(2024-08-08) McKenzie, Bet On It; Zvi Mowshowitz On Professional Gambling, Trading, And AI Futures

Patrick McKenzie: Bet on it: Zvi Mowshowitz on professional gambling, trading, and AI futures. This week I interviewed Zvi Mowshowitz, who I Internet-met 30+ years ago in middle school then became acquainted with for real through his recent public intellectualism on covid-19. We talked about his interesting career path through Magic, professional gambling, and equities trading, which are very different but rhyme in important ways.

[Patrick notes: I add commentary to the transcript using this convention. This is, necessarily, after the conversation and in my personal capacity. As always, nothing you read in my personal spaces is necessarily endorsed by other organizations, including Call The Shots, Inc., a 501c3 that I ran which is discussed (as VaccinateCA) below.]

• (00:00) Intro
• (00:16) Meet Zvi Mowshowitz
• (04:11) Trading and Magic: The Gathering
• (07:24) Professional sports gambling
• (11:58) Navigating the sportsbook market
• (22:33) Sponsor: Check
• (23:48) Financial markets vs. sports betting
• (34:02) Covid-19 early predictions
• (43:21) Covid-19 policy failures and blame
• (49:52) Vaccine rollout chaos
• (01:01:11) The importance of scaling effective strategies
• (01:14:46) AI predictions
• (01:23:58) Wrap

Patrick McKenzie: Hi everybody, my name is Patrick McKenzie, better known as Patio11 on the internets, and I'm here with my buddy Zvi Mowshowitz.

Zvi Mowshowitz: Yup, also known as TheZvi.

Patrick McKenzie: I don't know the quickest way to encapsulate you professionally for people who might not be familiar with your work – I would say public intellectual.

I actually became aware of you when I was in middle school, 25+ years ago, because you were big on the Magic: the Gathering scene. So what happened in between Magic: the Gathering and today?

[Patrick notes: It’s difficult to overstate how formative M:tG was during my middle school years. Some of my first writing for the Internet was analysis of the metagame for the Dojo

Zvi Mowshowitz: So many things. I played a lot of Magic: the Gathering in high school and college. Decided to become a professional; spent roughly 10 years in some combination of playing Magic and writing about Magic to pay the bills and keep going.

I tried to join a startup developing a game. That didn't work out very well. I got into sports betting (gambling) in various capacities for a while; after that I tried to found a personalized medicine startup called MetaMed which lasted a few years and got reasonably far, but ended up not having good product-market fit, basically – and we didn't understand marketing – and it didn't work out.

Then COVID-19 happened: I did a combination of making my own game, sort of in the style of Magic, which didn't ultimately work out, and I started spending a lot of time worrying about COVID and thinking about COVID and analyzing COVID.
I realized I might as well share this information with other people;

When COVID was winding down and I had just written my last COVID post, entitled “Your Best Possible Situation” – which is that you get to stop writing these posts and go back to your life – I jokingly said weekly COVID posts should be replaced with weekly AI (LLM) posts because there was a lot happening.
Then everyone said, “yeah, yeah, absolutely, yeah, you gotta do this!”

[Patrick notes: My Internet buddy Visakan Veerasamy keeps a collection “Joke about the outcomes you want.” There is a corollary to this, which is: do not joke about outcomes you don’t want. Having seen how self-deprecation gets rewarded in the world for a few decades and then how rapidly response changes when one simply stops doing it, I would flag this as being far deeper wisdom than people generally appreciate. (Well, I mostly stopped doing it.)]

now this is my day – all day, all the time.

Patrick McKenzie: The best possible form of audience capture is when the audience says, “we think you're actually good at something, we'd like you to continue doing that for the next couple of years” – something that's pro social and actually useful for the world.

Zvi Mowshowitz: The thing is, I think it's super important. I've been a worrier in one form or another about existential risk from AI since about 2007 (or something like that) – well before any of these current things were happening. This has not come to me recently.

Trading and Magic: The Gathering

you've done three somewhat different, somewhat similar things that broadly look a little bit like trading.

Magic started out largely also as trading, because everybody had a limited pool of cards and there wasn't a good, strong marketplace

So trading was a substantial portion of that, and I kind of didn't like it.

mostly it was just trying to not be cheated all day and making sure that the trades were fair.

But trading has always been fascinating to me – as a game, as a competition, as an intellectual exercise, as a thing that I believe makes the world a much better place by distributing resources properly and allowing people to figure out what matters and all that.

Patrick McKenzie: I think many people who work in finance in some capacity, or in the markets, or doing “formal trading” – or even high stakes negotiation, etc. – got their start on things that society broadly does not believe are real, but which certainly felt real to us in the moment.

I get into other markets, some of which are more clearly zero-sum and competitive, and some of which are clearly productive and useful.

Professional sports gambling

talking earlier about – a hole in my financial knowledge is about sportsbooks – but you did that professionally for a while.
Can you tell the audience a little about what being a professional sports gambler looks like?

it's one of those jobs where you choose where you want to draw your attention

The great advantage of being a sports bettor is the great advantage of any trader, which is that you always have the option to do nothing

One of the things I specialized in was derivatives, essentially: if the home team is a two-to-one favorite, and on average, it's going to be 42.5 points in this NFL game, how many points will the home team over-under be? And what are the odds on that?

Patrick notes: I am glad I never learned until today that sports games had derivatives available, or I would have sunk much, much more intellectual effort into them than I have

Zvi Mowshowitz: Also, I focus on arbitrage and on comparing the odds at various different places.
That’s one of the things – in the American stock market, you go there and there's one price.

When I got to crypto, it was just a feast of that. Everyone's price is different; moving money around takes time. People have different preferences. People are very irrational. You can take advantage of this.

Zvi Mowshowitz: But the modern sportsbook philosophy would treat making 5 percent at a place like a Bodog traditionally, back in the day, or today like a FanDuel or a DraftKings… if you were managing the lines at FanDuel and you're charging these prices they're charging – which are kind of outrageous, even on the main lines – if you reported back to your boss that you only earned the 5% (that is kind of the dream scenario for the getting two-way action), your boss would think you're bad at this.

Patrick notes: This was a revelatory point for me, and to draw it out a little more: the odds that balance the market may involve less total wagered by punters. You should welcome accepting more total wagers if you’re pretty sure the marginal wagers are only low-information punters, accepting that you are now directly betting against them versus merely market-making, because betting against low-information punters is a good way to make money

Patrick McKenzie: I know relatively little about the market, but a fascinating thing I learned was that the sportsbooks aren't blind to the identity of the customer in the way that market makers would be typically blind to the identity of the customer in traditional markets. You’re allowed to give worse prices to people who you think have an edge versus people who don't have an edge; you're allowed to do various shenanigans to attempt to incite interest in the market, and then pull those back before you get action, etc.

There are a lot of these dynamics. The key skill – when you have access to all these markets and want to make a profit purely on trading – is, you want to figure out what the good prices are, where you can make money, but you also simultaneously have to avoid getting kicked out of all these casinos.

There's a handful in the world that will say, “we welcome winners.” You can go to Pinnacle

But FanDuel and DraftKings will tell you to take a hike because that is not their business. William Hill does not want your business. (like card-counting)

One of the things you never want to do is join for the first time and then suddenly make a bunch of weird prop bets and obscure bets on Romanian third league that give away the game, that tell them right away who you are, because the Bayesian evidence is so strong

Financial markets vs. sports betting

The biggest thing is that it's unified and it is much, much more competitive and much, much more efficient. Also, the skill level is through the roof

Any one of them, if they tasked them with beating the sports markets, they'd all crush it. They'd all just completely destroy this thing.

There's always a question of, “why am I allowed to make this trade?” The financial market's like, “Who is selling to me at this price? This price is wrong, so why am I getting to do this? Who is my counterparty?

The other difference, of course, is they're positive-sum, in the sense that these are real investments; the numbers can go up.

Patrick notes: I credit Luke Constable for most improving my model here: there are the fundamentals, and then there are capital flows, and all models of the world which do not include structural reasons for capital flows will fail catastrophically to model the world.]

you can do common sense and say, “this is a good company, making good things, that's making reasonable decisions” – these things are just not going to be factored in by the computers fully in my mind.

So you basically make reasonable decisions and then you diversify enough, and that's fine for me – and then for international I have an ETF because like it would be expensive and annoying – but for an average person, of course they should just buy some combination of ETFs and forget about it.

Patrick McKenzie: Present-day, my children have college funds in a tax-advantaged vehicle in Japan. There exists a fund that I won't name which is wrapping an American index fund.

Patrick McKenzie: Anyhow, one of the ongoing themes of working in the finance industry and looking at it, there are many mistakes made, to be clear – but in many ways this is where society in the United States broadly decides to allocate the time, attention, and effort of a lot of very, very smart people. (talent)

The artifact that sticks out most of my mind for this is, for folks who've seen The Big Short, there's the Jenga scene, which is outlining a strategy for essentially shorting the housing market prior to the 2008 collapse (credit crisis 2008).
There is an actual deck which is available on the Congressional Record, a PowerPoint deck, that was played at the actual meeting that this scene dramatizes. In reading that deck, – the level of analysis about the US housing market, about the trends, the loan underwriting deficiencies, the market in “the sand states” versus the rest of the country, etc. – I was extremely struck. The people who wrote this have observationally a better, more detailed, more rich understanding of what is going on in the housing market than any other sorts I've ever seen with respect to the housing market – be it regulatory reports, or talking with people who are actually in real estate, etc. etc.

best way to find that deck is Googling the exact title, “Shorting Home Equity Mezzanine Tranches.”

Covid-19 early predictions

Do you want to talk about the COVID years, and being in the awkward position that you were one of relatively few people looking at a pandemic as it was happening in real time?

Zvi Mowshowitz: One of the relatively few people who was looking at a pandemic and willing to share the information

So we go back and we think about COVID: I think there were very good models of COVID at various hedge funds – but that doesn't mean they were telling anyone. (I don't have any specific knowledge. I'm just saying that obviously there were.)

With COVID, I noticed it somewhat in January, understood in February a model of some of the things that were going to happen.
I tell the person I'm working on the game with – mid-February, something like that – I'm like, “this is probably going to be the last time we go into the office, very soon, and we're probably not gonna see each other for a while.” He's looking at me like, “What is this guy talking about? But he's not bluffing. He obviously means it.”

Zvi Mowshowitz: Then I try to explain a bit, but… I'm trying to figure it out, and then I'm trying to make decisions, because everyone has to make important life decisions that are going to impact how these next few years are going to go

I start writing in advance, and I notice I'm really concerned, “what am I going to do?”

I stocked the pantry in advance with a month's worth of stuff in the middle of February

Then we have this revelation of, “oh, if me, my wife, and our two kids are stuck in this Stuyvesant Town two bedroom apartment, and can't go outside for weeks or months on end, effectively, my wife predicts crazy.

You need to get out of there, get out of there now.”
The thing is, you don't have to only understand what's going to happen, you have to understand what your reaction is going to be and what you can and can't handle.

We move out to Warwick, New York, so we can rent half of the house and have a yard and have space, and we can hopefully stay sane. We just pile all our stuff in and we just move. We get out of there inside of a week, [to] where her parents are right there, so we have some people we can form a pod with – we can do something reasonable.

I figure I'll just write my stuff up, what I'm thinking about, and the first few are just warnings and explaining basic information.

I start pulling a list on Twitter of people I'm following specifically for this purpose, and I get into a groove, and I'm trying to figure this out – but it feels like nobody else is doing this job, like I'm the only person in the world who is taking this kind of level-headed approach of trying to figure things out.

I make predictions every week – “Here's what I think the next week's numbers are going to look like.” Then I see, “here's what I had, here's what I said last week, here's where I was wrong; here's how I'm updating based on the fact that it missed high

Over time I built up a model of this, and I got increasing confidence. I started a debate with Robin Hanson, and then writing up an early thing gave me more confidence people would want to hear it, and be willing to receive it and use it.

One thing leads to another. I'm still making my game, but effectively that's stalled because we can't raise money in the middle of everybody freaking out about a pandemic – everybody's like, “I don't have time for this phone call.”

So instead I'm just writing about COVID all day, and that just keeps going and I get better at it; it keeps being useful for a while and this lasts longer than I or a lot of other people expected – I definitely made some mistakes

The biggest one I think a lot of people made, and [which] I definitely made was, I didn't understand the homeostasis aspect of the situation.
I didn't understand how we would be so foolish to get the problem just enough under control that the situation was only terrible, but not try to actually solve it

and also not just take our lumps and get back to get back to business and do something reasonable. We ended up in just this nightmarish middle ground forever.

When we moved out, we signed a lease that was month to month because we figured, “we're going back to the city in a few months,

I came around to this in the summer [of 2020] and figured out what we were going to do. It became clear how we were reacting to various things; we were settled in for the long haul.

I just settled in, and I did the thing; I was doing it completely unpaid for most of it, and then after a while, I was just like, “well, I'd like to be able to do this with support, does anybody want to support?”

I was very, very fortunate that some people really appreciated what I was doing, and they reached out and said, “actually, we would!”

They've asked to remain anonymous,

Patrick McKenzie: To zoom in on a couple of parts of that,

there were “legitimate experts” that made many, many very confident pronouncements about how things were going to go, and the correct policy responses, and similar – and those confident pronouncements were wrong

then the CDC and WHO spent months assiduously refusing to call the disease airborne where that was already manifestly obvious, etc etc.

Patrick McKenzie: The fact that they were made has not quite been sandblasted out of the record, but many people profess to not remember things that were obviously, truly said.

it's obviously the case that every large employer had to make a decision on whether to close the office or not, and those decisions were not made randomly.

You could, if you wanted to keep score on decisions on, without loss of generality, AppAmaGooFaceSoft – Apple, Amazon, Facebook, Google, etc. – they have tens of thousands of employees. They would prefer they not die. And they all made various decisions around closing and opening offices.

I'm very confident about how that actual scoring size would go. I think many people are very confident.

Patrick notes: Compare Google on March 10th versus, I don’t know, the Surgeon General of the United States that week.

Covid-19 policy failures and blame

I developed the “theory of blame,” that essentially the goal of these people was to avoid being blamed in a two week time horizon for the things that they decided.

There was no need for a plan. Everyone was just trying to survive politically and logistically in various ways – they just didn't see that continuing to try and muddle through in this way would be so much more supremely expensive than the two options that actually made any sense

I think the moment that struck home for me was [when] there was a model of COVID that was getting a lot of play, and was treated as if it was a legitimate thing to think about and model and plan on – and it made absolutely no sense.
I wrote (Apr11'2020) a post titled “Seemingly Popular Covid Model Is Obvious Nonsense,” because it wasn't just that I thought it was wrong, I thought it was obvious nonsense.

everyone who thought about it, “yes, you are just correct. This is just obvious nonsense.”

Patrick notes: The essay thoroughly earns that title. Indeed, pointing out the ways it earns it is shooting fish in a barrel, which is why it is extremely useful to point out that a Magic: the Gathering geek correctly and specifically pointed out the failure in real time

It cost us an extra year of our lives and trillions in basically wasted capital.

Patrick McKenzie: Many things from that period are burned into my memory; one that is particularly burned into my memory is the sudden campaign in the US media and public health circles against the efficacy of filter masks for containing airborne illnesses.

Patrick notes: As has been observed before, one of the most striking bits about the early pandemic was credentialed experts very confidently recommending against masking then very confidently recommending mandatory masking. “We have always been at war with Eastasia.”, they said, with this obediently reported by a press corps that couldn’t remember their own articles or tweets from the ancient mist of four weeks prior

Zvi Mowshowitz: As someone who was masking in March – obviously – I was one of those who fought that good fight.

That was not one of the ones where I felt I was being a genius. That was one of those where I was like, “This is obviously crazy. Everybody I know with half a brain has realized that masks are a good idea here. Everybody who's saying the masks don't work is obviously lying” – and I mean lying, in March.

Patrick McKenzie: Yeah, I think the most charitable interpretation is, around March 2020, we thought there was a supply chain issue for masks, we wanted them allocated preferentially into the medical system versus being diverted to the population at large, and that required lying. We lied in full knowledge of that fact, and then walked back to lie after the supply chain issues were solved.

Zvi Mowshowitz: I don't think they had any idea the order of magnitude of damage to public trust they were doing when they did this. I don't think they thought about it. I don't think this was top-of-mind.

I don't think they thought about the damage they were doing when they walked it back without admitting they were walking something back, and tried to just memory hole it. You say “when we have a functioning democracy” – I think this is the way we end up with not a functioning democracy,

But yeah, it just made everything so much harder – the vaccine situation if nothing else. That was a huge, huge problem.

Vaccine rollout chaos

Patrick McKenzie: Yeah. On the topic of ‘things that there were no plans for,’ it wasn't strictly speaking that there was no plan in 2020 for rolling out the vaccine eventually, but it turned out that that plan was vastly underbaked relative to the societal importance of it.

Zvi Mowshowitz: The plan seems to be less baked than the plan that was formed by the person I'm talking to right now spontaneously at the time.

[Patrick notes: A few geeks, knowing little of medical delivery, piled into Discord one evening and whiteboard out an operational plan for successfully finding vaccine doses statewide without requiring explicit cooperation of an agency.

The vaccine arrived in December of 2020; in early January of 2021, the state of California was reporting to the federal government that it was successfully injecting 25% of the strictly limited number of doses that it was receiving, and that sounded a little bit crazy.

There was widespread reporting in the media that people could not find the physical locations

I thought, “hmm, plausibly there's at least one person in the state of California who's capable of making a website which will list names and addresses of the places where the vaccine is available. Perhaps someone should do that.” I tweeted this out on Twitter and Karl Yang, who follows me on Twitter, invited 10 people into a Discord to start hacking on that website.

we effectively became something that was very close to “the public-private clearinghouse for vaccine location information in the United States” because in ‘the plan,’ knowing where the vaccine was was not a priority and so not ordered and not done – so we bluntly decided to do it.

Zvi Mowshowitz: None of the things that they did with the vaccine rollout were the things you would do if your goal was to roll out a vaccine as quickly as possible to as many people as possible, and ideally to the right people

They just were very, very worried about other things, and really bad at their jobs.

Then there was a massive politically inflected spoil system around the vaccine, which – the administration of that spoil system and strict adherence to it outcompeted administration of the vaccine as a goal at the margin, consistently for many months, in a way that killed many, many thousands and tens of thousands of people.

Patrick McKenzie: Many people were in the position that they were managing care for others. I was likewise trying to assist my parents, who were in Illinois at the time, in getting the vaccine.

I flew over to California to run VaccinateCA, which was originally California-centered and then covered the entire United States. A thing we learned early was that pharmacies got a huge allocation of the vaccine relative to all the medical care providers, and if you were approaching the system from a position of no knowledge, you should attempt to get it from a pharmacy.

the number of seekers versus number of doses for those two pharmacies was grossly out of whack.
Relatively few people continued calling to the third largest pharmacy in their town. And because of the foreseen state reasons, the third largest pharmacy got the third largest allocation.

Once we figured this out for California, I immediately phoned my dad and said, “Dad, you've been trying to get the COVID vaccine for weeks and have gotten turned away many times at the pharmacy that you usually go to; who's the third largest pharmacy chain in Chicago?”

He knew that off the top of his head and called them. He calls me back 30 minutes later, he's like, “mom and I have an appointment now.” I'm like, “how is this not on the nightly news every night until the situation is resolved?”

Patrick notes: The vaccines needed a halfway competent marketing department, and did not have that, despite being the most anticipated product launch in the history of the world

Patrick McKenzie: We tried to get out that message at the margins too, get it into all the places… it was not a priority for the federal government that people would be able to Google where the vaccine was – for a combination of understandable and absolutely maddening reasons, one maddening reason being that various political actors wanted credit for the work that “their people” were doing, versus merely solving for ‘getting as many Americans vaccinated as quickly as possible’ – so “ship the information onto Google” was not a north star of project plans despite this

Zvi Mowshowitz: (I mean, I can speculate but you can’t.)
The biggest thing about this to me as an update – because I'd already figured out the government was dysfunctional

the inability of almost everybody to be able to navigate this information environment, and the inability of any sources to figure out this was the situation and then share that information with other people, that kind of gobsmacked me.

I think this is one of the places where I didn't do as good a job as I should have. I should have been harping much louder on the question of “how do you personally get your hands on the vaccine as quickly as possible?”

I have a process that's basically, I imbibe information from various sources and I curate my feeds carefully to make sure that this gives me a good mix of information and I'm not going to miss something, and then I respond to it. That process is less good at understanding when you need to be very proactive about a specific thing, and you need to go out and do the thing yourself.

Somehow even though I understood that – vaccine distribution was all I was talking about – this is really important, I just didn't focus anywhere near enough on this question.

That's a classic mistake: you understand what's important, and you invest in it, but you should have invested so much more in it

Patrick notes: To be clear, there were many sibling efforts, some directly inspired by us and some not. One of the takeaways that has received the least widespread recognition: there was a repeated user behavior of people organizing on Facebook into local vaccine hunter groups, which swapped up-to-date location information and also had members of the professional-managerial class call into pharmacies/county health departments/etc on behalf of people who can’t successfully operate a bureaucracy but can successfully operate Facebook.]

Zvi Mowshowitz: I just didn't think ahead to the problem. It just didn't come up to me on my radar. I guess that's actually, now that we talk about it that way, a good lesson to be like, “I don't necessarily think ahead to what the problems [are that] I'm going to inevitably be in the future as much as I probably should – and maybe you can actually intervene on this now?”

The importance of scaling effective strategies

Patrick McKenzie: Ah, morale management – a challenging problem. Speaking of response curves, you’ve returned many times over the years to the concept of More Dakka. The title encapsulates both what I love about our weird corner of the internet and a little bit of what frustrates me about our weird corner of the internet: it’s a concise reference – by way of a second-order reference to Warhammer 40k – to a concept which is really, really useful for people.

Zvi Mowshowitz: Dakka essentially is ammunition – it’s like “more firepower.”

The idea is, so much in our lives, we kind of know what the answers are. We know the things that are improving matters, but then when we notice a good response, we don't then scale up what we're doing. We [might] do a little bit of it, and then we're like, “oh, that was helpful, and then we don't realize we can just keep going.

One classic example of that that I used in the post was gratitude journals.

The more often you do this, the happier you will be – and this is vastly more efficient, and also almost free, compared to all the other things people do to try and be happy.

And yet almost no one does it.
I don’t do it either. I will sort of do the mental step version of it, and that is helpful, it's incredibly helpful – and the step where you email people and you thank them is incredibly helpful.

Then there are so many other things where it's like, “okay, I’ve tried doing this 10 times, but I haven't tried doing this a hundred times.” So often it is just keep doing it until it stops being better to do more – it is a very, very good principle.

Patrick McKenzie: This has wide applicability in so many domains. I've seen it up close and personal.

I ran small software businesses for many years

The classic thing is, if you have ten channels – email, SEO ads on Google, etc. – and you explore those ten channels, one of them will work out really, really well, two of them will work out “eh, we're glad we did that,” and then you'll have seven failures.

What the marketing department or the person in charge will often do is like, “Okay, we've run ten experiments, we've gotten seven failures, so let's run ten new experiments.” The thing that very rarely gets said is, “The thing that works out really, really well… should we do a lot more of that?”
Should we do that – not necessarily to the exclusion of all other things – but should there be someone specifically in charge? If SEO has been the magic bullet for us, should we have The SEO Person that spends all of their time on SEO and makes sure that we have an update about the new SEO things every Friday?”

Patrick McKenzie: Many people are familiar with the efficient market hypothesis; I think a lot of us have kind of a shadow version of it in our head, like, large, well resourced organizations must be making rational decisions all the time.

Patrick McKenzie: False. This is false. If you understand one thing about the world, understand that a collection of very smart, extremely well resourced people can be making absolutely terrible decisions, and know that while they are making them, and that state can continue for years on end.

*If you look at some of the largest, most sophisticated marketing shops in the world, you will see this pattern over and over and over again: “Yeah, we have the one thing that makes all the money. How much do we invest into that one thing versus all the other things?”

“Eh, It's 5 percent of the budget.”*

Zvi Mowshowitz: The most maddening version of this is when people figure out the right thing to do – which often just involves throwing money at the problem in a reasonably intelligent way – and they do a little of it, and it has a small effect,

To me the canonical version of this, whether or not you approve of the goal – I think it's very important – is the fertility problem.

Right now, in many countries, there are almost no children. You have South Korea – now they have 0.6 children per woman

You run these experiments and people say, “okay, we gave new mothers $2,000 and then, yeah, the number jumped a little bit, but it didn't seem to last that much compared to the other things that are going on.”

Have you tried thinking about $20,000? Have you tried thinking about $200,000? Even if you're not going to do it now, you don't think it's worth it, just figure out whether or not this would work,

Zvi Mowshowitz: The cultural context is different, so you are going to have a very corrupted experiment, but you just get so much more information if you just try different numbers and see what happens

As a gamer you learn to do this, as a gambler you learn to do this, as a trader you learn to do this, and as a rationalist you learn to do this – and in AI a lot of people are indeed learning to do this.

But at the same time, so many people see this new AI tool and they say, “huh! that's kind of cute. This does some cool new things.” And then they just kind of forget about it.

This alien just showed up on your doorstep that knows all the things and will explain them to you, and respond to whatever you want.

Patrick McKenzie: I think this is a story of our lives for writers as well. I've written about 5 million words or so and people ask me for writing advice. I often tell them, “however much you think you want to write right now, that's kind of homeopathic relative to the amount you'll write if you become a good writer.

Visakan on Twitter has a good articulation, “do a hundred things – the same thing a hundred times. Write a hundred blog posts, record a hundred videos, etc.”

Zvi Mowshowitz: Teller, of Penn and Teller: the definition of magic is often just someone who put way, way, way more time and attention into this thing that anyone thought anyone would.

I was a professional magic player, and the periods where I was really, really good were when I just had the gumption

The first time I made a pro tour top eight, I was literally in class, in a lecture, and my deck is in my hand

It just doesn't stop. It doesn't. It would seem like maximum overkill to most other people, but it just gets better. You just keep going, get that little extra edge.

Zvi Mowshowitz: Yeah, on another podcast a few days ago I heard the expression, “the future belongs to the obsessed,” or something like that. That just seems totally true. You don't have to be obsessed with the same thing all your life, but you have to be able to be obsessed with it today, and you need to be able to understand when it's time to be obsessed with something until you got what you wanted out of it

One of my worries about this, as someone who has spent more than a little bit of their life playing video games, is that the world and actors within it are very good at giving you synthetic things to obsess over where that is maybe not the optimal thing to do for large periods of your life.
If I could just get those years running the World of Warcraft raid guild back, that'd be awesome.

Zvi Mowshowitz: Don’t be so sure! That might have been a much better education than a lot of other things, because it taught you so many valuable skills on so many levels

I think that a lot of the stuff we do, the most valuable part of it is the skills you develop along the way and the things you learn – obviously the trap is, you learn video game skills that only apply inside video games and then you learn to play more video games and then that's a disaster if you take it too far

But yeah, I have three kids, and when I watch my kids play video games, as long as they are progressing, as long as they are trying to get better, as long as they are trying to figure things out, as long as they are doing some form of deliberate practice in any way, I am pretty much thrilled.
I think this is one of the best things they could be doing with their time if I don't have a great social activity or something lined up for them right now

Patrick McKenzie: I think one of the positive changes of the world is…
A reason why I found myself shuffled into running a World of Warcraft raid guild – versus having 60 direct reports in some organization that did things more important than killing virtual dragons – was because I was in a weird place in the economy and was not on a management track anywhere, et cetera, et cetera.

One of the iterations about the world in startupdom: you can take people who are on paper not ready for the management track.

AI predictions

Patrick McKenzie: I wouldn't want to end without talking about AI a little bit. I think we come from slightly different perspectives on it.

what’s the one paragraph version of, “if you understand nothing else about where we are, understand this”?

Zvi Mowshowitz: A handful of AI labs are spending exponentially more resources to build smarter and more capable language and other models that are getting rapidly more powerful, more capable, more useful – that are already highly useful now and that you should be using on a regular basis to make your life better – and we don't know when this process is going to hit a wall and stop being economical and effective, and able to pump more intelligence into the system.

If it doesn't stop soon, it’s going to, at minimum, transform the economy and everyone's lives in ways that are very difficult to anticipate and predict – that might be very good, very bad, or something in the middle

Patrick McKenzie: Yeah. I come at it from a very slightly different angle with respect to the existential risk part of the equation.

My p(doom) is somewhere around p(nuclear winter), but I have spent a few year marinating with the arguments by people much more concerned than I am, which is why my p(doom) is not p(orcas hunt humans to extinction). Zvi’s is higher.]

I think it's important to understand both the broad shape of this and also understand individual technical artifacts, because the technical artifacts – the sum over all of them is the broad shape of things.

We use a bunch of words that kind of obscure the truth, use jargon; people don't understand what “one-shotting an exam” means. The thing I tell less-technical people is, “you have something that is functionally about as smart as an undergraduate and capable of doing most things that an undergraduate can do relevantly in intellectual domains – and which makes lots of mistakes which, if you've met undergraduates before, you might be familiar with.

Patrick notes: As I remarked to Tyler Cowen, I think the Internet is the Great Work of humanity. ((2024-09-30) ZviM AI And The Technological Richter Scale)

Zvi Mowshowitz: I think of it this way: the downside of AI, if AI basically doesn't get much better than it is – and I mean downside in terms of how big a deal it is, not in terms of how bad it could be. – the pessimistic case is what I would call “only internet-big.”

So be prepared for something like that, and you should try and get in on this at the ground floor in terms of understanding it, and preparing

years for this to cycle through the economy, people to figure out what to do with it, people to build programs around it to use it better, people hooking it up to tools, people hooking it up to your personal contacts and resources, people putting it in an assistant on your phone – so this is gonna power your version of Siri or ‘Okay Google’ or anything like that – very soon.

It’s going to take a bunch of jobs. There will be other jobs that people will do instead. It's going to make a lot of people a lot more productive

Patrick McKenzie: Yeah. For relatively intelligent, relatively sophisticated people who are looking at this and looking at the centers of the probability distribution of that impact, I would agree that the most reasonable, least impressive outcome is, “oh, it's only as big as the Internet is”

I'm very happy we went through the industrial revolution. I'm also very happy I'm living hundreds of years after the industrial revolution, both because we get the benefits of it, and because we avoided a very tumultuous time in history.

Patrick McKenzie: I think people will feel like, “okay, I've heard this before from VCs et cetera, ‘Bitcoin is gonna be the next big thing.’”

That was me, hating on Bitcoin because I'm a bit of a crypto skeptic – I never really bought the pitch that it was going to be the next internet. I did not buy the pitch that mobile computing was going to be about as big as the computer was; I think I was directionally wrong on that, while being directionally right on cryptocurrency.

I would bet everything I had and and borrow more to bet against the outcome that AI is only as big as cryptocurrency in terms of realized impact on human life.