Garry Tan - Unwrapping the Gift

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories and strategies that will help you better invest both your time and your money. Invest Like the Best is part of the Colossus family of podcasts and you can access all our podcasts including edited transcripts, show notes and other resources to keep learning at joincolossus.com.

**SPEAKER_2** (1:54)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
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**Patrick O'Shaughnessy** (2:20)
My guest today is Garry Tan, founder and managing partner of early stage venture firm, Initialized Capital. Before starting Initialized, Garry was a partner at Y Combinator, employee number 10 at Palantir and co-founder of YC backed blog platform, Posterous. Our discussion covers what's missing in the investment world, how to best systematize venture investments and what he learned from Paul Graham. Please enjoy my conversation with Garry Tan.
Garry, could you begin by telling us what you mean by software and the global brain and why this concept is interesting to you right now, given what's going on in the world?

**Garry Tan** (2:53)
Yeah, it's actually something that I think is driving every organization that's trying to use software in the world. And actually, interestingly, it was brought to my attention by Yuri Milner of Digital Sky. He came to speak at Y Combinator and I remember him distinctly saying one of the reasons why he invested in Facebook very early, or relatively early, at the $10 billion mark, was that he came to a realization that something like 10% of the world's energy goes to data centers, which is also about the ratio that the brain consumes in a human body. And I don't know if that's true or not, but I thought that was very interesting.
And all the world's people and all of the world's resources are coming together, being organized around a nervous system that is basically the internet and software. And that was, he came to speak at Y Combinator probably 10 years ago or more.
But I think ever since I heard that, I've been seeing that absolutely everywhere. And I think now, if you look at every business that we like to fund or every business that's growing very quickly and reforming the way resources are delivered or all transactions are being sold, you can extend it all the way to crypto.
What's happening is that it's that story, not just at the global brain level. Like we think about Facebook and social media and we're not really sure. 10 years ago, we were very optimistic about those changes. And today I think we're quite a bit less optimistic about those changes, probably rightly so. We don't know what it's doing to our children. We don't know what it's doing to our society and to political thought and to geopolitics. But what's interesting now, I think, rather than think too much at the global level, now what we can do and what you and I can do is think about it at the local level. So maybe don't worry about Facebook. Someone else can solve that hopefully. What we do have very deep control over is our own organizations and our own communities. And how does that play out in our own world? And even lots of listeners here might be in startups. Some of them might be in financial institutions. No matter what organization and how old that organization is, every one of those organizations is reorganizing into a local brain. And I think that that's very interesting to me because that's something that's never happened before. It's often a one-time shift.