Dwarkesh Patel: evaluation

Transcript context

…Right. The good news is that it can be a very long time, because there is, as we just discussed, so much low hanging fruit around different improvements that are possible. So I think it'll be many decades before that happens. But it's true: that will eventually occur. On the second question: "It's obviously virtuous or compelling or exciting to foster all these nascent startups and to be an anti-incumbency force. But what's the case for supporting established businesses?" People misunderstand that for a small business, typically, at least in the cases where we denote them startups, there's usually an embedded innovation. And this innovation is all that the company is. They have a new idea, and they're going to do something better or different etc. Generally speaking, we like innovation and so we have positive sentiments towards that startup. But there's a lot of innovation that comes from large established businesses. That's not all they do, they are also just running the existing thing. So maybe it's a smaller share, but the aggregate fraction of innovation that comes from established businesses is really large. We have to be cognizant of the cognitive bias, of the startups being more conspicuous. On a relative basis, the improvements in turbine, fab or insulation technology come largely from established businesses. To choose any sector of the economy, a significant fraction of the important inventions that occurred over the last 10 or 20 years will have come from the incumbents. As a general class, and Tyler wrote a book on this, big business is underrated. If you look at the survey data, people tend to have very positive sentiments not only towards startups, but towards small business as a class. Even though they have negative sentiments or relatively negative sentiments towards big business, it is not that bad on an absolute basis, but not as favorable. It's true that established businesses tend to pay better, tend to be more efficient, more of the innovation in our economy comes from them and they produce a lot of consumer surplus. The specific case for Stripe working with them is: typically they're coming to us not because they want to take the thing that they're already doing and go through all the work of transposing to Stripe, but because either they want to do a new thing, that they're not doing today — so it is associated with some new business line or innovation or invention. Or they've spotted the opportunity to produce a new product and want to meaningfully change how they provide an existing one in a fashion that, again, yields consumer surplus. That sounds very abstract and theoretical, but in practice, it tends to mean they want to take what they're selling in this market and sell it in many more markets. Or they've realized that they're selling it in this modality, and they should sell it in other more convenient ways, like on mobile or something. lling in this market and sell it in many more markets. Or they've realized that they're selling it in this modality, and they should sell it in other more convenient ways, like on mobile or something. In each of those cases, if it's successful, if people buy it in significant numbers, we're getting this decentralized signal from the economy, that there's now something of value being provided, that wasn't heretofore. As I take stock of the businesses, the enterprises that are in the process of migrating to Stripe or that did so over the last year, whether it's the large retailers, global manufacturing firms or shipping companies, it typically has one of those two patterns. New product or current product sold to people who weren't buying it before. Yeah. If you think about the big trends in society that are needed to solve our big problems, like Moore's Law or the cost of solar, you have marginal improvements over many decades.…

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