Nate Silver on the Art of Risking Everything
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From the Free Press, this is Honestly. I'm Michael Moynihan. Most humans are cautious by nature. We naturally like to do what's comfortable and safe. But comfortable and safe usually don't lead to, well, success. In fact, the most successful people in the world share something in common: they love risk. That's true of the best poker players, hedge fund managers, venture capitalists, and crypto traders. All of these people consider statistics, they embrace uncertainty,

and they make bold predictions that ultimately pay off for themselves, and sometimes for humanity. So how do they do it? My guest today, Nate Silver, has a theory on what drives them, how they think, and how they achieve enormous success, or, at times, catastrophic failure. He just wrote an entire book about it, On the Edge, The Art of Risking Everything.

It analyzes these types of people and the principles that guide their risky decision-making, which he argues is key to understanding what drives technology and the global economy. Nate, one of the most sophisticated thinkers on risk and uncertainty, is a statistician, sports analyst, professional poker player, and the founder of FiveThirtyEight, a website that revolutionized political reporting with its data-driven election predictions. Today, Nate and I discuss why it's important to take more risks.

and how he sees this election playing out. If you hear statistics and data and probability and analytics and roll your eyes, I get it. But this is a conversation that goes beyond all that. Nate tells me what frustrates him about his critics, why he's happy to no longer be affiliated with FiveThirtyEight, and how his biggest passion, poker, helped him become one of the world's most famous prognosticators. A quick break, and then we'll be right back with Nate Silver. Stay with us. This show is brought to you by What Could Go Right?

With the constant stream of doom and gloom headlines, it's easy to see how the news is making us feel like we're on the brink of disaster. But what if we're not?

If you're looking for a show that questions the status quo, then I recommend What Could Go Right, a podcast hosted by Zachary Karabell, commentator at The Wall Street Journal, and Emma Varvalukas. Every week, What Could Go Right brings on expert guests to discuss the world's most pressing issues without resorting to pessimism or despair. They're engaging in important conversations that are often left out of the mainstream media.

What Could Go Right comes out on Wednesdays, and each week you might hear from, say, Harvard professor Noah Feldman on what it means to be a modern Jew, political writer Oshan Jaro on the future of legalized psychedelics, or my friend and Pulitzer Prize-winning opinion columnist Brett Stevens on civic culture and political parties. And on Fridays, What Could Go Right highlights the latest progress report from across the globe, from repairs in the ozone layer to life-changing medical advancements.

If you're looking for a weekly dose of optimistic ideas from smart people and a little bit of good news, check out What Could Go Right wherever you get your podcasts.

Hi, Honestly listeners. This episode is brought to you by A Fine Mess, the new podcast produced by our friends at Evoke Media. If you're looking for another podcast that tackles thought-provoking topics with some of the world's most fascinating people, then check out A Fine Mess. Each week, philanthropist and venture capitalist Sabrina Miraj Naeem interviews a range of experts on topics ranging from geopolitics to AI to gender to 2024.

Sabrina and her guests tackle these naughty issues of curiosity instead of dread, which going into this election cycle is saying a lot. On A Fine Mess, you'll hear from forward-thinking leaders like Colorado Senator John Hickenlooper on the lessons he learned from 10 years of cannabis legislation, or Stanford University lecturer Matt Abrahams on how to handle divisive political conversations.

A Fine Mess is a great podcast companion to Honestly, so don't miss out. Listen to A Fine Mess available every Monday wherever you get your podcasts and tell them Barry sent you. Now, back to the show. Nate Silver, welcome to Honestly. Thank you for having me.

There's so much going on in the world of politics. Obviously, I mean, you were quite vocal in saying that you thought Joe Biden, if the Democrats wanted to win, should jettison him as a candidate. Kamala Harris is now in the race. The polling has kind of swung in the other direction. When I think about polling, and most people do, if you're in this game, you think of Nate Silver.

So what is the polling telling you now? What is your model telling you now? So our model has the election at basically 50-50, which is very different than Biden. When Biden dropped out, the model had him with about a 25% chance of winning, I think 26.7% or something to be more precise. And I think that was probably an optimistic case because the model is trained based on past data.

And you haven't had a lot of past candidates who were incapable of doing a press conference without everybody cringing, who was risking having his fundraising totally dry up, right? Who had another debate to survive against Trump. And so I think the real numbers, if I were betting on it, might have been 10% or something. And so to have 50% all of a sudden, and so far she's had momentum that doesn't always sustain itself, but to go from kind of almost being dead in the water to having this

coin flip for the future of everything, I guess feels good by comparison. She's turned around the fortunes of the Democrats in a pretty significant way. I was at a dinner party the other night and somebody said to me, I said, I'm going to talk to Nate Silver. And we had a really interesting conversation. And the thing that you have heard 400,000 times

And you're going to hear it again, I apologize, that oh, in 2016, he got it all wrong. And so I went back and looked at that and I said, well, at the table on my phone, I said, I don't know if you understand how this works. I mean, 29% was that what it was? I mean, that is not 0%. 28.7, I think I've burned in my memory banks, right? And as you point out, and you pointed out in your book, etc.,

The Huffington Post model said 0%. Less than 1%. Or 1% or something. People really misunderstand what you do. Oftentimes they think you do polls yourself. You have a model that aggregates a lot of this data. What do people misunderstand about polling? Because I hear it so often, like, oh, I don't trust the polls. I mean, there are a lot of misconceptions about polling, but part of the reason to have a forecast that's probabilistic like ours is it accounts for

for how wrong the polls might be, right? In 2016, Hillary Clinton was slightly ahead in the polls, but only slightly, that even a minor polling error would be enough for Trump to win. Contrast that with 2020, when Biden has leads of five, six, seven points in some of these polls and eight points nationally. And by the way, in 2020, the polls were actually worse

than in 2016. They missed by a bigger amount, but because Biden had a bigger lead, he was safer. And so we just had a close call, a scare instead of losing. So that's one part of the answer. The other part is I think of this like a gambler. I mean, that's what the book is about. And before I ever made an election forecast, I played poker and built

probabilistic models to forecast baseball players and other sports. And in that world, if you are higher than the consensus, that's what matters, right? The fact that the consensus betting odds were that Trump was about 15% and we were at 30 means that if you were a gambler, you would make a really large bet on Trump, actually, because you're getting paid out at six to one and you're going to win that bet one out of every three or four times. So it's what we call positive expected value. So for me,

It wasn't just, oh, 30% chances happen, although they do. It was a good forecast that would have made you money. Part of the reason why I decided this year to put the model behind a paywall at the Substack Silver Bulletin is because I kind of want that self-selected audience that understands how I think and understands how probabilities work, quote unquote. Of course, the forecast leaks out from behind the paywall, but I don't think that

this election forecasting was ever meant to be this big mass market product where I used to be associated with ABC News. It's as mass market as it gets, right? It's a 70 year old watching cable news or not cable news, I guess network news even. You were owned by Disney.

Yeah, it's the largest media company in the world. And I like being back and being independent again a lot better. And the economics of it are a lot better, frankly, too, because we're capturing the audience that like actually looks at the world in this way. And we don't have to dance around. It's you don't have to be afraid of a percentage. Right. Sometimes that

less than 50% outcome is going to happen. In some ways, I'd be very happy if the election is 50-50 on election day still, because then I can be like, okay, whatever, flip a coin, go ahead. But unfortunately, in real life, we usually get into like a 75-25 zone with most things. It's not zero or 50 or 100. And I have no idea whether that would be a Trump rebound or a further Harris momentum. I mean, it's not like exactly going on a limb to suggest that it's going to come down to tens of thousands of votes in a handful of three or four or five states that has a

the past two times, but I think people are kind of gradually learning that. And I think when you issue a forecast, it's in the context of a campaign that people have strong emotional feelings about.

If you are forecasting a football game, people kind of intuitively understand that sometimes a ball deflects off the receiver's hand into a defender and it's a pick six, an interception. And there's some element of bad luck there, right? People don't like to think about politics that way, but like there've already been several instances of what you might call luck in this election, where the fact that there's an assassination attempt against

former President Trump, and he turns his head to look at a billboard of immigration data and therefore just has his ear grazed instead of averting something much worse, obviously. Or the fact that the Biden campaign delusionally thinks that he'll do well in a debate and want to move a debate forward for the timetable. And instead he does so badly, a cataclysmic sequence is triggered where he has to drop out of the race

which substantially increases Democrats' chances. Or the butterfly ballot in Florida in 2000. You can get in these long philosophical debates about, is it metaphysically uncertain? I don't know. But we definitely don't have all the answers. And probabilities are supposed to be a way to be humble, actually, about that. And when you put numbers on something, people instead being, oh, he's very certain of something. And I'm just trying to

quantify how uncertain I am. The model is based on polling errors dating all the way back to 1936. So there's like the Dewey versus Truman example. The model knows about how far off the polls were that year, for example. So you're never going to get to 98-2 in an election like this. I mean, and people, how they react to these things are very tribal. I mean, if Nate Silver says...

Joe Biden should resign or step down from running or that if Kamala Harris is not looking great in the polls, people will attack you as being partisan. Unlike, you know, betting. I mean, if you think your favorite team is going to lose and you're going to make money, you bet against them. That's a normal instinct, but less so here. I mean, there's a very, very tribal thing that happens when I see, particularly with you, and it's a very, very strange thing. And I'm sure you've adjusted to this over the years. I saw a headline on a Freakonomics podcast.

from 2015, and it said, Nate Silver, America's favorite, I can't remember, you know, prognosticator, whatever they call him. And I said, well, those are the halcyon days when Nate Silver was America's favorite, whatever it is he does, numbers guy. You kind of fell out of favor in a way because of partisan politics, right? I mean, people didn't like what you were saying because it went against their side of the ledger. Yeah, I think it's three things. It's the 2016 cycle where on the one hand,

We were taking pains to emphasize that Trump actually did have a pretty good chance and the Hillary people were complacent. On the other hand, you become kind of a goat or enemy or villain, not greatest of all time goat, but like a scapegoat. The opposite of the greatest of all time. Yeah. Yeah. When Trump wins, even though in a gambling perspective, we actually thought he had a better chance. Right. And then the aftermath of 2016, where there is all this blame about Russia and Facebook and not kind of looking at

Media coverage and there's kind of this reversal where in fact the polling showed a closer race to the Convention of Wisdom held and that got totally flipped in the narrative. So 2016 obviously is part of this. Then some of the COVID stuff where I thought this also happened in an election year in 2020 and I thought some of the reactions from Democrats were

very partisan, the fact that Trump was in office and that you didn't want to do things like have a vaccine come out before the election that would make Trump look good, potentially, or competent. I mean, the moment when you have these 300 public health people

who said, let's sign a letter saying it's a really good idea to go out and protest after the murder of George Floyd in the middle of a pandemic, which I think is correct, actually, right? It's an important moment for America. And the risk of getting COVID outside, wearing a mask, don't even need to wear a mask, but is pretty low, even in a group setting outdoors.

And it outweighed the consequences of this low risk of getting COVID outdoors. The problem was that that was also true for lots of other things. Lots of other political protests, visiting relatives in a hospital, going to a beach in Florida. And it was so nakedly hypocritical. I mean, that was kind of the end of my being a good soldier, being like, oh, yeah, the lockdown will work for a couple of weeks and then we'll figure it out. And then the Biden stuff, because...

It was just so flagrantly obvious, certainly after the debate, but to some extent even beforehand, that like he was trying to run out the clock and he was not

capable of running a fully fledged presidential campaign. I mean, he turned down a Super Bowl spot, which is one of the most softball interviews historically in politics done by every president since George Bush. And people are paying $10 million for a 30 second spot in the Super Bowl. You get like a five or 10 minute softball interview, most watched Super Bowl of all time. And he turns that down. And the reason why is because we found out later on that

any impromptu setting for Joe Biden is 50-50, maybe literally 50-50 to blow up into a total disaster. And the fact that Democrats were trying to cover for this and the fact that we still don't know very much about kind of what Joe Biden's health conditions are. I mean, the media has kind of been off the story since Harris replaced the nominee. It was treated as a horse race story. There's also a governance story, like a 3 a.m. phone call story and a transparency story about like, you know, why shouldn't the American public have

more transparency into his medical conditions and medical records. Of course, Trump is no better on that front at all. You know, that caused a lot of friction. So those three things have a cumulative effect, but also the fact that, and this is what I talk about in the book too, I'm from a different kind of tribe than they are, from a gambling, risk-taking tribe, from a tribe that has its own jargon. And the analogy I've been using is that it's as though I'm from the deep south of

And now I'm a person in New England. You know, we speak the same language. It's like not like the accent is so strong that we can't understand one another. But I just always felt kind of out of place. And the book is kind of a journey of going back to my happy place, starting with a casino in Florida and all these people who understand and think like me and trying to translate between that world and the politics world.

I mean, that is a great transition to your book. In the book, you have this paradigm of the river versus the village. Explain that to people and, you know, what that is and how it's not just a political paradigm. I mean, you do say that people in the village are kind of more left of center politically than people of the river. Tell us where that came from and why you think that's a kind of necessary frame for the book.

So let me start with the village first, just because that's a more familiar term. Other authors have used similar terms or terms like professional managerial class. But this basically means academia, media and government, especially when a Democrat or an establishment Republican is in office. Right. So it's like it's the establishment, the East Coast establishment. It's Harvard University and The New York Times and institutions like that. It's progressive. It's increasingly politically partisan.

It is also competent. It has most of the experts in the world. Even if you're a little bit skeptical of experts like I am, I think in general there's a lot of human capital there. But in election years, it becomes very weaponized and politicized.

The river is my term for the kind of gambling and risk on world that I feel more comfortable in, although I'm really kind of have a foot in both camps. So you have Silicon Valley there, you have Wall Street there, you have crypto there, you have poker there, of course. You even have things like effective altruism there. And what I found is that you have the same habits of mind throughout the river. And by the way, the reason why it's the river and not the village is the village is like one community.

Whereas the river is like a region where people kind of have similar values and talk to one another, but it's not quite as self-contained. Yeah. And those are basically the risk takers. It's the people that combine being very analytical. So they're usually good at like probabilistic thinking with being very competitive. And what results from that is being willing to take risks where you think you're going to benefit on average. And, you know, and I argue in the book that the river is kind of

winning this confrontation of elites because they're both groups of elites, right? This is 98% of people are living somewhere else in the suburbs or whatever. Certainly the river is winning financially where you see Silicon Valley and Wall Street or less metaphorically finance and tech are becoming a larger and larger share of the economy. Even things like the gambling business is a medium sized sector. It's not huge, but it's growing, even booming in some areas. So this skill set is kind of winning

the financial war and increasingly maybe winning the cultural war. I don't think Elon Musk buying Twitter and renaming it X, I'm still going to call it Twitter, sorry. Financially, that probably is not a gamble that will work out, but culturally that

quite dramatically kind of shifted the conversation, I think. And so when you have Bill Ackman, who's not as analytical as some people in the river, but certainly has to qualify, Bill Ackman versus college university presidents, right? That's the direct confrontation. The New York Times suing OpenAI over copyright infringement. That's a direct confrontation of the New York Times is more business savvy than most media outlets these days.

You're actually seeing this battle that was metaphorical at one point kind of being reified. I think of the risk takers, the river types, the Bill Ackman's of the world, the Peter Thiel's, etc. It seems like a smaller percentage of that whole pie of the river in the village. Because the village, I mean, it's hard to tell though, right? Because people desperately want to seem a part of the village.

They want to not be challenged on these things. They want to make sure they work at the New York Times. I mean, is that a smaller piece of the pie? I mean, it seems like these poker blackjack players and the people that think about probability all the time, maybe I'm just living in a different world, seem to be a much smaller slice of the pie than the village. So...

In the book, there's this fairly elaborate metaphor where the river starts upstream and kind of high minded intellectual waters, things like effective altruism and the history of probability theory, and then moves downriver and expands out into some river delta, basically. So at the end of the river,

This is where I call it the archipelago. This is where you have crypto and sports betting and illegal gray market ways to bet on various things and online poker and things like that and day trading and meme stocks. Those activities are reasonably popular. But further upriver, where the real money is made, they're pretty small. I mean, I didn't really have any

connections with Silicon Valley before I started writing this book. Once you're seen as someone who can give a fair trial, a fair hearing as a journalist, then all of a sudden you've like met most of the most famous VCs. They're not big, sprawling entities. They're small numbers of people. I mean, Keith Rabois told me that, yeah, they're really only six people in all of venture capital that really matter, right? I'm sure he puts himself in there and Peter Thiel and Mark Andreessen and people like that.

And it's what those six people matter that determine kind of the fate of the earth or the amount of power that a negative example, obviously, Sam Beckman Freed had, or the amount of power that Sam Altman has in shaping open AI, even as kind of like a somewhat unrepentant

neoliberal capitalists. I'm like, have the free market and then figure out how much you want to redistribute later. I still think it's a good idea, basically. I am a little bit worried about the concentration of power and wealth in individual hands because these people are very complicated people.

and very flawed, even if also sometimes genius level intellects. But it makes them sort of messianic sometimes, doesn't it? I mean, I had a conversation with Sam Altman. We did not get along. And it's because I was pushing back on these ideas because he was talking about UBI.

And he seemed to be one of these people that said, you know, look, I'm incredibly smart. Absolutely true. I have helped create revolutionary technology. Absolutely true. So therefore I can solve everything else, which is an instinct that a lot of these people have that I think is totally wrong. Yeah, no, I mean, they believe in the great man theory of the world, I think, and man's somewhat intentional. I mean, there is gender discrimination in Silicon Valley that we can talk about or not. They have big egos. It's partly because it's just so the way things can go wrong

viral these days and the way things can kind of go up exponentially, right? Like I'm looking at like what happens, this is a much smaller scale example, but like what happens to like traffic to a newsletter in an election year and how it just kind of goes exponential. Like what the fuck? I'm sending this email out to 140,000 people or whatever. But imagine if that

exponential keeps going up and keeps going up and keeps going up. And you're Sam McMinfree and you're involved in everything in the world. And you're shooting commercials with Tom Brady and going to the Met Gala or Elon Musk. I think you probably do develop like a

God-Messiah complex, or you start to wonder, am I living in some type of simulation? Because from like, I don't know, from like a Bayesian standpoint, Bayesian reasoning means under uncertainty, considering different hypotheses. I mean, if you're Elon Musk and you're the richest person out of 8 billion people in the world, or you're Joe Biden or Xi Jinping or Vladimir Putin or something, you might be like, this is pretty fucking weird. What are the chances that I wound up in this position? And I think it must do very funny things to your mind.

In poker, we use the term degenerate gambler as kind of a term of affection, right? A degenerate gambler is willing to take risk. So it's seen as honorable, a kind of self-depreciating honor to be a degenerate gambler. Which you are, by the way, and we didn't introduce that. You are a poker player, a degenerate gambler. You make money at it. You're in the World Series of Poker. You do a podcast that's...

often half about poker with another poker player. I mean, I have started to view you as a poker player who just happens to be good at sabermetrics and baseball and political forecasting and crunching those numbers. But I mean, it strikes me in this book too. It's mostly, it's a book about poker also, that that is kind of your passion in life, isn't it? Yeah.

Yeah, it's my safe space, I guess you'd say, right? Your quiet space, because you talk for a living, but this is... No, there is something that's kind of contemplative about poker. I mean, I like taking walks or going on hikes, right? Because it's kind of solitary and contemplative. And if you're talking, talking, talking and writing, writing, writing all day, it's very hard to get into things where your mind is just not crunching

words, right? And trying to figure out what's a better turn of phrase I can use for this column I'm planning and what's the headline I can use and what's the banner image I can use. You're always kind of working in the background. So like things that are more immersive, like poker or like hiking in nature are things that I prefer to like watching TV or something where I'll just, my mind will wander. I won't really be paying attention before much longer. But like these people like actually are kind of crazy. I'm not quite sure how literally I...

intend that, but like, first of all, to like keep taking these risks once you're already a made man, right? I mean, in some sense, the rational thing to do once you sell your first startup for mid eight figures or something, right? Just go and buy a villa in Tuscany and learn the craft of local winemaking and find some good charities to donate to and

have rich and wonderful friends or whatever, right? It's a very common response. I wouldn't work again. I would take my money. I would go somewhere else. But I mean, in the book, in listening to you talk about this stuff, it's a personality type, right? I mean, these are people that can't stop doing this. It's not that they want necessarily to gain more and more money as just that being the bottom line. And whether it's nurture or nature, and it's probably a mix of both, I think everyone feels it very deep down. I talked to a guy who is a

explorer named Victor Vincent Vescovo. So he's actually climbed the world's seven summits, the highest peak on every continent and gone to the depths of the five oceans, right? The deepest point in every ocean. And used to be like instruct fighter pilots at the economy that's sometimes called Top Gun. And he's like, yeah, I meet the other people in the explorer class, very aware that when you're climbing a mountain, you have a risk of dying. I mean, it happens actually with some frequency that the greatest climbers in the world do

die on Mount Everest or K2 or whatever else. And he's aware of that risk. He's like, yeah, we just seem to have...

some genetic compulsion to do this. I mean, you have a 15th century job. You're an explorer. I mean, that's a pretty interesting... And because we lack, in certain ways, adventure in the world. If you read Ross Douthat, his book about decadence means that we've kind of explored every inch of the Earth's surface. We haven't sent a man to the moon since 1970-something or whatever, right? And so we now have to explore...

either virtual frontiers, so things like AI, or like some acrum of like actual frontiers. So that's kind of what like a casino is, is like a middle class accountant from Des Moines, Iowa, who used to think of himself as being risk-taking and played for his college football team, right? But now kind of lacks excitement, would go once a year with his buddies to

Vegas and gamble way too much and drink way too much. And so that's kind of part of why the industry I think succeeds is that type of better. Some people have like a need for risk. And meanwhile, other parts of the world are becoming safer. The free press obviously talks a lot about

free speech. And free speech is actually risky. Words can inspire action, including actions that you might not want, but like to say, hey, we are going to trust people's ability to hear different arguments and have arguments and understand that the arrow of history doesn't always bend toward better whatever outcomes you might want, right? That it actually is very bumpy and transient in some ways, but we want a more risk on world because we think that's actually better in the long run.

You talk about this at great length, obviously, in this book. We're supposed to learn something from this, give people a sense of what they'll kind of take away from this as a reader. I mean, we're not just sitting here as observers and say, well, these people are cool. They take risks. Yeah, we knew that. I mean, you look at this in a slightly different way. How are we supposed to kind of learn from these riverians, these people of the river?

I'd say my advantage is that I am one of them. And then I have very intimate and honest conversations with the other ones. So there's one chapter that's called, for example, 13 Habits of Highly Successful Risk Takers, which is just kind of tells you more about how they think. And also, this is like an important chapter.

class of people. I mean, if you're someone who is in the village, although I suspect the free press's audience is more village averse than, you know, some news outlets. A lot of people that live in the village read the free press and listen to the free press. For sure. If you want to understand...

how Elon Musk thinks or how Sam Beckman and Freed thought or how Sam Altman thinks or how Peter Thiel thinks or Mark Andreessen, these are kind of some of the canonical characters of the book, then like I talked to four out of five of them directly. And like, I think I can provide a better explanation through my reporting and my experience and my empathy in a weird way. I mean, I don't have empathy for SBF, right? But I've been there and I understand the thinking. And so it's a guide to this very powerful skill set that's kind of

ruling the world or at least certain parts of the world, financially adjacent parts of the world and increasingly culturally adjacent parts and media and things like that. Did they frighten you in any way? I mean, being, you say four out of the five people you mentioned, I think the one that you didn't was Elon, right? But you did have some- Didn't talk to Elon, no. We exchanged DM, but no substantive conversations. There are people, I mean, we love these things. On the right, it's George Soros. On the left, it's the Koch brothers are now down to one Koch brother.

Just in general in society, we talk about these dark figures like Elon Musk. Now Bill Ackman is one of them because he's put his head above the parapet on the Israel-Palestine stuff. What do you think about people who are like, you know, these guys have too much power. They have bad ideas that are contrary to my ideas, particularly people like Peter Thiel. And they're generally a negative influence on the culture. I mean, you've interacted with them. Is that...

something that in any way, even the smallest way, you worry about. I mean, the only time I kind of felt actual worry was when I was with Sam Beckman-Fried in this darkening apartment in the Bahamas after he was arrested. There's no record of Sam ever being violent or anything like that, but I was kind of alone with him

20 miles from the nearest hotel and things like that and he was saying things he probably shouldn't have been saying so it kind of ran through the back of my head like where would I go escape if I had to think of you know if I had to run what would happen that was just my paranoia look I think

the critiques that these groups have of one another are actually mostly correct, right? The Rivers critique of the village that it has become too risk averse and too concerned about reputation and the cancer culture thing was stupid and like the COVID stuff was stupid. Like I think that critique is basically right, but the opposite critique is right too. I mean, I do think that like, I am not suggesting that we should like

redistribute wealth by having like a wealth tax or something. I think it's kind of a consequence of a good system basically. But like, yeah, absolutely people should be worried about having that much power in any person's hands. Because to get to the top of the heap, you have to take these huge, insane gambles and you have to be very distinctive, right? In ways that are good and bad. Talking to these complicated figures, I more and more think, and this is the thesis of the one guy I didn't talk to was

Elon Musk. But fortunately, there was a very comprehensive Walter Isaacson biography of Elon Musk and Walter Isaacson spent two years with him. And the thesis of that book is basically like you have to take the good with the bad, that things that make Elon great also make Elon terrible at certain things. It's all one complete package. And I kind of firmly believe that, too. Up next, Nate Silver tells us about the time he spent with Sam Bankman Freed before FTX collapsed. Stay with us.

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Talk to me a little bit about your relationship with Sam Bankman Freed. When did it start and what was your interest in him, you know, vis-a-vis this book and how did he kind of slot into it and just kind of how the story started and ended? I mean, it must have affected the way you saw a lot of this stuff. So I first talked to Sam in January 2022, which for context is March.

Right near the original kind of Bitcoin peak came in like November December 2021 So and this was just kind of part of our general blocking and tackling Interviews, right? Okay. We have a crypto chapter who are some of the more obvious people who who to talk to in the crypto space Great. He follows me on Twitter. So therefore it's relatively easy interview to get usually it's a good indicator and so talk to him and it was interviewed at the time and

Didn't particularly stand out. I mean he has a delivery that's kind of monotonous, right? So the affect it's not the conversation that you come from saying. Oh, that was a really warm wonderful dynamic conversation It's like okay. He said interesting things we transcribe the interview and we'll go back and revisit it later. I

Suddenly, by like mid 2022, SBF is everywhere in the river. He is the host of a party for a guy named Will McCaskill, who's a philosopher at Oxford, who is an effective altruist, who had a book called What We Owe the Future about what he calls long termism. So it's about saying we should really care about the welfare of people forever.

5,000 years from now, which I don't really think I agree with. But anyway. And a brief detour for you, if people don't know about this, because Sam Altman and Sam Backman Freed, they kind of are representatives in a way of this movement of effective altruism. Just as a brief kind of definition, what is that? Because you talk about it quite a bit in the book.

So effective altruism is actually a brand name created by Will McCaskill and another Oxford philosopher, Toby Ord, that originally referred to just what it sounds like. When you're giving to charity, how can you do it more efficiently? And then that spins out to lots of other things, like how much waste is there in, say, the American Red Cross is a relatively...

tractable problem. But then you get into things like, okay, what is the value of a cow's life relative to a human life when we're considering the welfare aspects of vegetarianism, for example? The sort of Peter Singer arguments. It merges with the Peter Singer arguments. It merges with strands of futurism. So it's all these kind of weird people, not weird person myself, I don't mean this in a derogatory way,

Tim Walls, J.D. Vance way, right? It's all these weird people on the internet that back in the more innocent days of the internet kind of all met one another and had nerdy topics. And then all of a sudden this becomes...

very relevant and very mainstream and there's a ton of money and Elon Musk is adjacent to it. And I don't think Bill Gates would call himself an effective altruist, but clearly what the Gates Foundation does, they are very concerned with the effectiveness of what they're doing. And that was Sam Bankman Freed's kind of brand, wasn't it? I mean, I might be kind of overnight billionaire, but I'm trying to give away a lot of this and do good with it, right? Which I think was

One of the few partly sincere things about Sam, right? Like he took an interest in effective altruism early on. His parents were utilitarian, or at least his mom was like a famous utilitarian philosopher. Yeah, so he sought that out.

And I originally kind of thought that crypto was like a great way to like make a lot of money and then donate it through the F-Techs Foundation. Now, the counter to that is that Sam is clearly quite interested in having power himself. He had talked repeatedly about his ambitions to become president of the United States, for example. His involvement in politics was, I think, actually not particularly effective. He bankrolled this

candidate in a congressional primary in Oregon and spent way too much money, which just wound up annoying voters that were being sent like 50 flyers in the mail saying the same thing and things like that. Like Peter Thiel and Blake Masters in Arizona. And Peter Thiel, yeah. And look, so you see in politics, these guys make a lot of mistakes. I mean, Peter Thiel and Blake Masters and Peter Thiel and maybe J.D. Vance, frankly, too, that seems to not have helped

trumped out very much. And they don't know their limits. What they do know is two things that Silicon Valley people know that having a long time horizon, playing a long game is really under rewarded. Peter Thiel

We've said some dumb things that he's done in 2016, did make a big bet on Donald Trump at a time when it was extremely sacrilege in Silicon Valley. And even at a time when Trump was the underdog in the polls, maybe not as much of an underdog as Huffington Post model said, but a two to one underdog and endorsed him and was playing kind of a long game about politics.

anticipating a vibe shift in the culture. So that's one thing is being willing to look at a 10, 15, 20, et cetera, year time horizon for a startup that might finally pay off 15 years later. And number two is understanding the value of making high risk, high upside bets where what I call the expected value, if you simulate this out a hundred times, where that has a very big payout.

And if you're a founder, then you have to be a little bit crazy to take that risk. To gamble all in on one idea that you're expected to commit to for 10 years, I mean, usually most of them won't succeed. But if you're a venture capitalist, you get to play the game over and over and aggregate these different long shot, high reward bets into a fund, and you almost can't lose. Mark Andreessen kind of told me that once you get to a certain level of prestige, it's a self-fulfilling prophecy because the best founders all come to you because you...

create a spark plug for them and create a virtuous cycle. And so even though they are very smart and they do understand risk-taking in ways that are important and you can even learn from, yeah, I mean, it's not great that you have this virtuous spiral created that gets bigger and bigger. And Driesen Horowitz is making 20% return on investment every year where I can get whatever, my 7% or 8% from the S&P 500. They're going to grow a lot faster than the average American's portfolio. How does this affect...

in American and global politics. I mean, the river is, you know, a lot of people that are very, very wealthy. They might be right of center sometimes in the case of Peter Thiel and, you know, Founders Fund and people like that. And then the village, you know, seems like a bunch of prissy West Village Brooklynites who either work at the New York Times or definitely subscribe to it. Both of those things annoy populace, right? Do the growth of these two kind of sectors make populism more likely?

I mean, there was one source that I spoke to in the context of AI and thinking about the amount of power that a Sam Altman might have. He's like, historically, when elites gain this much power to reform society, then that's when guillotines come in, right? That doesn't always end well for the people who accumulate so much power that they're dictating terms for everybody else. There have often been alliances in global politics and American politics between extremely wealthy people

populists. And you see some of that now on the right, I think, where you have some kind of support now for Trump. But the observation is correct. These are both groups of elites. If I wanted to be cynical about the way that big casinos use poker, right, that poker has a

Prestige poker literally is an intellectual game, right? Interesting people in poker so it kind of becomes free advertising for the casino part of their operations where you're guaranteed to lose money over the long run more or less and so I think especially in AI

where you talk about the idea of an AI takeover, where, oh, don't worry, you know, human beings are going to no longer have to work because it'll be abundance created by AI. I mean, Sam Altman literally told me that he thought AI could alleviate global poverty. Well, how do we get there, right? Who's going to be happy about, maybe people find fulfillment in the work they do. And like something doesn't compute there where we're just going to displace and radically reform society in ways that don't obviously seem

So great. I mean, people, especially people on the river, by the way, people like the struggle. They like to compete. And when you have like utopian movement, this is kind of why Marxism doesn't work, by the way. I was going to say, this is sort of tech Bolshevism when you say...

At the other end of this ideology or technology are, you know, lands of milk and honey. We've heard that enough times in history to maybe recoil a bit from it. I can't believe that he actually thinks that or says that. Yeah, I know. I mean, and you have these kind of weird left-right convergences when it comes to utopian movements. And effective altruism in some ways is kind of a utopian movement.

movement. And you have literally people talking about like simulated realities and emulated realities and so it gets very weird the further upstream you get in the river. Yeah, I mean look, these are people who made their wealth and became kingmakers very fast and they want shortcuts to everything, UBI being one of them, that universal basic income will solve this stuff. This has been a suggestion for many, many years. I mean the Nixon administration suggested it too and I think it was Donald Rumsfeld that headed up the project.

You talk about AI in the book. Tell me your kind of assessment of AI and where it is now, because I see two conversations about this. It is the Sam Altman one, it can solve everything, or the other one, the robots will destroy us. So it's important to understand that this leap forward that happened with large language models like ChatGPT or Claude, for example, was kind of this uncanny miracle, right?

in the sense that this idea might have sounded stupid at the beginning. Let's just have a computer read every piece of text that's ever been published on the internet, have a really simple algorithm, and then just leave it on for a really long time until it crunches the text into numbers, into vectors,

And then you come back six months later and it's a magic box where you ask it a question that gives you a pretty fucking good answer most of the time. Like this is kind of this was not predicted. And it can actually follow up. That's the interesting thing. I mean, you can actually have a conversation with it. Yeah, I know people take for granted.

how uncanny this would have seemed even three or four years ago, right? And yes, these models hallucinate. Yes, they are sometimes tuned to be too politically correct. Yes, they sometimes bullshit their way through things, but like no one would have expected or almost nobody.

would have expected this technology to exist in this form so quickly. So the question is like, is that predictive of further leaps forward or was it kind of like a miraculous one-off? And I think the jury is still out on that. I mean, it seemed a year ago, a year and a half ago, more like, oh my gosh, this is happening pretty fast. And now progress has kind of stalled out. And there are maybe some rational reasons to think that like, maybe there is some cap on kind of human,

plus level intelligence, but not superhuman intelligence. If you're reading texts from all human beings and kind of taking the average of that might make you smarter, wisdom of crowds, but can you synthesize new knowledge? I don't know as much, but the fact is that we don't know entirely how this technology works. It already does things that we weren't expecting. And the people in charge of it are balls to the wall, pressing the accelerator. Sam Altman was $7 trillion in investment in new semiconductor fab manufacturing facilities. So

So it kind of has to be a risk, right? We can assess whether it's a high risk or a low risk. But if Sam Altman is saying that, yes, this could destroy all of civilization or lead to a misaligned takeover, but the benefits outweigh the risks, like, okay, I'll take him at his word, right? Which probably means that, like, we do need to have more regulation and more intelligent regulation and think very carefully about how much power we want Sam Altman or an AI lab to have. Yeah, I mean, it's a radically different world when we're worried about

AI and computers and robots being sentient and arguing with us and beating us up and murdering us. A little different than what I expected, but you know, I mean, we also have things like cryptocurrency you talk about quite a bit in the book.

There was a point at which, and I think there was probably just this nexus of the cryptocurrency boom and people getting free money from the government during COVID. I mean, we saw a lot of data that suggested people were just buying Bitcoin or various shit coins too, the lesser known and crappier ones that didn't do as well.

But there was a point at which it all started seeming like a bit of a scam and a bit of a casino. You're somebody who knows the inside of casinos. It seemed like America was becoming a casino when you had things like Bitcoin and various other crypto. And then, of course, the meme stock stuff, which is great and democratic. I mean, I'm glad that the average person

Investor can go onto a website and not have to call a broker and have a small amount of money and invest it in the market. But then it kind of took that weird GameStop turn. I mean, talk a little bit about that. I mean, as somebody who's a numbers guy and a gambler. So there are interesting dynamics when people get together to try to rocket up the value of a stock.

This might get a little far in the weeds as far as game theory goes, which is another big theme in the book. Typically, it's hard to sustain a bubble because it's rational for someone to cash out before the bubble bursts, right? And things like GameStop that are such an obvious bubble. I mean, there's no pretense that this value is in line with its long-term expected revenues. It's obviously just kind of like a joke. But...

If you and I own the shares and we refuse to sell and a hedge fund has a short squeeze on it, as long as we remained aligned, then in the short run, the hedge fund is fucked. And the fact is that usually in the kind of pre-internet era, then you and I wouldn't really have any means to coordinate. And so the president of the dictates that like one of us will race to take our profits and run and burst the bubble.

However, in a world of Reddit forums like WallStreetBets and Twitter and things like that, I mean, it's a lot easier to actually implicitly coordinate in the kind of hive mind of the internet or Dogecoin or something like that, which was meant to be a joke. At one point appreciated by like 10,000x relative to its original value. That's not supposed to happen. And so, yeah, it shows how...

chaotic, I mean, chaos theory in a literal sense, the dynamics of like meme-ization. I don't know what, what I meant to mean to, you know, the way that memes can go viral is like, there is like actually like a lot of intrinsic randomness in this. And it can be a very, very powerful influence. And, you know, the fact that you're still having GameStop bubbles, uh,

three years later, and they don't last as long, right? But like that, it's certainly interesting and maybe like a little bit dangerous and maybe reveal something about the nature of being in an ultra-connected society. Is it wrong for people to think that GameStop was this wonderful democratic moment? I mean, you have high frequency trading, you have people in hedge funds that can move markets very easily, right? And then you had these people banding together and trying to screw over the hedge funds who were trying to short like an ailing company's stock.

Is it actually a democratic movement? Can, you know, because everyone hates the big guy. Everyone hates Wall Street. Donald Trump hates Wall Street. The Democrats hate Wall Street. Is this the counter in some way that rather than destroying it, we get involved in it as the average person? No, I think that romantic view of things, I am sympathetic to that, I'd say. I'm saying like 80% sympathetic. In part because like in the Moneyball era, the story was that like the mathematical analytics nerds were the outsiders who were ostracized and they...

deservedly earn their place in society by being willing to make gambles and bets on unconventional thinking, right? Well, now their way of thinking is the conventional thinking. And like you can succeed in the river if you are very good at like doing fancy math and very willing to take risks. But like that's not for everybody. It's a skill set that requires a particular skill

set of training and a particular knowledge base and particular kinds of privilege too. I don't want to sound again too woke or anything like that, right? But like certain people have the privilege, they have health and they have enough of a baseline where they can afford to take risk and certain people can't afford to do that as much. You don't have the agency to do that. And so, yeah, it becomes a winner-take-all

economy more and more and more and more. And so I feel sympathy for people. And crypto was a little bit decentralized like this, too. I mean, of course, people were getting in on like a get rich quick scheme that mostly didn't work. But like these are guys that like, you know, one guy decided to order a pizza using Bitcoin as a joke. And one guy kept it on his computer. And the third guy had it on his laptop that he threw away five years ago. And like one of them is now a billionaire. And like it's

It's kind of democratizing. I like that part of that movement, even though there's a lot you can make fun of in crypto too. Yeah. You said there, I think it's the second time you said this since we're talking, I don't want to sound woke here. I'm going to read a quote to you from your own newsletter with the headline of this particular dispatch was something about you being a, am I a closet right winner? Yeah. And that...

The quote was, however, I have also become more estranged from what you might call the progressive political class over the past several years. Yeah. How is it that you've become estranged from the progressive political class? I mean, is it an ideological thing? Is it just the treatment of you, which we've discussed before? I mean, what is it that, you know, are you becoming more conservative as you get older, sort of more libertarian? What is that estrangement all about, Nate?

I talk about in that post, I mean, there's kind of classically two political dimensions, one on economic policy and one on social policy. Right. On economic policy, I've always been kind of like a pro market person.

centrist, so neoliberal, right? Let the free market do its thing and then redistribute. And then on social policy, we've always been kind of libertarian. So it's kind of, you can call it center-left libertarian, you know, probably not that far from where some of your listeners are, Michael. But there is a third dimension too, which is how much trust do you have in the establishment? I'm actually going to publish a post on this. Whenever the election stuff goes quiet, which apparently won't happen until November, I guess. But like, do you trust establishments, institutions to

to behave in the ways they're supposed to behave and to not be corrupted and self-interested. And on that dimension, I'd say medium trust in institutions.

which is actually maybe higher than a lot of people do. But that dimension, and like COVID certainly affected that. It affected my confidence in the competency and the ability of institutions to be nonpartisan, for example. That codes as being very conservative, but it doesn't have to be. I mean, if you look at the kind of

leaderboard on Substack, you see lots of flavors of people who were center right or left, but are establishment skeptical in different ways. And because the Democratic Party became the party of elites, or at least the expert class, then people think you're a Republican. You're saying, hey, look, let's actually look at the expert literature on how experts behave. And experts are actually subject to groupthink,

to internal political pressure. It's not great, by the way, that 98% of the Harvard faculty are Democrats and 2% are Republicans or whatever else, or there are no Republican journalists at NPR. It's probably not great. I understand why that is, but it's probably not great.

But yeah, I think people don't think enough about the kind of psychology and sociology of the expert class. And if you do, and if you say, hey, the performance on some of these things hasn't been great. On COVID, wasn't great. It was a hard problem to solve, right? We probably spent too much money and inflated the currency too much. That probably wasn't great.

that the whole misinformation genre is a place that seems to have become very partisan, that things that are not misinformation, like Joe Biden's age, are labeled as cheap fakes or whatever else. And I'm not low because I actually know some of these people. I think the average journalist at the New York Times or the average Harvard professor is very smart. And 60% of them are probably acting in good faith, but there's too much tolerance of bad faith. And you see a decline, I think, in the capacity of the expert class. Yeah.

Is that changing in a way? You have a Substack and you know, you're not a radical, you're not a reactionary, but you can say what you want without fear that your institution is going to kick you out. The Free Press is an example of this and plenty of other institutions. I mean, even Joe Rogan, even stuff like that, you know, however accurate the information is on Joe Rogan, it doesn't really matter, but that's an alternative source of news for a lot of people.

I mean, it feels like people are a little more open about saying what they believe now because there's other avenues of getting their ideas out there. There are other places to work. It is the market at work in a way here. I mean, have we reached a point where, you know, the village, as it were, is, you know, kind of under attack and it can't really sustain the previous model of controlling the culture? Yeah.

No. I mean, the village has made a number of adjustments. The New York Times has, I think, pivoted somewhat more back to the center, which annoys liberals to no end. Universities have begun to bring back more objective criteria. So testing requirements and they have ended increasingly ideological diversity statements. Right. So you do see a correction when its position is really quite neutral.

Threatened I mean higher ed in particular the media approval ready to been in the tank forever, right? But like higher ed I mean there really was a huge backlash that shows up in the polling against Harvard It's not just in elite discussions It is adaptive and the media in particular because it's like not a great business people the media adapt to new circumstances and what the financial incentives are And yeah, I mean the fact that there was a preference cascade I think a lot of people on the left felt like well

I'm kind of on the side of racial justice if you make me pick. And I don't want to be labeled. And by the way, I'm not on the side of Donald Trump if you make me pick or maybe strongly not on the side of Donald Trump. That's not a hard choice. Right. And if I speak up on anything and dissent from the consensus and I'll be labeled a Trumpist or a racist or a misogynist or anti-trans or a COVID denialist or whatever else. Right. All these names. It took people a while to

to kind of call that trick out if you want to put it like that, right? It's a pretty good trick that like, hey, you're on our side anyway. So why be such a fly in the ointment about this thing that's objectively not very important when we're on the right side of things? It took people a long time to build up the courage and the capital to do that. And then some things changed. I mean, Elon taking over Twitter because that was the performative space of the hive mind, you know, Substack. I mean, it's not

enormous relative to other parts of media, but like a lot of the more influential people are on Substack and being read and it's a forum where people you see a lot of great writing and a lot of people feeling free to be themselves and then people learn. I mean, you know, Barry's talked about this or other people, but like you don't actually face negative real world consequences I have found from idiots being mad at you on Twitter. Maybe the first time, maybe in kind of 2020, 2019 when this was more novel and we turned into like kind of more of a mob mentality on Twitter,

What happens instead is you have people, A, signing up for your newsletter, which is great, but B, saying, hey, I've always didn't know that you actually have this kind of nuanced view on like what liberalism means, for example. Next time in town, you want to get lunch or something, right? And you actually find that like a lot of people support you because actually the views that like

I think I'm propagating, I mean, are very popular historically. I mean, capitalism and liberalism are historically pretty successful and popular ideologies. Yeah. I mean, people ask me, I think you have heterodox views. And I say, well, no, if I look at all the polling on all of the views that I hold, it seems very, very in line with the mainstream.

I don't think I maybe I'm not in line with certain elements of the village. Yeah, one of the most controversial posts I did was this thing where I said, vaccines good lockdowns bad, right? If you look at the polling, about 60% of the public agrees with me on both of those issues, right? 60% pro vaccine 60% at this point, in retrospect, kind of anti lockdown more or less.

But to hold both those views simultaneously is seen as extremely heterodox, when in fact it's just kind of going with the most popular position in each case.

Yeah, why is it that, you know, you look at polling data constantly and, you know, what Americans think about all sorts of issues too. But, you know, why is it that that's the instinct? That if you want lower taxes, then you probably want a sturdy Second Amendment and or opposed to abortion. Why would those things line up? They shouldn't. And they line up because we're in like a two-party system and the two parties have to compress multidimensional space into two-dimensional space. And that leads to like

lot of weird alliances like in in some ways like a European parliamentary system where the Green Party I might not agree with it or like the Christian Democrats or whatever usually have a coherent ideology and Democrats and Republicans mostly don't but because it's incoherent that increases the incentive Enforce that and punish deviation from the norm, right? Because if you say hey look I

boy, I really agree with you on abortion, but I want lower taxes or vice versa, then like that's a hard problem to herd all those cats and keep them in line. And so I think public intellectuals too have become more partisan in some ways. And like public intellectuals should just ask questions about things and should kind of not be part of anybody's team. But the fact that you've had educational polarization, meaning increasingly, and it's maybe changing now, but increasingly

college educated people, especially with graduate degrees, vote overwhelmingly democratic. That has, again, corrupted, I think, nonpartisan expertise. And by the way, if you're a socialist or a communist or whatever, I'm not worried about that. I'm trying to argue against partisanship as kind of fraying the mind from independent thinking. And so, yeah, getting rid of that partisanship, I think, is a big part of where the vibe shift has come in lately.

As a poker player, as somebody who understands probability and looks at polls all the time, you know, this is kind of the basis of your book in a way. What would you want people to take away from, learn from a poker player, somebody who's not risk averse at all like yourself? I mean, what do you think that one thing that you could tell them if they could actually implement in their own life would make it significantly better? Yeah.

I mean, I think most people would be better served by taking on more risk in the financial career aspects of their lives, but also focusing on process and not results. Because poker, you learn the hard way. If I get all my money in,

with three of a kind, and you have a draw to a flush, and we get all in on the flop, which is the first three cards, I'm going to win that about 70% of the time. Which means I'm going to lose that about 30% of the time, and whether the next card happens to make you a flush or not, I have no control over. I played the hand well to get the money in as a 70/30 favorite. And so being process-oriented,

what's the reason behind someone's forecast or what's the reason behind what someone's saying? And then in the long run, yes, results matter and they count for something and you should be accountable and make predictions that you can actually quantify and measure. But focusing on process, focusing on the long game is a big differentiator.

In being less superstitious. I mean Americans seem very superstitious to me, right? Yeah, I know into a casino The most amazing thing is the roulette wheel. I don't I don't gamble and I knew nothing about this stuff And they put the numbers up that have hit right which is completely random and they say well, you know They put those up so people don't want to bet them again because it just fell on that Yeah, or they think it's streaky and they can trick people either way into seeing signals and random noise Yeah, and so yeah

Understanding when a sequence is randomly generated, playing the long game is essential. Nate Silver, thanks for joining us. Thank you so much. Thanks for listening. And thanks so much to Nate Silver for coming on the show today. If you like this conversation, please share this episode with your friends. And if you want to support the work we do here, go to thefp.com and become a Free Press subscriber today. See you next time.