, it's moving very fast too. Um, and I, I'm not afraid of AI, and I hope creators aren't afraid of AI, because I actually think it's going to make great tools to tell stories even better, and make it possible to make movies they couldn't before. Um, and I, it not meant, won't likely displace the things that humans are very particularly good at. Performance, emotion, uh, writing, all the things in the writing and the, in the performance. But things like, uh, The technology it takes to de-age an actor, those tools have moved so fast now, that first is five years, when we did The Irishman, that technology was about probably thirty million dollars of the budget was just the technology to do the de-aging, and it was very disruptive to the production cycle, you know, what actors had to put on their face and all that kind of thing, extra camera rigs, all kinds of different things. Today we can …

AI assessment note: “I think it's going to likely to be less likely to be in distribution and be in creativity.”

Q You have taken a slightly more Nuanced approach where you're not taking the very expensive broadcasting rights of a sport, but like you did on F-One, you create a documentary behind it, and it works just as well. Would you like to elaborate as to why you did that and more thoughts around that?

A Formula One is probably the best example of the theory playing out. For me, I believe that big sports, cricket in, in India, the NFL in the United States is, those leagues are so powerful. The, the consumer demand for them is so high, they should get all the money. So whoever's delivering it, it's just a distribution business. Should be very, very low margin just for distribution only. So if, if I had that game and then next week I lose it and it goes to the next person, that audience, that whole audience can go from here to here. So at the end of the day, I don't know why you would lose a lot of money on a sport because it's, you'll never get to the place where it's profitable. So, and you probably can't make enough profit on everything else that you could lose too much on that sport. So one of the tests for, for me was to what you just described with Formula One, we built this show called Drive to Survive. Formula One is very popular around the world, but weirdly unpopular in the United States. We, people didn't know the sport. They didn't know how it works. They didn't know these people. It's play, it's race, the races are in the middle of the night. So, um, it just never got popular. So we did this documentary series. What I loved about the sport and why I thought it'd make great television. It's, you know, beautiful people doing dangerous things in beautiful places. You kn…

AI assessment note: “Formula One is probably the best example of the theory playing out.”

Q kind of like tried to portray it, I think got too muddled because I don't have a clear understanding of much of this. So let's see, when you say we moved from the internet to, like, today's AI when everybody's talking about AI, what was that one thing? If you had to fixate on one thing, why is AI in twenty-twenty-five different from when people spoke about AI in twenty-ten?

A I think, ah, the biggest change from twenty-ten to twenty-twenty, or like the twenty-twenties, I would say, not just twenty-twenty-five, is, ah, this thing called neural networks actually work. And I would say the forefathers like Lacan or Hinton, Benjia, they did a lot of work to establish the foundations, but one guy single-handedly, you know, with, with, with, with, of course, with a group of amazing engineers who worked with him, truly made it work. I'd say it's, uh, Ilya Sutskiver. Um, and, and I think the magic sauce was throw a lot of data and compute at it. Uh, and now you can ask, like, oh wait, is that really all? Like, um, was it really that simple? And yes, like, honestly, yes. And I think, uh, that's where, like, it was, it, it came down to blind faith in, in doing things.

AI assessment note: “the biggest change from twenty-ten to twenty-twenty... is this thing called neural networks actually work.”

Q And he was sharing the profit, the customer?

A Uh, there was no entry for sharing the profit. So what the guy was very smartly doing was, let's say now, from the 20 rupees to 50 rupees, he's on five crores in the customer account. Now there should be a transfer from the customer account to the stockbroker's own account, that's only when he's benefited, right? And there was no such entry. What he was very smartly doing was taking intraday positions in Reliance and HDFCs of the world of five crores and 10 crores and charging insane brokers on these Trades. So let's say it's buy reliance for five crores, and within a minute, place a sell trade of five crores, and he's charging brokerage on both the sides, and that's how he's moving the money out of scratch.

AI assessment note: “there was no entry for sharing the profit. So what the guy was very smartly doing”

Q What did your dad do? I remember meeting him.

A Yeah, so, so basically my, my dad migrated to the States, I think it was 1979. And so he was part of that, I think, like initial wave of engineers pre Valley boom and, you know, pre sort of internet era and the dot-com era and He went from, I mean, the story goes, he went from Hyderabad to Iowa, which is like, I don't think you could find the more opposite, you know, environment, right? Like horn fields and 10 feet of snow and, you know, and I think it was like him and like some, like a bunch of people from Hyderabad and Punjab and like Iran, and there was like this group of like Brown people basically that showed up to become like, do double E at the time, like electrical engineering in Iowa. So he, I don't think he was a particularly good engineer, but he, um, was, was like fairly entrepreneurial in spirit. So he, He, uh, graduated, and then he moved to California, and I guess there was a lot of buzz about, like, semiconductors and things at the time, and, um, so he sort of, you know, he ended up working at this company, um, called Synopsys at one point, which is semiconductors, and got into that semiconductor space, and then that sort of, like, so he's, he's become sort of like a serial entrepreneur for the last, 30 odd years now, been in, been in the valley, and that's where I was born. So I was born in, in the heart of the valley, actually, a place called Fremont. Um, not …

AI assessment note: “he ended up working at this company, um, called Synopsys”

Q And what did computers use to do that?

A So for that, it's, it's basically what caused the emergence of what we could call classical computer science. Okay. You write a program and that program basically internally searches for a solution and has some way of checking whether the solution it, it proposes is good or not. Um, Uh, people had a name for this in the city. They call this, uh, heuristic programming, because you can't, you can never exhaustively search all solutions for a good one, because the number of solutions is ridiculously large. You know, at chess, for example, right, you, you can play a certain number of moves, but then for every move that you play, your opponent can play a certain number of moves, and then for every of those moves, you can play a certain number of moves. So you get this exponential explosion of the number of possible Trajectories, basically, or sequences of moves. And, uh, you cannot possibly explore all of them until the end of the game to figure out which move to, uh, to play first. So, so you have to use what, you know, what's called heuristics to, to basically not search the entire, uh, graph or tree of possibilities.

AI assessment note: “They call this, uh, heuristic programming, because you can't, you can never exhaustively search”