good morning, everyone. my name is garrett johnson and we are excited to have you with us today for. realignment live 2023. i am one of the co-founders of lincoln and now serve on the board chairman and you know, we're excited to have you all here because lincoln is focused on big ideas and, engineering and and realignment does a great job of bringing together big thinkers to focus on big ideas. and so this is really core to the mission of network. in addition to you being live in this room, which is incredible, nothing beats being in person, we also have this streaming live obvious c-span. so thank you to everyone via c-span. we're excited to have you as part of this conversation. i also want to give special shout out to a long time supporter of really alignment, a financial supporter which makes it possible for marshall and sager to do what they so well. so a special you to the hewlett foundation for partnering with realignment and lincoln to provide some financial support for the incredible work that marshall and sager do on a weekly basis. the event sponsors for today. i also want to give a special thanks to them the intercollegiate studies and future without their support. this event would be difficult to put on and so having them as our partner for today has made this possible so a special thank you to the intercollegiate studies institute and america's future so. you know, as i mentioned at lincoln network, focus on big ideas and engineering. so big ideas manifest itself in different ways you know, it's a traditional sort of think tank where we are educating policymakers hopefully around how not to screw up the internet more than they already have we, you know, spend time on the hill. zach graves, who's the executive, has built an incredible team. dan lipps. i mean, have, you know, runs policy for lincoln. grace meyer is the ceo and they built an really incredible team here in washington, d.c.. i was talking to someone before we got started, and this is the first time where we actually have no one living full time in california and san francisco and pretty most of the team lives here and, washington, d.c., which i don't if that's a good thing or a bad thing. but there's a lot to do to keep everyone busy here in washington, d.c., with all of the policy conversation going on, many of those conversations will be featured during today's lineup. this event realignment like first kicked off in 2020 in miami and to, you know, capacity issues out of covid. we kept it to about 50 people and today we have, you know triple if not more than that register that be here during the course of the conversation and you know that is just a small percentage of the on a monthly basis the realignment grown incredibly over the past few years. they now have hundreds of thousands of listeners on a monthly basis in addition to the increase able speakers that will featured today. some other highlights i'm a weekly listener to the realignment. other highlights are people like balaji sreenivasan, mark andresen, eric weinstein to, jd vance and, josh hawley, marco rubio the most recent podcast that came out i think yesterday is with mike gallagher, congressman from from wisconsin and talking about his chairmanship of the china special task force special committee and and the topics that he's going to cover as part of his chairmanship looking at the role of ccp as you know tries to gain ground in the u.s. and european markets but they also talked about issues like diversity in the military and, a whole range of topics. and as you know, you know, there's just so much ground that marshall and sagar cover in their conversations so please do go to that podcast and continue to support the realignment we are excited that for a full day of great conversations one of the first conversations to kick off the morning will be with someone that i've known for a number of years. we both lived in san francisco, so during the time he's now based in colorado, i moved to florida like a lot of people we are refugees from the from the state of california but he's an investor in my company now and he's very thoughtful guy come from an academic background who made a shift to venture capital he has a new book out that's really fantastic and it's titled paper belt on fire how renegade investors a revolt against the university among many things. one of his claims to fame as he helped to launch the teal fellowship. and as many of you know, incredible founders have emerged out of teal fellowship. i won't steal his thunder michael gibson will tell you that and many other stories. so please welcome to the stage to kick. realignment 2023 marshall the saga and michael gibson. yeah, i just want to start off by saying huge thank you to lincoln network. it's everyone here. we don't do many live recordings. it's a blast that this is actually like a totally packed house today. quick run of show. we're doing these like quicker 30 minute conversations. definitely. like, come in, come out topics. the shorter podcast we're going to put them together and then put them out on the feed. so let's just kick things off. mike i think it's really key, especially because we're sitting here in dc what is the paper about because honestly it doesn't feel like it's on fire right? it's pretty good. yeah, i things is important to me. when it came to the book title, it's like, how do i characterize of what i see in the world? so mutual acquaintance, friend of ours, balaji sreenivasan and i used to like just walk around san at like midnight jamming on ideas and back in like 2013, we started dreaming of that, you know, just as the rust belt defines the midwest and some of the hollowed out industries there, that maybe there were technological trends that we're going to put pressure on what we saw as these east coast institutions and and businesses. and then biology came the paper belt and so what is that? it refers to right here starting in dc up to boston where dc laws money, regulations, visas, so on printed on paper in delaware you can incorporate on paper in new york symbolically, the wall street journal, new york times, madison avenue printing media ads on paper and then finally as the arch symbol of the american education system, harvard and mit printing diplomas on paper now, you know, that's kind of cute name, but the one thing that stood out for me when i you know, the more you hang out with punks and computer security and crypto people is, this idea that in a paper economy, you are relying a third party, usually an institute person, to validate an that this piece of paper is real and then it means something. so the federal reserve prints money. the treasury department will tell you whether it's real or not, and somehow that value is secured, that likewise a diploma is a piece of paper and theoretically it is meant to signal something that is validated by the institution that that issues it. so the idea of bitcoin was created to to disintermediate these third parties. so that inspired me, you know, these institutions that are meant to validate and authenticate these pieces of paper, they've just become less trustworthy, reliable over time. is the dollar what we think it is? not quite sure. a diploma signaling skills something else? not quite sure. and this is even true of modern art, right? where you know someone tells us that you know, some something that a child could do is, well, it's been authenticated by these institutions as is something off about that. so wanted to have that as the theme my work we focus on a lot on on people who don't have a college degree so there is a criticism of the higher education system, but i think it applies broadly to all these institutions. and yet, michael, you know, we've also seen some of the alternative institutions also on fire, i think a little bit in the last year. college education in i believe the number of applications are higher than ever, dropping standards. people found out they were willing to pay $75,000 a year for zoom school, actually didn't impact their tuition at all nor in terms of the demand of that institution. i believe law law firm, no law school matriculation is also sky high. so to what extent this a narrative that we want to be true and then what extent is it a narrative is actually true? right. so, you know, not a settled debate, but the education pays, you know, never denied that. the question is why does it pay? so there's a wage differential between people who have degrees and those who don't. you know, the standard story is something that, you know, the capital story that people go off universities. those universities teach them skills, impart those skills, and then those skills are rewarded, the labor market. but there's a strong body of research in economics that test. this know most famously bryan caplan in the case against education presents idea of the signaling theory and what is that. well it means that, you know, it's not what you learn in school that is valuable in the marketplace it's actually what you're signaling about yourself a person that you sure have sharp cognitive skills but more than that perhaps is that you willing to undertake a four year project at great expense take assignments, hand them in on time, show that you're reliable and quite frankly obedient and the labor market rewards that so i think a time of crisis when the idea of a future money becomes valuable, everything becomes present oriented. so that means established businesses establish institutions. and so maybe that signal actually becomes more valuable. and in that high interest rate environment, something i'm curious about here, obviously in this kind of you get into this in the book, the criticisms initially of, the teacher fellowship, but when we just zoom in and, look at what you're actually doing, it's saying hey there are probably smart under 19 year olds who if you them money mentors focus they could do a lot of really interesting things it's not shocking i produced a bunch of like interesting ideas institutions you could talk about that. i'm curious though and this goes to your 1517 work what is scalable from that right like collecting bill gates money. he was 19 in the seventies. that has always kind of been true. so for mike, all the kids who have less left, right, the k-through-12 education system after covid right, what can applied to them? they've learned from your fellowship in 1517. yeah that is strong pushback we get you know or i get from the and then even the program is okay work with the olympians and navy seals what do we do for the average american and it's true so like famous example, we worked with vitalik buterin helped him launch etherium vitalik learned mandarin on his own. you know, he was just like typing mandarin in his phone. he's like, oh yeah, i taught myself, okay, that is. and pretty in the world. you know, what i've looked to is i think at a policy level, for one thing, if we acknowledge the signaling story, then, you know, issues like the student debt crisis become, you know, it's it's, it's the idea of free college is even crazier because then you're just letting more and more people pursue this arms race to send a signal that that is socially wasteful. so i think at the highest level, it would be great if the government did not that behavior. but on the more practical level i've been actually recently inspired by countries to some degree germany and austria, but really switzerland stands out to me because they have a robust apprenticeship. the thing about skills that the best way to learn them is actually from the people using them or on the job, learning by doing and that is something that we saw in the fellowship but i think it can apply across different trades industries. i mean switzerland it's not just manufacturing the trades, it's also retail and so on. something like 70% of all swiss teens partake this in this program. they paid $1,000 a month and then they're able launch careers without college degrees that aren't, you know, denigrated by culture. these are, you know, real. and what's more is the upshot is they don't have an underclass like 20 over educated surplus elites who are indebted as wage slips. right. so, you know, i look to those policy ideas as a way to provide a real education. i mean, i think we're just transfixed this idea of the classroom of the school. you know, maybe the more controversial ideas like to say that teenage labor is good and maybe we can actually skill people up to some degree, maybe time and full time in their teens so that they're ready to work in their twenties. and i think that would be a version the fellowship. so we currently have public schools and then this idea of charter schools, the problem an apprenticeship is if your employer trains you and you go off and work else that doesn't help them. so much. so they're a little reluctant. so it would be kind of interesting as if we allowed those vouchers that go to charter schools and other types of schools could could we apply those to apprenticeships? so that would be like mini fellowships. the answer is, is like some i'm going to like double down on the idea and say, okay, we can apply this to all sorts of different jobs and professions and careers. i think it's really interesting idea. i would love to see it in practice. it seems to me like the major obstacle to it are the exact elite credential, the credential holders themselves who are going to try and protect it at all costs. so how would this how does this operationalize you know, like in the idea of you're trying to short higher education bubble like what does that actually look like in practice. well yeah at the highest level it's can we support people who have extraordinary or even just fulfilling successful careers. what would be even better was like if they were well-rounded in a sense. so they're not only you know, an engineer of some kind, let's say, but they also, you know, the liberal arts to some degree and show some level of learning a well-furnished mind. i think if we can show that they're all or are alternative paths that are just as rich rewarding then maybe that makes the appeal of at least when colleges defend, that's what they point to as as the value of college, not the wages is not you know the fun. it's always like hey this improves soul somehow. and so if we show that there are better ways to do that, then i think that would strike a blow. but you're right, i think i mean, there's stockholm syndrome of the people who have been through system. harvard could certainly expand its enrollment. 10,000 students without loss of quality i think they don't because i the biggest objection is from the alumni it waters down the value of their degrees. so it's going to be a struggle sure something would love to hear from you on is a link to your fellowship was in the minor minor minor category news because chart charlie jarvis of the what was with frank frank yes frank the jpmorgan scam of a student loan companies it was 15 different levels of things that like fit here so i'd be curious to hear why just tell the story to make the audience like how like you kind of intersected with charlie but broadly can we speak about how it actually unironically like there's something deeply wrong in like credential test tract education, like escalating levels of like why would you do this? like what it seems like obviously she has her like deep moral failings, right? feels like it's symptomatic of a broader, like arms race, of and for senator. 230 and 40 under 40, another ten speak to that culture category. 200 to yeah so charlie jarvis we in 2012 we invited cnbc to come film a documentary of our final round interviews for the teal fellowship. and i saw this headline, frank you know the details. i can't my memory isn't sharp or i haven't read enough. but basically committed fraud by saying that there were these real accounts and then sold the company to jpmorgan again. and then they discovered that there were these fraudulent accounts. so really bad situation. but i don't know when you think of elizabeth holmes and adele. yeah, even adam neumann to some extent, it's always like, what were they like when they were? and so, yeah we i met charlie in 2012 and this interview process in and the story comes out and i'm like, wait a second, we know this person. and and then i had this vague memory of her. she was really polarizing at the time and it was split saw. i looked up the old notes. i mean, there people who wanted to believe her vision she was working something called partner up basically a way to donate money to the developing world and you know people people who wanted to believe in the mission believed her. but then there were the skeptics who were like, there's nothing there. like what's going on when we her about it? there's nothing there. and then we had this weekend. we would arrange a scavenger hunt for the finalists in order for them to get to know san francisco and get to know each other. and we a rule that the teams had to stay together and go through the scavenger hunt, you know, in the order was created and charlie's broke that rule and then what's more is she went off shopping instead of working on the scavenger hunt. and so i was laughing. i was like, it's so funny. it's like, yeah, we knew when there was, like, little things where, you know, you had to come out on stage and pitch to the audience. and we said, oh, you got to talk from the lectern because that's where the microphone is. otherwise cnbc. cnbc is not to pick it up. she refused to do that. she stood in the middle of the stage, thought she'd be different. so there were all these things where it was like, oh my god, when i look back on it, it's too much on the nose where it's like, oh, was breaking rules then and the key thing is she lied that she had turned. oh yeah. right and that's what saved me on the story right? that's right. so she had been claiming in public that we awarded her a fellowship and turned it down. and so, i mean, that was that was wild. so then i tweeted about that and some, you know, forbes reached out to me or whatever because i think it is important to set the record straight, but it speaks to something you pointed was like even if you start something like the teal fellowship, our first year, there were a lot of people were, you know, eccentric, intrinsically motivated people. but as you know, there was more success. so over time it started to attract credentials. towns who were looking for that signal to send the world in some fashion the same way they might for a rhodes scholarship or or a harvard degree or whatever. and i think forbes is feeding into that. so i think it's like it's almost like we're looking for trappings of success than success itself. and i guess in any system, going to have people mimics who try to send the but not the substance in. and i think that really comes the forefront when you enter an economic downturn, when there's less free flowing capital, the number of fraud cases and corruption cases get revealed and you see who's swimming naked. yeah, these people really do fascinate me. yeah. if you haven't read the story, i highly recommend it. i mean, we're talking about 4 million fake accounts here, which takes skill, you know, at a certain you got to admire it. so i want to dig a little deeper. it's kind of. you're talking about a credential institution. and you mentioned the rhodes scholarship. you you know, this is these are all highly kind of elite like at the when i'm tracking is an enormous response amongst our audience to people dropping out of college specifically younger men or not even dropping out but just feeling like i'm not going i'm not doing this, which is leading to a lot of gender that has all kinds of downstream crazy impacts on wages, on marriage ability. there's a social crisis coming 25 years down the line, specifically because of this time. what so clearly is a gap? how do we fill it without catering specifically to the rhodes scholar? i feel like that person is always going to be fine. they're either going to have to deal, shop, fellowship, or they're gonna go to harvard, right but like, what about somebody who is going to matriculate to a state school for, let's say, i don't know, like a psychology degree or even an engineering, but just says, no, i'm not doing it right, but it's actually not good idea if we look at it in terms of wages. so we've got we've got to be able to help that person somehow. now also both develop as a human being, but also give them the economic opportunity that they feel owed in life. right. and yet emotionally, they they that this institution is allied against them. that's something i'm really interested. yeah, maybe too. i'll take two cuts at that. the first one would be to go back to that idea of what a school looks like. i think it says something that we're stuck in the past in this industrial model where people march lockstep the same age, the same people in the same location mean everyone. look at ferris bueller's off as i guess i'm dating myself but it's it's funny because it's like it is a prison like these people sitting in desks learning things that are useless to them. so i think as a society we have to wake up to the fact that school or at least a building with rows of desk under scalding fluorescent lights is a tool to educate people. it is not education itself. and so i think a lot of young men are being drugged into compliance with that system because they don't want to sit down and think. we just have to be honest that it could as young as, you know, maybe an schools aren't doing this but teach the and then maybe at some point 12, maybe 14, 15 it could be the case that people ready to split time between the classroom and then developing some set of skills. but i and i think young men are dropping out of this because this system is just so obviously not working for them. like you said, they're going through it. they're not getting the skills they need, and then they they drop out of life and spiral downward into netflix or even worse, like opioids, you know, some detachment from reality. and then the second cut would be i just hate as a culture that we denigrate the trades i mean, the fact that like so many people right now are being forced into the college track, you have this giant assembly line geared towards some vaguely degree and. there are so many people who are forced on to it the majority of people don't finish. they take on debt you know, it's something like most people graduate in six years. and when do graduate so the number the number people who go to ivy league schools get the b.a. english live like that is a small number it's really someone who's like could been a carpenter maybe could have been an electrician instead our society says you're a dunce if you do that. and so that they go down this track, that's not meant for them. so i think and especially for men, younger men think that that is a big issue. and and so maybe if we transition towards something these on ramps i like maybe the more controversial thing to say is like you can't actually teach schools or teach skills in classroom beyond reading writing arithmetic. you do have to learn on the job. you actually have to learn these skills. and so i push in that direction. i want to go back to the you're telling about charlie, how she wouldn't stand at the lectern and how she skipped out on the scavenger hunt. you know, this is a book this is not just like a prescription higher education, but it's also like a story that you're telling. so i'm really interested in the narrative. if charlie had pulled it off, though, i think there's a world war this stage you were saying like that's when knew, right, charlie? just like all the other people stood front of the lectern and she just said, no. and there's also people like elizabeth holmes do this to like they kind of realize that there's like an advantage narratively in being. yeah. so like when you're sitting down with a roomful of like 16 to 19 year olds. yeah. how you actually like logistically sort through like what is just like literal signaling. yeah. within the universe and like what you actually looking for i guess, you know, it's, there's a clip. i hope it never gets out there because in the thing there's stuff on youtube right? but like it's not available. so i actually i have a dvd and like, you know, the forbes reporter reached to me. he's like, how can you validate, you know, the the scavenger hunt thing? i'm like, well, you know, the dvd's at my parents house in the garage. so i to be i got to phenix and i dug out the dvd and then i'm there like cnbc producers, they want conflict. so they're like, can you at least try to defend her a little bit? so i'm saying what you just i'm like, hey, you know, she's breaking rules and you know, there's something innovative about, you know, she's not going to be someone's boss. so it's like even with the adam neumann if you've seen those documentaries, it's amazing. i haven't met the guy, but he must be like the world's greatest salesman. you convince people that this real company was changing consciousness. so there's something about charisma to that is powerful. and i think investors in silicon valley and then maybe even, you know, the wider world can be drawn to charismatic people who are just con con men. and in the end, so what, you know, for i never when we're investing then i came to see this with the fellowship is that i never want to be in a shark tank situation where i don't know this person and they're pitching me an idea for 15 minutes and i have to decide whether not to invest in that time. i came to see we were too imitative of colleges in the beginning. we had an application that asked for gpas test, all that kind of stuff. and i came see applications as one like fruit. they write fast two. it's just this time slice where i have no idea who this person is and the things that matter. the character. i can't evaluate. so we changed our system to try to evaluate people over time, like can we interact with them in way and gain more data points about who they are? we implemented things like little one k grants, you know, go build this. and that was take a month or two at least. that gives us some of what it's like to work with this person. but i think there is an aristotelian mean in inverse where, you know, there are some people who are cautious, who play it safe and then they never venture forth and learn anything. and then there are the adam newmans who like raise a war chest and sail off into the ocean to nowhere. so and they get up in a bit like quibi is a company they raised like $1,000,000,000 and lit it on fire and learned nothing. so it happens quite often. so it's like it's more of a it's never going to be a science, but you have to find person i call edge control in the book where somehow they're able to push that frontier but in a way where they don't destroy themselves, you know, lurch off into the world of fraud and make believe. but on the hand, they are still taking risk and i think that is a challenge if you're trying to reverse engineer, you know, very young people to extent. did the education system help or hurt them, mold the characteristics that you were looking for in the fellowship? and how could we replicate that across the united states? so i mentioned those test in the application. one thing that stood out to us is a negative signal, and i think it was just like a random sampling. i maybe it's not that it says something about this, but anyone who won the intel science award that became a negative betray, it was like, really? yeah. because the types of people who win that award are the types of people who don't build things but are good at pleasing committees. so their projects would often on this edge of like believe fraud, but in some kind of narrative about saving the world. so it could be like a new type of muffler that, you know, sucks up the carbon or something, you know, and like this has been tried before. everyone wants to believe in it because they want to believe that this could be help climate change. so that wins intel science awards. but when we saw these people go out into the wild, they because had lived so long under institutions and structures that ordered their days scheduled their weeks gave them assignments and goals suddenly when self-directed and you have to invent your own goals or try to discover them. they were they were at sea. so there is something in our education system and it may just be like the fact of the medium that you are going to become a structured person in that way. and i don't think homeschool is the answer, but it was interesting to see that. the people who were homeschooled and we had a large proportion of them come through the program, the transition into the into the real world was just more seamless. and they were able to navigate things on their own much better. and i think it had something to do with not the content of the education, but just the fact of like one type of person had to raise their hand to, ask to go to the bathroom, the other person just directed themselves. so i think there is something we should think where how do we we do to pay attention to the way that our institutions character independent of what they teach. and i think school system that's one of the things i've noticed that it does the worst. you know as we're nearing the end here, a big question that has come up. increasingly, we're talking about this before we started the event is to what degree is everything talking about, right? like the rise of the technology industry? i don't mean like the internet. i mean like post 2007 post financial crisis. while these institutions don't work how much of that and then the urge them to drop out was was driven by like low interest rates. and now what they've gone back up like how much does like the fact the tech industry has had massive layoffs like how much do you see folks like retreating back to back more traditional, traditional contacts? yeah, that is a great question. so my book is like one of the broader themes. the book is this idea of stagnation that since the early seventies we haven't seen as much progress in sectors outside of call it like smartphone phones, the internet and computers. when you look at energy creation and health education transports and we've just seen the rate of progress decline quite a bit, you know, in terms of health i'll use that as just a clear example in 1900, the average age or the life expectancy at birth, four was about 45 years go to 1980. at that point we have raised it to 73 years since 1980 to the present. we're about like two years more than that. so, you know, over that stretch of time, we've just seen progress slow down quite a bit. and in the last five years, because of covid, because the deaths of despair, life expectancy has actually stayed flat or gone down. so, you know, to me, that's that's a that's regress. that's not progress. so, you know, my read american history since the seventies is that because we weren't improving the standard of living for the middle class and the lower classes the government instead of addressing problem said let them get credit. and we had 30 years of easy money that seemed be going well up until the financial crisis and then again post financial crisis same thing so i think in a sense it was like the governments to paper over some of these deficiencies that we saw in the world. and you're right, when there's more capital, more bad get started, just because it's more readily available. so in that sense, you know what, fewer people are going to start things. and these layoffs like money becomes less valuable as rates go up. so everything becomes present. orient and that makes sense. it's going to be harder to start a business, but that doesn't mean that doesn't like i don't think the federal reserve is going to solve that stagnation problem in i think real growth, real jobs, real wage gains for for all broadly across the country will only be addressed if we address those deeper problems rather than to solve it through financial engineering. so yeah, i think i think you're right. one of the big surprises to me, i a bit of a bitcoin maximalist in the sense i think like that and maybe etherium is the backbone of some like that that is real everything else is ponzi finance. i did think bitcoin would have held up more as an inflation hedge over the last year, but it still stand pretty strong, $22,000. i think that's that's pretty impressive. but you're. right. that the the to me just showed how powerful the federal reserve is like for the global economy that you know any asset turned into a speculative asset in the last ten years especially the last and now feeling the hangover, you know, the alcohol's out of the punchbowl. so, you know, i don't have a good answer in terms like i still think you know, progress because people invent things or discover new things. we knowledge and i think we have to get back to the basics on that that is an excellent place to leave us. thank you for joining us. oh, thanks for having me. go. appreciate it.