YouSaid · the spoken record

Byrne Hobart

lines on the record: 77
first: 2022-12-01
most recent: 2022-12-01
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“So you can coast on that momentum for a while. But what I think the trap you can run into is that you identify people who are like 95th percentile talent with 99th percentile just super aggressive parents. And that combination gets them to 99th percentile performance until they leave home and then they never do whatever that thing is ever again because they didn't really like it. It was just something their parents pressured them into. Now maybe the ideal would be you get 99% health on both. So the parents are putting them on this trajectory, but the parents are actually aiming a very powerful rocket ship and it's going to go right in the right direction, which is ideal. And I think there's a reasonable possibility that I think there are some level of just imprinting that young kids have where a lot of kids learn about programming when they're very young and that's something that they do from a very, very early age.”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. So I think part of what this gets to is the question of what are you optimizing for when you're doing a talent search? And I think this is maybe one reason there could be some alpha left in talent search among people who are super young is that a lot of the academic institutions that are doing some form of talent search, what they're pretty much optimizing for is how does this person do over the next year? So if someone is a math prodigy and they get to join the math team at that school, the school is not trying to optimize for will this person be proving novel theorems when they're 25. It's really, will this seven-year-old be doing algebra by the time they're eight? And that is still very tied to parental involvement, especially once parents like kids, they like structure. And if you tell them this is the appropriate next thing to do with your kid, then they're more likely to do.”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“They're laughing at me and things. Like at some point, you decide that this is actually natural talent, but for a lot of other domains, there's just so much room for parents to push one thing and do some accommodation with their kids' talent and their own emphasis to get their kids really good at it. And that's very hard to adjust for, especially because if you ask the parents, they're going to underestimate how much they overemphasize things because to them, this is just a normal thing that everyone should be interested in. And so you won't get a good signal from asking parents and then you won't get a good signal from asking other people because they don't know how this family spends time at home. And if the median family has more YouTube and Netflix time and less math practice time, that family is just going to assume it's pretty much their behavior as normal.”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“Getting back to the talent identification problem, but part of my thesis there was that it's really hard and it's getting harder that you had Y combinator going after the relatively young talent versus what the median VC was going after when YC started and then stuff like Pioneer and Emergent Ventures is going even younger and the younger you get, the more it is this luck driven thing that is about what they got exposed to, with the exception of Prodigies. I'd like to think that if I encountered an eight-year-old Mozart, I would be able to identify this person as just an extraordinary talent where like even if their parents were making them practice 10 hours a day, they couldn't be that good without talent and maybe something similar with the Polaris where, okay, if I encounter a six-year-old who can routinely beat me at chess and so I go Google some, you know, read some chess books and then go back and try to beat them again and they're actually better.”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“Your kids every day about multiplication, they will start doing multiplication at a pretty early age. And it's not that they are really, really smart and they got to multiplication a couple years early. It's that you push them in that direction and they were able to do it early. So the earlier you go, the more you are over-indexing on what the parents did, what they emphasized, and also what they told the kids was just part of the script. And there are anecdotes about this from none of the specifics come to mind, but I remember anecdotes about people who grew up in”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the closest you could get is something that is either totally illegible to the parent's status, like understanding of status or something that is actively low status. And it's hard to enumerate those and not just get swamped in, well, should this thing be low status? Is it high status? Is it actually terrible to say that you'd ever want to hire someone who was really good at X for some value of X? But I do think that So basically the origin of that point was that I was arguing that when you, if you look at people who are at some percentile and their 20s or 30s, like a lot of at a high percentile, like a lot of it has to be that they have some combination of talent and have tried really hard. There's probably been some element of luck, but over time the luck starts to wash out, hopefully. But the younger you go, and this is partly just my experience of having kids, like if you talk to”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, if the hyperfocus is like just right, perfectly calibrated, that's good, but then maybe adjusting your appearance is this way to say that you have correctly calibrated your hyper focus and you're going to get one thing right and it's going to be really, really right. Like you're going to get things right. They're going to be really, really right. And you've identified what things matter and what things don't.”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“There will be a tilt away from the piper informal founders. But I also think that if you treat that hyperinformality as either this attempt to gain the system and just say, like, I'm going to be remind people of Mark Zuckerberg circa 2005 as much as possible so they can raise money and pretend to be the next big thing. But that's one thing people are signaling. And then the other thing is they're just accidentally signaling total indifference to anything except the thing they're working on. And maybe that's a good thing, but maybe it's a good thing in unregulated domains and then a really, really bad thing in regulated domains. Like if you're investing in a medical device company, you probably don't want a founder who just cannot focus on anything except the product because there are rules they have to follow and norms and things. It gets bad if all they're focused on is this one element.”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“It's like a decent market timing signal, apparently, that if a lot of people from Harvard Business School go straight into some field, that field is probably peaking. So there's a little bit to that where the suit is some example of conformity. On the other hand, wearing a suit in Silicon Valley is an example of nonconformity. And I guess outside of New York within the US, most of the time wearing a suit as a tech company founder would be this weird sign that you're either like you don't know what you're doing, you don't know what the right signals are, or you're about to testify from Congress, and that's why you have a suit now, not generally a great sign, but maybe it is a sign that you are willing to do some more conformist things and that you can pay attention to details and the details are boring, but also that you are putting some, you're making some kind of financial investment in that particular appearance. So yeah, I would guess that there...”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I guess I would draw the distinction between the physical type of someone versus their presentation and their dress. I don't know. I'm sure someone could run some interesting numbers on that, but I don't have a good sense of what exactly they'd get from that. But in terms of how people publicly present themselves, my guess is that, yeah, there will be this swing towards investing in people who look a little bit more formal, a little bit more boring. And these things are somewhat cyclical. Like, I think part of the norm on investing in or treating, basically treating the suit as a negative signal is that a lot of investors have this view that when the MBA has come into an industry, a lot of the alpha is gone. And it is true that MBAs, at least there's”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“The normal dose of Adderall just because their boss hired me to do that specifically. I think dealers don't exactly have patient confidentiality norms. Doctors do. So maybe you hire a doctor instead of a dealer specifically to get that plausible deniability.”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I do think that just within stimulants, the difference between short acting stimulants and long-acting stimulants does mean the difference between a hostile takeover boom and a structured products boom. And then, yeah, there's, I think the drug is called MSEM or something, which is like a Parkinson's treatment. And there's some evidence from pretty small sample size studies that one of the side effects of this drug is compulsive gambling. And the drug story, there have been very, very fun tweets about this claim and then there have been these official denials from the company doctor, on the other hand. If you're a company that has a company doctor, maybe that says something about the level of medication you're consuming. And maybe the company doctor's job is partly to say, as a doctor, I can assure you, I would never give someone.”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“And we should fire these people and replace them with cheaper employees. So levering up a company and then levering up in order to buy out a bigger company and then firing everyone and shutting down the pension plan and distributing the surplus to shareholders, it is just very standard Cokehead behavior. Whereas if you look at”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“How someone would trade differently or invest differently if they had a really strong asset trip or took ecstasy or something. But the stimulants where people can just consistently reuse them. They keep people alert. They make them active and wanting to do things. It seems like stimulants would have a connection with financial markets. So yeah, that the theory is like if you look at the 1980s where a lot of, there were a lot of these hostile takeover deals where someone would find a company that's underperforming and When you look at the spreadsheets and say this company is underperforming, what you're often looking at is a story that is more like this company believes that they have this social obligation to the community where people work and that they have an obligation to give their customers a fairly priced product and maybe they give them really good customer service that doesn't really pay for itself and it's the right thing to do. Well maybe especially if you are a co-head with kind of cokehead morality, just say, well, that's not the right thing to do at all. You should actually just take the money.”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“Achieved Stronger So it was, I think saying every crash can be explained by the director taking at the time, I think it's a little far. But I do think that the impact of drugs, of new drugs on financial markets is underrated. And you have examples of this going back pretty far. There is some connection between caffeine consumption and extroversion and risk-taking. You temporarily get a little bit more willing to do deals when you have consumed caffeine. Lloyds of London before it was this insurance consortium, it was a coffee shop. It was Lloyds Coffee Shop. So you do have some history of coffee shops being associated with financial centers. And then you have to zoom forward because we just haven't had that many novel stimulants. I guess depressants, deliriums, whatever. Like other drug categories probably just don't lead to that much financial activity. I don't know.”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“Have plumbing works or how septic tanks work. Like, that's not good. That means something very, very bad happened in your house. And it could be nice to be an expert on those things. But if you suddenly became an expert, it's because somebody else wasn't doing their job. So I think you could view a trader like that where they can be very good at the finding little pricing discrepancies thing and have just no awareness of what the operation stuff is, especially because the better the operations team is, the less anyone else needs to be aware of them. So if nothing is going wrong, you never email them and then you forget they exist.”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“When prices collapse, and there's a lot of chaos going on, is that other people who would love to be trading can't trade because maybe the broker they use is suddenly insolvent and they can't get to a new broker, their money is frozen. So if you're planning to be there when everybody else is out of the market, then you have to have lots and lots of contingency plans. And it's not enough to buy lots of deep out-of-the-money put options, as Jane Street does, you also have to make sure that you're buying those options from the counterparty who will actually send you the money when you need it, or that you want to structure those things so the actual cash gets to your account at the time that it needs to be there. And that maybe is something that a prop trader should not be spending most of their time thinking about. It's one of those things where it's like, you know, if you own a house and you, like if over the last 24 hours you learned a whole lot about electrical wiring or you learned a whole lot of about”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“Possible that part of what happened was just that Jane Street has its operations people, they have their trading people, and there may have been enough siloing within that that if your job is just identify discrepancies in ETF prices and take advantage of them, you don't actually have to know things like how do we figure out which counterparties are creditworthy? How do we make sure we have enough liquidity? How do we have backup plans upon backup plans upon backup plans in case something goes wrong with our liquidity situation? part of the Jane Street model seems to be they're very very opaque but like very opaque in terms of their their trading operations but part of the model seems to be that they want to be the trader who is there and trading and making a market when everything fells apart and what that means is that like the way you make the most money in trading is when markets are insanely volatile volume is very very high and you're still trading but the reason that markets get really volatile”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“This brilliant perfectionist who can always see the future and also be just a giant asshole to everyone you meet. And I'm going to try to do both of those things. And it turns out one of those is really, really easy to do. And then one of them is really, really hard. And you have to do both to be Steve Jobs. But you can sort of give this service level impression of jobs-in-ness by just being really obnoxious to everyone. So I think some of it is that. But the other is that if you get really good at just very narrow domain specific stuff, you might miss what other stuff people have to be good at for that skill set to be valuable. And so I think thinking about his previous background where he worked at a prop trading firm and seemed to do well there. It's Jane Street. They're very, very selective in who they hire. Very hard to get in. And they're very profitable. So, you know, good to get in. It's entirely.”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. Yeah. So I think you can tell a couple stories there. Like one story, and I know I've been saying a lot, like you can tell multiple stories. There are multiple stories that fit the fact. We have lots of different weird things to explain and therefore many different weird explanations that fit them. So I think one version is, okay, he's never all that smart and decided that he could just play up this weird, eccentric genius thing. that would be able to get away with it. There are these anecdotes about how someone told him to cut his hair and he said, no, I have to look kind of crazy for this. And so that fits in. And it is kind of like an MIT thing to do that, to like play up your eccentricity because you know there are these super brilliant, very eccentric people and you can be like them. It's kind of like a lot of people they read about Steve Jobs and they're like, well, the secret to success is being”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“Keeping really close track of where your money is, where it's supposed to be, what the rules are, so that you know exactly how to break those rules. I don't think SPF, I don't think FTX was in any position to commit that kind of fraud. I think that if they tried to do something like that, they'd wire the money from an account that didn't have any money in it or something or send it to the wrong account. There are these stories about them accidentally burning a bunch of USDC by sending it to an address that didn't exist or something like that. The operational slip-ups actually make it harder for them to have committed fraud. And it's unquestionable at this point that their record keeping was very bad.”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“Out with one another. So they actually accounting frauds tend to be fairly sophisticated. They tend to really dive into edge cases. I was reading up on MF Global, which was big futures brokerage that collapsed in part because they were dipping into customer funds and making some investments they shouldn't have. They did a lot of clever and shady stuff. Like one of the things they would do is there was one point where they were transferring money at the last minute out of their customer funds in order to make margin calls. And what they would do is they would send the wire from the customer account to a different company account and they'd send it a couple minutes before the wires closed for the night. And then they would send this email right after the wires closed saying, hey, we just realized we set this transfer from broad account and get a reverse tomorrow. But that gave them at least one night of enough liquidity to survive. You can only do that kind of fraud if you are actually”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“And we actually spent it, and now it's gone. We've lost it. What would you do in that circumstance? And I think the ideal answer is, well, I'd immediately come clean and step down and commit myself to getting everyone paid back and paid whole. And I think there's also the possibility that the realistic answer is more like, well, I would scramble and try to make sure that that didn't cause the company to collapse and try to beat people back later. And so at that point, you've sort of backed your way into fraud through earlier episodes of incompetence. But I think one of the problems with the fraud story is frauds have to be good at accounting because they have to, like, you know, there's very rough schematic sense. They have to be twice as good as accounting as everybody else because not only do they have to have the real books that tell them how much money the business has and whether or not the next check they write will balance, but they have to have the fake set of books and they have to have a way to make those.”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“Some point, but I suspect the fraud actually happened pretty late if it happened, which I think there's like 80, 90% chance that there was some level of fraud versus pure incompetence. But if so, I think may have happened fairly late in the story and as kind of a last desperate move. And I think part of what drives the response to what happened with FTX and Alanita is that if you think the story is pure fraud, it's very easy to say you would never do that. Like I could say very easily. I would definitely never start a Ponzi scheme and then start another bigger Ponzi scheme to pay off the first Ponzi scheme. That's not me. That's not most people. But I think if you draw this scenario where they discover at some point, like a couple months ago or even a month ago, they realize, hey, we actually, there's a billion dollars plus that was supposed to be customer money, but we thought it was out.”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“That is systemically important in crypto and then having that company completely vaporize over the course of a couple days. Really, really bad and worth understanding what happened, but it's partly worth understanding what happened because there are just different solutions that present themselves depending on what you think the story is. Like if the story is fraud, it's actually a lot harder to solve because there are just a lot of people who are willing and able to commit fraud and to lie. If the story is bad accounting, then that's actually a lot more solvable because then you could say things like the solution is make sure you never invest in a crypto exchange that doesn't have a real auditor and make sure that they have their proof of reserves calculation and it's happening consistently and that you can audit that. There are different solution sets and then I think the actual story is going to be somewhere in the middle of extreme risk tolerance plus extremely poor accounting plus fraud and”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“Maximally exculatory version, which actually is still really bad, is Alameda was a real company. They really made money trading. They took tons of risks. And SBF has talked about why he thinks that's a good thing, that FTX cuts some corners when they were raising money and that they had really bad internal accounting and that basically the extended entity of Alameda and FTX sort of lost track of whose money was where and ended up with Alameda spending FTX customer money, which I think is like one way to look at that is like if you think, okay, fraud is like twice as bad as just incompetently losing money, well, it's not as if we had a $4 billion fraud instead of an $8 billion fraud, everyone would be like, well, that's fine. That's normal. Like, why are you giving Sky a hard time? Like, it's bad no matter what. Running a big company.”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I think the first thing to say is that there's a lot we don't know. There's a lot we may never know because so many of the decisions that FTX were made through self auto deleting encrypted chat. So there are some holes we will never be able to fill in. The lack of accounting is also going to make it tough. Basically, I think you can tell a bunch of different stories here. The really obvious one is fraud and you can debate over exactly when it started. One version of the story, which is getting some currency, is that SBF had this entity Alameda, and it was supposed to be this really hot crypto trading fund, but maybe it was a Ponzi scheme all along. And then maybe at some point that Ponzi scheme started to run short on cash, so we decided to start an exchange, and the exchange got more cash, and then he used the cash to pay off previous investors, whatever. I think that's one version. And then kind of the”
2022-12-01 · Dwarkesh Podcast · Byrne Hobart - FTX, Drugs, Twitter, Taiwan, & Monasticism · IDENTIFIED FROM THE TRANSCRIPT · source