Extreme Capitalism with Jason Calacanis

Basecamp co-founder and CTO David Heinemeier Hansson sits down with entrepreneur and angel investor Jason Calacanis to debate the gig economy, democratic socialism, and whether the American dream is dead. The conversation in this episode is adapted from a longer interview that can be found in full at This Week in Startups.

Transcript

(00:00:00) Broken By Design by Clip Art plays.

Shaun: (00:00:01) Welcome to a bonus episode of REWORK, the podcast by Basecamp about the better way to work and run your business. I’m Shaun Hildner.

Wailin: (00:00:08) And I’m Wailin Wong. Earlier this week, Basecamp co-founder and CTO David Heinemeier Hansson sat down with Jason Calacanis, an entrepreneur and angel investor who hosts This Week in Startups. The last time these guys went head to head was March 2013 so they had a lot to catch up on and argue about, including the gig economy, democratic socialism, and class mobility.

Shaun: (00:00:31) Today on the show, we’re bringing you part of that conversation. If you want the whole two-hour uncut enchilada, go to ThisWeekinStartups.com or listen to This Week in Startups on whatever app you use to listen to REWORK. Now, here’s Jason Calacanis interviewing David Heinemeier Hansson.

Jason: (00:00:51) I tell people who work for me that the average person in our investment company puts in I think 45 to 55 hours a week. Of that, probably 30 to 45 is in the office and probably five is like responding to emails or texts and stuff like that off hours. I think a solid 50 and sometimes 60 is the upper bounds of not burning out. That’s where I’ve come to in my career, is like there are times when things are competitive and you have to ratchet things up. I’ve been in those situations. But I think sustainability for me is somewhere in that 50 hour a week range.

(00:01:28) What do you think a sustainable work schedule is? I mean obviously it varies by person, but let’s just say in business you’re in a competitive environment you want to win.

David: (00:01:36) Yeah. I think what’s also fascinating about this is that we don’t have to sort of just grasp numbers out of personal anecdotes. That this kind of stuff has been studied intensely, as well. And it’s been codified into these social contracts that we’re going to have eight hours for work, eight hours for play and eight hours for sleep. That working a 40-hour work week is actually a really well-designed system and it wasn’t designed out of benevolence. It was Henry Ford constructing the Model-T assembly line going, do you know what? If I make my workers work 50 hours a week or 60 hours a week, they just end up making more mistakes, putting parts in the wrong way and I have to take essentially automobiles that aren’t working right back and fix them and it costs more.

Jason: (00:02:21) His other reasoning was, I want my workers to have a car and have a longer weekend to go drive it somewhere and stay at a motel overnight. So he’s actually thinking, and I think this is one of the things that tech people have to start thinking about is what do we want the consumer base to be? And when you think about minimum wage, one of the best arguments for Apple or Amazon paying 15 or 20 bucks an hour, which is the minimum wage in Australia and other, sort of more functioning democracies is, you know what, if they have that extra five bucks, maybe they buy an iPhone, every 18 months instead of 36. It’s actually going to benefit you in the long term.

(00:02:58) And they did it up in Seattle. They thought the restaurants were going to all go out of business and it turns out they had more customers. And it was like, hey, geniuses. The people who work at the restaurants are going to other restaurants because they can afford it again.

David: (00:03:11) It’s one of those things where just hey, if we just made a slightly fairer, equitable society, oh wait, it’s better for everyone. Like having just a tiny handful of people hoarding everything at the top. It doesn’t even benefit the tiny handful of people hoarding everything at the top. You end up creating a worse society in all the factors, right, not just the economy but politically and socially and on any factor you can measure the prosperity and success of a society. You end up just fucking it up. You really need to design society around like something like a Rawls veil where you go, hey, if I didn’t know where I end up, how do I want society to work? If I can’t decide at the inception that I’m going to be part of the 1%, what kind of support systems would I like? What would I like my healthcare system to look like? What would I like my education system to look like? What would I like my socioeconomic support system to look like? It’s not super complicated moral philosophy, here.

Jason: (00:04:09) You grew up in Denmark?

David: (00:04:11) Yes.

Jason: (00:04:12) I know you went to university there and that is interesting. There is a term getting to Denmark, which means getting to a high functioning society amongst the elites in the globe, like when they go to Davos and other places. I haven’t been to Davos, but at other conversations with these globalist-type people, they’re like, we have to get to Denmark. Which is a really great compliment. It means what the people want is what they get in their government.

(00:04:34) Yeah. When we look at America and how amazing we’ve performed on a capitalistic basis, but how poorly we’ve performed in government services. Healthcare and education are a disaster, here. We spend the most, we get the least. But on a capitalist basis, we have the giant companies that for a little 300-million-person country are taking over the globe. And we are the benefactors of that as a country.

(00:05:00) What do you think about that balance where our government’s completely dysfunctional. We don’t get what we need out of it yet we spend the most money. But capitalism, unconstrained capitalism in America, I would call it, we’re very vibrant. Less rules-based capitalism, let’s call it. Fluid capitalism, extreme capitalism. There’s gotta be a word for it.

David: (00:05:16) Late stage.

Jason: (00:05:16) Late stage I think is the insulting word for it because it kind of says like this is the end of the game.

David: (00:05:22) Yes.

Jason: (00:05:24) So late stage capitalism or extreme capitalism, I’ll call it. Was it worth it or not worth it? Because we do have Google and Facebook and Amazon and all these incredible services, Uber, Airbnb. We are the owners of those as a country, those companies, right? So was it worth it or not?

David: (00:05:40) Well, first of all, we’re not the owners. There’s a small handful of people who are the owners who get the lion’s share of the benefits of those companies. So positing it as though, hey, this is a shared benefit to America is doing a disservice to all the people who this is not a benefit at all. In fact, they are the prey. If you look at companies like Facebook and Google, there’s certainly people benefit from it. And then there’s certain people who are being exploited by it. And I think perhaps that’s even more concrete when you look at the gig economy and you look at companies like Uber or DoorDash or any of these other atrocious companies who essentially have built their wealth off exploitation and violation of people and misclassifying them as contractors instead of workers.

(00:06:24) But let’s put that aside and take the big picture first, which is sort of, is capitalism a good thing? This is one of those arguments that I always find so fascinating because in the context of you saying getting to Denmark, that’s the goal, right? Denmark is a capitalist system. What are you talking about? They’re free markets. They’re free companies. They are not state-owned companies. Much of Western Europe has simply decided that there’s certain parts of the economy, that certain parts of society, that operate poorly under market economics, they are education and healthcare in particular.

(00:06:56) So if you look at most of Western Europe, and it’s not just Denmark, although all of Scandinavia is a particularly well-functioning example of the government running healthcare. Not paying for insurance, running. Like the doctors at the hospitals, they’re employed by the government. Same thing in the UK. And you take education. The universities in Denmark, they’re not sort of private universities where the government kicks in on the debt scale. No, they’re run by the government and you know what? They’re run really well. In fact, when I came from Denmark to here, I was astounded at just how poorly those two parts worked.

(00:07:31) When I came to the US I had a girlfriend at the time who was rolled in Loyola University and first of all, the cost was just obscene. I think we were paying something like 30 or 35 grand a year for that? I forget the specifics. Which when you come from a country like Denmark where education is not only paid for by the government, there’s a stipend for any student to cover basic living expenses.

Jason: (00:07:54) Explain that because that’s mind blowing to Americans. Explain how the stipend works. How much is it, how do you get it, technically.

David: (00:08:00) You get about 1000 bucks a month to pay for your living expenses while you attend university, and you can do this for up to, I think, six years or something. Which, a Master’s degree in Denmark is usually around five years and then they allow you one year to essentially gap it. Most people don’t necessarily finish their Master’s degree in five years. And then I think there’s probably also an extension available if you pursue a PhD.

(00:08:23) The interesting part for me, though, where you can sort of say how is this affordable? Is that in an American frame of mind, you think, like, oh is the government really paying like 30 or 40 or 50 grand a year for all these students. Of course they’re not. The education system is incentivized to be efficient. My entire education at the Copenhagen Business School, I looked at this once and I thought it was something like $18,000 for a three year Bachelor’s degree. That was what it cost the Danish state to produce that education. And you go well that’s obviously a lot less.

(00:08:52) I know there are some examples where in-state tuition, so on and so forth. But if you just say, what does it cost to educate anyone who wants a higher education and give them the stipend to allow them to live while they do? So what will it cost society? And the answer is a whole lot less than you would think. A whole lot less than what is spent on the American system, which is a system that’s heavily gate kept, right? Where either you have to have these extreme grades and you almost have to prepare for college in kindergarten or you have to be very wealthy.

(00:09:23) And that’s a broken system. And then on healthcare it’s the same thing. Denmark has great healthcare. Now every society, even if they have great healthcare, have people who complain about that healthcare. That’s just the nature of it, right? But if you look at the overall stats, life expectancy and all these basic things, Denmark does just way better than the U S and Denmark spends something… I think it’s like 8% of GDP. And the U S spent 18% of GDP on healthcare.

(00:09:46) So you go, here, you have to have the most important functions of society, healthcare and education. The American system is a for-profit capitalist system that is just being whipped by state funded and run systems. And you go, do you know what? That should just give you some room for pause here. That may be the capitalist system in all factors of society is not the clear answer.

(00:10:10) That doesn’t mean that we can’t have for-profit companies producing phones. Yeah, that works great. Hey, get your phone on the free market. You’re not that interested in the free market when you’re about to die.

Jason: (00:10:22) Yeah, I mean it does seem like when you do this hybrid of, because we do have Medicare and we have some state-sponsored things and we have some…

David: (00:10:31) And people love them.

Jason: (00:10:32) Well they do love them. Yeah. It’s like they’re fighting for it. That’s how they make their decision on how to vote, is for that. So it is even more. We just have to go one way or the other. I think it has to be completely capitalistic or it has to be, you know, in a free market where customers are paying. But we’ve picked the worst of all worlds to tie it to employment creates the most unhealthy dynamic. I mean, I have people who can’t work for some of the startups I’ve invested in because the healthcare is not good enough. Or they can’t leave a company that’s hit scale because they can’t get as good healthcare. So now you have employers dealing with employees who either don’t want to go or don’t want to leave and it just creates this total dysfunction, in terms of like we were talking about before in the…

David: (00:11:13) Isn’t that ironic? That here you have a market, sort of, approach that’s essentially undermining the free market. It’s undermining the free movement of labor. People can’t change jobs, they can’t do all these things. And what are we doing this for? For some sort of ideological obsession that the free market is the right answer for everything. It is so clearly not the right answer for healthcare and I think failing to address that is creating some of those great frictions in American society and American politics. And I think, hopefully, we’re finally getting to the point where people have just had enough.

(00:11:45) And of course they’ve had enough. You look at all the objective measures of medical bankruptcies or the outcome of the medical system, you go, like, this shit is broken.

Jason: (00:11:52) Big time.

David: (00:11:54) And I see that as someone who’s very rich in comparison to the standard and I can afford any kind of healthcare I want and I’ve gotten any kind of healthcare I wanted and this system is still completely insane. I go in to get some sort of checkup, I have to fill out more papers than, I don’t know, applying for a driver’s license in the Soviet Union would have required, right? The system is baroquely bureaucratic. And the whole wrestling of everything with insurances and so on, it’s just bust. On all objective factors the system is just bust and it needs to be replaced.

Jason: (00:12:28) Yeah. I mean, in this we are in agreement. And it seems like, when you talk about getting to Denmark, America, it seems like it takes an extra decade or two to get through these things. If you look at gay marriage and you look at cannabis regulation, we’re so far behind on these things and…

David: (00:12:48) No. No, this is what gives me such hope about America. That for all the failings in America, there is absolutely a willingness to change. Cannabis, not legal in Denmark.

Jason: (00:12:59) It’s not legal in Denmark?

David: (00:12:59) Not legal in almost all of Europe. There is a—

Jason: (00:13:02) That’s crazy.

David: (00:13:02) In Portugal and in Holland, these things… there’s either decriminalizations or full-on legalization. It’s not legal anywhere else and this has happened in the US in a very relatively short amount of time. And this is what gives me such hope and why I agitate so lively for all these advantages. I know American can do this and I know it particularly so, because as you said at the start of this, America’s uniquely rich. You look at GDP per capita, America just—

Jason: (00:13:30) Bonkers.

David: (00:13:30) —trounces Denmark. It’s more than 20% higher GDP per capita in the US than it is in Denmark. The money is here. It’s just being spent very poorly. 18% of GDP spent on healthcare? Bonkers, right? The fact that the federal government can’t provide these services is simply just a factor of taxation. The US collects something like 17% of GDP in taxes. Compare that to France or Denmark and it’s in the mid to high forties. Literally in Denmark, we collect three times the amount of GDP per capita to provide these basic services to society and what do you get? You get Denmark is literally number two on the list of happiest people in the world.

(00:14:09) Number one is Finland, which has a very similar system to Denmark, right? And the US, I think, is 19.

Jason: (00:14:16) And if you just think about like also when people get pregnant and have babies, you get time off paid for by the government or by companies. How does it work?

David: (00:14:26) Usually it’s a bit of a combination, but yeah, that’s a great point because this is really all of Western industrialized world has paid parental leave. And the US has none. Like literally zero weeks assigned in general worker protections. You go to a place like Denmark, you get six months off at full pay and then you can take additional time after that at reduced pay. I have three kids, well, we have three kids and haven’t gone through that. I just, I can’t even imagine someone who has only two weeks from when they have a kid until the partner who had the kid has to get back to work. You go, Jesus, that is just inhumane. And why? Why do we need that? Right?

(00:15:06) So that’s one area where I’d actually give tech some kudos that there’s been some movement here on policy that a lot of tech companies actually have quite generous parental leave programs now. Obviously that should just be a societally [inaudible]. And also I should actually say tech companies have these wide generous policies for their treasured unicorn employees, their engineers, their designers, their project managers. They’re not exactly giving these benefits out to their gig workers or their call center staff or any of the other worker areas of the economy.

Jason: (00:15:37) Perfect, perfect segue. You were lamenting the gig worker economy and that they’re being exploited. I’m curious, if you look at being a ride sharing driver or delivering food as an entry level, I’m going to work at 20 hours a week and make whatever, $12 to $20 an hour, depending on how busy it is. Do you have a problem with that or do you have a problem with it starts to tip over into full time, they should get benefits? Because it seems to me like these are jobs have already existed and nobody complained about them. But if Uber or Lyft and DoorDash become large companies, then all of a sudden it’s, well, this feels unfair.

David: (00:16:13) Well, it’s just exploitation on an industrial scale and I think there are many problems here. One problem is that no one is taking home after expenses 12 to 20 bucks an hour. There’s been numerous studies on this. Basically everything hinges on the fact that you convinced gig workers to run down the assets that they have. You convinced them to run down the asset, like their car, defer maintenance, defer depreciation, basically not dealing with any of the costs of actually providing the service. So even in the best of cases, or I don’t even know if it’s a best case, even in the case where someone just works 10 hours a week because they want to make some extra cash, is utterly exploitive.

(00:16:50) The fact that gig-workers are not being paid for their expenses, the fact that they’re not being paid while they’re waiting between jobs. I saw one study just come out, was it last week, about the fact that Uber and Lyft are majorly contributing to congestion in cities, to traffic because 40% of the time spent working for these apps are spent without passengers in the car. And those 40% of that hours, they’re not being paid for that hours. You’re like, what?

Jason: (00:17:17) So if a freelancer, though, I mean you’ve worked with a lot of freelancers. If a freelancer is between writing blog posts or designing logos, but they want that flexibility, shouldn’t they be able to have it? And be 1099? Or can only rich people be 1099?

David: (00:17:33) Sure, I think there’s just a material categorical difference between someone who’s making essentially no money after you account for expenses or whether that makes up for it or not. Everyone I’ve ever known who’ve done consulting in tech, they don’t charge what a full-time worker would get paid per hour. They charge what, three, five, 10 times as much because they know that the job and the income is lumpy. So you might have a great contract here for a month that’s full time. Great. But you’ve got to make essentially three months pay to fill up your funnel and deal with that. So it’s just not at the same scale. I think that the fundamental underlying issue here is that gig workers, as you say, they should be paid 15-20 bucks an hour after expenses, accounting for time spent servicing the platform. And that includes the time driving from dropping off one patron to picking up the next.

Jason: (00:18:25) Yeah, I think now Uber is doing that. They pay for that time, but I don’t think they pay for the wait time, and there’s a minimum now with the 50 cents a mile fee. So, I don’t think you’re correct in that they’re making under what would be minimum wage at any case, because why would millions of people then choose those jobs, David, if there are so many other jobs that are looking? Why would you choose to do this if there are so many out there?

David: (00:18:47) There are not. This is desperation. It’s kind of like why would anyone ever get a payday loan? Know what the interest rates are on payday loans? They’re outrageous. Why would anyone ever do it? This is a multi-billion dollar industry. When you have an asset, like a car, and you need cash, sometimes you will look at that equation and go, do you know what? It may be I’m deferring maintenance. It may be I’m running down my asset, but that’s tomorrow. Today I need 80 bucks, so I’m going to drive for Uber or Lyft or Door Dash.

Jason: (00:19:15) Or all three.

David: (00:19:15) Yeah, or all three.

Jason: (00:19:17) I mean, most people are using multiple, yeah.

David: (00:19:19) And then on the long scale, I’m not going to make any money, but the long scale just doesn’t matter. Tomorrow matters. Paying the bill that’s due now matters, picking up groceries matter. And this is kind of the preying and the precarious that I find just so disappointing. And I find it doubly disappointing because I remember when Uber first came out and it was essentially black cars, right?

Jason: (00:19:37) Yup.

David: (00:19:37) And thought, wow, what a great idea. And this was a relatively expensive service because it is relatively expensive to have a private chauffeur, right? This is the other illusion we have here, is that like suddenly everyone could afford to have private chauffeurs, private shoppers doing all this work for them, while those workers were being well-paid and the companies turned into multibillion dollar companies, no, no. Society didn’t just fundamentally change in any of those ways such that we could all enjoy an army of servants.

(00:20:07) So I think that there’s some fundamentals here that are uncomfortable. I think these companies are continuing to be unprofitable because the real product that they have, for example, getting chauffeured around, is a high-end luxury product that people just can’t afford at the scale of its current use. That maybe there’s a great Uber that’s a $2 billion company or an $800 million company or whatever the size of the industry was for black cabs.

Jason: (00:20:34) Be careful with the valuation talk, David. I still have a big piece of that company. Let’s not run down the valuation just yet, okay.

David: (00:20:40) Well, I think this is exactly why I need to talk about it. Right? Because I don’t have a piece of any of these companies, which is why I talk about valuations in general because I think they’re really important. And it’s really important to examine who owns these companies, who funds them, and look at how does that maybe bias their view on whether we should have a broad social net or whether companies should be required to hire people as employees. These are the conversations we absolutely need to have.

Jason: (00:21:05) Well, I mean the argument I think for low prices for Ubers is that it gives back to the discussion about people having access to stuff. It gives a larger group of people access to actually get a ride when they need one, right? I lived in Brooklyn, in the boroughs. You couldn’t get a taxi. You might be able to get what they called a gypsy cab back in the day. You pay somebody under the books in an illegal car, three or four bucks to take you somewhere. And Uber does provide a really safer, much safer tracked down to the millisecond, like where the car is and vetted approach than those cabs, right? So that was progress in my mind.

David: (00:21:39) Maybe. Right. You saw the Uber safety report, what, 2000 rapes in a year or something like that or assaults or…

Jason: (00:21:45) Well, I mean, you have to understand the denominator on these as well. I mean the denominator is giant. They did 1.7 billion rides in a quarter, so.

David: (00:21:51) Sure, just let’s not pretend that they’ve solved the inherent safety issue that is getting into a stranger’s personal car. Right. They haven’t, right. Maybe they made things better and I don’t even want to argue that point.

Jason: (00:22:02) I do. I think they’ve made it, I think it made it much safer than a cab.

David: (00:22:05) You’re right. Uber is a better product in user experience. There’s no doubt about it.

Jason: (00:22:09) And safer. You admitted safer.

David: (00:22:11) Maybe. I’m not going to concede that point, but we can put that one aside.

Jason: (00:22:14) I would, because here’s the thing, it has to be safer because you know exactly where the cab is at every point. And you have the credit card number of the passenger, so for both parties you have their entire history of where they’ve taken people and you have the minute by minute location, second by second location of the car. With a cab, people used to share licenses in the yellow cabs and they could drive anywhere and they’re not tracked and there is no central dispatch tracking it in real time where you can press the safety button and say there’s a problem.

David: (00:22:42) Sure. On remediation on following up, if there was a great investigation into these claims, you would have more data, no doubt about it. One of the key problems with Uber and other platforms is they’ve been very reluctant to do that. Not only have they been in reluctant to do that, they’ve been actively interfering in investigations.

(00:22:59) One of the main scandals that came out before Uber went public was when one of the senior executives went to India to essentially get the medical records on a rape victim there because it was looking bad. I think this story is very muddy on whether safety’s actually better.

Jason: (00:23:15) Yeah, I think there’s been some regime change there.

David: (00:23:17) Yeah, sure. Right.

Jason: (00:23:19) What do you think the results should be, because this is one of the statistics I got early on from TK and other folks was, and it’s still true today, the majority of drivers are switching from 10 hours to 50 hours the next week, like massive swings in how often they want to work and how they want to work. You’re a proponent of people having agency, you just said, and you wrote a book about it. You’ve orchestrated your company around that, so you yourself say, hey, this is how white collar workers should work. Shouldn’t the blue collar workers be able to have the same freedom that you yourself promote for white collar workers?

David: (00:23:50) I think that’s a great debate because it’s this fallacy of what blue collar workers want most of all is the freedom to choose. They want the flexibility. Absolutely not. If you ask these people, what would you rather, would you rather have the flexibility to set your own hours or would you rather be paid, let’s say 15 bucks an hour, have benefits, have sort of an expectable scheduled? They’d go, of course, I’d rather have those things. Of course I’d rather have a predictable income.

Jason: (00:24:15) No, I think you’re 100% wrong. You just said yourself that you want to have lunch with your family and go for a walk outside. That’s exactly what these people want. They’re no different than you, David—

David: (00:24:25) They’re not doing that.

Jason: (00:24:25) They want to drop their kids off at school. No, that’s exactly it, they’re dropping their kids off at school. They drive Uber for a couple of hours, pick their kids up, drop them off at whatever they’re doing, sports or something, and then they go do a couple of rides. That’s exactly the pattern of people who are using the gig economy is that they want to do hours of work in pockets that they can set.

David: (00:24:43) That is the idealized version of the people who don’t live at the edge of precarity. I just heard a stat that was 90% of all the Uber drivers in New York, they work full time. And when you talk to these drivers as I’ve done a fair bit, not on Uber because I refuse to use Uber after the torrent of scandals. But I still use Lyft and Lyft is essentially the same system with marginally better governance perhaps.

(00:25:06) But when you talk to these workers, like their concerns are not oh yeah and then like in the morning I was just playing with my kids and… No, no, like these are poor people getting exploited.

Jason: (00:25:17) Wait, wait. but if you’re saying that they’re making less than minimum wage and they’re being exploited and they’re working full time, why wouldn’t they take one of the massive number of full time jobs available at Starbucks, Apple, Walmart, Target, all these places that can’t find workers today. Those people cannot find workers and they pay 12 to 15 an hour at those places. Why would they take the car driving job if it’s so bad? That’s where I think your argument breaks down because they’re opting into it and you said before, well they’re doing it on the margins. But now you’re saying they do it full time, which might be the case in New York if they are full time in New York, aren’t there better options if they’re making under minimum wage, which they’re not?

David: (00:25:50) Well, clearly there is for a lot of people, right? Which is why the churn is so high. I saw another stat is basically like 100% of drivers churn every year or something like that. Like truly astonishingly high churn rates. And part of that is that people realize what the true cost is after it’s been a while. Like taking two Uber rides or doing it for a month. You don’t incur any of the costs that are inherent with driving your own automobile around, right? You’re not going to be changing tires, you’re not gonna be having to change a transmission. You’re not gonna do any of the things that happen if you drive 200,000 miles, right? So I think this idealized version that it is essentially sort of suburban people who don’t just want to make it a little bit of extra cash and that is how this is made up. It’s just bunk. It’s not, it’s majority poor people.

Jason: (00:26:36) Well, I think the original idea, by the way—

David: (00:26:37) It may be, if that was what the original intention was.

Jason: (00:26:40) I think the problem is if somebody buys a new car and they are experiencing that huge depreciation, that is an issue. The idea always was with Lyft especially, or Zimride and Sidecar. Those first ones was, Hey, you got this car already. You might as well use it and make a little extra money on the side and pay for it. And that was sort of the expectation in the early days. And then people liked it so much. The drivers liked it so much, they opted into doing it as careers because those people do have agency and could go work in other jobs. I think is one of the problems where your argument breaks down, David, is that you think rich people have agency and can change jobs and you think the poor people don’t have agency and can’t change jobs. They can. This just happens to be an entry level job.

David: (00:27:20) Yeah, and they’ll change from one level of exploitation to the next. If you look at the people who are actually making minimum wage, which by the way is not $15 in most of the country, right? Like it’s closer to seven or eight bucks. Oftentimes people who are making minimum wage and dealing with that situation, they don’t have real agency. They don’t just work one job, they work multiple jobs. And in any case, as some of these arguments we’ve had on Twitter, you’re an investor in Uber, right? Like I’m not going to convince you that Uber is a predatory organization that exploits poor people because like that’s just not cognitively dissonant with your position. Right. And that’s fair.

Jason: (00:27:54) If you want to ask me what my position is. Actually my position on it is I think it’s provided a massive safety net for society of an entry level job that anybody can do at any time to make money and that actually produces this great foundation which has resulted in us having the lowest unemployment in the history of the country. Because we have these entry level jobs that people can jump in and out of while they plan for better jobs and increasing their skills, which are freely available to learn on the internet. They can go—

David: (00:28:21) Yes, I think this is correct.

Jason: (00:28:22) And level up.

David: (00:28:23) Because this is the American dream pitch that you start sort of at the entry level and then you have all the opportunities available to you and you will pull yourself up and you will get to a better place. The only problem with that is the American dream is false in America. If you look at any of the studies on social mobility, the US have one of the lowest degrees of social mobility.

Jason: (00:28:42) Wait, false how? False that it’s not happening or false, that it’s not possible.

David: (00:28:45) Well, everything is possible. That’s an uninteresting discussion on a socioeconomic level. The interesting discussion is at what rates does it happen? At which rate does someone from the bottom 10% end up in, let’s just say the top 40% right, and it’s not even bottom 10% it’s more like in the bottom 80% what does it take to go from blue collar to white collar in the US? And this is one of the things I care about because that’s what I went through in Denmark. My parents were absolutely working class. They were probably working class poor. I didn’t know. I didn’t know until I was maybe 16, 18 because I had no consequences from it. I got a wonderful education. I got a great healthcare system, which by the way, I needed because I had some hearing issues when I was a kid that required multiple surgeries and so on, and so forth. We never paid a dime for it. It was never in our consciousness that access to medical care was something that was charged for. Right? So I had the experience of essentially living through the American dream of ending up in a far better place than where I started socioeconomically.

(00:29:45) And if you look at the statistics, America just sucks for that. Like if you were born poor, you are likely to end up poor. There isn’t this great transmission of poor people ending up being rich people in the US it’s possible. There are lottery winners, there are exceptional individuals who will sort of defy the odds. That happens all the time. It happens in all societies. But that is not a great way to gauge whether you have a fair and sound society. And why do I think that is? A lot of it is about these sort of baselines, right? That hey, can you get a great education if you’re poor in the US? It’s pretty difficult. You can be an exceptional student and then maybe you can get scholarships and so on and so forth.

(00:30:27) But if we’re only allowing the exceptional out of poor people to essentially get a proper education, yeah, well, we really haven’t solved anything structurally. We’ve just allowed a handful of very fortunate and perhaps very skilled people to perpetrate the myth that the American dream is still alive and it’s not, it’s absolutely dead.

Jason: (00:30:44) Yeah. See the only problem with the argument that the American dream is not alive is that I see it every day in what I do here in Silicon Valley, in angel investing.

David: (00:30:54) Because you see anecdotes, you see anecdotes, you don’t see the lived experience of 300 million people. You see a handful of people and you see the ones that are exceptional by the fact that they’re in front of you, right? How many poor people are making it in front of you, making a pitch to you? None of them. Or if they are, it’s the exceptional proportion of them.

Jason: (00:31:14) Oh, no, that’s not true. That’s not true. I would say a large number of them come from blue collar backgrounds, with their parents. That actually is a trend where that, I think stress…

David: (00:31:22) Again, how many people have you seen? 1,000? 2,000? 10,000?

Jason: (00:31:26) Well, besides the two of us on the phone call here. Yeah, it’s, I would say it’s a significant portion of startup founders come from that background, but that could be an outlier situation where there is a bias there.

David: (00:31:38) I guarantee you that it is because I’ve actually looked at the stats. And if you look at the stats for social mobility, which is the way you write the American dream, can you go from rags to riches? It happens worse in America than almost any other Western society. And you just go like for me, as someone who’s immigrated to the US I just go with indignation that is fucked up.

(00:31:58) How did we end up with such a rich society?

Jason: (00:32:01) Why did you have such a bad… Why did you have such a different experience?

David: (00:32:02) Because I had an exceptional experience. First of all, I was prepared for that exceptional experience by going through all these safety nets. I guarantee you I would never have been qualified to work with Jason and sort of start the company and run it for 20 years with him if the Danish state had not paid for my healthcare, had not paid for my education, had not paid for all of these things that made my lived experience such that I didn’t feel like I had to drive a taxi like my dad did. Which I mean that that is a literal statement of truth. My dad literally drove a taxi on and off in Denmark for quite a while.

Jason: (00:32:34) My dad was a bartender, so a very similar job.

David: (00:32:37) And yeah, I didn’t look forward to that being my profession. It didn’t even occur to me that that was something that I had to do, right? Like I was on a different track right from the get-go because there’s a social—

Jason: (00:32:47) How much of the upper mobility do you think is people giving up on the American dream and not being motivated to go online and learn? Because when we were coming up, none of this information was available online. Today, every course at MIT, majority of the courses at Stanford, Harvard are all available for free. And if you had somebody come into your office at 37signals, makers, of course, Basecamp.com and they said, listen, I took these six courses over at MIT, here’s my coursework in AI. And you were hiring an AI person, would you in any way care that they had gone to MIT and paid them or had just done the courses online?

(00:33:26) And in fact would you not pick the person who is self-motivated enough to take the six courses in AI machine learning and hire them over the person who paid?

David: (00:33:36) Oh, totally.

Jason: (00:33:36) Because I think it would be the latter.

David: (00:33:37) Yeah. I mean we’ve never cared about credentials at Basecamp. We don’t even look at these things. I don’t know at which universities, the people who work with me at Basecamp graduated from, it’s just not interesting. We look at the skills but when you look at those skills, it’s absolutely true. The information is out there. What is not out there is the time and the prerequisites to chase it. There’s a reason when people go to college, they consider that a full-time job. They may work part-time on top of that, but going to college is a full-time job. It’s not a whole lot of people who just have 40 hours a week or even 20 hours a week to just say, do you know what, I’m going to, after I’ve been at a brutal minimum wage job, I’m going to get online and I’m going to study for five hours a night.

(00:34:16) The people who do that, they’re truly exceptional. And how do we know that? Because there’s so few of them. So the proof is in the pudding.

Jason: (00:34:23) Yeah. Well, no, maybe not. This may have to do with motivation because you know the average American watches four hours of TV a day. So if they swapped out but two hours of that, just to half of it and watched educational material, would they not in a year or two be upwardly mobile in your mind?

David: (00:34:39) No, because this is…

Jason: (00:34:41) They wouldn’t.

David: (00:34:41) Blaming poor—

Jason: (00:34:42) Really.

David: (00:34:42) Blaming poor people for their predicament is just not an avenue I think that’s very interesting because you can do just comparative social studies.You can look at what happens in societies that have these well-functioning social nets that help people up. Like what are the broad trends?

Jason: (00:34:58) No, no. I would argue I’m in agreement with you on healthcare and I’m in—

David: (00:35:02) Like, I don’t think Danes are any smarter than Americans, right? Like hopefully that’s not something Americans think.

Jason: (00:35:07) Absolutely. It’s a better system. We should have a world class education system like the Danish, obviously. And we should have world-class—

David: (00:35:16) Healthcare.

Jason: (00:35:16) Healthcare, but putting that aside…

David: (00:35:18) But you can’t.

Jason: (00:35:19) The fact is that—

David: (00:35:20) I’m just going to stop you. You can’t put those things aside.

Jason: (00:35:22) If all the information is available to learn freely on the internet. Freely, everywhere you turn, any school can be learned and we’re hiring people to your own admission based on their skill, not their credentials.

David: (00:35:33) Yes.

Jason: (00:35:34) Then maybe the educational system of going to college and spending all this money and having credentialing should give way to just learning skills quickly?

David: (00:35:43) No.

Jason: (00:35:44) And the ability to do that on your own.

David: (00:35:46) I mean, yes, it is a theoretical ability and I think it’s fine that it’s available as an option, but I think we have a larger responsibility to society than simply cranking out workers. We should be cranking out citizens, people who are broadly versed in not just a narrow technical skill, like, oh, I know JavaScript. Yeah, okay, that’s good. Know what? We need fewer people who just know JavaScript and more people who know JavaScript and ethics and geography and all these other things, right? Like these are tools, skills. This is, hey, I’m really good with a calculator. What can I do? Do you know what that that’s not that interesting. And I think it’s really damaging for society as whole when we look at the purpose of society just being, can you get a job?

Jason: (00:36:30) But it is interesting to add those skills to get out of the low paying entry-level jobs like delivering for DoorDash, Lyft or Uber.

David: (00:36:37) I agree. It’s just not happening, right? You can just look at the statistic right now, the masses working for Uber, Lyft and DoorDash are not going online and they’re not getting these amazing degrees, right? In fact, they’re often getting—

Jason: (00:36:50) Why? Why?

David: (00:36:52) Because it’s hard, right? Like I went to a… I took a university degree that was essentially a full-time degree. It had professors, it had classmates, it had all these reinforcing social contracts that help you learn. To just sit down on your own in front of a browser and then expect like you’re going to be a world-class programmer. You’re going to be a world-class… It’s possible, but it’s exceptional.

(00:37:12) And on a societal level, we can’t just look for exceptional solutions. We must look for the common solutions that simply empirically work.

Jason: (00:37:18) All right, so here’s one that seems to be working. Development schools seem to be producing some number of qualified developers and obviously there’s some controversy around these income sharing agreements. ISAs. Lambda School is one, that’s the one most people know. It’s, I think you pay 20 or you do $30,000 and they take a percentage of your salary capped at 30 or something like that. Do you think that’s net good for society, that innovation of ISAs or do you think it’s just a Band-Aid, capitalistic acceleration of what’s wrong with the American system?

David: (00:37:57) Oh man, you’re really picking on my talking points. That last one that was a zinger. It is absolutely a Band-Aid on capitalist society failings. The fact that anyone would think that getting a remote sort of learning experience for nine months, like that’s something people should be on the hook for 30 grand for. It’s just truly mind blowing. I think on that particular issue about ISAs, they have all the same incentive pitfalls that subprime mortgages did. That essentially the originated of these bonds, they get to sell them off and do, I mean that’s the a controversy… Well, controversy is shitty word. The backlash against Lambda right now is the revelations that they’re selling off the ISAs. That they’re not aligned.

Jason: (00:38:43) Yeah. They put them into a bundle like mortgages and they sell them to somebody to go collect on them.

David: (00:38:49) Exactly. Now you’re a tranche? Like what the fuck? We’ve reduced people to tranches in a mezzanine of securitized product and then they’re on the hook and they’re being promoted. I read some of this promotional materials from some of the hedge funds and lending institutions who are partnering with Lambda about it. And they’re all about, this is a great new avenue for attractive returns and you can get 8% on… hey, these are people.

(00:39:17) Do you know what? There’s just something aesthetically extremely revolting around packaging people’s lives up in this way, slicing them and then selling them as a securitization when what we really should have in the first place is what’s on the actual docket right now in the political system. Hey, cancel student debt and make higher education tuition free. That’s the real solution.

Jason: (00:39:37) If it’s the state-run, affordable one, not, oh, let’s give…

David: (00:39:42) Oh, no, no, no. It’s not like let’s send everyone to Harvard or Stanford or yeah, totally.

Jason: (00:39:46) I like the idea of Lambda School because putting aside the bucketing people into a tranche of here is a thousand loans, you’re going to make 8% on it. I like the fact that it’s an option because these are high paying jobs. You have a really good chance of getting one when you graduate—

David: (00:40:04) No.

Jason: (00:40:04) Even if it’s just 60, 70, 80k.

David: (00:40:07) Like first of all, this whole thing with placement rates. I’ve been getting a lot of information about this.

Jason: (00:40:11) Really, you think it’s a scam?

David: (00:40:12) Once I started tweeting about it, I got a bunch of people who knew what things looked like on the inside, who started sending me messages and—

Jason: (00:40:19) Oh boy, I think—

David: (00:40:20) Once journalists and so on begin digging into what the actual placement rates are, they’re going to see a system that’s just utterly—

Jason: (00:40:26) At Lambda School.

David: (00:40:27) Yeah, at Lambda School. That are underly unsustainable.

Jason: (00:40:30) So here, let’s do a thought experiment. If a hundred people went through, what do you think the number is that have to get a job in tech in the entire scale to make it worth having this program. Where do you think is the acceptable—

David: (00:40:41) Well, the funny thing is you can just do the math, right? So let’s say you take a bond out on someone for 30 grand. What does it cost you to provide the education? And then you go… Like, let’s say it costs five grand to provide the education. You just needed one out of six to essentially go through and then you would be break even. If, I mean, all things being equal, you’re not considering acquisition costs and so on. This basically means that you can set up a system where you just expect that two out of six, right? Now you’re at a profit. That four out of six people, they’re going fail, right? You’re going to give… you don’t know which one’s going to fail.

(00:41:13) It’s almost like VC economics where you go, like, hey, I just need this one—

Jason: (00:41:15) It is.

David: (00:41:17) —one hit out of 10, then I’m golden and fuck the other nine. Right? I just need two students out of the six, then I’m golden. Fuck the other four. And then you read some of these stories about who the other four were, how they were sold on the program, how they got enrolled in it, what they had to give up in life and so on. And you go, like… you know what, just going, fuck the other four. That’s a really terrible way of going.

Jason: (00:41:39) Are they hard selling them? You think they’re hard selling them?

David: (00:41:42) Oh, absolutely. Like the whole pitch is, hey, you work in some entry level job somewhere making what, $32,000 a year. Here’s your golden new opportunity in the off worlds. Jump on this Blade Runner ship and we’re going to take you to a 75K a year job. All you have to do is go through a nine-month program. You’re good. You’re golden, which is just not true.

Jason: (00:42:03) Yeah.

David: (00:42:03) And I think that that’s… it is predatory and I think it’s a bad model and let’s get to the root though. Let’s get to the root, which was you labeled the root. This is a bandage.

Jason: (00:42:14) What do you think if they charged $5,000 and then got whatever, 25 K over five years if you got a job, but if you didn’t, no problem.

David: (00:42:25) I think once you lower the economics to such a level where it’s not existential, it’s completely different. I’d like those models a lot better. And there are actually a bunch of coding schools that are priced on that.

Jason: (00:42:34) Somebody is doing a free one, right. There’s a free code school.

David: (00:42:36) Yup. Yup. Which is wonderful, right? Like if you’re going to do a bandage on the failures of capitalism, do the bandage as charity. I have the utmost respect for the people who tried to soften the blow of American capitalism through charity, especially the kind of charity that it’s not just writing a big check for a tax write-off, but the kind of charity that is personal investment of their time, their empathy into real people.

(00:42:59) And then there are other schools that are commercial but commercial on a completely different level. Some guy just wrote me last week talking about this school that’s like 200 bucks a month. I have no sense of vetting this.

Jason: (00:43:09) Oh, that’s great.

David: (00:43:10) But that’s still, I mean, 2,500 bucks a year. And I think they said the whole program took about 18 months or something. So that’s roughly in this realm of what you’re talking about.

Jason: (00:43:18) That’s like paying a phone bill, or your cable bill or something like your phone and cable, it’s like two of your bills.

David: (00:43:23) Yeah, I mean, let’s, let’s not sort of undermine the purpose. We were just talking about precarious gig workers. A lot of them don’t have 200 bucks extra a month to spend an education.

Jason: (00:43:32) So you’re saying poor people can’t put together 15 hours to increase their future. So this is where I find yourself a little condescending in that regard. I think even poor people could put the money together and aspire to take one of those courses.

David: (00:43:44) Dude, what, what is it like two thirds of the American people don’t have like $400 for an unexpected bill? I think that’s the statistic.

Jason: (00:43:51) I think that, yeah, they debunked that. They debunked that headline a bit. Yeah. They, the way they asked that I think is a little debunked. They could, they might have to ask one of their friends for it, yes. The point is people in our country love to have debt.

David: (00:44:01) I don’t think they love to have debt.

Jason: (00:44:03) I mean, we have a debt driven society, even affluent people and middle-class people take debt when they don’t need it.

David: (00:44:08) Right, because nothing happened on the general sort of income scale from 1980 forward while education, healthcare and housing just skyrocketed. So the reason people take on a whole lot of debt is that the expectations of living standards that they were seeing growing up, they’re just not true anymore. For most people since 1980 forward, they had no progression in real income and they had astronomic rise in expenses on just the three basics of housing, education, and healthcare.

Jason: (00:44:38) All right, so Jeff Bezos and Bezos Expedition gave you that minimal viable lifestyle. He provided for you this incredible gift buying shares at an extraordinary price. And for this, you barbecue him incessantly on Twitter as the richest man in the world.

David: (00:44:55) Yes.

Jason: (00:44:54) And I was breaking your chops about this. You and I have full contact Twitter even though unfortunately as we get older we seem to be agreeing on so much.

David: (00:45:03) Everyone becomes a socialist eventually. So I’m just dragging you along a little faster than natural progression.

Jason: (00:45:08) I know. It’s so true. I’ll tell you, I love capitalism, even late stage capitalism, but I just think that we’ve screwed up so bad on healthcare and education.

David: (00:45:17) Yes.

Jason: (00:45:18) That objectively if we’ve done this bad, we need to look at who’s done it great and just fucking copy the system.

David: (00:45:26) Yes. Yes.

Jason: (00:45:26) Like literally just need to go over there and fucking photocopy because this is a shit show where people are scared of getting sick and they’re not able to just get a basic education at a cheap price. If that’s socialism, I’m all in on it.

David: (00:45:40) And it is. That is the huge thing where I’m, like, hey, I’m on Twitter advocating for what’s being called socialism, and I’m like, these reforms are so mild.

Jason: (00:45:49) They’re mild, yeah.

David: (00:45:49) They’re so sensical. They’re even it economical when you look at as the GDP discussions we had, right.

Jason: (00:45:55) That’s the best part about it is it makes business sense.

David: (00:45:58) Yes. This doesn’t have to be about ideology and sort of the clash of ideologies, socialism versus capitalism. Hey, I built my business on capitalism. Free market. It works great for web software. I don’t want the state to run web software. I want to be some regulations, especially around privacy and monopolies and so and so forth, but like the free market is good. No one is saying the free market isn’t good.

Jason: (00:46:18) Well, one of the problems with the breakdown in the discussion is the word socialism is very triggering and being anti-capitalist is also very triggering. So I’m very triggered when people want to take away capitalism.

David: (00:46:29) Which no one does. No one does. I mean there’s a fringe group that wants to do anarchy, and—

Jason: (00:46:32) Eh, Bernie kind of.

David: (00:46:35) Bernie is mild.This is what gets me about Bernie. Bernie in Denmark, he would be a middle of the road potatoes centrist.

Jason: (00:46:43) Really?

David: (00:46:43) Absolutely.

Jason: (00:46:45) Yeah. What does a radical in Denmark look like if Bernie’s center, what’s left of him?

David: (00:46:49) The funny thing is a lot of this stuff that gets called most radical, it’s basically like the US 1950. Do you know what the top tax rates were in the 1950s in the US? The US invented the income tax. The US was actually incredibly progressive on taxation for a very long period of time, all the way up until basically Reagan, 1980s.

Jason: (00:47:07) Yeah.

David: (00:47:07) All the radicalism that people freaking the fuck out over now you just, like, hey, that’s American history, like 60 years ago. It’s not exactly like it’s from a foreign civilization.

Jason: (00:47:17) So on a taxation basis, there are people who want to go all the way up to 60-70% in Denmark.

David: (00:47:23) Oh, it was 67% up until a couple of years before I moved and now it’s down around 52. Which do you want to know what the irony here is? The irony is that in California, my effective tax rate is virtually the same as Denmark.

Jason: (00:47:36) It is 49% or something. Yeah, it’s brutal.

David: (00:47:39) So you pay the 13% on income tax in California and then you do the 37 on the federal side like and you’re at 50. And in Denmark I think it’s like 52%.

Jason: (00:47:47) Thank God for capital gains. Just sell shares in your company. Never take a salary.

David: (00:47:52) Exactly. That’s how most people beat it. And Jason and I were the idiots. We just only take salaries. We never take capital gains. So we pay full boat. And this is actually why people have their fucking pitchforks out.

Jason: (00:48:01) Well no, you could pay yourself with a dividend.

David: (00:48:05) No, dividends gets taxed as income. You need capital gains. And do you know what the thing is? I’m not interested. I’m happy paying 50%. 50% is a good number.

Jason: (00:48:14) When’s the last time you talked to Bezos? I’m curious. And then does he like ever DM you and be like, bruh, I provided you the minimum viable lifestyle. You’re breaking my chops and I’m like your number one target on Twitter.

David: (00:48:26) I think it’s probably about 10 years since we spoke to Bezos last.

Jason: (00:48:28) So what is your main beef with him? That he doesn’t pay taxes, that he mistreats the employees.

David: (00:48:34) We’re making this beef personal and it’s not personal.

Jason: (00:48:37) Well because you say his name in the tweets, it is personal by definition, right?

David: (00:48:42) Well I call shit out when I see things that are relevant to Jeff. Like he’s the richest man in the world. I don’t know if he currently is or I mean whatever. It changes sometimes from week to week.

Jason: (00:48:50) I mean aside from Putin whose wealth is undisclosed, he is. Yes.

David: (00:48:53) Right.

Jason: (00:48:54) In terms of disclosed wealth.

David: (00:48:55) Yes. Right. And even if you are sort of competing with Putin on wealth, like you deserve some scrutiny here, right? Like we would like our oligarchs to undergo some scrutiny and that’s what I’m basically saying.

Jason: (00:49:06) The cluelessness of Bezos in this regard. It’s really clueless of him to not be self-aware enough to know that when you are the richest person, you do need to take steps. And he did tweet at some point, I don’t know if you remember this, like, how do I give money away?

(00:49:21) And I was like, you built a trillion-dollar company so you know how to build $1 trillion in value and whatever they’re selling every year. Tens of billions of stuff. Like I think you’ll figure it out, kid. Like there’s a lot of ways to give money away. Just give it to Bill Gates. He seems to know exactly how to lower poverty and mortality rates. He’s extraordinary at it.

David: (00:49:40) Well, let me give you an even better example. Just pay your workers. Like if Amazon has a better working conditions, including for people who work in the warehouses, that’s a great way of giving back. Just pick a city like Pittsburgh and don’t ask them to give you $4 billion. Like there are great ways to run a more ethical business where you’re not sort of just trying to hoard all the money and then at the end of the day you get your midlife crisis and then you’re trying to figure out how to spend it all.

(00:50:05) No, just not be such a hoarder in the first place. We’re all going to be better off if there was a little bit more slack in the system. And I think there’s just such a obsession pathology in a lot of American business that is like we’re going to squeeze everything to the last cent and I don’t care. We’re going to exploit. We’re going to get there and oh shit, it’s the end of the day. Can I buy an art wing somewhere? Can I do an endowment for some university?

(00:50:28) And you go, do you know what? Philanthropy does not make up for dysfunction. We need structural changes. And I think one of the structural changes we need is that we don’t need that many billionaires and they don’t need to be that rich. So if we can Institute a progressive tax regime where the richest 400 families in the US don’t actually pay the lowest effective tax rate in the US, that’s progress. I’m a big fan of the wealth tax, too.

Jason: (00:50:54) Oh, I hate the wealth tax.

David: (00:50:55) I’m a big fan of the estate tax. I’m a big fan of taxes in general.

Jason: (00:50:59) The wealth tax is a disaster. Everybody who’s done the wealth tax has regretted it and gotten rid of it, even France.

David: (00:51:05) No they haven’t. No they haven’t. They failed to enforce it because of structural issues in Europe.

Jason: (00:51:10) Do you know how hard it is to go count all of your race cars? Put a value on them every year for 1% and then pay it?

David: (00:51:16) This is a complete fallacy.

Jason: (00:51:17) You going to have to get an auditor to come and look at your 12 Ferraris David and your 14 Lamborghinis and figure out what the cost of those 27 cars are.

David: (00:51:26) And it’s so easy. There’s a market for these things.

Jason: (00:51:29) No, it’s not easy. Then you have to hire like somebody to go assess the value of all the—

David: (00:51:34) Hey listen, what do you do all day? Don’t you do valuations? Don’t you do angel deals? So when you put prices on shit, yes you do. There’s entire industries focused around this.

Jason: (00:51:43) No, no. We just say it’s 6 million. It’s 8 million. Great. Sounds good. Let’s go. That’s what we do. We don’t hire like some outside person and be like, oh my God.

David: (00:51:50) But there was a market. All you need is a market. You don’t need a valuator. You just need a market. You need transactions and then you can look at it and it doesn’t even matter. 80% of all the wealth is in publicly valuated stocks, bonds and assets, financial assets. Those financial assets, they’re constantly assessed. That’s what the entire public markets are around. We know exactly how much Bezos is worth because basically his entire net worth is his stock portfolio.

Jason: (00:52:15) Well, no, the better thing would be to just have a minimum tax. It would be so much easier if just people paid a minimum tax like I think that would be an easier one to sell. I’m just thinking about the American capitalistic bought and sold government system. Just a minimum where whatever you made, you have to pay a minimum of 20%, even as a crazy rich person with deductions. No matter what the deductions are, there is a base level of tax. That’s the problem here is that everybody’s figured out all these loopholes. This is why the flat tax was such a brilliant movement as well. Just, let’s stop having every possible loophole. Then people rack up losses. Then Trump’s like, oh, you know what? If you buy a plane, you can depreciate the whole thing.

David: (00:52:55) Yeah, it’s…

Jason: (00:52:56) And literally the entire discussion I hear amongst rich people now is the depreciation of a plane in one year and how amazing this is that Trump did this because you can sell your stock in Amazon buy the plane and you’re basically not exactly getting it for free, but the depreciation gets counted against those gains that year. It’s bonkers.

David: (00:53:14) It’s not bonkers. It’s obscene and this is why people are sharpening the guillotines. And I think rich people, and I include myself in that group, clearly. We’re going to thoroughly regret that we took so much and left so little.

Jason: (00:53:28) All right, as we wrap up here. Yeah, I know you’re anti-Uber, my number one investment. I know you’re also anti-Superhuman, my number five investment right now in terms of returns.

David: (00:53:38) I’m working on reshaping your investment philosophy, Jason. I mean, I feel like we got halfway there.

Jason: (00:53:44) I know my… but I can’t buy equity in your companies. So wait. There’s a Superhuman killer or corrector of tracked emails that you’re coming out with? Explain what it is or what you can explain.

David: (00:53:55) Yeah, yeah, yeah. It’s hey.com it’s a new email service with integrated clients.

Jason: (00:54:01) HEY.com. Great domain. You’ve got hey.com.

David: (00:54:04) We didn’t get, we bought, expensively, hey.com.

Jason: (00:54:09) That’s $1 million domain.

David: (00:54:09) It was big bags of money and they were very heavy. That’s how I’ve been replying people on Twitter when they ask about it. Yeah, it was pretty expensive. It’s a great domain.

Jason: (00:54:18) H-E-Y.com. Three letter domain is a million. I got $1.5 million for 20.com. Two-zero dot com.

David: (00:54:24) Yeah.

Jason: (00:54:23) I bought it for $70 like 15 years ago.

David: (00:54:26) That was a great investment and this… the guy who held hey.com, this is public records. He’d held it since, I think, ’95. And I’m like, dude. Great fucking investment. And he was actually using it. He wasn’t squatting.

Jason: (00:54:39) Oh, he was using it.

David: (00:54:40) Yep.

Jason: (00:54:40) That’s cool.

David: (00:54:41) So that was the other thing. So we bought it expensively and that was part of saying, hey, we’re going to do something completely un-us. It’s funny, someone on Twitter, when I announced that I was going to come on this show, they pulled up the clip where you had asked something about, hey, so do you want to compete against Gmail? And I said like, oh no, I’m not at all interested in that domain. And here we are. I’m building essentially a Gmail… well, competitor’s a big word because what, we’re not going for a free meal service that tries to get a billion people to watch an ad or have their emails mined. So we’re going to build a niche service as all paid email services are.

(00:55:17) But hey.com. It’s a new email service with integrated clients. It comes out in April. And we haven’t revealed a lot about the features, but one of the things we have talked about is that I’m just furious about the tracking that goes on with email. And your number four investment, Superhuman, was the worst of the bunch. And there was this big exposé, I think it was Mike Industries that put it out. Where essentially Superhuman was embedding these spy pixels and then reporting back to the sender when the recipient had opened it, where they had opened it from, how many times they had opened it, and at what time.

Jason: (00:55:48) This is kind of a standard feature, though, in like all sales automation software has this. Salesforce, everything has it.

David: (00:55:54) Well, Superhuman did by far the most grotesque, obscene version where they revealed all sorts of detail in aggregation did no one else was doing at the individual level. But you’re right, this was something that was happening in other… especially salespeople software and so on. There was no other individual email client that had ever gone this far like Superhuman did.

(00:56:14) So for us, when I read the story about Superhuman, I was just so disgusted. I thought this is just the worst. So first it led to an introspection at Basecamp. I was like, I wonder what kind of spying pixels we have? And it turned out because we used, or we use, MailChimp, it embeds spying pixels by default. And in that case it mainly just uses it to aggregate open rates.

(00:56:35) But I went, that’s still bullshit. We shouldn’t be doing that. So we stopped doing that.

Jason: (00:56:39) No, it also tells you where the IP address was. It gives you location data, too, in MailChimp. It tells you like 60% of your people are in North America. 30% are here. It gives you that data.

David: (00:56:48) Ugh, fuck. I didn’t even know that. Okay, that’s terrible too. So anyway, the pitch here with HEY.com is we’re going to cut that shit out. We’re going to essentially be a spying pixel blocking client. You can detect these things. You can do things about how you proxy images and actually designature. I just looked at… someone from your staff sent me, using Superhuman, sent me an email and I looked up in the HTML and there it was the spying pixel. It was right there at the top. They use a hidden image.

Jason: (00:57:16) It’s like read receipts. It should be, the standard should be like when you turn them on. Like, I think on iPhone you can set, I want read receipts, because I want the person to know I read it. That’s the obvious standard here.

David: (00:57:26) I do this with my wife. I do this with my wife. I have one person in my entire life who I’ll allow read receipts for. It’s my wife and it’s great. Consent-based read receipts. They’re totally kosher.

Jason: (00:57:38) Yeah.

David: (00:57:38) I’m really impressed by this conversation. I think we were on the same page about social democracy, social sort of safety nets about healthcare, about education, about breaking up big tech.

Jason: (00:57:49) And Bloomberg. We both agree Bloomberg should be the next president. So this is great.

David: (00:57:53) I think that’s another two-hour episode.

Jason: (00:57:56) All right. Listen David, it’s great to get you back on the pod and you’ll be releasing this on your podcast as well. So thanks for having me as a guest.

(00:58:03) Everybody check out hey.com basecamp.com RubyonRails.org. And if you have not read REWORK back from 2010 it is a great book. A lot of great insights in there on how to do remote work and just run an organization.

(00:58:18) You’re one of a kind, David, and I appreciate you coming back on the pod.

David: (00:58:19) Well, thank you so much for having me. Let’s not wait 10 years for another one.

Jason: (00:58:23) Yeah, absolutely. Maybe we’ll just make this like we’ll do it every year and we’ll just do the rundown of where we’re at.

David: (00:58:29) All right, sounds good man. Sounds great.

(00:58:30) Broken By Design by Clip Art plays.

Shaun: (00:58:37) REWORK is produced by Wailin Wong and me, Shaun Hildner. Music for the show is by Clip Art. Thanks to Jason Calacanis for sharing the audio of his interview with us. You can find his show at thisweekinstartups.com or wherever you listen to your favorite podcasts. And he’s on Twitter at @Jason. David is on Twitter at @dhh and I’m sure both of them would be happy to argue about Bloomberg and Bernie and the wealth tax all day long. Our Twitter is at @reworkpodcast. We’ll be back next week on Tuesday with a regular episode. Unless the class war has started by then. In which case it’s been nice knowing you all.

Anne Hathaway clip: (00:59:22) You think all this can last? There’s a storm coming, Mr. Wayne. You and your friends better batten down the hatches ‘cause when it hits you’re all gonna wonder how you ever thought you could live so large and leave so little for the rest of us.