YouSaid · the spoken record

Agustin Lebron

lines on the record: 64
first: 2022-06-23
most recent: 2022-06-23
sittings or episodes: 1
sources: podcast

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“Well, I mean, selfishly, I want to ask you, Dorkesh tell me about what you're doing, what is this that you're building here?”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. So, yeah, it's Augustine LeBron 3. I don't know why three, but that's what it is. I mostly talk about trading, sometimes talk about software, sometimes talk about random things in the world. I'm not much of a social media guy. In fact, if it hadn't been for the book, I would still be a social media non existent person. But I've kind of gravitated towards Twitter. It's where I end up having interesting conversations.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's a good question. I think it probably varies by person. Like, if you are destined or have the capacity to be a world-changing physicist, then probably you don't do any of the sequential weirdness. You just kind of go down that road. But maybe I'm going to. And then there's the revolutionary type there's like Albert Einstein, there's the Claude Shannon, these sorts of people where it's like, I'm just going to invent a whole new field, right? And so actually, Claude Shannon is kind of an informative case because he famously just basically played games all day and just thought about random things and kind of tried to have as broad an exposure to things as he could. I mean, rode unicycles and that sort of thing. you know maybe maybe like you need to be a little bit self-aware about kind of which of the two you might you might be”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Of sequential excellence, I think, is a thing that I like to think about a lot because you have the time, right? Like spend five years being a front-end developer and get just incredibly good at that. And then go do something else. Maybe it's not programming. Maybe it's something else, right? And maybe come back to it, right? And you'll have this other perspective. That's kind of my thought.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I would say number one thing I always tell my kids this all the time life is long. Like life is not short. Life is long. And what that means is you should think of yourself as having many opportunities to learn things and try things and do things. And so again, this is just my own experience, but I feel like I'm sort of sequentially obsessive. Like I will sort of block off six years of my life, it turns out. Like empirically, this is what has happened to get really, really good at a thing. And then like, okay, next six to seven year period. I'm going to try to get really, really, really good at another thing that is kind of different. And that's worked out for me because it's easy to undervalue the importance of deep, deep, deep expertise in a thing and the process that is required to get really, really good at something. And so this idea of”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Deepness in the sky. A deepness in the sky by Werner Vinch. If you're a software engineer and you like science fiction, read it with the eye towards thinking of it as a software book. A thing I would say. If you want to think about kind of risk taking in general, Aaron Brown's red-blooded risk is, I'm trying to think of books that probably people haven't heard of. Red-blooded risk by Aaron Brown is really, really, really good. In fact, all of his books are really good. The thing that got me interested in finance was reading his book, The Poker Face of Wall Street, because I was playing poker at the time. And that's kind of like, eh, maybe Wall Street, maybe that's a thing. So the poker face of Wall Street by Aaron Brown or the Red Blooded Risk. And one that's kind of off the wall a little bit is it's called Kalima Stories by Varlam Shalamov. And it is a collection of stories about people who sort of lived in the gulag in Siberia during sort of Stalinist times. I think it is possibly the most revealing book about human nature that I've ever read. It's depressing.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“I think to the extent that crypto is breaking the oligopoly of a few large financial participants in the market today. I mean, I don't know if you followed the saga of the CFTC review of FTX's proposal to do sort of a different kind of futures margining process on actual real futures. I think this is a good thing. There's a lot of vested interest and entrenched interest that are kind of getting their bell rung. And that's a good thing. So that's kind of the direction that I would take it. Sort of the financial infrastructure or the plumbing of finance is probably going to be sort of cryptoified. That doesn't mean it's all going on chain. I think all the blockchain is is a very slow, weird database, but it is a very slow weird database that has some useful properties in some situations.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I'm going to leave the financial markets to last. I think Western Union is out of business. It's probably a good outcome. Like, it's probably good. All those stupid Thomas Cook money exchange in the airport things are out of business. Like, that's probably good. If only that happens, I think we're already in good shape. Certainly the idea of NFTs as transferable signals of facts about you or facts about whatever persona or avatar you want to have, I think it's pretty exciting. Like the idea that I have to like call my university and get a transcript from them and stuff, like that seems insane to me. How some of these kind of credentialing systems can work with NFTs strikes me as a fairly natural thing.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“The other thing about crypto people always, especially people from Jane Street, like whenever I meet them again and say, hey, how's it going? Almost the first question they ask me when they find out what I'm doing is like, so what? Like, are you all laser eyes now? Like, what's your deal? And I think by crypto standards, I think I'm very non-laserized in the sense that this is probably going to be an unpopular opinion within the crypto world, but I think success for crypto definitely looks like integration into the financial system. Like it just, it's not like it's going to replace it. It's not going to be like, oh, Goldman and Chase are going to go to zero and Coinbase is going to crush it. That's not what it looks like. Success for crypto looks like traditional finance integrates, takes the best ideas, and crypto companies are incredibly successful in that process. But we end up with something that's kind of a hybrid of the best of both. Like, I think that's success.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I think the thing about crypto that I like is to the extent that you believe in this somewhat stagnationist theory that, look, whether it's through regulation or just cultural changes or whatever, that we're not doing bold new, exciting, weird things, the extent to which crypto is a shelling point around which everybody has decided, look, all of the crazy weird stuff that we want to try, we're going to do it here. I like that. I think that that is a very good thing for the world. And I'm not saying this is going to be the case, but if all of crypto goes to zero and all that's happened is we've had a large wealth transfer from the rich olds to the young people who want to build cool stuff, that's still good for the world, you know, like I think it's going to be more than that. I think there's a lot of interesting, exciting things that are going to come out of the crypto world. But, you know, we get at least that, right? Like a coordination around.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“With their money in the S&P. I think the difference there is passive investing is at least, again, over a long haul, you are providing risk capital to companies that are hopefully sources of discounted future profits, right? And so there's a reason that you might expect that to make money for you. Whereas when you're trading either FX or something that doesn't earn yield from like actually providing value to the world, then no, you probably shouldn't expect to make money by passively investing in that.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't see how it makes sense for somebody to just throw some money in a pool and expect to get sort of outsized returns by just doing nothing, right? Like outsized returns come from you knowing how to do something or being able to do something nobody else does, right? And so just it doesn't strike me as an exciting thing very long term.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, so I think the thing I would argue is, and perhaps you've seen this paper from last fall that shows that at least half of liquidity providers on Uniswap V2 lose money. They just lose money. And that's on priors, what you would expect, right? Like, let's say that there was no fee on Uniswap, right? Like liquidity providers just toss their money in, then liquidity providers are systematically getting address selected against by every trade that happens, right? And so the fee that you collect as a liquidity provider is a compensation for the adverse election that you are undertaking by being a liquidity provider. But of course, that fee is sort of set by fiat, right? Like it's either the 5-bit pool or the 30-bit pool or whatever. It is not adaptive to market conditions, right? And so I am personally long-term skeptical about CFMMs as a market mechanism that is going to work. I just, I don't see how...”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“And so James 3 provides them the service of being able to sell them that ETF. And then James Red takes care of all the little details, right? That's the thing that JaneStreet is really good at. And so there's gains from trade there. It's not zero-sum in that sense”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“The answer is no, and I'm pretty sure the answer is no. And the reason is because, again, getting back to this idea that Jane Street provides a service to the world, right? Like, so who are they? Jane Street doesn't want to trade against other market makers and other market makers don't want to trade against JaneStreet because they're in the same business and they know like that's not who they're going to make their money from who they're going to make their money from is people who need the service that Jane Street provides. So for example like if I am a pension fund or if I'm a large hedge fund or something and I want to put on a bet in some random country, maybe I should just buy that country ZTF right it's certainly a lot easier more straightforward convenient to just buy the ETF than to go to that country's stock market and buy all the individual stocks right and so that's not a thing that they're an expert in right like they're not an expert in trading Vietnam stocks right they're just an expert in making these macro bets let's just say right”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“I think there actually are. If I remember correctly, and maybe this is something I read maybe a year ago, the average startup founder is actually significantly older than sort of the popular conception. It's just that the young flashy startup founder gets all the press, right? And perhaps rightly so. I'm not besmirching, you know, the young founder's press, but I think there's a lot of people kind of just doing it possibly with similar backgrounds to mine. I think it works”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Lot of that stuff was to the people I was talking to. And so now, yeah, like hopefully bringing all of those experiences to the table in this new startup that I'm doing, I'm optimistic that that'll occur again.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I think if there's one constant for me, it's I am surprised by how much my previous careers inform my next careers. Like when I wanted to move from engineering to trading, it did continually surprise me how useful the engineering training as opposed to just kind of like hopefully being just generally smart and being able to figure things out. Like the actual engineering training was useful. And then coming back to the consulting with companies, again, really surprising how, like I expected that, you know, when we were doing kind of the management and hiring consulting, that it would be about the Nuts and Bolts of, okay, well, what does a good hiring process look like? What kind of interview questions do you want to build? How do we evaluate them, et cetera, et cetera? And there's a component of that, but all of the other trading stuff, like how to think about the market for candidates and that sort of thing. Like it surprised me how non-obvious.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“So, need is probably a hair strong, but certainly the culture that I want to build is one where it's almost need. Like it's almost like want, right? Like I would want to hire somebody. I want to hire somebody for whom understanding the problem domain deeply is a critical part of the job they feel they're doing. And so is it possible to build something like this another way? Probably, but that's not the company I want to build.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Hire really, really good people, honestly. Like, don't skimp on those first few employees is, I think, a really important thing. Where the bar is kind of, like the bar is kind of weird. Like, it's not like there's sort of one total ordering over a quality of engineer, right? There's like, they're incredibly multivariate. But certainly one really, really good, thoughtful engineer who can build correct code is worth for not so thoughtful people in a spot like that. And so that's kind of the thing we're optimizing for right now.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Exercise in sociology, like in organizing teams and in creating processes and culture and conventions around the building of software, like software development is fundamentally the management of complexity. Like the science of managing complexity, because it is incredibly complex, right? And so all that sociological stuff ends up being some of the most important stuff to think about.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so as you said, Jane Street uses OCAML. I think one of the biggest advantages of using that language is it is strongly and statically typed. And so you can put a lot of things like you can use the type system to make impossible states unrepresentable. This is like a really good software engineering thing you should do. And it makes it sort of very easy and enrichment to do that in. And so this like, oh, I didn't know I had to handle this explode problem is kind of minimized. But yeah, like, you know, Jane Street and companies like it obviously optimize for avoiding hot loops in code that incinerate money really, really fast. And that is not what your average whatever SaaS startup optimizes for. Or it shouldn't be anyway. But the thing I keep coming back to in talking to technology leaders and that sort of thing is software development is fundamentally an”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, exactly. In fact, I would say probably the best book I have ever read about software development is actually science fiction. Werner Vinch, A Deepness in the Sky, I feel like is very crucially about, like it sort of takes this idea, like, what if we've been building on the same software stack for 6,000 years? What does that look like? Like, what does that world look like? I think it teaches us a lot about how to think about large software projects, large long-term software projects.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Thousands of software engineers like what do they do all day and he said to me like look I don't actually know for a fact but I'm pretty sure the vast majority of them are like well this library is deprecated we need to upgrade this thing let's change like all this like code and all these different little places right so like there's just sort of like a like a like a sort of an archaeology of software that occurs where where you know if you build if you've been building a software piece of software for like 20 some odd years like there's just all this cruft in there that you're just continually trying to maintain so that it's functional as you go from you know this os to this other os to the cloud to whatever right um so i think that's that's kind of uh like an accumulated debt that large companies certainly have”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, certainly startups is the classic example and it's non-recourse debt, right? Like if it goes belly up, like you don't have to pay it back, right? You're done. So yeah, like startups should definitely do this. And you see it all the time, right? This concept of an MVP where let's just get something out there. Let's get some feedback from the users with the understanding that hopefully with the understanding that you're going to have to essentially rewrite it from scratch if it's successful. I think it's a very useful and very, very productive way to do software startups because yeah like the implied interest rate that you're willing to pay is incredibly high. Larger companies, it's interesting. Like if you ask yourself, this is kind of a conversation I had with one of my good friends who I actually didn't consulting with, he worked at Qualcomm for a lot of years and I asked him because he worked very closely with Microsoft like Microsoft employs tens of”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and look, the cross-pollination goes both ways. But yeah, the idea of you being an agent in the world you're trying to study is fundamental in trading. And it makes it so much more And okay, that's great. Like, let's say you've figured out something that predicts the price movement 55% of the time. Like, that thing can still actually lose a lot of money in production because of the, again, so there's the adverse selection effect of you're only going to do a small fraction of the good trades and you're going to do all the bad trades you want. But also if you are actually making money at it, this is like a big shining signal to the rest of the world. Like, hey, there's money over here. Why don't you compete it away? And so, yeah. That's definitely a huge component of it.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“EA person thinks about things rationally and just enjoys the process of kind of this collegiality and working with people and thinking interesting thoughts together. Jane Street's going to be a very natural fit for you. And I think maybe that's some of it too.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's a great question. I think maybe at two levels one is the idea of being very rational and not fooling yourself and to use a Yudkowski term, just shut up and multiply. Like I think that that is a thing that is very common, I think, in the two circles, or at least probably it should be. try to really understand the real world and it matters to do so and doing so using kind of rational mathematical, logical approaches. I think that there's a lot of overlap just inherently there. But I think you could say that about any number of finance, Wall Street, whatever trading firms. I think the one thing that Jane Street has going for it differentially from those other firms maybe is a culture of collegiality. I think that's kind of an important thing that Jane Street has developed over the years and continues, I think, to have. And so I think there's a lot of overlap there. Like it's the kind of place that if you are an”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“So there's a couple things that I might say. One is the concept of sample efficiency. These things are incredibly sample inefficient in a way that the way the humans learn are not. And so there's something fundamental there that we're not getting, right? And the thing that I think we're not getting is the things that our brains have, which are structures for semantic understanding. To the extent that these large language models have semantic understanding, it's kind of by accident, right? It's just like it's the clever Hans thing, right? It's just like a super clever Hans. And it's super impressive. And I'm not criticizing the models. Like they're incredibly impressive. But it's still a clever Hans thing. And so there surely must be a better architecture out there, much like our brains have these sort of architectures that sort of specialize in certain things that give these machines like semantic understanding.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Where, like, it used to be kind of all human power and a little bit of machine power, where you had kind of this big central, like, why did factories in the 19th century and early 20th century, why were they kind of tall and thin? Well, it's because they had one steam plant and they had like all these belts and stuff to like use the power from that one steam plant, right? And then like electric motors happen. It's like, okay, now factories are horizontal, right? But over time, the trend is for it to be sort of less human power and more machine power. And I think the analogy is perfect. I think AI over time is going to take more and more of that sort of cognitive load from the human. That seems inevitable to me.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“If you ask a reasonably aware person what AI means, probably today in 2022, 90% of people are going to say, oh, we're talking about large language models. Of course, that's what AI is, right? And so it's a question like, is GPTN going to be a significant force in markets? Like, I'm honestly kind of skeptical about that. I don't know that the, let's just keep making larger transformers is the way that we're going to get to AI, but that's my personal parochial opinion. But if we think of AI more broadly as slowly but surely increasing the range of things that things that machines can do that humans can do, like the more we sort of creep into the things that humans can do that machines can do as well, then yeah, then like the human part is going to slowly start to get disappeared away. I think the natural analogy is what happened in the 20th century with manufacturers.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I would say it's already getting and gotten more efficient. When my former boss started, the idea of an options market maker having 10 stocks that they were market makers in was like, that was kind of the limit, right? When I was doing it, we could handle like 100 stocks, right? Market making in 100 stocks. Again, technologists made everything more efficient or more efficient in human time. That will continue. You can sort of set up things where I'm looking at some data and I can run a bunch of different models and just select the good ones and make sure that I'm not overfitting because I have all these overfitting predictions. This is all stuff that you can do now that maybe you couldn't do 20 years ago. That will definitely happen. I think when people talk about AI and trading, I think it's very hard to like we have to define terms. I think that's the hard part is defining terms when we talk about AI. Because if we talk about”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so the thing about finance or like market making, trading in general is it's very labor intensive, right? So you should think of it almost like the value of a seat or the value of a person's time. And so are there going to be going? So, I think those will always kind of be there.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“To be more consolidation that seems unlikely to stop just because you sort of gain the benefits of the economies of scale just kind of keep going up. But then again, you have sort of new things that come up like crypto and that sort of thing where it's the Wild West right now and there's going to be like a big consolidation over the next 10 years. I think that's the natural arc of things.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“So I think to the extent that Jane Street and companies like it provide a service to the world, and I really do think they provide a service to the world, then they're going to be around and they're going to be profitable. Now, are they going to gain, like we'll call them excess returns? Even that's not so obvious because the thing about trading firms is, especially market makers and that sort of thing, like most of the time the business is pretty good if you're really good at it. But sometimes it's really good. Like when there's lots of market volatility and that sort of thing, but that's precisely because you are the person, you are the entity that is willing to take the risks that nobody else is willing to take. And to the extent that we're going to still continue to have volatility in terms of either like market volatility or economic downturns or whatever, there's always going to be a service that these companies are going to provide. Now, over the long run, I feel like probably there's going to be”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“And certainly the other thing about it is like Lot of the regulations, especially around capital requirements for banks, are incredibly baroque and they feel like job Ponzis a lot of the time. Like we need to figure out a way to employ all these people and like, okay, we're just going to create Basel III. And that's going to be an extra thousand employees for every large bank in the world. That's probably kind of a deadweight loss, but doing things more simply doesn't seem like it's going to get you sort of the stability outcomes you want. And so, yeah, it's just, I feel like it's just kind of poor trade-offs all around.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“That's also a tough one. And it's not that I haven't thought a lot about these. It's just I feel like I don't have a great answer. Like at the margin, what would I? Like if you sort of made me regulator of the world, like at the margin, what would I do? There are some things that I would regulate more. And this is probably going to be a very unpopular opinion among my financial friends. But I think leveraged DTF should be banned from retail trading. Like I think they're just kind of a bad instrument. In particular, like all the volatility products. So I feel like that should probably be regulated some more. But at the same time, this sort of qualified investor status thing that people are driving a truck through, like that seems weird. Like, should there be, should we just eliminate the qualified investor status and let people invest in whatever they want? Or should we make it even more restrictive? I'm not sure about that one.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Perverse thing where the people most like the most well informed people that people really could or should be making these decisions about like is this a legitimate thing we should be doing are biased towards thinking like yeah you know what this is probably a good thing to be doing or there's value to this and so It's hard to sort of disentangle the experience and the biases that that experience sort of gives you.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“I go back and forth on this question. I really do. Because kind of when you see it from the inside, a lot of it is zero-sum competition. And it feels like, come on, there's got to be a more efficient way to do this. But at the same time, kind of outside view, we haven't come up with a more efficient way to do this. And it's hard to argue with GDP growth. And so I kind of go back and forth on it. Certainly. I think the other thing about it is there's two countervailing forces. You can sort of be inside something and be really, really familiar with it. And just the act of being very, very familiar with something just gives it legitimacy kind of automatically. But at the same time, if you look at something from afar, you're like, oh, that's ridiculous, right? Like that's not a thing that should exist, right? And so it's the sort of.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I think it's a balance. Certainly, I don't think that, again, it depends on how big the reference class is. Certainly, I have never done any trading that looks like look at a balance sheet and an income statement and listen to an earnings call and make a bet on that. Like that's sort of fundamental trading. I have never done any of that. And I think it would be a pretty big mistake to put me in that situation. But within, we'll say that the well-defined realm of quantitative trading. I think a lot of the same skill sets apply in different markets like you're kind of bringing the same skill set to different markets and having that experience of going around and looking at different kinds of markets and how they work informs like you think about things and gives you that wider vision that I think makes you a better trader. So yeah, I think it's a balance.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“You see, like, give me like, I'll give you a perfect example here in San Diego where startups in San Diego tech companies in San Diego love to hire intuitive employees that have two to three years experience because intuitives a bunch of people and they train them and they train them pretty well and then like they get poached but of course like nobody really actually thinks about the idea that like intuit knows who the good and the bad are after two years and like you're not seeing”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Should be investing in training your people. You also get the benefit of training them exactly the way you want. And if you put in that work and you think carefully about what it is that people are coming to work to do for you day to day, probably they're not going to leave, right? Like if you give them a reason to not leave, they're probably not going to leave. Switching jobs is incredibly costly and risky. People don't go out of their way to do so. Like you're kind of getting the inertia working in your favor anyway. So like, let's work on these things.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I think one of the things I always tell companies is go more junior. Like if you look at the salary of somebody who just comes out of school, and I'm not talking about somebody who just came out of Stanford, I'm talking about somebody who just came out of like a reasonable CS program, right? And you look at their salary three years later, like it could be almost double sometimes, right? It's just a crazy, crazy jump. And that is kind of unjustified. I mean, you can sort of see the argument for it, but it's just like there's definitely a kink at the two to three year point because every startup or i mean every tech company seems to want to have two years of experience and a lot of it is because companies just don't want to or can't see themselves investing in the training of those first two years and if they do they tell themselves well they're just going to leave after two years to go for a higher paying job somewhere else but I think those are terrible answers by and large to the problem like you”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Need one or two like 90th percentile people, and I should evaluate for and in particular pay for that. And then the rest, I should try to hire a kind of 40th percentile people and, you know, put them in situations where they can be effective. That's a much, much more cost-effective way and more stable way to build a company. But nobody wants to hear that. Nobody wants to build a company like that.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, so I think this is the thing about companies again, there's a lot of schizophrenia and tech hiring. One of the things that's clear is everybody says they want to hire A players, but only a small fraction kind of by definition can hire those sort of high percentage or high percentile kinds of people. And so what ends up happening is a lot of startups have the failure mode where they try to build these incredibly selective processes. But the people who they really, really want are never going to accept their offers. They're going to go somewhere sort of more high status or more high paying in particular. And so you try to select for like an 80th percentile person, but you end up selecting like a set of 50th percentile person people who look like 80th percentile people, which is really, really bad. And so what you should actually do as a startup is be very clear-eyed and say, look, if I have a team of 10, I probably...”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Really, really hard training and experience to ask these sorts of questions in a way that gets you the signal you want. But I think that's a big part of it. The extent to which you view your job as vocational is the extent to which you're going to hate those brain teasers, right? Like, so if I'm a programmer and I want my job to be, I'm just going to write code all day and sit down and just write code, then you're not going to like those brain teasers because you don't think of them as part of your job. Whereas if you think of your job as a programmer as somewhat more expansive in the sense of like, well, I'm here to really think about hard problems and I happen to implement them in code, then maybe you're going to think of the brain teasers as more correlated to the thing you want to be doing. So again, select for what you like.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Way to measure exactly. So, this is the thing, right? The dirty secret of all of this stuff is that explicitly testing for IQ is illegal in the United States as an employment practice. However, you can kind of drive a truck through it because companies do. Like, for example, Wonderlick is a company. Maybe people have heard of Wonderlick because it's the test they give quarterbacks in the NFL. Wonderlick is a company that is dedicated, for example, to building employment testing that is essentially IQ testing but has the, you know, whether it's a fig leaf or actually legitimate justification that as long as you can show that it is important for job performance, then you can kind of do the testing, right? And so essentially, I feel like a lot of these brain teaser type questions are, as you say, IQ tests disguised. I think oftentimes they are badly misapplied by the interviewers. I think it takes actually a lot of”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Getting really, really good at evaluating your interviewers, I think, is an undervalued skill. Not so much because you want to tell like, are they good or not? But it's more like, are they a good fit for me? Is this company a good fit for me? And the best signal of whether the company is a good fit for you is who the people are that are interviewing you and what do they ask you to do. If a company is at all sensible, what they ask you to do in the interview is highly correlated to what you do in the job. And so that's kind of maybe like a baseline. Don't adverse select yourself by just kind of being like, meh, yeah, I think this will probably work out or perhaps more importantly, this is a high status company. I am told that it is a high status company and that letting that override your personal understanding of what the experience was. I think that happens very, very frequently. So once you get past that, then you're probably in good shape already. And at that point, I think it just comes down to, you know, putting yourself in the”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, certainly, I think in the car insurance situation, I am fairly sure there are now car insurances that essentially put an accelerometer and a GPS on your car, and they essentially monitor how safely you drive or whatever, how jerkily you drive probably. And I imagine that you can sort of decrease your adverse election by taking advantage of those kinds of things. In the case of the employment thing, that's a tougher one. At some level,”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I think one of the things that maybe isn't terribly polite to talk about, but I think is critical, is just G, intelligence. It strongly predicts outcomes across jobs, across industries. And so that is some element of it. That is certainly some element of it. But also I would say I think in an ideal world, you would build this process, the selection process kind of like a game, like maybe like a mobile game or something where you're sort of people are sort of incentivized to kind of keep trying at stuff and maybe it's a little bit of a grind. And again, you're sort of selecting for that hardworkingness, stick to whatever you want to call it, to use a principal skinner term. And so, yeah, like some combination of those two things, I think are pretty, or almost definitely predictive of actual value.”
2022-06-23 · Dwarkesh Podcast · Agustin Lebron - Trading, Crypto, and Adverse Selection · IDENTIFIED FROM THE TRANSCRIPT · source