“The software has so much knowledge of markets, and data, and models, and risk, and positions, and trades that anything you could want to know about the markets and about our risk, you can just ask the software.”
R. Martin (“Marty”) Chavez is widely renowned as a trailblazer and leader who revolutionized the way that capital moves and works on Wall Street. Most recently, Marty served in a variety of senior roles at Goldman Sachs, including Chief Information Officer, Chief Financial Officer, and global co-head of the firm’s Securities Division. Chavez began his long and illustrious career breaking from tradition as an openly gay Latino working on Wall Street, an industry that had not yet earned a reputation as widely accepting.
In the 1980s, Goldman Sachs made one of its most important decisions in its company’s history when Lloyd Blankfein helped develop a computer-generated risk management system by integrating computer scientists and IT professionals with the trading desk. Chavez was the 12th member of this new age team, named SecDB, developing software that revolutionized Goldman’s ability to process data and inform risk management. “You can ask the software to run trillions of ‘what if's, hypothetical's, what if dollar-yen moves here, what if the fed does this to interest rates?’ And then you can start to ask, ‘Well, how much money would we make or lose?’"
Chavez is now applying the AI technology and ideas he helped develop in finance to the life sciences, his original passion. This includes a company that has created a digital microscope designed to outline cells and their tissue specimen to identify potentially cancerous properties.
LISTEN AND SUBSCRIBE
SPEAKER
Marty Chavez
Chief Information Officer
Goldman Sachs (2014-2017)
MODERATOR
Anthony Scaramucci
Founder & Managing Partner
SkyBridge
EPISODE TRANSCRIPT
John Darsie: (00:07)
Hello everyone. And welcome back to SALT Talks. My name is John Darsie, I'm the managing director of SALT, which is a global thought leadership forum and networking platform at the intersection of finance technology and public policy. SALT Talks are a digital interview series that we launched during the pandemic with leading investors, creators, and thinkers. And what we're trying to do during these SALT Talks is replicate the type of experience that we provide at our global conference series, the SALT Conference, which we unfortunately had to postpone in the wake of the pandemic, but are looking forward to resuming in 2021. And what we're really trying to do at the conferences and on the SALT Talks is to provide a window into the mind of subject matter experts, as well as to provide a platform for what we think are big ideas that are shaping the future.
John Darsie: (00:51)
And we're very excited today to welcome Marty Chavez to SALT Talks. Marty is widely renowned as a trailblazer and a leader who turned the Wall Street trading business into a software business, revolutionizing the way that capital moves and the way that capital works. Most recently Marty served in a variety of senior roles at Goldman Sachs, including Chief Information Officer, Chief Financial Officer, and the global co-head of the firm's securities division. Marty was also a partner and a member of the Goldman Sachs management committee. Marty has achieved singular acclaim in the financial services industry for his work on SecDB, an early platform that transformed the trading business into a software business. He's also known for bringing the front and back offices together.
John Darsie: (01:35)
Far from the stereotype of a banker, Marty is a disruptor at heart, and he was among the most senior Latinos on Wall Street during his time at Goldman, as well as the most senior openly gay executive at Goldman Sachs. In 2016 a New York Times profile describe Marty and his departure in sensibility from the button-down partners of Goldman LOR. Prior to joining Goldman Sachs, Marty was the CEO and the co-founder of Kiodex, which was acquired by SunGard in 2004. And he was also the Chief Technology Officer and co-founder of Quorum Software Systems. He holds an A.B magna cum laude in biochemical sciences and an S.M in computer science from Harvard and a PhD in medical information sciences from Stanford, specializing in architectures and algorithms for probabilistic expert systems.
John Darsie: (02:26)
So Anthony, our moderator today, Anthony Scaramucci, the founder and managing partner of SkyBridge Capital, he overlaps a little bit in terms of Harvard and Goldman Sachs with Marty. But I would say they took slightly different paths. I don't know if Anthony has his degree in biochemical sciences or that long architecture is algorithms and probabilistic expert systems, but he's a pretty smart guy and we're looking forward to a conversation between Anthony and Marty. And reminder, Anthony is also the chairman of SALT, Anthony with that, I'm going to turn it over to you for the interview.
Anthony Scaramucci: (02:57)
Marty, after he blasted me with H.R. McMaster, reminded everybody that I got fired after 11 days and McMaster threw me a farewell party just right at the Adam's apple with the karate chap, he's bringing up the fact that you are way smarter than me, right? And the reason he's doing this is because I threatened to fire him last time. And of course it was a hollow and very shallow threat, Marty. And so now here we are again, we're stuck with him [crosstalk 00:03:24] the next 45 minutes. So I'm sorry about that, Marty, but you know what, what can we do? We got to get millennial traffic on SALT Talk and so John is our millennial magnet.
Marty Chavez: (03:35)
Okay. Seems to be working.
Anthony Scaramucci: (03:37)
It's great to have you on. And in all seriousness, you are a true pioneer and you've done many things for our industry. But also, the way you've lived your life and your openness is to me, it's a very gratifying thing. And so I'm usually appreciative of you joining us, but I want to talk about your personal and professional background because, why did you go into investment banking, how did you lead there? And when you were a kid, did you think you were going to go in that direction? And if you didn't think you were going to go in that direction, what direction did you think you were going to go in?
Marty Chavez: (04:12)
Well, actually, paradoxically, the only reason I ended up on Wall Street is because it was not part of my plan. And what I mean by that is as college class of 85, and I remember in my graduating class, it seemed like almost everybody was going to Wall Street, if they weren't going into consulting. And well, something happened in October of 1987, and there are so few people from the class of 85 on Wall Street as a result. And so I took a different path. I'm a computer scientist, and I'm really just a computer geek and always interested in applying computer math software modeling analytics to real-world problems and I've been interested in a lot of different real-world problems. And my first job was actually assigned at the times, it was when I was in prep school and it was a summer job at the Air Force Weapons Laboratory. And I was writing Fortran programs to simulate explosions of neutron bombs. That was sort of a thing you could do in New Mexico at that time.
Marty Chavez: (05:23)
Turns out the math is pretty much the same math used all over the place, including on Wall Street for modelings, [inaudible 00:05:30] partial differential equations. So who knew that would eventually be useful, but I went off in a different direction. I studied biochem in college simply because one of my professors said, "The future of life sciences is computational," which seems obvious today. It was not obvious in 1981. So I was at Stanford Medical School, and I was doing this MD-PhD program and doing some work on machine learning, early work, early groups of people saying, "Hey, can we get machines to figure out how to do diagnosis of sick people just like doctors do?"
Marty Chavez: (06:10)
The problem though, the scope and the complexity of problems in medicine are so much greater than what the computers were able to do at that time. So my PhD research was, well, can we get approximate answers really fast with the low compute power we've got, but it honestly, wasn't really working. And that time, the early nineties is now we look back and we say, "That was a nuclear winter of AI and machine learning." We stopped using the term AI because what we were able to do was so far away from the aspirations of artificial intelligence, it was almost an embarrassment. So in the middle of that, a Wall Street firm that I had never heard of, told the head hunter, "Go to Silicon Valley and give us a list of entrepreneurs in Silicon Valley with PhDs from Stanford in computer science and ship them in for an interview."
Marty Chavez: (07:11)
And so I thought it was a joke. I thought it was taking this bank really scamming them for a free trip to New York, hanging out with my college roommates, see shows, have a good time go to an interview. And so I went to the interview and one thing led to another, and a week later I moved to New York and that's how I got on Wall Street, entirely serendipitous. I had the background they were looking for but I had no idea what my background was going to lead to, it just happened.
Anthony Scaramucci: (07:43)
That was a fascinating story, and you started in J. Aron and if I remember correctly from your bio, and so you know Lloyd and Gary who are personal friends of mine.
Marty Chavez: (07:54)
Since I was a kid.
Anthony Scaramucci: (07:54)
Like Tim O'Neill, who moved on [crosstalk 00:07:56] Goldman geography, but I want to take you back to those days. I joined Goldman in 1989, and I can't remember the Chief Technology Officer, I think his first name was Rick, but I can't remember his last name.
Marty Chavez: (08:08)
Taking me back. I wouldn't be even remembered back then.
Anthony Scaramucci: (08:11)
Okay. But there was something that happened in the mid eighties at Goldman, where they made a mainframe decision that they felt was the incorrect one.
Marty Chavez: (08:21)
Yes.
Anthony Scaramucci: (08:21)
Do you remember this part of the story?
Marty Chavez: (08:23)
Yeah, I do remember.
Anthony Scaramucci: (08:24)
And so I think they chose digital when they probably should have chosen IBM and gone with the more robust and so there was a big technology commotion. And the reason I'm bringing this up is that I still feel it's 30 years later or 35 years later from that decision and C-suite people still have a problem in technology in terms of understanding where to go, why to go where to go. And so what would you say to those people that are listening in to us right now about what you've learned in your career and how to guide people that are not as technologically proficient as you are, but have to make these really big macro decisions for their companies?
Marty Chavez: (09:06)
Well, I think that everyone can learn a lot from [inaudible 00:09:11]. So what happened in response to the episode you described is that Lloyd and the other J. Aron partners effectively began seceding from the IT decisions of the firm. And you'll know, Anthony, that J. Aron had just become a part of Goldman Sachs a few years earlier. So it always had this independent streak and Lloyd would go to the IT division of Goldman Sachs and he'd say, "I want a risk management system." And they go and do a bunch of work for a year and then they'd be very excited. And they'd presents what they had done to Lloyd and you know Lloyd so I'll paraphrase. He said, "This is not at all what I had in mind." Though he might've said it more vigorously and they kept going back and forth.
Marty Chavez: (10:04)
And so Lloyd had what today I think is one of the most brilliant brainwaves that any leader has ever had and he is not a computer scientist or mathematician. He said, "The problem is we have this far away IT division, and they do their thing and they know a lot about computers. But over here on the trading floor, I got a different reality and different problems. I know a lot about trading and I don't know about computers. We're talking past each other, we're speaking different languages, we are not communicating. So when I say, I want a risk management system, I know what I have in mind, but they're not hearing me and they're looking for functional specification, but I don't know how to write functional specifications. And so this is going to go on forever, it's nobody's fault.
Marty Chavez: (10:53)
So Lloyd's thought was, once he had the awareness, he said, "Well, what am I going to do about it? I'm going to go across the river to where you find computer geeks." And in those days, you went to Bell Labs, close to New York, cross the river. And he said, "I'm going to get my very own computer geek and I'm going to put that person in the chair next to me. And I'm going to treat him really well, like a professional on the trading desk, even though he is not at all like the salespeople and the traders. And I'm going to order the salespeople and the traders to work with him and listen to him, and I'm going to run everything by him. And we're going to do that and see how it works."
Marty Chavez: (11:32)
Well, that's the guy, Armen Avanessians, he's still at Goldman, he hired me. He's the one who said, "Hey, what we need here is a piece of software that becomes the trading business. The software has so much knowledge of markets, and data, and models, and risk, and positions, and trades that anything you could want to know about the markets and about our risk, you can just ask the software. You can ask the software what it is right now, but with software, you can do something that you can't do anywhere else. You can ask the software to run trillions of what if's, hypothetical's, what if dollar-yen moves here, what if the fed does this to interest rates?" And then you can start to ask, "Well, how much money would we make or lose?"
Marty Chavez: (12:17)
So this was Armen's brainwaves in response to Lloyd's. And then Armen says, "Well, I got to go shopping for computer scientists and Stanford, Silicon Valley seems like a good place to get them." And then that is the SecDB project. So I just had the incredible fortune of being an early person in this group, which Armen called strategists are strat for short. I was maybe the 12th person and now it's several thousand. And having people like that and bringing them into your business and not treating them as tech support, "Can you help me turn my computer on and off?" But, "We've got some problems in this business on the scientific process. As partners, let's collaborate on solving them." When you invite computer scientists, data scientists, machine learning people, into your business, and you treat them as first-class citizens, you get an amazing result. And that would be my counsel to any leader, you do not need to be a computer scientist to run that playbook.
Anthony Scaramucci: (13:23)
Well, I think it's great advice and it's basically to be less intimidated and be more communicative, I think is the real thing. I mean, sometimes people do to their insecurities and the fact that they're intimidated, they overshoot, or they try to pretend that they know more than they do as well. So I think you're giving really good advice to C-suite people. Let's talk about AI for a second, because I'd like to get your thoughts on AI philosophically. The brain right now, the human brain is probably learning more quickly than a computer at this point. Is that fair to say, or not necessarily true at this point?
Marty Chavez: (14:01)
Anthony, there are some things that human brains do really, really fast, and the computers are making progress, but they're still not where human brains are. So let's say you're a human being evolving on the savanna, and you're looking for predators on the horizon.
Anthony Scaramucci: (14:24)
Pay attention Darsie. This is you by the way, that you're evolving on the savanna. So pay attention, Darsie, okay? I think we're going to get a few shots in, Chavez. I mean, after the way he started this thing. Okay. So we're back on the savanna, we're all evolving together. Go ahead.
Marty Chavez: (14:39)
And we're watching out for predators. Human beings and human brains are really, really fast at predator detection, do I stay here or do I run? And that's something that computers are getting very much better at very, very fast. But then here's something that human brains are actually pretty terrible at. So no matter how smart you are, if I asked you to multiply two, 10 digit numbers, any $10 calculator is going to be faster and more reliable than any human being by a really long shot. So human brains just work in very, very different ways and there's been a lot of research, right? We seem to have a cognitive system that makes very fast decisions using a lot of approximations and guesses and pattern matching based on experience that helped us avoid getting eaten by predators.
Marty Chavez: (15:34)
And we have a much more complex system that is mathematically based, where we can reason about how to make correct decisions under uncertainty and that system, however, is not instinctual. It gets amazing answers, but it's slow. And the answers will often be different from the answers our gut gives us and understanding the difference between those two is super important.
Anthony Scaramucci: (15:59)
So then the follow-up question is an obvious one. When does that sort of stuff converge between the human and the computer?
Marty Chavez: (16:08)
Yes. So we don't know, there's a lot of opinions. I I'll say a couple of things, first of all, there's something incredibly powerful about anything, you know this is from finance, anything that compounds, compounded growth over time is exponential. And it might seem really, really slow, 2%, 3% growth, but you look at it over 20 and 50 years and it starts being extraordinary, right? And so something like Moore's Law, which says compute power is increasing exponentially. Well, back in the fifties, it didn't seem so great, seemed to be going pretty slowly. But now we're onto the proverbial second half of the chess board where you've been doubling, and doubling, and doubling, and suddenly it's starting to be really meaningful. And so computers are getting so much faster and they've been doing it for a long time and we don't really see any end in sight.
Marty Chavez: (17:12)
And so it seems like at a certain point, they'll just be enough computing power that you could simulate a human brain. You could simulate all of those neurons spirally. And so that will be one way that you get automatic or artificial general intelligence, that seems like it's going to happen. Who knows when? But one thing is very important to say, is that there's been a breakthrough and we're really seeing the fruits of that breakthrough in these last 10 years. Here's the breakthrough. If you can take a problem and you can frame it in the following way, "Here are a billion examples of my problem." Let's say my problem is recognizing whether there's a cat in this picture, right? Here's a billion images and human beings for some reason, love talking about cats and posting pictures of their cats on the internet. So we got lots of pictures out there on the internet.
Anthony Scaramucci: (18:10)
Wasn't the internet invented for that thought, Marty? [crosstalk 00:18:16] and so forth, right?
Marty Chavez: (18:19)
Well, as silly as the example is, it's really powerful because there's billions of images out there on the internet. And people have said, "Hey, look at my cat." And so now a computer can look at all these images and say, "Oh, a human being has told us, 'These 500 million images contain a cat, these 500 million images do not.'" If you can frame a problem that way it's been labeled so that these ones are cats, these ones are not cats. Using techniques that are standard deep leaning, we can train up a deep learning network and we can give it a new image that it's never seen before and ask, "Is this a cat?" And it will give us a highly reliable answer.
Marty Chavez: (19:00)
But it's gone beyond that, Anthony in that now you can show it an image of a cat. It'll tell you how many cats there are, where they are, what breed of cat, how old the cat is like, it'll tell you an awful lot by looking at the image. Now, that is amazing because now think of some real problems like translating from one language to another. If we have out there on the internet, billions of documents that have been translated from English to all these other languages, we can shove them into a neural net and it can now translate between languages. So any problem that can be framed in that way, the techniques we have now are so amazing that they're going to be better than any human being at that problem.
Marty Chavez: (19:45)
But here's the punchline. A lot of things that we do, and our having general intelligence, we don't think can be framed in that way. There is no sample set of a billion cats and a billion not cats. And because that doesn't exist, these techniques don't work. And for us to really have artificial general intelligence, we're going to need another big breakthrough. And if that breakthrough has happened in some lab somewhere, I'm not aware of it.
Anthony Scaramucci: (20:16)
But it's a fascinating discussion. And so ultimately, and I'm sort of leading you, but I'd like to get your opinion. You're optimistic about future innovation and you're optimistic about the unleashing of the prosperity that that will afford human beings in civilization.
Marty Chavez: (20:34)
Absolutely. Yes, sir.
Anthony Scaramucci: (20:35)
And so then the secondary question is, well, we have to figure out a way to make sure that there's some level of equal distribution so that it just doesn't become some top heavy, would that be fair logic?
Marty Chavez: (20:44)
I agree 100%, I think with these exponential technologies, you see a power law behavior in the distribution of wealth, right? So we're all familiar with the bell curve, right? There's people certain height, that's the median, finding someone who's three feet above the median height is going to be surpassingly rare, essentially zero probability. But wealth to your point is not distributed that way, almost no matter who you are, there's someone who's 10 times richer, right? Eventually you get to Jeff Bezos, but the people who are just sort of unfathomably richer than everybody else. And it seems that these exponential technologies are increasing that winner takes all dynamic.
Marty Chavez: (21:33)
So I am a huge advocate. We have to do something about this because while these technologies will make the planet better and will make life better, they pose many problems. There's existential problems about work, what will we need human beings to do? And about retraining people whose jobs go away, not so much because they've gone to China or India, but because they've gone to computers and robots. And how do we retrain them for new things and how do we do that in a timeframe where society doesn't break down? And so I am a firm proponent that there will always be interesting things for human beings to do and human beings are always better than machines at doing. I don't see that changing, but during any 10 to 20 year period, you can have some huge dislocations. So I'm all in when it comes to universal basic income, what would that actually look like, how do we get it done? Those are the hard questions.
Anthony Scaramucci: (22:38)
Right. And also a package of, I think you and I probably share a similar faith you and I. I did Andrew Yang's podcast and I am a believer in UBI, but I would also say I am a believer in uneven outcomes, Marty, but I want there to be more equal opportunity. Because I was a product of the good public school system and two blue collar parents that didn't go to college. But without that good public school system, I couldn't have catapulted into Tufts and Harvard and ultimately to Goldman Sachs. And so we recognize some of our success in life is providential, but it would be nice if we could come up with the right policies, not necessarily left or right policies, but the right policies that could flatten that playing field.
Anthony Scaramucci: (23:21)
But one thing that human beings are not great at, Marty, and maybe machines can help us with this is that we have this narrative going between socialism and capitalism and there stark narratives. And perhaps there's something more subtle in between that we can synthesize and make people understand that you can have unlimited outcomes, but you need some base level of equal opportunity. But that's for day and another SALT Talk. I want to go back to what you're doing right now and how you have used all of this wonderful life experience that you have to do what you're doing today. Tell us what you're doing.
Marty Chavez: (23:59)
Well, if you wait long enough, all kinds of amazing things happen. So I took essentially a 25, maybe more, 25 year call it detour, away from the life sciences and computation and life sciences, the intersection of those two things. And with the progress of software and technology and chips getting faster, that 25 years has been amazing. And so problems that we couldn't begin to solve in 1990 now look like they might be solvable, maybe not today, but we can see a path. And so almost everything that I'm doing these days is at that intersection of computation and life sciences, can we take a scientific process that is often, for instance, in the case of discovering new medicines, also a business process. And can we do to that process, what I and many of us at Goldman worked on for the trading business?
Marty Chavez: (25:07)
Turns out that the trading business, as hard as it was, is actually a really easy problem to solve compared to say, simulating a human organism or a human population. How many things do you need to know about a foreign exchange forward trade, two currencies, the exchange rate, the delivery date, party A, party B, you've now fully specified it. Imagine what it would take to fully specify a human being or even a single cell inside a human being. Well, the computers have made so much progress that you can actually begin to tackle these problems. And so I'm advising working with an array of companies and they are doing fascinating things.
Marty Chavez: (25:52)
I'll give you a couple of examples, paige.ai, as the first board I joined after I retired from Goldman. And I had heard about it from my friend, Jim Pryor, a legendary investor who was their first investor. And here's what they're doing, think of it as creating a new microscope to give to pathologists, except this microscope is digital. And this microscope has the unbelievable property that it outlines cells that you're looking at in the tissue specimen and says, "I think these cells are cancerous and here's the cancer I think these cells represent. And here's the treatment protocol that I would recommend." Not replacing the pathologist, but a second set of eyes on the problem with amazing results.
Marty Chavez: (26:44)
Another company, I'll give you an example of, Recursion in Salt Lake City, doing amazing things where they are building up a library of images of cells, and we're talking vast numbers of images. And here's what the cell looks like by itself. And now if we perturbed the cell a little bit with some molecule there might be a drug candidate or a [inaudible 00:27:09] with a CRISPR mutation, change its genetic code a little bit. Here's what the cell looks like now. And we're capturing how the cells metabolism changes, and we're doing this over and over again, and then we're throwing machine learning at it. And so we're then using the models that come out of this process to guide drug discovery.
Marty Chavez: (27:31)
So drug discovery has mostly been throw a million molecules at a cell and see what they do. And then eventually scale it up to mice and eventually human clinical trials, very expensive, very high failure rate. If we can do anything in software to fail earlier say, "Stop, don't even run any more experiments here, that's not going to work." And to find more promising candidates earlier, this would transform drug discovery. So those are the kinds of things I'm working on.
Anthony Scaramucci: (28:01)
Well, it's fascinating. I'm thrilled that we have you and your mind working on these things for all of us. I want to switch the topic abruptly. John's going to come in here in a second and ask the questions. We've got lots of questions in the queue. I want to talk about digital currency for a second, because you have a view there, you have a philosophical opinion there. And just wondering what you think of crypto currency, the ongoing digitization trends that's impacting us, there's also an EOS coin. Some of us don't even know what that is, myself included. And I was wondering if you could talk a little bit about that and what your opinions are in crypto.
Marty Chavez: (28:40)
I love talking about crypto. I worked on some of the techniques, some of these cryptographic techniques when I was a grad student and they're powerful and they're fascinating. And when I first heard about Bitcoin, I got really excited because actually Bitcoin is a solution to an old problem in computer science. It's called the Byzantine Generals Problem, but it's really an old problem of, we've got a noisy world full of unreliable information and disloyal people. In the face of that, how do all the loyal people come to a decision, how do we all agree on something? Well, this is the core of what the Bitcoin protocol does, which is how do we all agree that this is a real transaction where party A sent this many Bitcoin to party B, that that is what the blockchain does.
Marty Chavez: (29:38)
And so when I first heard about Bitcoin, I thought, "Okay, is super incredibly interesting. I got to get really up to speed on this because I can see all kinds of applications." But immediately the skeptical part of me sets in. So I've got two huge skepticisms that remain, though I'm open of course, to changing my view with new data. Here's one part of skepticism, these techniques to achieve fault tolerance agreement, like agree in the face of 50% of the network being hacked, they're very expensive, right? I did an analysis for a class I taught at Stanford and I remember at the time I taught the class in February. The amount of electricity consumed by all the Bitcoin mining ratings was equal to the entire energy consumption of Switzerland, right?
Marty Chavez: (30:31)
So just running the Bitcoin protocol, that is very expensive. And so I wonder, do you really need that kind of super expensive computation for most applications or is this maybe a kind of overkill? That's one skepticism? The second skepticism is I have never believed for one split second that Bitcoin or Libra or any of these things is going to replace the US dollar. I think that is an absolutely preposterous idea. And the reason for that, is really when you think of what money is, right? Money fundamentally, especially fiat money and legal tender, all relate to something very deep and political philosophy.
Marty Chavez: (31:18)
Which is, if we are in the boundaries of the US and I owe you a dollar, and I give you a dollar bill which says, "This note is legal tender for all debts public and private." And you reject it. It doesn't matter whether you accept or reject my dollar bill. My debt is forgiven, it's extinguished. I tendered the bill to you, doesn't matter if you accept it, the debt is gone. And the US backs that extinguishment with its monopoly on the use of force within its boundaries. It can put people in jail for not paying its taxes, it can seize their property, right? That is something that's not going away anytime soon. And so the idea that Bitcoin and a bunch of people running computers would just replace the sovereign seems to me like something that's not happening in our short-term reality, or even the medium or long-term.
Marty Chavez: (32:08)
So those are my skepticisms. But can we take the US dollar and use the techniques being developed here in digital assets such as Bitcoin, and continue the dematerialization of the dollar. It's already mostly electronic, right? We've got these paper bills, but most dollars are not represented that way, they're in bank accounts. And we can talk about what bank accounts are, right? That digital journey of the US dollar has been going on since the 1950s, my view is it will continue and it will adopt all of these techniques. And you will have a digital US dollar. You would have heard about it during the pandemic. There were discussions in the Congress that were super exciting.
Marty Chavez: (32:54)
"Hey, we're going to order the Federal Reserve to create a digital US dollar. And then we're going to distribute the stimulus money directly to Americans with this new digital US dollar." It is a fantastic idea. But when I read that I thought, "Okay, I'll sit down and I'll code up a digital US dollar over the weekend. Yeah right, like that's going to happen." It's a vast project, you don't order the Federal Reserve to get on it this week, right? It's something that will evolve, my view, must evolve to stay competitive with the Yuan. The Chinese are very aggressively turning that into a digital asset. I think we absolutely have to, as a matter of sovereign might and wealth and diplomatic policy and maintaining the dollar as the global reserve currency, it must digitize, it must become a cryptocurrency itself.
Anthony Scaramucci: (33:45)
And what is EOS?
Marty Chavez: (33:46)
So EOS is a company I've known about. It's a coin [inaudible 00:33:52] associated with a company called Block.One. And I've known the founders of Block.One for a few years, one of their investors is a friend of mine for many years. And so I've always followed with interest what they're doing. And yes, they have this currency, but what they're most excited about is building distributed applications for finance, for social media that are based on this currency and also creating a new fabric for computing, where you can do very complicated, distributed calculations across millions of machines and do them reliably even if the computers are going up and down and the communication links are failing. I think that technology of a distributed global computer is super important and I'm happy to work on that with them as well.
Anthony Scaramucci: (34:45)
Well, fascinating stuff, Marty. I'm going to turn it over to John. He's got questions from our audience and we really appreciate you being on today.
Marty Chavez: (34:53)
Sure. Thank you, Anthony.
Anthony Scaramucci: (34:55)
[crosstalk 00:34:55] Don't be asking about the skateboard, okay? I know you're thinking of the skateboard Darsie. Just stick to the facts, okay?
John Darsie: (35:02)
We're going to have to do an entirely separate SALT Talk about the idea of a blockchain US dollar digital currency. Because, I think that's a fascinating topic. And like you mentioned, it's something that China has announced their intentions to aggressively digitize their currency. It's almost already digitized on an app like WeChat where people are exchanging currency in an app that is the dominant app in China, despite that currency not technically being the sovereign currency, so it's a fascinating topic. I want to switch gears a little bit. So there's a problem on Wall Street as there are in a lot of industries and it's a diversity problem.
John Darsie: (35:38)
And you are a Latino, you're an openly gay man, so you occupy a very rarefied space on Wall Street. How did that experience shape your time? You're working at Goldman and on Wall Street, is Wall Street a friendly place to work for someone who is openly gay and someone who might not fit the archetype of what the average worker at one of these banks look like, and how much did you fight yourself trying to blend in versus being yourself and being openly representing your identity within the firm?
Marty Chavez: (36:10)
So I had a bit of an unusual story, which is I came from Silicon Valley to Wall Street in 93. As I mentioned to Anthony, I really wasn't planning a career on Wall Street, I was looking for a free trip to New York. And I was out in Silicon Valley at the time and I remember going to venture capitalists meetings with my co-founder and he would actually tell me to kind of do it up a little bit, "Go ahead and wear that Queer Nation t-shirt to the meeting, I'll think that's cool." And so here I have a Wall Street and I didn't know anything about Wall Street. I'd only heard that it had a reputation for being homophobic. So they put the offer in front of me instead of saying, "Yeah, this is great." I was just silent and I was silent because I'm thinking, "Wow, am I going to go back into the closet just for a different job, I don't really need or want this job, particularly I'm happy in Silicon Valley."
Marty Chavez: (37:11)
And so as I sat there, I just blurted it out to the gentlemen who was hiring me, "I think I need to tell you that I'm gay." And this was 1993. Suffice it to say that that kind of experience had never happened to him and I'm not sure it had ever happened to anywhere in Wall Street back in 93. And so he didn't know what to say. And so all he could think of to say was, "Hey, do you have a boyfriend?" Which is, I think maybe not the response you would have in 2020, but I took that to mean, "Well, this must be a gay friendly place." I think it would have been more accurate for me to have concluded that this was a place that didn't care if I was straight or gay, it just cared that I was good at math and software. And for me, that has always been enough, for me personally.
Marty Chavez: (38:09)
I don't want anybody to do anything special for me, but neither do I want my being me to be a liability. And if it is a liability, I'll go somewhere else. Now that kind of open-mindedness over the years became more sophisticated at Goldman Sachs and elsewhere. And we began to understand that diversity of your workforce was like diversification of your portfolio. The only free lunch available, you get a different perspective. You avoid missing things by making it a place where lots of people want to come. So Wall Street has definitely made that evolution. I've always been almost always the only one or two of people like me in the room. And been super fortunate that I had a lot of straight white Jewish males who were my mentors and brought my career along at every step of the way.
Marty Chavez: (39:12)
If I had been waiting for a Latin mentor or an LGBT mentor, or God forbid, one who was both Latin and LGBT, I'd still be out there waiting. My philosophy from growing up, and this is something my mother drummed into our skulls, growing up in Albuquerque, New Mexico where Hispanics were the majority by numbers, but not the majority in any way by economic clout. And my mom would say, "You're Hispanic. You'll have to work twice as hard to get half as far. So no moping about that, you better get busy." And so that while it's rather brutal advice and wouldn't be for everybody, and it's unfortunate that someone has to give it, I'm grateful to her for that as well.
John Darsie: (40:03)
Well, it's a really inspiring story and I have to give Anthony credit too. He's made SkyBridge a place that is very much like that. We have several openly gay members of our workforce and he's worked very hard on LGBTQ issues. And I think he's part of the solution as well. And I think for you, you've now created that role model for people who, whether it's a non-traditional path or a traditional path to Wall Street that young Latinos, young-
Anthony Scaramucci: (40:29)
Nice speed you've got, Marty. See how he's buttering me up. [inaudible 00:40:31].
John Darsie: (40:31)
I do have to give Anthony credit.
Anthony Scaramucci: (40:35)
He took the ballpoint pen and stabbed it into my jugular as we started, but now he's foaming and... keep going Darsie.
John Darsie: (40:43)
I got to make sure I keep my job. We opened this in a very rocky fashion, right?
Marty Chavez: (40:48)
I understand that.
John Darsie: (40:49)
But it's just an inspirational story. And hopefully you've become that role model for a lot of young people who-
Anthony Scaramucci: (40:55)
But in all seriousness to Marty, it is truly inspirational. And so I've always believed that life, liberty and pursuit of happiness, maybe they thought it was supposed to be for just straight people, but it's not, it's for everybody. And you are a living example of that and a role model for that. And one of the things I worked on with vice president Biden a few years ago, actually was in Davos, expanding the human rights about sexual preference not just the United States, but around the world. So we're making progress, thank God. And it's because of people like you willing to be out there taking a stand.
Marty Chavez: (41:31)
Well, I'd like to say I was some kind of a hero, for me it was really more pragmatic than that. I just thought, I'm not going to go backwards in my life. I hated being in the closet and I'm not going to do that. So it was almost a kind of expedience, but I guess it doesn't matter however-
Anthony Scaramucci: (41:48)
No, I think you're not giving yourself enough credit because we're both contemporaries. And I know a lot of my friends, I'm born in 1964. A lot of my friends born in the sixties had great difficulty opening up, particularly if they grew up in a Latino community, or an Italian community where the parents are very Roman Catholic, okay, and there's a lot of blocking and block-headed thinking that goes on. So it took a lot of risks. You deserve the credit for being the role model that you are. Go ahead, John. I know you spoke-
Marty Chavez: (42:20)
And 64 was a good year. Anyway, I was born in 64 too.
Anthony Scaramucci: (42:23)
Were you? Yeah. So see, there you go. See that's a-
John Darsie: (42:25)
Now he's going to get into an astrology thing with you.
Anthony Scaramucci: (42:29)
It was a great year, okay? Go ahead, Darsie, continue.
John Darsie: (42:34)
All right. I want to talk about the pandemic for a moment. So you've now shifted back into maybe what was your original passion in life sciences, but you pay attention to tech trends across a wide spectrum of industries. What do you think the pandemic in terms of long-term consequences or results of the pandemic that are here to stay in terms of digital trends and the way we think about work, think about living. What trends do you think have been accelerated by the pandemic that are here and that people particularly investors, for example, should pay close attention to?
Marty Chavez: (43:07)
Sure. So I think my view would almost at this point, be the consensus view or the emerging consensus view, but maybe I got to it a bit ahead of time. But the idea is that the pandemic with all its terrible cataclysmic consequences has in the sense of a chemistry reaction, it's a catalyst. It isn't making things happen that it was just not sensible for them to happen, it's speeding up in a dramatic way, things that were already happening, but they might've been happening too slowly for us to really observe them, right? And there's some aphorism about 10 decades of progress in 10 months, right, and then you have other decades where it seems like nothing happens. Well, we've had one of those 10 months, 10 decade kind of periods. And so I don't know where all this is going to go to shake out, but there's a few things that I'm highly confident about.
Marty Chavez: (44:09)
First, the digitization of finance, right? The idea that we have these little pieces of paper that we still write things on, right, or little pieces of paper that say US Federal Reserve Note on them. It's so cute, it's so quaint. It's kind of ridiculous, right? And think of all the things that we write on little pieces of paper, here's a particularly horrible example. If you've ever bought an apartment, you know how many pieces of paper come together for that, right? So all of those things are going away. I had some experiences during the pandemic of people requiring notarized documents and everything that we had to go through to cause a document, a physical document to be notarized in the depths of a pandemic, right? So, that's changing.
Marty Chavez: (45:00)
And we're just going to look at all these cumbersome workflows that have lots of paper steps and lots of manual intervention and anything that doesn't need to be there like, why are you swiping a card? That is also kind of silly and quaint and signing some piece of paper even more so. So you can see all those things as gone. And it's just a matter of months. I think another thing that you're seeing iS some restrictions that no longer made any sense. So for instance, if you're a pathologist in a clinic or hospital, there's been a requirement you have to be in a clinic or a hospital. They're looking at your microscope, looking at those slides, but you know what? No, you don't like, who said that, right? There just weren't the tools.
Marty Chavez: (45:48)
So one of the interesting things that Paige, which I mentioned to you has been doing is, in the process of constructing this AI and machine learning enabled technology that spots cancer cells, you can make the entire workflow of a pathologist go digital. No need to be in a lab, no need to have a microscope, no need to be in any particular place. So this trend of telemedicine, maybe you could just have a Zoom with your doctor and stick out your tongue, that's happening and there's not going to be going back. There'll be some things that you still have to be present for but there's a ton of things that you don't, and those are not coming back.
Marty Chavez: (46:31)
And people are working really hard on making those kinds of unnecessary in-person interactions go away. The really big question, which we don't have the answer on is, what will happen to the office? Now I'm a computer scientist, I'm an engineer. I've been building virtual communities since I was 10. I do occasionally like being in a physical space with people, but actually I'm more productive at work if I'm not surrounded by people bugging me. And so going virtual for me, I've just told everybody who wants to do some kind of collaboration with me, "I'm all in. And think of me as a permanently virtual person." There will be times when we get together, but I'm in boards meetings and people say, "Oh, this would be so much better if it were in person, I can't wait to go back to the way things were."
Marty Chavez: (47:30)
And I will always say, "You know what? I am very interested to hear that it's, you think it would be better for you if it were in person, I'm totally fine. This is great for me. I didn't have to travel across the pond to be in this meeting and I'm loving that." Right? So I think we're going to see the same thing happening with the world of work. There's going to be a regular cadence where people want to get together in an office or something that maybe looks a little bit like an office. But I don't think it's going to be 9:00 to 5:00, Monday through Friday, that is a relic of the industrial revolution and that rigid construct is going away. It will be replaced by something much more flexible and will vary by role and will vary over time. And we don't know exactly what that's going to look like, but we're starting to see the outlines.
John Darsie: (48:21)
Well, I think that's a fascinating masterclass in where we're headed. And I think Anthony and I have experienced that. We have young kids at home, it's been nice to be able to spend time with your family. You go into the office a couple of days a week, and then you feel like I can be just as productive at home and so it becomes more of a blended life. But you have so many great answers to so many great questions. You're not just a nerdy computer scientist, you understand the social elements of all this. You talked about universal basic income. You worked on Wall Street, so you understand the money part of it and you're a civically engaged type of person.
John Darsie: (48:51)
Do you ever see yourself? And I'm hoping the answer is yes. But do you ever see yourself serving in an appointed position or an elective office down the road, if vice president Biden wins, Anthony's going to be calling his future Chief of Staff and telling him that, "You got to call Marty Chavez to digitize the dollar and fix a lot of other problems we have." But is that something that you've thought about and want to do?
Marty Chavez: (49:14)
If asked to do something that I could be effective at, given that constraint, that I'm a mostly virtual guy, right? Then-
John Darsie: (49:25)
The government should be the same way. It's like if they can't sit down in the same room, they can't pass the stimulus bill. They want to send everybody $1,200 checks. And that becomes a big ordeal when you could digitize the whole thing and it could happen in an instant.
Marty Chavez: (49:36)
I would be up for something that didn't require me to move and something where this combination sort of weird intersection of experiences and skills that I've had would be useful. I'd have to think hard about it.
John Darsie: (49:53)
I was trying to think of what job would be the best fit for you. And then one came to mind and it was president of the United States.
Marty Chavez: (50:01)
Yeah. I think you have to move to Washington for that one.
John Darsie: (50:04)
Yeah, maybe not. Maybe in five or eight years, whatever it may be, maybe that'll change and we can have more digital president Chavez.
Marty Chavez: (50:12)
Yeah. Well, you're very kind. And I do believe in giving back, I don't know exactly what forms that will take over time. For me, it's mostly been philanthropic I'm president of the Harvard Board of Overseers this year, and that's something I'm really passionate about. But you never know where where the path will take us.
John Darsie: (50:35)
So we say that we would like to have our guests back in the future on a lot of shows, but this is one, we actually mean it. I feel like we could talk about so many different topics for such greater length, but it was great to have you on, we even went into overtime a little bit here. But thank you so much for joining us. It was a pleasure, Anthony, you have any final words for Marty before we go.
Anthony Scaramucci: (50:52)
Yeah, because I mean, you just blew us up on every other guests that came on [inaudible 00:50:56].
John Darsie: (50:56)
I didn't say which ones I was lying about.
Anthony Scaramucci: (51:00)
Now we got to call every person that came on to SALT Talks, "No, we really did mean that we [inaudible 00:51:03]." It's okay, [inaudible 00:51:09], we're surviving the pandemic. Marty, great to have you on, it's a real pleasure. And I hope and we both really do mean this, hope we can get you at one of our live events at some point.
Marty Chavez: (51:20)
That would be fun. And like a cryptocurrency thing, that I'd definitely say yes to that if it ever makes sense [crosstalk 00:51:26].
Anthony Scaramucci: (51:26)
Well, we certainly want to do that as well. And wish you the best of luck with what you're doing and hopefully we can connect soon.
Marty Chavez: (51:33)
All right. Thank you.
Anthony Scaramucci: (51:34)
Thank you for joining SALT Talk.
Marty Chavez: (51:35)
Be well. My pleasure. Take care.