{"version":"1.0.0","segments":[{"startTime":0.33,"endTime":2.31,"body":"- Let me start with a"},{"startTime":0.33,"endTime":2.31,"body":"personal anecdote, right?"},{"startTime":2.31,"endTime":4.56,"body":"How is technology affecting finance?"},{"startTime":4.56,"endTime":7.14,"body":"But how does technology affect any of us?"},{"startTime":7.14,"endTime":10.5,"body":"How does it affect our"},{"startTime":7.14,"endTime":10.5,"body":"personal day to day lives?"},{"startTime":10.5,"endTime":15.5,"body":"Well, as Wendy pointed out,"},{"startTime":10.5,"endTime":15.5,"body":"my name is Raghavendra,"},{"startTime":15.943,"endTime":18.33,"body":"and this is a complicated name."},{"startTime":18.33,"endTime":20.7,"body":"Most people find it"},{"startTime":18.33,"endTime":20.7,"body":"difficult to pronounce,"},{"startTime":20.7,"endTime":24.15,"body":"but I had no idea just"},{"startTime":20.7,"endTime":24.15,"body":"how difficult it was"},{"startTime":24.15,"endTime":26.91,"body":"until I realized that even computers"},{"startTime":26.91,"endTime":29.46,"body":"had a difficult job pronouncing this."},{"startTime":29.46,"endTime":31.17,"body":"Let me explain."},{"startTime":31.17,"endTime":33.93,"body":"I use a service called Google Voice."},{"startTime":33.93,"endTime":37.26,"body":"So when someone calls my"},{"startTime":33.93,"endTime":37.26,"body":"phone and leaves a voicemail,"},{"startTime":37.26,"endTime":39.9,"body":"Google transcribes it into an email"},{"startTime":39.9,"endTime":41.73,"body":"and sends it to me on email."},{"startTime":41.73,"endTime":44.253,"body":"So, this is what Google did to me."},{"startTime":45.15,"endTime":47.07,"body":"It says, \"Hello, this is Robert Green."},{"startTime":47.07,"endTime":49.38,"body":"I'm calling you for National"},{"startTime":47.07,"endTime":49.38,"body":"market Research firm."},{"startTime":49.38,"endTime":52.413,"body":"We would like to speak with, the Avenger.\""},{"startTime":52.413,"endTime":54.42,"body":"(students laughing)"},{"startTime":54.42,"endTime":57.45,"body":"Raghavendra, the Avenger,"},{"startTime":54.42,"endTime":57.45,"body":"kind of similar, right?"},{"startTime":57.45,"endTime":59.22,"body":"I mean, I'm okay being called the Avenger,"},{"startTime":59.22,"endTime":61.74,"body":"but it's kind of seems"},{"startTime":59.22,"endTime":61.74,"body":"rather silly, right?"},{"startTime":61.74,"endTime":63.69,"body":"So I said, okay,"},{"startTime":63.69,"endTime":65.76,"body":"I'm going to change my"},{"startTime":63.69,"endTime":65.76,"body":"name to something else."},{"startTime":65.76,"endTime":67.344,"body":"I'm going to shorten it."},{"startTime":67.344,"endTime":68.67,"body":"I'm going to call it Raghu."},{"startTime":68.67,"endTime":71.61,"body":"Unfortunately, technology"},{"startTime":68.67,"endTime":71.61,"body":"screws up here as well."},{"startTime":71.61,"endTime":74.88,"body":"You type the word Raghu into"},{"startTime":71.61,"endTime":74.88,"body":"Google and search for it,"},{"startTime":74.88,"endTime":76.893,"body":"this is what you end up with, right?"},{"startTime":78.48,"endTime":80.52,"body":"'Cause ragu sauce, you"},{"startTime":78.48,"endTime":80.52,"body":"have ragu bolognese,"},{"startTime":80.52,"endTime":83.76,"body":"you have ragu, but there's no human being."},{"startTime":83.76,"endTime":85.44,"body":"I said, all right, let"},{"startTime":83.76,"endTime":85.44,"body":"me try something else."},{"startTime":85.44,"endTime":88.2,"body":"I took a photo myself, uploaded to Google,"},{"startTime":88.2,"endTime":91.29,"body":"and did a reverse image"},{"startTime":88.2,"endTime":91.29,"body":"search on that photo."},{"startTime":91.29,"endTime":92.88,"body":"Said, who is this person?"},{"startTime":92.88,"endTime":94.92,"body":"And Google very confidently says,"},{"startTime":94.92,"endTime":96.243,"body":"this is who you are."},{"startTime":97.5,"endTime":99.72,"body":"Some of you may recognize the gentleman."},{"startTime":99.72,"endTime":100.98,"body":"It;s Ben Bernanke,"},{"startTime":100.98,"endTime":103.8,"body":"the former head of the"},{"startTime":100.98,"endTime":103.8,"body":"Federal Reserve in America."},{"startTime":103.8,"endTime":105.03,"body":"Very important guy."},{"startTime":105.03,"endTime":107.22,"body":"He was charged of setting"},{"startTime":105.03,"endTime":107.22,"body":"interest rates in America,"},{"startTime":107.22,"endTime":109.23,"body":"and therefore the world,"},{"startTime":109.23,"endTime":111.66,"body":"but he's also 20 years older than me."},{"startTime":111.66,"endTime":113.67,"body":"I said, okay, let me find someone else,"},{"startTime":113.67,"endTime":115.503,"body":"someone maybe a little younger."},{"startTime":116.58,"endTime":117.51,"body":"And so Google says,"},{"startTime":117.51,"endTime":119.098,"body":"this is who you look like."},{"startTime":119.098,"endTime":120.18,"body":"(students laughing)"},{"startTime":120.18,"endTime":122.52,"body":"And some of you may human"},{"startTime":120.18,"endTime":122.52,"body":"recognize this gentleman, right?"},{"startTime":122.52,"endTime":123.51,"body":"Especially those who watching"},{"startTime":123.51,"endTime":125.31,"body":"English Premier League football."},{"startTime":125.31,"endTime":126.76,"body":"It's of course Pep Guardiola."},{"startTime":127.92,"endTime":130.113,"body":"So what are we going to talk about today?"},{"startTime":131.73,"endTime":134.79,"body":"Well, we are going to"},{"startTime":131.73,"endTime":134.79,"body":"talk about the problems"},{"startTime":134.79,"endTime":136.77,"body":"that financial intermediaries have,"},{"startTime":136.77,"endTime":139.05,"body":"and specifically the major problem"},{"startTime":139.05,"endTime":140.34,"body":"financial intermediaries have"},{"startTime":140.34,"endTime":143.73,"body":"is how to deal with information,"},{"startTime":143.73,"endTime":146.493,"body":"specifically, three types of information."},{"startTime":147.87,"endTime":150.42,"body":"Number one, imperfect information."},{"startTime":150.42,"endTime":152.67,"body":"We do not have enough information"},{"startTime":152.67,"endTime":154.533,"body":"to make decisions properly."},{"startTime":155.4,"endTime":158.25,"body":"Second one, asymmetric information."},{"startTime":158.25,"endTime":160.11,"body":"The person on the other side of the deal"},{"startTime":160.11,"endTime":161.763,"body":"has more information than we do."},{"startTime":162.6,"endTime":165.54,"body":"And the third one, behavioral problems."},{"startTime":165.54,"endTime":166.98,"body":"That means, in other words,"},{"startTime":166.98,"endTime":169.653,"body":"even if you do have the"},{"startTime":166.98,"endTime":169.653,"body":"right amount of information,"},{"startTime":170.55,"endTime":171.66,"body":"we don't know what to do with it."},{"startTime":171.66,"endTime":175.26,"body":"We make mistakes in dealing"},{"startTime":171.66,"endTime":175.26,"body":"with that information."},{"startTime":175.26,"endTime":176.37,"body":"So these are the problems"},{"startTime":176.37,"endTime":178.32,"body":"that financial intermediaries face,"},{"startTime":178.32,"endTime":181.2,"body":"and the thrust of my six lectures"},{"startTime":181.2,"endTime":184.53,"body":"is about how technology"},{"startTime":181.2,"endTime":184.53,"body":"is changing the way"},{"startTime":184.53,"endTime":186.3,"body":"we deal with these problems."},{"startTime":186.3,"endTime":187.5,"body":"And in particular,"},{"startTime":187.5,"endTime":190.08,"body":"I'm going to talk about"},{"startTime":187.5,"endTime":190.08,"body":"three types of technology."},{"startTime":190.08,"endTime":192.69,"body":"Cryptography, big data,"},{"startTime":192.69,"endTime":195.39,"body":"that is basically sensors/smartphones,"},{"startTime":195.39,"endTime":197.343,"body":"and artificial intelligence."},{"startTime":199.17,"endTime":201.15,"body":"Let me start with an example"},{"startTime":201.15,"endTime":204.687,"body":"of how technology transforms"},{"startTime":201.15,"endTime":204.687,"body":"the world of finance,"},{"startTime":204.687,"endTime":208.68,"body":"and the example goes"},{"startTime":204.687,"endTime":208.68,"body":"back all the way to 1838"},{"startTime":208.68,"endTime":212.013,"body":"with the patent by Samuel"},{"startTime":208.68,"endTime":212.013,"body":"Morse of the telegraph."},{"startTime":212.94,"endTime":216.39,"body":"Now, before the telegraph came along,"},{"startTime":216.39,"endTime":219.06,"body":"what was the prior technology available?"},{"startTime":219.06,"endTime":221.64,"body":"Well, there were homing pigeons,"},{"startTime":221.64,"endTime":223.17,"body":"there was the Pony Express,"},{"startTime":223.17,"endTime":226.17,"body":"people riding on horses"},{"startTime":223.17,"endTime":226.17,"body":"from one town to another,"},{"startTime":226.17,"endTime":227.58,"body":"there were visual telegraphs,"},{"startTime":227.58,"endTime":229.29,"body":"people standing on top of big hills"},{"startTime":229.29,"endTime":231.57,"body":"waving flags to each other,"},{"startTime":231.57,"endTime":232.683,"body":"and railroads."},{"startTime":233.52,"endTime":236.01,"body":"The common thing with all"},{"startTime":233.52,"endTime":236.01,"body":"these technologies were,"},{"startTime":236.01,"endTime":237.39,"body":"number one, they were slow,"},{"startTime":237.39,"endTime":238.89,"body":"number two, they were expensive,"},{"startTime":238.89,"endTime":241.32,"body":"and number three, they were limited."},{"startTime":241.32,"endTime":243.243,"body":"So what did the telegraph do?"},{"startTime":244.26,"endTime":245.61,"body":"The first thing the telegraph did"},{"startTime":245.61,"endTime":248.04,"body":"was replace all these technologies,"},{"startTime":248.04,"endTime":253.02,"body":"and it replaced them because"},{"startTime":248.04,"endTime":253.02,"body":"it dramatically reduced costs."},{"startTime":253.02,"endTime":254.79,"body":"Initially, there were a bunch of firms"},{"startTime":254.79,"endTime":256.17,"body":"competing with each other"},{"startTime":256.17,"endTime":258.99,"body":"to introduce telegraph"},{"startTime":256.17,"endTime":258.99,"body":"services across America,"},{"startTime":258.99,"endTime":261.903,"body":"later replaced by a single"},{"startTime":258.99,"endTime":261.903,"body":"firm, Western Union."},{"startTime":262.95,"endTime":265.59,"body":"And ultimately, the telegraph itself"},{"startTime":265.59,"endTime":268.563,"body":"was displaced by a newer"},{"startTime":265.59,"endTime":268.563,"body":"technology, the telephone."},{"startTime":270.21,"endTime":274.503,"body":"But how did the telegraph"},{"startTime":270.21,"endTime":274.503,"body":"changed the world of finance?"},{"startTime":275.7,"endTime":278.73,"body":"Well, the major thing that telegraph did"},{"startTime":278.73,"endTime":281.73,"body":"was basically centralized prices."},{"startTime":281.73,"endTime":284.79,"body":"They had one price everywhere."},{"startTime":284.79,"endTime":286.143,"body":"Let me give you an example."},{"startTime":288.3,"endTime":292.32,"body":"In 1846 in New York, two cities,"},{"startTime":292.32,"endTime":295.77,"body":"Buffalo, Upstate New"},{"startTime":292.32,"endTime":295.77,"body":"York, and New York City,"},{"startTime":295.77,"endTime":298.71,"body":"the prices of corn and wheat in Buffalo"},{"startTime":298.71,"endTime":302.1,"body":"lagged four days behind"},{"startTime":298.71,"endTime":302.1,"body":"those in New York City."},{"startTime":302.1,"endTime":303.66,"body":"What that essentially meant was,"},{"startTime":303.66,"endTime":307.11,"body":"suppose you are buying corn in Buffalo,"},{"startTime":307.11,"endTime":310.41,"body":"you have no idea whether the"},{"startTime":307.11,"endTime":310.41,"body":"person who's selling the corn"},{"startTime":310.41,"endTime":315.41,"body":"is actually maybe really"},{"startTime":310.41,"endTime":315.41,"body":"want to sell the corn"},{"startTime":315.42,"endTime":320.42,"body":"or maybe he has news that"},{"startTime":315.42,"endTime":320.42,"body":"the price in New York"},{"startTime":320.49,"endTime":321.99,"body":"is about to fall."},{"startTime":321.99,"endTime":323.88,"body":"You don't know which one is true,"},{"startTime":323.88,"endTime":327.03,"body":"so you're always worry"},{"startTime":323.88,"endTime":327.03,"body":"about trading in a place"},{"startTime":327.03,"endTime":328.86,"body":"where the corn and wheat prices"},{"startTime":328.86,"endTime":330.48,"body":"or prices of any commodities"},{"startTime":330.48,"endTime":333.36,"body":"lags behind that of another place."},{"startTime":333.36,"endTime":335.19,"body":"Well, in 1848,"},{"startTime":335.19,"endTime":337.44,"body":"those two markets were"},{"startTime":335.19,"endTime":337.44,"body":"linked telegraphically,"},{"startTime":337.44,"endTime":339.57,"body":"and the prices were set simultaneously,"},{"startTime":339.57,"endTime":342.003,"body":"and this happened all over America,"},{"startTime":343.356,"endTime":346.89,"body":"and people tried to capitalize"},{"startTime":343.356,"endTime":346.89,"body":"with this one as well."},{"startTime":346.89,"endTime":348.42,"body":"Over the 19th century,"},{"startTime":348.42,"endTime":350.31,"body":"literally hundreds of exchanges"},{"startTime":350.31,"endTime":354.12,"body":"appeared and then disappeared"},{"startTime":350.31,"endTime":354.12,"body":"all over the country."},{"startTime":354.12,"endTime":356.55,"body":"Only five exchanges remain important."},{"startTime":356.55,"endTime":361.2,"body":"New York, Philadelphia,"},{"startTime":356.55,"endTime":361.2,"body":"Boston, Chicago, San Francisco,"},{"startTime":361.2,"endTime":362.91,"body":"and each of them specialized."},{"startTime":362.91,"endTime":364.53,"body":"New York, for example,"},{"startTime":364.53,"endTime":368.04,"body":"specialized in stocks and bond trading."},{"startTime":368.04,"endTime":372.09,"body":"90% of stocks and bond"},{"startTime":368.04,"endTime":372.09,"body":"trading today in Americas"},{"startTime":372.09,"endTime":374.34,"body":"carried on Wall Street in New York."},{"startTime":374.34,"endTime":376.44,"body":"Chicago, options and so on."},{"startTime":376.44,"endTime":378.18,"body":"So each market specialized"},{"startTime":378.18,"endTime":381.213,"body":"in a particular type of"},{"startTime":378.18,"endTime":381.213,"body":"financial transaction."},{"startTime":383.04,"endTime":387.093,"body":"But why was centralization so important?"},{"startTime":388.14,"endTime":390.3,"body":"Well, the big thing centralization does"},{"startTime":390.3,"endTime":392.16,"body":"is increases liquidity."},{"startTime":392.16,"endTime":395.91,"body":"As I said, one of the things"},{"startTime":392.16,"endTime":395.91,"body":"we are worried about in finance"},{"startTime":395.91,"endTime":398.79,"body":"is that when we buy or sell something,"},{"startTime":398.79,"endTime":400.98,"body":"the price moves against us"},{"startTime":400.98,"endTime":404.643,"body":"because the market infers"},{"startTime":400.98,"endTime":404.643,"body":"information from our trading."},{"startTime":405.57,"endTime":408.54,"body":"If he buy, for example, lots of corn,"},{"startTime":408.54,"endTime":410.73,"body":"market thinks, oh, this"},{"startTime":408.54,"endTime":410.73,"body":"guy has information"},{"startTime":410.73,"endTime":412.26,"body":"about where corn is going to go,"},{"startTime":412.26,"endTime":414.96,"body":"the price moves against"},{"startTime":412.26,"endTime":414.96,"body":"us before we have a chance"},{"startTime":414.96,"endTime":416.523,"body":"to take advantage of that."},{"startTime":417.39,"endTime":418.71,"body":"Same thing when you're selling,"},{"startTime":418.71,"endTime":421.83,"body":"price drops when you're trying"},{"startTime":418.71,"endTime":421.83,"body":"to sell because people assume"},{"startTime":421.83,"endTime":424.41,"body":"that you know what's"},{"startTime":421.83,"endTime":424.41,"body":"happening to the market."},{"startTime":424.41,"endTime":426.33,"body":"But when liquidity goes up,"},{"startTime":426.33,"endTime":429.48,"body":"we become price takers, not price makers."},{"startTime":429.48,"endTime":432.96,"body":"So in other words, regardless"},{"startTime":429.48,"endTime":432.96,"body":"of how much you buy and sell,"},{"startTime":432.96,"endTime":434.763,"body":"the price doesn't move against you."},{"startTime":436.74,"endTime":440.58,"body":"Beyond this, because of the"},{"startTime":436.74,"endTime":440.58,"body":"presence of increased liquidity,"},{"startTime":440.58,"endTime":442.44,"body":"people were more willing to invest"},{"startTime":442.44,"endTime":445.71,"body":"in these new (indistinct)"},{"startTime":442.44,"endTime":445.71,"body":"securities, right?"},{"startTime":445.71,"endTime":448.59,"body":"There was an increased amount"},{"startTime":445.71,"endTime":448.59,"body":"of investment in the market,"},{"startTime":448.59,"endTime":452.25,"body":"and brand new types of institutions arose"},{"startTime":452.25,"endTime":454.44,"body":"to cater to this demand."},{"startTime":454.44,"endTime":456.66,"body":"You investors wanting to invest"},{"startTime":456.66,"endTime":460.08,"body":"in these new types of opportunities."},{"startTime":460.08,"endTime":462.157,"body":"Well, a brokerage house"},{"startTime":460.08,"endTime":462.157,"body":"would come in and say,"},{"startTime":462.157,"endTime":465.0,"body":"\"You know what, can help you buy shares,"},{"startTime":465.0,"endTime":469.47,"body":"which will allow you to invest"},{"startTime":465.0,"endTime":469.47,"body":"in these opportunities.\""},{"startTime":469.47,"endTime":471.037,"body":"Analysts came along to say,"},{"startTime":471.037,"endTime":473.43,"body":"\"Well, we'll help you"},{"startTime":471.037,"endTime":473.43,"body":"analyze these companies"},{"startTime":473.43,"endTime":476.7,"body":"to figure out which one of"},{"startTime":473.43,"endTime":476.7,"body":"these are good investments.\""},{"startTime":476.7,"endTime":478.83,"body":"And of course, you have"},{"startTime":476.7,"endTime":478.83,"body":"investment banks who came along"},{"startTime":478.83,"endTime":480.097,"body":"to say to the firms,"},{"startTime":480.097,"endTime":482.43,"body":"\"We have an idea what"},{"startTime":480.097,"endTime":482.43,"body":"the market is thinking,"},{"startTime":482.43,"endTime":485.64,"body":"we'll enable you to price"},{"startTime":482.43,"endTime":485.64,"body":"these shares appropriately.\""},{"startTime":485.64,"endTime":489.393,"body":"So all these new institutions"},{"startTime":485.64,"endTime":489.393,"body":"arose because of technology."},{"startTime":490.35,"endTime":493.353,"body":"Eventually, of course,"},{"startTime":490.35,"endTime":493.353,"body":"the telegraph disappeared."},{"startTime":494.46,"endTime":498.03,"body":"So from 1850, when the"},{"startTime":494.46,"endTime":498.03,"body":"telegraph was first introduced,"},{"startTime":498.03,"endTime":502.89,"body":"it costs about a $1.55"},{"startTime":498.03,"endTime":502.89,"body":"for a 15-word message."},{"startTime":502.89,"endTime":506.16,"body":"Price slowly dropped over time until 1902"},{"startTime":506.16,"endTime":507.903,"body":"when the telephone was introduced."},{"startTime":508.77,"endTime":510.0,"body":"And now notice that the price"},{"startTime":510.0,"endTime":511.89,"body":"of a telephone call keeps dropping,"},{"startTime":511.89,"endTime":514.593,"body":"the price of the telegraph keeps going up."},{"startTime":515.49,"endTime":519.48,"body":"Today, the cost of a phone"},{"startTime":515.49,"endTime":519.48,"body":"message is effectively zero."},{"startTime":519.48,"endTime":522.81,"body":"Most of us have unlimited minutes"},{"startTime":519.48,"endTime":522.81,"body":"or big buckets or minutes,"},{"startTime":522.81,"endTime":525.933,"body":"so the marginal cost of a"},{"startTime":522.81,"endTime":525.933,"body":"phone call is close to zero."},{"startTime":527.25,"endTime":531.03,"body":"In contrast, you can still"},{"startTime":527.25,"endTime":531.03,"body":"send a telegram, by the way."},{"startTime":531.03,"endTime":531.9,"body":"Not everywhere."},{"startTime":531.9,"endTime":534.06,"body":"I don't know if any of"},{"startTime":531.9,"endTime":534.06,"body":"us have sent a telegram."},{"startTime":534.06,"endTime":537.54,"body":"At least, I haven't sent one"},{"startTime":534.06,"endTime":537.54,"body":"since possibly the 1980s."},{"startTime":537.54,"endTime":539.763,"body":"But in Japan, you can send a telegram."},{"startTime":540.63,"endTime":542.79,"body":"People send it for"},{"startTime":540.63,"endTime":542.79,"body":"birthdays, for weddings,"},{"startTime":542.79,"endTime":543.96,"body":"things like that."},{"startTime":543.96,"endTime":546.12,"body":"But the way they send"},{"startTime":543.96,"endTime":546.12,"body":"the telegram is curious."},{"startTime":546.12,"endTime":547.44,"body":"You go to the telegraph office,"},{"startTime":547.44,"endTime":548.94,"body":"you say, \"I want to send a message"},{"startTime":548.94,"endTime":551.73,"body":"congratulating this"},{"startTime":548.94,"endTime":551.73,"body":"person on his graduation,\""},{"startTime":551.73,"endTime":553.95,"body":"the telegraph operator takes your message,"},{"startTime":553.95,"endTime":557.31,"body":"types an email, sends the"},{"startTime":553.95,"endTime":557.31,"body":"email across the country,"},{"startTime":557.31,"endTime":558.27,"body":"person on the other side,"},{"startTime":558.27,"endTime":561.3,"body":"prints out the email onto a telegram form,"},{"startTime":561.3,"endTime":563.73,"body":"and then hand delivers"},{"startTime":561.3,"endTime":563.73,"body":"it to the recipient."},{"startTime":563.73,"endTime":565.86,"body":"So, it's a telegraph sort of,"},{"startTime":565.86,"endTime":567.993,"body":"but it doesn't actually exist anymore."},{"startTime":569.34,"endTime":572.487,"body":"But, so what this basically"},{"startTime":569.34,"endTime":572.487,"body":"says is the telegram"},{"startTime":572.487,"endTime":574.14,"body":"and the telegraph services"},{"startTime":574.14,"endTime":576.18,"body":"improve the speed of communication,"},{"startTime":576.18,"endTime":578.403,"body":"the telephone increased it even further,"},{"startTime":579.57,"endTime":583.413,"body":"but is improving the speed"},{"startTime":579.57,"endTime":583.413,"body":"of communication enough?"},{"startTime":584.76,"endTime":589.76,"body":"Let's go back to 1754"},{"startTime":584.76,"endTime":589.76,"body":"BC, the Hammurabi code."},{"startTime":591.51,"endTime":594.96,"body":"If you just think of the"},{"startTime":591.51,"endTime":594.96,"body":"Babylonian economy at that time,"},{"startTime":594.96,"endTime":599.37,"body":"the Babylonian economy was"},{"startTime":594.96,"endTime":599.37,"body":"partly barter, partly currency."},{"startTime":599.37,"endTime":601.17,"body":"So they had about a hundred laws,"},{"startTime":601.17,"endTime":603.66,"body":"which talked about property"},{"startTime":601.17,"endTime":603.66,"body":"and commerce, right?"},{"startTime":603.66,"endTime":606.633,"body":"Things about debt, about"},{"startTime":603.66,"endTime":606.633,"body":"interest, about collateral,"},{"startTime":607.68,"endTime":611.16,"body":"and they had very strict"},{"startTime":607.68,"endTime":611.16,"body":"standards to prevent usury."},{"startTime":611.16,"endTime":613.68,"body":"For example, if you are a lender,"},{"startTime":613.68,"endTime":616.86,"body":"you can't charge more than"},{"startTime":613.68,"endTime":616.86,"body":"20% for a server-based loan,"},{"startTime":616.86,"endTime":620.283,"body":"you can't charge more than"},{"startTime":616.86,"endTime":620.283,"body":"33% for a grain-based loan."},{"startTime":622.38,"endTime":624.48,"body":"You also had certification."},{"startTime":624.48,"endTime":627.6,"body":"As a lender, you could only sign,"},{"startTime":627.6,"endTime":630.33,"body":"finalize the contract before a witness."},{"startTime":630.33,"endTime":633.39,"body":"And finally, those collateralization."},{"startTime":633.39,"endTime":635.13,"body":"So these are secured loans."},{"startTime":635.13,"endTime":636.6,"body":"Now, think of these four things."},{"startTime":636.6,"endTime":637.92,"body":"They are what we have today."},{"startTime":637.92,"endTime":642.783,"body":"Nothing really has changed"},{"startTime":637.92,"endTime":642.783,"body":"from 1754 BC to 2022."},{"startTime":643.98,"endTime":646.14,"body":"So, there are some things"},{"startTime":643.98,"endTime":646.14,"body":"which have changed."},{"startTime":646.14,"endTime":649.35,"body":"For example, collateral would be houses"},{"startTime":649.35,"endTime":651.03,"body":"or property like today,"},{"startTime":651.03,"endTime":653.76,"body":"but you could even use"},{"startTime":651.03,"endTime":653.76,"body":"your wife or your child"},{"startTime":653.76,"endTime":655.413,"body":"as collateral in those days."},{"startTime":656.28,"endTime":658.62,"body":"That, by the way, you"},{"startTime":656.28,"endTime":658.62,"body":"cannot do today, right?"},{"startTime":658.62,"endTime":660.78,"body":"If you really didn't have"},{"startTime":658.62,"endTime":660.78,"body":"either a wife or a kid"},{"startTime":660.78,"endTime":662.1,"body":"who blames you, I mean, you know,"},{"startTime":662.1,"endTime":665.01,"body":"you're willing to sell"},{"startTime":662.1,"endTime":665.01,"body":"them off as collateral,"},{"startTime":665.01,"endTime":667.11,"body":"you would have to enter"},{"startTime":665.01,"endTime":667.11,"body":"into slavery yourself"},{"startTime":667.11,"endTime":668.85,"body":"to pay off your debt."},{"startTime":668.85,"endTime":669.93,"body":"Apart from that though,"},{"startTime":669.93,"endTime":672.33,"body":"the rest of the features"},{"startTime":669.93,"endTime":672.33,"body":"are pretty similar"},{"startTime":672.33,"endTime":673.95,"body":"to what we have today."},{"startTime":673.95,"endTime":677.07,"body":"So what does the finance"},{"startTime":673.95,"endTime":677.07,"body":"world look like today?"},{"startTime":677.07,"endTime":679.98,"body":"Well, we have enormous sums of money"},{"startTime":679.98,"endTime":682.92,"body":"wired daily across the world, right?"},{"startTime":682.92,"endTime":687.57,"body":"We have card payments for the"},{"startTime":682.92,"endTime":687.57,"body":"standard method of payment"},{"startTime":687.57,"endTime":689.34,"body":"for most of the developed word."},{"startTime":689.34,"endTime":691.95,"body":"For example, I mean, I"},{"startTime":689.34,"endTime":691.95,"body":"don't carry cash, right?"},{"startTime":691.95,"endTime":693.51,"body":"Almost never have cash."},{"startTime":693.51,"endTime":697.98,"body":"Everything is on my phone,"},{"startTime":693.51,"endTime":697.98,"body":"or payments by card."},{"startTime":697.98,"endTime":699.39,"body":"If you want to borrow money,"},{"startTime":699.39,"endTime":702.54,"body":"credit is granted with"},{"startTime":699.39,"endTime":702.54,"body":"credit score models,"},{"startTime":702.54,"endTime":706.86,"body":"but none of this is really new, right?"},{"startTime":706.86,"endTime":710.13,"body":"If you think about wiring"},{"startTime":706.86,"endTime":710.13,"body":"money across the world,"},{"startTime":710.13,"endTime":711.42,"body":"doing the crusades,"},{"startTime":711.42,"endTime":714.21,"body":"when the knights would go to the Holy Land"},{"startTime":714.21,"endTime":715.35,"body":"to fight the infidels,"},{"startTime":715.35,"endTime":717.21,"body":"they would carry letters"},{"startTime":715.35,"endTime":717.21,"body":"of credit with them"},{"startTime":717.21,"endTime":718.77,"body":"from their banks."},{"startTime":718.77,"endTime":723.12,"body":"The letters of credit is just"},{"startTime":718.77,"endTime":723.12,"body":"an ancient form of what we do."},{"startTime":723.12,"endTime":724.92,"body":"Now we wire transfer the money,"},{"startTime":724.92,"endTime":726.81,"body":"then you would just go from,"},{"startTime":726.81,"endTime":728.687,"body":"carry a piece of paper with us"},{"startTime":728.687,"endTime":730.29,"body":"to tell the bank there to advance us money"},{"startTime":730.29,"endTime":731.613,"body":"on our account back home."},{"startTime":732.6,"endTime":735.9,"body":"Card payments is just an"},{"startTime":732.6,"endTime":735.9,"body":"advanced form of store credit."},{"startTime":735.9,"endTime":739.56,"body":"In fact, the earliest"},{"startTime":735.9,"endTime":739.56,"body":"credit card was in New York"},{"startTime":739.56,"endTime":741.45,"body":"where a group of merchants,"},{"startTime":741.45,"endTime":745.14,"body":"basically restaurants, got"},{"startTime":741.45,"endTime":745.14,"body":"together to have a Diners Club."},{"startTime":745.14,"endTime":747.72,"body":"And the idea is, if you"},{"startTime":745.14,"endTime":747.72,"body":"have a Diners Club card,"},{"startTime":747.72,"endTime":749.88,"body":"you can go to a restaurant"},{"startTime":747.72,"endTime":749.88,"body":"and have a meal."},{"startTime":749.88,"endTime":752.4,"body":"Basically, you're taking"},{"startTime":749.88,"endTime":752.4,"body":"a loan to have a meal."},{"startTime":752.4,"endTime":755.04,"body":"You pay off the loan over time, right?"},{"startTime":755.04,"endTime":756.24,"body":"But that store credit,"},{"startTime":756.24,"endTime":757.8,"body":"and store credit has been around"},{"startTime":757.8,"endTime":759.24,"body":"since stores have been invented."},{"startTime":759.24,"endTime":760.65,"body":"Nothing new in this."},{"startTime":760.65,"endTime":763.26,"body":"Or even the credit score"},{"startTime":760.65,"endTime":763.26,"body":"models we used today."},{"startTime":763.26,"endTime":764.55,"body":"300 years ago,"},{"startTime":764.55,"endTime":768.09,"body":"we'd have the same credit"},{"startTime":764.55,"endTime":768.09,"body":"score models being used."},{"startTime":768.09,"endTime":769.623,"body":"So what's the takeaway here?"},{"startTime":770.94,"endTime":772.86,"body":"The takeaway is simple."},{"startTime":772.86,"endTime":776.28,"body":"In the past, technology has"},{"startTime":772.86,"endTime":776.28,"body":"dramatically reduced the cost"},{"startTime":776.28,"endTime":778.863,"body":"of collecting and processing information,"},{"startTime":779.82,"endTime":782.73,"body":"but it has not changed the business"},{"startTime":782.73,"endTime":784.44,"body":"of making payments and loans,"},{"startTime":784.44,"endTime":788.49,"body":"and it has not eliminated the"},{"startTime":784.44,"endTime":788.49,"body":"essential frictions involved"},{"startTime":788.49,"endTime":791.22,"body":"from adverse selection"},{"startTime":788.49,"endTime":791.22,"body":"to moral hazard, right?"},{"startTime":791.22,"endTime":793.8,"body":"For example, if you took a"},{"startTime":791.22,"endTime":793.8,"body":"loan the time of Hammurabi,"},{"startTime":793.8,"endTime":796.41,"body":"you'll face roughly the same moral hazard"},{"startTime":796.41,"endTime":798.15,"body":"and adverse selection of a loan"},{"startTime":798.15,"endTime":799.55,"body":"at the time of Bill Clinton."},{"startTime":801.36,"endTime":803.7,"body":"And just as important,"},{"startTime":803.7,"endTime":805.77,"body":"the incumbent institutions"},{"startTime":803.7,"endTime":805.77,"body":"were the only ones"},{"startTime":805.77,"endTime":808.26,"body":"who had the money to apply new technology."},{"startTime":808.26,"endTime":811.11,"body":"So whenever you had new"},{"startTime":808.26,"endTime":811.11,"body":"technology coming along,"},{"startTime":811.11,"endTime":813.09,"body":"the incumbent institutions"},{"startTime":811.11,"endTime":813.09,"body":"would apply it first,"},{"startTime":813.09,"endTime":814.64,"body":"and they would earn more money."},{"startTime":815.79,"endTime":818.22,"body":"So, what has changed?"},{"startTime":818.22,"endTime":820.08,"body":"Well, there have been lots of developments"},{"startTime":820.08,"endTime":821.55,"body":"in the last 10 years."},{"startTime":821.55,"endTime":823.59,"body":"Some of these developments include,"},{"startTime":823.59,"endTime":825.66,"body":"central bank issued digital currencies,"},{"startTime":825.66,"endTime":827.12,"body":"what we call GovCoins,"},{"startTime":827.12,"endTime":830.61,"body":"we have private digital"},{"startTime":827.12,"endTime":830.61,"body":"currencies, Stablecoins,"},{"startTime":830.61,"endTime":834.42,"body":"we have decentralized"},{"startTime":830.61,"endTime":834.42,"body":"finance, what we call DeFi,"},{"startTime":834.42,"endTime":837.33,"body":"we have tech platform firms arising,"},{"startTime":837.33,"endTime":840.63,"body":"Apple, Google, Alibaba,"},{"startTime":840.63,"endTime":842.61,"body":"we have big data,"},{"startTime":842.61,"endTime":845.52,"body":"we have AI algorithms who"},{"startTime":842.61,"endTime":845.52,"body":"understand who you are"},{"startTime":845.52,"endTime":847.113,"body":"and predict your preferences."},{"startTime":848.61,"endTime":850.47,"body":"What are the technological innovations"},{"startTime":850.47,"endTime":852.24,"body":"that cause this change?"},{"startTime":852.24,"endTime":854.61,"body":"As I said, there are"},{"startTime":852.24,"endTime":854.61,"body":"three major innovations"},{"startTime":854.61,"endTime":857.4,"body":"I'm going to talk about in this series."},{"startTime":857.4,"endTime":859.77,"body":"The first one, cryptography,"},{"startTime":859.77,"endTime":861.78,"body":"the second one, big data,"},{"startTime":861.78,"endTime":863.82,"body":"basically sensor technology, right?"},{"startTime":863.82,"endTime":866.61,"body":"So beginning with introduction"},{"startTime":863.82,"endTime":866.61,"body":"of the first smartphone,"},{"startTime":866.61,"endTime":868.863,"body":"the iPhone in 2007."},{"startTime":870.24,"endTime":873.36,"body":"And of course artificial intelligence."},{"startTime":873.36,"endTime":877.23,"body":"There are a host of other"},{"startTime":873.36,"endTime":877.23,"body":"ancillary technologies."},{"startTime":877.23,"endTime":879.6,"body":"For example, you need hard disk space,"},{"startTime":879.6,"endTime":881.61,"body":"that's the cloud,"},{"startTime":881.61,"endTime":882.96,"body":"you need cheap computing power,"},{"startTime":882.96,"endTime":886.08,"body":"processing powers become"},{"startTime":882.96,"endTime":886.08,"body":"cheaper and cheaper every year,"},{"startTime":886.08,"endTime":887.85,"body":"but that's ancillary."},{"startTime":887.85,"endTime":890.55,"body":"It doesn't really change"},{"startTime":887.85,"endTime":890.55,"body":"the business of finance."},{"startTime":890.55,"endTime":893.91,"body":"The first three have really"},{"startTime":890.55,"endTime":893.91,"body":"changed the way finance works,"},{"startTime":893.91,"endTime":895.56,"body":"and that's what I want to focus on."},{"startTime":896.79,"endTime":898.23,"body":"To understand that,"},{"startTime":898.23,"endTime":901.2,"body":"let me give you a very simple picture"},{"startTime":901.2,"endTime":903.66,"body":"of the cycle of finance."},{"startTime":903.66,"endTime":907.773,"body":"What we have here on the"},{"startTime":903.66,"endTime":907.773,"body":"left-hand side is the firm."},{"startTime":909.12,"endTime":912.18,"body":"The farm needs money to invest."},{"startTime":912.18,"endTime":913.98,"body":"It doesn't have any money."},{"startTime":913.98,"endTime":916.26,"body":"The people with the money"},{"startTime":913.98,"endTime":916.26,"body":"on the right-hand side,"},{"startTime":916.26,"endTime":919.02,"body":"the financial marketers, the investors."},{"startTime":919.02,"endTime":924.02,"body":"So the firm goes to the"},{"startTime":919.02,"endTime":924.02,"body":"investors and issues securities."},{"startTime":924.6,"endTime":926.07,"body":"What are the securities?"},{"startTime":926.07,"endTime":930.27,"body":"Well, short-term debt,"},{"startTime":926.07,"endTime":930.27,"body":"long-term debt and equity."},{"startTime":930.27,"endTime":931.86,"body":"What are these things?"},{"startTime":931.86,"endTime":934.41,"body":"Well, they're basically pieces of paper."},{"startTime":934.41,"endTime":938.4,"body":"For example, debt would be"},{"startTime":934.41,"endTime":938.4,"body":"a bond that looks like this."},{"startTime":938.4,"endTime":940.98,"body":"It says, give me money, and in return,"},{"startTime":940.98,"endTime":943.59,"body":"I'll give you interest"},{"startTime":940.98,"endTime":943.59,"body":"payments every six months,"},{"startTime":943.59,"endTime":945.51,"body":"and then after two years,"},{"startTime":943.59,"endTime":945.51,"body":"I'll give you your money back."},{"startTime":945.51,"endTime":948.84,"body":"Or for five years, I give you"},{"startTime":945.51,"endTime":948.84,"body":"your money back, whatever."},{"startTime":948.84,"endTime":951.75,"body":"Or they can say, give me your money"},{"startTime":951.75,"endTime":954.09,"body":"and I'll give you a share of my profits."},{"startTime":954.09,"endTime":956.58,"body":"If I make a lot of money,"},{"startTime":954.09,"endTime":956.58,"body":"you make a lot of money."},{"startTime":956.58,"endTime":959.7,"body":"I lose money, you may"},{"startTime":956.58,"endTime":959.7,"body":"lose some money as well."},{"startTime":959.7,"endTime":962.943,"body":"So the different type"},{"startTime":959.7,"endTime":962.943,"body":"of financial instrument."},{"startTime":963.81,"endTime":966.45,"body":"The market values these"},{"startTime":963.81,"endTime":966.45,"body":"financial instruments"},{"startTime":966.45,"endTime":969.45,"body":"and decides how much they're worth,"},{"startTime":969.45,"endTime":973.66,"body":"and so they transfer"},{"startTime":969.45,"endTime":973.66,"body":"the money to the firm."},{"startTime":973.66,"endTime":976.83,"body":"The firm takes that money"},{"startTime":973.66,"endTime":976.83,"body":"and invests in assets,"},{"startTime":976.83,"endTime":979.14,"body":"short-term assets are"},{"startTime":976.83,"endTime":979.14,"body":"called current assets,"},{"startTime":979.14,"endTime":982.02,"body":"long-term assets are fixed assets."},{"startTime":982.02,"endTime":983.55,"body":"In a restaurant, for example,"},{"startTime":983.55,"endTime":985.563,"body":"your current assets would be your food,"},{"startTime":986.61,"endTime":988.68,"body":"your accounts receivable,"},{"startTime":986.61,"endTime":988.68,"body":"things like that."},{"startTime":988.68,"endTime":990.42,"body":"Your fixed assets would be the building,"},{"startTime":990.42,"endTime":992.28,"body":"would be the kitchen equipment,"},{"startTime":992.28,"endTime":993.81,"body":"like, the refrigerator and so on."},{"startTime":993.81,"endTime":995.82,"body":"Your long-term assets."},{"startTime":995.82,"endTime":999.063,"body":"But the key is, those"},{"startTime":995.82,"endTime":999.063,"body":"assets generate cash flows."},{"startTime":1000.05,"endTime":1002.45,"body":"Part of those cash flows"},{"startTime":1000.05,"endTime":1002.45,"body":"go to the government"},{"startTime":1002.45,"endTime":1004.22,"body":"in the form of taxes,"},{"startTime":1004.22,"endTime":1005.51,"body":"unless, of course, I guess,"},{"startTime":1005.51,"endTime":1006.71,"body":"if you're part of the trust government,"},{"startTime":1006.71,"endTime":1008.81,"body":"which doesn't believe in collecting taxes."},{"startTime":1011.18,"endTime":1015.37,"body":"Part of that is retained by the firm"},{"startTime":1015.37,"endTime":1017.81,"body":"in the form of retained cash flows,"},{"startTime":1017.81,"endTime":1020.93,"body":"and part of it flows to"},{"startTime":1017.81,"endTime":1020.93,"body":"the financial markets"},{"startTime":1020.93,"endTime":1023.073,"body":"in the back for dividends"},{"startTime":1020.93,"endTime":1023.073,"body":"and debt payments."},{"startTime":1023.073,"endTime":1025.31,"body":"Well, this is the cycle of finance."},{"startTime":1025.31,"endTime":1027.77,"body":"Money flowing from investors, the firm,"},{"startTime":1027.77,"endTime":1030.2,"body":"flowing back to the investors"},{"startTime":1030.2,"endTime":1033.14,"body":"in the form of dividends"},{"startTime":1030.2,"endTime":1033.14,"body":"and debt payments."},{"startTime":1033.14,"endTime":1034.943,"body":"So, where do the banks fit in?"},{"startTime":1036.23,"endTime":1038.51,"body":"Well, the key thing is,"},{"startTime":1038.51,"endTime":1041.003,"body":"the firm and the market"},{"startTime":1038.51,"endTime":1041.003,"body":"don't know each other."},{"startTime":1042.23,"endTime":1045.26,"body":"The firm doesn't know who"},{"startTime":1042.23,"endTime":1045.26,"body":"is willing to offer money."},{"startTime":1045.26,"endTime":1048.05,"body":"I don't get any emails in"},{"startTime":1045.26,"endTime":1048.05,"body":"the morning, for example,"},{"startTime":1048.05,"endTime":1051.35,"body":"from Google saying, \"Hey, we"},{"startTime":1048.05,"endTime":1051.35,"body":"have a new investment project,"},{"startTime":1051.35,"endTime":1053.39,"body":"would you be willing to give us money?\""},{"startTime":1053.39,"endTime":1054.8,"body":"I mean, I'll pay nothing."},{"startTime":1054.8,"endTime":1057.14,"body":"I do get some messages"},{"startTime":1054.8,"endTime":1057.14,"body":"from Nigerian princes,"},{"startTime":1057.14,"endTime":1059.99,"body":"but those have been falling"},{"startTime":1057.14,"endTime":1059.99,"body":"off lately as well, right?"},{"startTime":1059.99,"endTime":1062.48,"body":"But apart from that, we really don't see,"},{"startTime":1062.48,"endTime":1064.28,"body":"we don't see anybody,"},{"startTime":1064.28,"endTime":1065.87,"body":"the firm doesn't know who we are,"},{"startTime":1065.87,"endTime":1068.12,"body":"we don't know which firms need money."},{"startTime":1068.12,"endTime":1070.85,"body":"So, the first job of a bank"},{"startTime":1070.85,"endTime":1073.4,"body":"is to match the borrowers and the lenders."},{"startTime":1073.4,"endTime":1075.29,"body":"I deposit my money at Barclays,"},{"startTime":1075.29,"endTime":1077.3,"body":"Barclays lends the money out,"},{"startTime":1077.3,"endTime":1079.52,"body":"but I don't know who"},{"startTime":1077.3,"endTime":1079.52,"body":"Barclays is lending to."},{"startTime":1079.52,"endTime":1082.64,"body":"The money goes beyond my sight."},{"startTime":1082.64,"endTime":1084.203,"body":"I don't know and I don't care."},{"startTime":1085.85,"endTime":1089.66,"body":"The second thing is that, when"},{"startTime":1085.85,"endTime":1089.66,"body":"I deposit my money in a bank,"},{"startTime":1089.66,"endTime":1093.26,"body":"I expect to withdraw my money"},{"startTime":1089.66,"endTime":1093.26,"body":"at the drop of a hat, right?"},{"startTime":1093.26,"endTime":1098.26,"body":"So, for example, I might"},{"startTime":1093.26,"endTime":1098.26,"body":"go to to a restaurant,"},{"startTime":1098.99,"endTime":1100.28,"body":"and I want to pay my bill,"},{"startTime":1100.28,"endTime":1102.26,"body":"I want to be able to withdraw my money"},{"startTime":1102.26,"endTime":1104.48,"body":"from my bank account right away."},{"startTime":1104.48,"endTime":1107.12,"body":"So that's a short-term deposit."},{"startTime":1107.12,"endTime":1109.55,"body":"But firms don't borrow for the short-term."},{"startTime":1109.55,"endTime":1110.99,"body":"They borrow for five years,"},{"startTime":1110.99,"endTime":1113.15,"body":"they borrow for 10 years, 20 years,"},{"startTime":1113.15,"endTime":1116.09,"body":"so the bank has to transform maturity"},{"startTime":1116.09,"endTime":1118.64,"body":"from short-term to long-term."},{"startTime":1118.64,"endTime":1120.68,"body":"And of course the"},{"startTime":1118.64,"endTime":1120.68,"body":"borrowers have to be good"},{"startTime":1120.68,"endTime":1123.53,"body":"because if the borrowers"},{"startTime":1120.68,"endTime":1123.53,"body":"don't pay back the money,"},{"startTime":1123.53,"endTime":1124.97,"body":"the bank is out on a limit."},{"startTime":1124.97,"endTime":1129.5,"body":"So the borrowers have to be"},{"startTime":1124.97,"endTime":1129.5,"body":"assessed for credit worthiness."},{"startTime":1129.5,"endTime":1132.77,"body":"And finally, the banks provide liquidity."},{"startTime":1132.77,"endTime":1137.453,"body":"So, this is the major rules"},{"startTime":1132.77,"endTime":1137.453,"body":"of most of these banks."},{"startTime":1139.7,"endTime":1140.81,"body":"Do they make money?"},{"startTime":1140.81,"endTime":1142.58,"body":"Is this lucrative?"},{"startTime":1142.58,"endTime":1145.22,"body":"The answer is yes."},{"startTime":1145.22,"endTime":1147.23,"body":"How lucrative is this?"},{"startTime":1147.23,"endTime":1149.93,"body":"Well, this graph here"},{"startTime":1147.23,"endTime":1149.93,"body":"is taken from a paper"},{"startTime":1149.93,"endTime":1152.99,"body":"by Thomas Philippon"},{"startTime":1149.93,"endTime":1152.99,"body":"who's a professor at NYU."},{"startTime":1152.99,"endTime":1156.26,"body":"What he shows is, in 1880,"},{"startTime":1156.26,"endTime":1159.59,"body":"this graph year represents finance income"},{"startTime":1159.59,"endTime":1163.355,"body":"as a proportion of GDP, US GDP."},{"startTime":1163.355,"endTime":1165.71,"body":"So in 1880, if you look at that number,"},{"startTime":1165.71,"endTime":1169.643,"body":"it says, 2% of American GDP"},{"startTime":1165.71,"endTime":1169.643,"body":"was in the finance industry."},{"startTime":1170.78,"endTime":1174.05,"body":"By the year 2014, it was 8%,"},{"startTime":1174.05,"endTime":1177.14,"body":"that basically means"},{"startTime":1174.05,"endTime":1177.14,"body":"that the finance industry"},{"startTime":1177.14,"endTime":1180.062,"body":"has grown in importance by four times."},{"startTime":1180.062,"endTime":1183.503,"body":"It has quadrupled in"},{"startTime":1180.062,"endTime":1183.503,"body":"importance over 130 years."},{"startTime":1184.82,"endTime":1187.223,"body":"So why do banks make so much money?"},{"startTime":1188.15,"endTime":1190.52,"body":"Well, typically three ways."},{"startTime":1190.52,"endTime":1191.353,"body":"One is, of course,"},{"startTime":1191.353,"endTime":1194.57,"body":"we talked about matching"},{"startTime":1191.353,"endTime":1194.57,"body":"borrowers and lenders,"},{"startTime":1194.57,"endTime":1196.4,"body":"but that's one of the"},{"startTime":1194.57,"endTime":1196.4,"body":"ways they make money."},{"startTime":1196.4,"endTime":1198.32,"body":"I deposit my money in a bank,"},{"startTime":1198.32,"endTime":1201.14,"body":"I get maybe 1%, maybe 1.5,"},{"startTime":1201.14,"endTime":1202.793,"body":"it's really generous these days,"},{"startTime":1204.08,"endTime":1206.3,"body":"but the borrowers pay eight or 9%."},{"startTime":1206.3,"endTime":1208.67,"body":"That difference, the net interest margin"},{"startTime":1208.67,"endTime":1211.913,"body":"is what makes the banks the money."},{"startTime":1212.78,"endTime":1215.51,"body":"Second thing, they"},{"startTime":1212.78,"endTime":1215.51,"body":"facilitate easy payment."},{"startTime":1215.51,"endTime":1218.54,"body":"So when I make a payment,"},{"startTime":1215.51,"endTime":1218.54,"body":"Visa, MasterCard,"},{"startTime":1218.54,"endTime":1220.19,"body":"a group of banks get that money,"},{"startTime":1220.19,"endTime":1224.6,"body":"they charge a fee to the"},{"startTime":1220.19,"endTime":1224.6,"body":"merchant when I make a payment."},{"startTime":1224.6,"endTime":1226.13,"body":"And, of course, bank charge fees."},{"startTime":1226.13,"endTime":1228.35,"body":"They charge fees for everything, right?"},{"startTime":1228.35,"endTime":1230.84,"body":"They charge fees for"},{"startTime":1228.35,"endTime":1230.84,"body":"finding good investments."},{"startTime":1230.84,"endTime":1233.9,"body":"They charge fees for advising firms,"},{"startTime":1233.9,"endTime":1235.85,"body":"like in corporate finance, for example."},{"startTime":1237.65,"endTime":1242.65,"body":"In fact, I was actually"},{"startTime":1237.65,"endTime":1242.65,"body":"recently reading a novel"},{"startTime":1242.99,"endTime":1244.73,"body":"by an author called Alan Campbell."},{"startTime":1244.73,"endTime":1247.37,"body":"Very good author, highly recommend him."},{"startTime":1247.37,"endTime":1249.41,"body":"But it's called \"Damnation for Beginners.\""},{"startTime":1249.41,"endTime":1254.0,"body":"It's about this old woman who"},{"startTime":1249.41,"endTime":1254.0,"body":"comes to a bank to complain."},{"startTime":1254.0,"endTime":1257.0,"body":"And she says, \"Look, I"},{"startTime":1254.0,"endTime":1257.0,"body":"borrowed money from you guys"},{"startTime":1257.0,"endTime":1261.08,"body":"a long time ago to buy my"},{"startTime":1257.0,"endTime":1261.08,"body":"son a graduation present,"},{"startTime":1261.08,"endTime":1263.27,"body":"and I've been paying back that money,"},{"startTime":1263.27,"endTime":1266.09,"body":"and I've been paying it"},{"startTime":1263.27,"endTime":1266.09,"body":"back for eight years."},{"startTime":1266.09,"endTime":1267.32,"body":"Money wasn't that much."},{"startTime":1267.32,"endTime":1268.7,"body":"I didn't borrow that much."},{"startTime":1268.7,"endTime":1271.33,"body":"Why am I paying back so much money?\""},{"startTime":1271.33,"endTime":1273.267,"body":"And the teller looks it up and says,"},{"startTime":1273.267,"endTime":1277.52,"body":"\"Well, I see that you actually"},{"startTime":1273.267,"endTime":1277.52,"body":"did pay back the money."},{"startTime":1277.52,"endTime":1280.31,"body":"You were supposed to make 26 payments.\""},{"startTime":1280.31,"endTime":1282.467,"body":"She says, \"Well, I made 86 payments.\""},{"startTime":1282.467,"endTime":1285.56,"body":"And says, \"Well, no, you were"},{"startTime":1282.467,"endTime":1285.56,"body":"supposed to make 26 payments,"},{"startTime":1285.56,"endTime":1289.707,"body":"but on the 26th payment,"},{"startTime":1285.56,"endTime":1289.707,"body":"you paid too much.\""},{"startTime":1289.707,"endTime":1291.41,"body":"\"Instead of paying 10 pounds,"},{"startTime":1291.41,"endTime":1293.51,"body":"which is what you were supposed to pay,"},{"startTime":1293.51,"endTime":1295.4,"body":"you paid 20 pounds.\""},{"startTime":1295.4,"endTime":1297.89,"body":"So we said, \"What are we going"},{"startTime":1295.4,"endTime":1297.89,"body":"to do with the extra 10 pounds?\""},{"startTime":1297.89,"endTime":1298.723,"body":"And we said,"},{"startTime":1298.723,"endTime":1301.55,"body":"\"Well, obviously she wants"},{"startTime":1298.723,"endTime":1301.55,"body":"to open an account with us,"},{"startTime":1301.55,"endTime":1303.257,"body":"so we opened an account for you.\""},{"startTime":1304.167,"endTime":1307.16,"body":"\"Unfortunately, our account"},{"startTime":1304.167,"endTime":1307.16,"body":"opening charges are 20 pounds,"},{"startTime":1307.16,"endTime":1310.58,"body":"so we gave you a loan to open"},{"startTime":1307.16,"endTime":1310.58,"body":"your account for with us,"},{"startTime":1310.58,"endTime":1312.44,"body":"and, of course, you have to"},{"startTime":1310.58,"endTime":1312.44,"body":"pay interest from that loan,"},{"startTime":1312.44,"endTime":1313.273,"body":"which you didn't,"},{"startTime":1313.273,"endTime":1314.69,"body":"and then you have to pay"},{"startTime":1313.273,"endTime":1314.69,"body":"interest from the interest,"},{"startTime":1314.69,"endTime":1315.523,"body":"which you didn't,"},{"startTime":1315.523,"endTime":1317.99,"body":"so now you owe another thousand pounds.\""},{"startTime":1317.99,"endTime":1319.4,"body":"Now, this is a story, right?"},{"startTime":1319.4,"endTime":1322.49,"body":"But there's an uncomfortable"},{"startTime":1319.4,"endTime":1322.49,"body":"element of truth"},{"startTime":1322.49,"endTime":1324.173,"body":"in some of these stories."},{"startTime":1325.34,"endTime":1328.88,"body":"Okay, so our bank's doing a good job."},{"startTime":1328.88,"endTime":1330.11,"body":"This is the second graph"},{"startTime":1330.11,"endTime":1332.18,"body":"from the same paper by Thomas Philippon,"},{"startTime":1332.18,"endTime":1335.57,"body":"and this shows you the"},{"startTime":1332.18,"endTime":1335.57,"body":"profits that banks are making"},{"startTime":1335.57,"endTime":1338.24,"body":"on the amount of money they manage."},{"startTime":1338.24,"endTime":1342.62,"body":"What you see here is the"},{"startTime":1338.24,"endTime":1342.62,"body":"ratio of finance income"},{"startTime":1342.62,"endTime":1344.9,"body":"to the level of assets they manage,"},{"startTime":1344.9,"endTime":1347.87,"body":"and notice a difference between this graph"},{"startTime":1347.87,"endTime":1349.25,"body":"and the previous graph."},{"startTime":1349.25,"endTime":1351.11,"body":"Previous graph are very steep,"},{"startTime":1351.11,"endTime":1353.033,"body":"This is relatively flat."},{"startTime":1353.87,"endTime":1355.34,"body":"What does that mean?"},{"startTime":1355.34,"endTime":1357.59,"body":"Well, what this means is,"},{"startTime":1357.59,"endTime":1359.42,"body":"profits from financial intermediation"},{"startTime":1359.42,"endTime":1362.81,"body":"have been relatively constant"},{"startTime":1359.42,"endTime":1362.81,"body":"for the last 130 years"},{"startTime":1362.81,"endTime":1363.99,"body":"at about 2%."},{"startTime":1365.21,"endTime":1366.53,"body":"What that means"},{"startTime":1366.53,"endTime":1370.01,"body":"is there have been zero"},{"startTime":1366.53,"endTime":1370.01,"body":"efficiency gains in banking"},{"startTime":1370.01,"endTime":1371.153,"body":"since 1880."},{"startTime":1372.47,"endTime":1375.08,"body":"Whatever work your grandfather"},{"startTime":1372.47,"endTime":1375.08,"body":"would do at a bank,"},{"startTime":1375.08,"endTime":1377.93,"body":"that's pretty much the kind of"},{"startTime":1375.08,"endTime":1377.93,"body":"work you do at a bank today."},{"startTime":1377.93,"endTime":1380.75,"body":"Kind of depressing when"},{"startTime":1377.93,"endTime":1380.75,"body":"you think about it."},{"startTime":1380.75,"endTime":1382.43,"body":"Anyway, this would all be okay"},{"startTime":1382.43,"endTime":1385.94,"body":"if banks were doing enough"},{"startTime":1382.43,"endTime":1385.94,"body":"of their jobs, aren't they?"},{"startTime":1385.94,"endTime":1388.91,"body":"Well, let's talk about before"},{"startTime":1388.91,"endTime":1391.19,"body":"to after the financial crisis."},{"startTime":1391.19,"endTime":1393.02,"body":"On the top left hand corner,"},{"startTime":1393.02,"endTime":1398.02,"body":"that's the amount of European"},{"startTime":1393.02,"endTime":1398.02,"body":"securitization across Europe"},{"startTime":1398.39,"endTime":1400.67,"body":"before and after the financial crisis."},{"startTime":1400.67,"endTime":1402.41,"body":"At the beginning of the financial crisis,"},{"startTime":1402.41,"endTime":1405.44,"body":"banks are about 710 billion pound"},{"startTime":1405.44,"endTime":1407.36,"body":"of use securities available."},{"startTime":1407.36,"endTime":1411.89,"body":"By 2012, that had dropped"},{"startTime":1407.36,"endTime":1411.89,"body":"to over 240 billion."},{"startTime":1411.89,"endTime":1415.19,"body":"Simultaneously, the Bank of England"},{"startTime":1415.19,"endTime":1417.47,"body":"and other central bankers around the world"},{"startTime":1417.47,"endTime":1418.82,"body":"dropped interest rates."},{"startTime":1418.82,"endTime":1420.98,"body":"So the average interest"},{"startTime":1418.82,"endTime":1420.98,"body":"rate of the Bank of England"},{"startTime":1420.98,"endTime":1424.277,"body":"from '75 to 2008 was 8.6%."},{"startTime":1425.59,"endTime":1430.16,"body":"On 2009 to 2013, they averaged 0.5%."},{"startTime":1430.16,"endTime":1432.14,"body":"And after that, from 2013 onwards,"},{"startTime":1432.14,"endTime":1435.29,"body":"for a few more years, it became 0.25%."},{"startTime":1435.29,"endTime":1438.29,"body":"Very little opportunity for the"},{"startTime":1435.29,"endTime":1438.29,"body":"banks to make money on that."},{"startTime":1439.67,"endTime":1442.07,"body":"Simultaneously, people"},{"startTime":1439.67,"endTime":1442.07,"body":"became very comfortable"},{"startTime":1442.07,"endTime":1444.32,"body":"doing stuff online."},{"startTime":1444.32,"endTime":1449.32,"body":"And most interesting, right in"},{"startTime":1444.32,"endTime":1449.32,"body":"the bottom-left hand corner,"},{"startTime":1449.42,"endTime":1451.28,"body":"there was an survey done"},{"startTime":1451.28,"endTime":1454.1,"body":"by the British Social Attitudes group,"},{"startTime":1454.1,"endTime":1456.297,"body":"and they would ask firms every year,"},{"startTime":1456.297,"endTime":1458.27,"body":"\"Do you think your banks are well-run?\""},{"startTime":1458.27,"endTime":1459.267,"body":"They ask people every year,"},{"startTime":1459.267,"endTime":1461.847,"body":"\"Do you think your banks are well-run?\""},{"startTime":1461.847,"endTime":1464.39,"body":"In 1987, 91% of the people they asked"},{"startTime":1464.39,"endTime":1466.16,"body":"thought that banks were well-run."},{"startTime":1466.16,"endTime":1470.84,"body":"By 2012, that number had"},{"startTime":1466.16,"endTime":1470.84,"body":"dropped to 19, a drop of 80%."},{"startTime":1470.84,"endTime":1474.47,"body":"Effectively today, banks are usually"},{"startTime":1474.47,"endTime":1477.47,"body":"at the bottom of the"},{"startTime":1474.47,"endTime":1477.47,"body":"trust tables every year."},{"startTime":1477.47,"endTime":1480.17,"body":"Year after year, banks are at the bottom."},{"startTime":1480.17,"endTime":1483.02,"body":"This is the latest Edelman Trust results."},{"startTime":1483.02,"endTime":1487.732,"body":"So Edelman Trust has this surveys"},{"startTime":1483.02,"endTime":1487.732,"body":"every year where they ask,"},{"startTime":1487.732,"endTime":1489.68,"body":"\"What do you believe?\""},{"startTime":1489.68,"endTime":1492.26,"body":"Do you believe that any of"},{"startTime":1489.68,"endTime":1492.26,"body":"the people in these industries"},{"startTime":1492.26,"endTime":1494.027,"body":"will do what is right?\""},{"startTime":1495.77,"endTime":1497.39,"body":"It's kind of impressive."},{"startTime":1497.39,"endTime":1500.06,"body":"The banks stay usually right at the bottom"},{"startTime":1500.06,"endTime":1502.46,"body":"of the trust tables, right?"},{"startTime":1502.46,"endTime":1507.02,"body":"This 2021, the only industry"},{"startTime":1502.46,"endTime":1507.02,"body":"that did worse than banks"},{"startTime":1507.02,"endTime":1508.94,"body":"was social media,"},{"startTime":1508.94,"endTime":1511.4,"body":"but that's relatively new."},{"startTime":1511.4,"endTime":1514.1,"body":"Banks have been consistently"},{"startTime":1511.4,"endTime":1514.1,"body":"at the bottom of their class"},{"startTime":1514.1,"endTime":1518.66,"body":"every year since the Trust"},{"startTime":1514.1,"endTime":1518.66,"body":"Barometer was introduced."},{"startTime":1518.66,"endTime":1520.58,"body":"So I want to ask yourself,"},{"startTime":1520.58,"endTime":1524.18,"body":"do you really need a regulated"},{"startTime":1520.58,"endTime":1524.18,"body":"financial intermediary today?"},{"startTime":1524.18,"endTime":1526.37,"body":"Well, if you eat alone,"},{"startTime":1526.37,"endTime":1528.62,"body":"you can go to LendingClub or Ochoa"},{"startTime":1528.62,"endTime":1531.37,"body":"to directly borrow loans"},{"startTime":1528.62,"endTime":1531.37,"body":"without a bank being involved."},{"startTime":1532.43,"endTime":1534.11,"body":"If you want to buy cryptocurrencies,"},{"startTime":1534.11,"endTime":1535.49,"body":"there's things like Coinbase,"},{"startTime":1535.49,"endTime":1537.893,"body":"which will allow you to"},{"startTime":1535.49,"endTime":1537.893,"body":"buy cryptocurrencies."},{"startTime":1538.88,"endTime":1540.53,"body":"If you want to send cash overseas,"},{"startTime":1540.53,"endTime":1542.87,"body":"Wise will do that for you."},{"startTime":1542.87,"endTime":1543.95,"body":"You want to buy a house?"},{"startTime":1543.95,"endTime":1545.33,"body":"Social finance, SoFi,"},{"startTime":1545.33,"endTime":1548.72,"body":"will lend you money to buy a"},{"startTime":1545.33,"endTime":1548.72,"body":"house without needing a bank."},{"startTime":1548.72,"endTime":1550.1,"body":"If you need a wealth manager,"},{"startTime":1550.1,"endTime":1553.58,"body":"Wealthfront and Betterment"},{"startTime":1550.1,"endTime":1553.58,"body":"will manage your money for you."},{"startTime":1553.58,"endTime":1554.9,"body":"If you want insurance,"},{"startTime":1554.9,"endTime":1557.81,"body":"car insurance will be provided by Root,"},{"startTime":1557.81,"endTime":1559.85,"body":"Lemonade provides gadget insurance."},{"startTime":1559.85,"endTime":1563.87,"body":"If you have no idea what"},{"startTime":1559.85,"endTime":1563.87,"body":"banking alternative you need,"},{"startTime":1563.87,"endTime":1565.19,"body":"you can go to angel List."},{"startTime":1565.19,"endTime":1568.46,"body":"It has a list of literally"},{"startTime":1565.19,"endTime":1568.46,"body":"hundreds of banking alternatives,"},{"startTime":1568.46,"endTime":1572.51,"body":"all of them providing services"},{"startTime":1568.46,"endTime":1572.51,"body":"that the banks do not do."},{"startTime":1572.51,"endTime":1576.898,"body":"So, what are the pain points"},{"startTime":1572.51,"endTime":1576.898,"body":"for traditional banks?"},{"startTime":1576.898,"endTime":1578.6,"body":"The first one is, of course,"},{"startTime":1578.6,"endTime":1581.15,"body":"this emerging competition"},{"startTime":1578.6,"endTime":1581.15,"body":"I was just talking about,"},{"startTime":1582.05,"endTime":1584.21,"body":"but that's just FinTech companies."},{"startTime":1584.21,"endTime":1586.58,"body":"There's a whole bunch of other competition"},{"startTime":1586.58,"endTime":1588.38,"body":"also coming into play here."},{"startTime":1588.38,"endTime":1590.26,"body":"For example, we have tech companies,"},{"startTime":1590.26,"endTime":1591.98,"body":"we have telecom companies,"},{"startTime":1591.98,"endTime":1594.65,"body":"and, of course, the FinTech startups."},{"startTime":1594.65,"endTime":1597.773,"body":"Customer expectations have"},{"startTime":1594.65,"endTime":1597.773,"body":"been evolving over time."},{"startTime":1598.82,"endTime":1602.0,"body":"The burden of regulations on banks"},{"startTime":1602.0,"endTime":1605.363,"body":"has dramatically increased since 2008."},{"startTime":1606.53,"endTime":1611.51,"body":"And finally, banks operate"},{"startTime":1606.53,"endTime":1611.51,"body":"with a host of legacy systems."},{"startTime":1611.51,"endTime":1616.01,"body":"Systems written in the"},{"startTime":1611.51,"endTime":1616.01,"body":"1970s and the 1980s."},{"startTime":1616.01,"endTime":1618.143,"body":"Let me ask you guys a question here,"},{"startTime":1620.51,"endTime":1624.29,"body":"What would learn a computer"},{"startTime":1620.51,"endTime":1624.29,"body":"language today for finance,"},{"startTime":1624.29,"endTime":1628.46,"body":"what do you think is the most lucrative"},{"startTime":1628.46,"endTime":1630.113,"body":"computer language to learn?"},{"startTime":1631.072,"endTime":1633.055,"body":"- [Student] COBOL."},{"startTime":1633.055,"endTime":1633.888,"body":"- Okay."},{"startTime":1635.06,"endTime":1635.893,"body":"Excellent."},{"startTime":1635.893,"endTime":1639.53,"body":"The answer actually is COBOL."},{"startTime":1639.53,"endTime":1641.18,"body":"Excellent, right?"},{"startTime":1641.18,"endTime":1645.41,"body":"COBOL is a language which"},{"startTime":1641.18,"endTime":1645.41,"body":"was written in the 1970s."},{"startTime":1645.41,"endTime":1647.09,"body":"It was actually my"},{"startTime":1645.41,"endTime":1647.09,"body":"second computer language."},{"startTime":1647.09,"endTime":1648.323,"body":"It shows how old I am."},{"startTime":1649.46,"endTime":1652.13,"body":"But the point where COBOL was,"},{"startTime":1652.13,"endTime":1653.93,"body":"all bank programs are written in there,"},{"startTime":1653.93,"endTime":1658.34,"body":"but all COBOL programmers"},{"startTime":1653.93,"endTime":1658.34,"body":"are retiring or dead."},{"startTime":1658.34,"endTime":1660.171,"body":"Well, I'm not yet either,"},{"startTime":1660.171,"endTime":1662.87,"body":"but the point about this is,"},{"startTime":1662.87,"endTime":1665.78,"body":"if you want to learn how"},{"startTime":1662.87,"endTime":1665.78,"body":"to run these systems,"},{"startTime":1665.78,"endTime":1668.57,"body":"you have to go to think about"},{"startTime":1668.57,"endTime":1671.09,"body":"how to maintain the bank current system,"},{"startTime":1671.09,"endTime":1673.1,"body":"you bolt on new stuff onto this."},{"startTime":1673.1,"endTime":1675.5,"body":"This is like flying a plane"},{"startTime":1675.5,"endTime":1678.38,"body":"and repairing the engine"},{"startTime":1675.5,"endTime":1678.38,"body":"while the plane is flying."},{"startTime":1678.38,"endTime":1680.24,"body":"It's super tough bank to do this."},{"startTime":1680.24,"endTime":1683.0,"body":"So they create, they"},{"startTime":1680.24,"endTime":1683.0,"body":"have a lot of problems,"},{"startTime":1683.0,"endTime":1685.55,"body":"and the biggest problem"},{"startTime":1683.0,"endTime":1685.55,"body":"deal with information."},{"startTime":1685.55,"endTime":1688.13,"body":"And as I said, three types of information,"},{"startTime":1688.13,"endTime":1691.22,"body":"imperfect information,"},{"startTime":1688.13,"endTime":1691.22,"body":"asymmetric information,"},{"startTime":1691.22,"endTime":1692.6,"body":"and behavioral problems."},{"startTime":1692.6,"endTime":1695.24,"body":"We'll talk about these"},{"startTime":1692.6,"endTime":1695.24,"body":"issues as we go forward."},{"startTime":1695.24,"endTime":1699.02,"body":"But for first, I want to focus"},{"startTime":1695.24,"endTime":1699.02,"body":"on asymmetric information"},{"startTime":1699.02,"endTime":1701.003,"body":"for the remainder of this talk."},{"startTime":1702.53,"endTime":1704.243,"body":"So what is asymmetric information?"},{"startTime":1705.68,"endTime":1707.75,"body":"Asymmetric information arises"},{"startTime":1707.75,"endTime":1711.323,"body":"from something we call"},{"startTime":1707.75,"endTime":1711.323,"body":"principal-agent problems."},{"startTime":1712.28,"endTime":1715.19,"body":"A principal is someone who hires an agent"},{"startTime":1715.19,"endTime":1717.02,"body":"to do something for them."},{"startTime":1717.02,"endTime":1720.47,"body":"For example, if I hire a"},{"startTime":1717.02,"endTime":1720.47,"body":"mechanic to repair my car,"},{"startTime":1720.47,"endTime":1723.71,"body":"I'm the principal, the"},{"startTime":1720.47,"endTime":1723.71,"body":"mechanic is my agent."},{"startTime":1723.71,"endTime":1726.32,"body":"If I hire a broker to sell my house,"},{"startTime":1726.32,"endTime":1728.93,"body":"I'm the principal, the broker is my agent."},{"startTime":1728.93,"endTime":1730.7,"body":"If I'm working for a company,"},{"startTime":1730.7,"endTime":1733.88,"body":"the company is the"},{"startTime":1730.7,"endTime":1733.88,"body":"principal, I am the agent."},{"startTime":1733.88,"endTime":1736.793,"body":"So principal-agent"},{"startTime":1733.88,"endTime":1736.793,"body":"problems are everywhere,"},{"startTime":1738.02,"endTime":1741.89,"body":"but there are two big"},{"startTime":1738.02,"endTime":1741.89,"body":"problems for finance."},{"startTime":1741.89,"endTime":1744.17,"body":"One is called adverse selection,"},{"startTime":1744.17,"endTime":1746.333,"body":"and the other is called moral hazard."},{"startTime":1747.29,"endTime":1749.33,"body":"What are these two things?"},{"startTime":1749.33,"endTime":1751.34,"body":"Well, adverse selection arises"},{"startTime":1751.34,"endTime":1753.443,"body":"before you write the contract."},{"startTime":1754.55,"endTime":1758.36,"body":"For example, think about"},{"startTime":1754.55,"endTime":1758.36,"body":"a car insurance company."},{"startTime":1758.36,"endTime":1760.19,"body":"If you are a car insurance company,"},{"startTime":1760.19,"endTime":1762.08,"body":"what type of drivers do you want?"},{"startTime":1762.08,"endTime":1763.727,"body":"You want safe drivers, right?"},{"startTime":1763.727,"endTime":1765.65,"body":"You do not want reckless drivers."},{"startTime":1765.65,"endTime":1766.8,"body":"They'll have accidents,"},{"startTime":1767.66,"endTime":1770.15,"body":"and it costs too much to keep them."},{"startTime":1770.15,"endTime":1772.04,"body":"So, what do you do?"},{"startTime":1772.04,"endTime":1773.9,"body":"You can ask them, right?"},{"startTime":1773.9,"endTime":1775.07,"body":"Are you a good driver?"},{"startTime":1775.07,"endTime":1776.69,"body":"But honestly, who's going to tell me"},{"startTime":1776.69,"endTime":1779.093,"body":"that they're reckless or"},{"startTime":1776.69,"endTime":1779.093,"body":"a horrible driver, right?"},{"startTime":1779.093,"endTime":1782.78,"body":"It's almost impossible to get"},{"startTime":1779.093,"endTime":1782.78,"body":"that information from you."},{"startTime":1782.78,"endTime":1784.19,"body":"That's the adverse selection problem."},{"startTime":1784.19,"endTime":1786.92,"body":"It's called a hidden information problem."},{"startTime":1786.92,"endTime":1789.5,"body":"The information that the agents have,"},{"startTime":1789.5,"endTime":1790.88,"body":"that you want to get out of them,"},{"startTime":1790.88,"endTime":1793.58,"body":"but they won't tell you"},{"startTime":1790.88,"endTime":1793.58,"body":"what that information is."},{"startTime":1793.58,"endTime":1795.2,"body":"Adverse selection."},{"startTime":1795.2,"endTime":1797.66,"body":"The second problem is moral hazard."},{"startTime":1797.66,"endTime":1800.63,"body":"Moral hazard is after"},{"startTime":1797.66,"endTime":1800.63,"body":"the contract is written,"},{"startTime":1800.63,"endTime":1803.66,"body":"the person changes their behavior."},{"startTime":1803.66,"endTime":1806.39,"body":"For example, this is called hidden actions"},{"startTime":1806.39,"endTime":1808.04,"body":"because you can't see the actions"},{"startTime":1808.04,"endTime":1811.01,"body":"after the person signs the contract."},{"startTime":1811.01,"endTime":1813.38,"body":"Again, going back to the"},{"startTime":1811.01,"endTime":1813.38,"body":"car insurance example,"},{"startTime":1813.38,"endTime":1815.06,"body":"now that I'm insured,"},{"startTime":1815.06,"endTime":1818.12,"body":"I drive a little less"},{"startTime":1815.06,"endTime":1818.12,"body":"carefully than I would"},{"startTime":1818.12,"endTime":1819.83,"body":"had the car not been insured,"},{"startTime":1819.83,"endTime":1821.78,"body":"because now the insurance"},{"startTime":1819.83,"endTime":1821.78,"body":"will pick up the tab"},{"startTime":1821.78,"endTime":1823.193,"body":"if something goes wrong."},{"startTime":1824.48,"endTime":1827.21,"body":"So let's see how these problems,"},{"startTime":1827.21,"endTime":1829.97,"body":"the way banks and other"},{"startTime":1827.21,"endTime":1829.97,"body":"insurance companies"},{"startTime":1829.97,"endTime":1832.04,"body":"and other financial institutions,"},{"startTime":1832.04,"endTime":1834.5,"body":"let's see some new and novel ways"},{"startTime":1834.5,"endTime":1836.903,"body":"of solving these two problems."},{"startTime":1837.77,"endTime":1839.52,"body":"Let's start with a simple question."},{"startTime":1841.34,"endTime":1843.38,"body":"If you borrow money from a bank,"},{"startTime":1843.38,"endTime":1844.79,"body":"assume you're credit worthy,"},{"startTime":1844.79,"endTime":1848.21,"body":"assume that you have the"},{"startTime":1844.79,"endTime":1848.21,"body":"ability to borrow from a bank,"},{"startTime":1848.21,"endTime":1849.8,"body":"I'd like to see..."},{"startTime":1849.8,"endTime":1852.05,"body":"I can sort of see hands over here."},{"startTime":1852.05,"endTime":1854.06,"body":"But let me ask you guys,"},{"startTime":1854.06,"endTime":1857.72,"body":"would it be easier to borrow a"},{"startTime":1854.06,"endTime":1857.72,"body":"hundred pounds from your bank"},{"startTime":1857.72,"endTime":1861.08,"body":"or a hundred thousand"},{"startTime":1857.72,"endTime":1861.08,"body":"pounds from your bank?"},{"startTime":1861.08,"endTime":1862.43,"body":"Let's take a show of hands."},{"startTime":1862.43,"endTime":1864.953,"body":"How many people would"},{"startTime":1862.43,"endTime":1864.953,"body":"say a hundred pounds?"},{"startTime":1866.09,"endTime":1868.16,"body":"Okay, excellent, hands going up."},{"startTime":1868.16,"endTime":1868.993,"body":"Beautiful."},{"startTime":1868.993,"endTime":1870.083,"body":"A hundred thousand pounds?"},{"startTime":1871.4,"endTime":1873.83,"body":"Okay, some hands going up there are two."},{"startTime":1873.83,"endTime":1876.35,"body":"The answer is, I'm going to side"},{"startTime":1873.83,"endTime":1876.35,"body":"with a hundred thousand pounds"},{"startTime":1876.35,"endTime":1878.42,"body":"rather than a hundred pounds."},{"startTime":1878.42,"endTime":1880.163,"body":"The reason is very simple."},{"startTime":1881.24,"endTime":1884.09,"body":"The bank has the same"},{"startTime":1881.24,"endTime":1884.09,"body":"adverse selection problem"},{"startTime":1884.09,"endTime":1885.23,"body":"as it always had."},{"startTime":1885.23,"endTime":1888.35,"body":"It has to judge whether"},{"startTime":1885.23,"endTime":1888.35,"body":"your credit worthy or not,"},{"startTime":1888.35,"endTime":1890.45,"body":"whether you're going to"},{"startTime":1888.35,"endTime":1890.45,"body":"pay back the money or not,"},{"startTime":1890.45,"endTime":1892.22,"body":"so it has to put somebody on the job."},{"startTime":1892.22,"endTime":1895.16,"body":"Somebody goes through your credit files,"},{"startTime":1895.16,"endTime":1897.68,"body":"somebody checks whether you"},{"startTime":1895.16,"endTime":1897.68,"body":"have an employment record,"},{"startTime":1897.68,"endTime":1899.78,"body":"somebody checks all these things."},{"startTime":1899.78,"endTime":1901.91,"body":"For a hundred pounds, there's no profit."},{"startTime":1901.91,"endTime":1903.8,"body":"The profit margin is so small,"},{"startTime":1903.8,"endTime":1905.87,"body":"I can't hire somebody to look at you."},{"startTime":1905.87,"endTime":1909.02,"body":"For a hundred thousand,"},{"startTime":1905.87,"endTime":1909.02,"body":"I have a ton of margin"},{"startTime":1909.02,"endTime":1910.04,"body":"to look at you to figure out"},{"startTime":1910.04,"endTime":1912.74,"body":"whether you're a good customer or not."},{"startTime":1912.74,"endTime":1916.34,"body":"So in other words,"},{"startTime":1912.74,"endTime":1916.34,"body":"basically, it's not worth it."},{"startTime":1916.34,"endTime":1917.667,"body":"For a hundred pounds, the bank says,"},{"startTime":1917.667,"endTime":1919.1,"body":"\"I'm not even getting out"},{"startTime":1917.667,"endTime":1919.1,"body":"of bed in the morning.\""},{"startTime":1919.1,"endTime":1921.47,"body":"I mean, if the bank said"},{"startTime":1919.1,"endTime":1921.47,"body":"something like that, right?"},{"startTime":1921.47,"endTime":1926.12,"body":"So, now I'm going to show you an example"},{"startTime":1926.12,"endTime":1930.95,"body":"where it works in a completely"},{"startTime":1926.12,"endTime":1930.95,"body":"different way, microfinance."},{"startTime":1930.95,"endTime":1934.28,"body":"The first microfinance"},{"startTime":1930.95,"endTime":1934.28,"body":"institution, Grameen Bank,"},{"startTime":1934.28,"endTime":1936.89,"body":"was set up by Muhammad Yunus in 1976."},{"startTime":1936.89,"endTime":1938.21,"body":"He actually got on Nobel Prize,"},{"startTime":1938.21,"endTime":1941.42,"body":"a Nobel Peace Prize, for"},{"startTime":1938.21,"endTime":1941.42,"body":"that a few years later."},{"startTime":1941.42,"endTime":1945.8,"body":"But the average loan Grameen"},{"startTime":1941.42,"endTime":1945.8,"body":"Bank makes is about $270."},{"startTime":1947.39,"endTime":1951.35,"body":"Not $270, $270."},{"startTime":1951.35,"endTime":1954.2,"body":"How do you make a profit with 270?"},{"startTime":1954.2,"endTime":1958.91,"body":"If you go to Sri Lanka,"},{"startTime":1954.2,"endTime":1958.91,"body":"the average loan is $180."},{"startTime":1958.91,"endTime":1959.99,"body":"That's tiny."},{"startTime":1959.99,"endTime":1963.263,"body":"How enough do you make a profit with $180?"},{"startTime":1964.76,"endTime":1968.3,"body":"Muhammad Yunus' big realization was,"},{"startTime":1968.3,"endTime":1970.43,"body":"he has to solve this"},{"startTime":1968.3,"endTime":1970.43,"body":"adverse selection problem."},{"startTime":1970.43,"endTime":1973.16,"body":"He has to figure out who are these people"},{"startTime":1973.16,"endTime":1975.41,"body":"who'd be willing to pay back their money?"},{"startTime":1975.41,"endTime":1978.05,"body":"In addition, he has to figure out,"},{"startTime":1978.05,"endTime":1978.883,"body":"how many of these guys"},{"startTime":1978.883,"endTime":1980.42,"body":"are not going to change their behavior"},{"startTime":1980.42,"endTime":1981.833,"body":"after borrowing from you."},{"startTime":1982.82,"endTime":1984.47,"body":"Now, the bank manager"},{"startTime":1982.82,"endTime":1984.47,"body":"can't do this, right?"},{"startTime":1984.47,"endTime":1987.5,"body":"I mean, they go around the"},{"startTime":1984.47,"endTime":1987.5,"body":"villages in Bangladesh and so on,"},{"startTime":1987.5,"endTime":1989.09,"body":"but they can go around maybe once a month,"},{"startTime":1989.09,"endTime":1991.223,"body":"maybe once a quarter, not enough."},{"startTime":1992.12,"endTime":1996.14,"body":"So, the big innovation here was that,"},{"startTime":1996.14,"endTime":2000.071,"body":"the people who most"},{"startTime":1996.14,"endTime":2000.071,"body":"capable of monitoring you"},{"startTime":2000.071,"endTime":2001.87,"body":"are your neighbors."},{"startTime":2001.87,"endTime":2004.12,"body":"So Yunus, basically, in Grameen Bank,"},{"startTime":2004.12,"endTime":2006.4,"body":"does not make loans to individuals,"},{"startTime":2006.4,"endTime":2009.1,"body":"they make loans to groups of people."},{"startTime":2009.1,"endTime":2010.93,"body":"Maybe 20 people."},{"startTime":2010.93,"endTime":2011.95,"body":"Usually, women."},{"startTime":2011.95,"endTime":2014.62,"body":"Women are more trustworthy"},{"startTime":2011.95,"endTime":2014.62,"body":"than men, right?"},{"startTime":2014.62,"endTime":2018.01,"body":"Men tend to get drunk and"},{"startTime":2014.62,"endTime":2018.01,"body":"gamble and stuff like that,"},{"startTime":2018.01,"endTime":2020.503,"body":"so Grameen lends mostly"},{"startTime":2018.01,"endTime":2020.503,"body":"to groups of women."},{"startTime":2021.55,"endTime":2025.48,"body":"And to get into a group"},{"startTime":2021.55,"endTime":2025.48,"body":"to borrow from Grameen,"},{"startTime":2025.48,"endTime":2028.69,"body":"you have to be introduced by"},{"startTime":2025.48,"endTime":2028.69,"body":"somebody in the group already."},{"startTime":2028.69,"endTime":2031.3,"body":"So that means basically"},{"startTime":2028.69,"endTime":2031.3,"body":"somebody's already solving"},{"startTime":2031.3,"endTime":2032.68,"body":"the adverse selection problem."},{"startTime":2032.68,"endTime":2035.05,"body":"This person will pay back the loan."},{"startTime":2035.05,"endTime":2037.54,"body":"But why do you solve the problem?"},{"startTime":2037.54,"endTime":2039.88,"body":"Well, Grameen also tells the women,"},{"startTime":2039.88,"endTime":2042.31,"body":"if any one person in this group"},{"startTime":2042.31,"endTime":2043.9,"body":"doesn't pay back their money,"},{"startTime":2043.9,"endTime":2047.14,"body":"the entire group gets your loans cut off."},{"startTime":2047.14,"endTime":2048.58,"body":"So now you have an incentive"},{"startTime":2048.58,"endTime":2050.53,"body":"to watch what your neighbors are doing."},{"startTime":2050.53,"endTime":2051.94,"body":"If your neighbor's not,"},{"startTime":2051.94,"endTime":2055.93,"body":"take the money and goes gambling with it,"},{"startTime":2055.93,"endTime":2058.48,"body":"they're like, \"Sorry, that's"},{"startTime":2055.93,"endTime":2058.48,"body":"my money you're gambling with.\""},{"startTime":2058.48,"endTime":2061.723,"body":"So they keep their fellow"},{"startTime":2058.48,"endTime":2061.723,"body":"members under control."},{"startTime":2063.07,"endTime":2066.01,"body":"That's an example without technology."},{"startTime":2066.01,"endTime":2069.67,"body":"Let me give you an"},{"startTime":2066.01,"endTime":2069.67,"body":"example with technology."},{"startTime":2069.67,"endTime":2070.63,"body":"This is another company."},{"startTime":2070.63,"endTime":2071.92,"body":"This is one of several companies,"},{"startTime":2071.92,"endTime":2075.25,"body":"this is not the only company,"},{"startTime":2071.92,"endTime":2075.25,"body":"which it's called Tala."},{"startTime":2075.25,"endTime":2076.99,"body":"Tala operates in four countries,"},{"startTime":2076.99,"endTime":2079.72,"body":"Mexico, Philippines, Kenya, and India,"},{"startTime":2079.72,"endTime":2083.77,"body":"and here you make loans on smartphones."},{"startTime":2083.77,"endTime":2088.03,"body":"So you apply for a loan"},{"startTime":2083.77,"endTime":2088.03,"body":"using a smartphone."},{"startTime":2088.03,"endTime":2090.91,"body":"So, what kind of information"},{"startTime":2088.03,"endTime":2090.91,"body":"does Tala ask you?"},{"startTime":2090.91,"endTime":2092.44,"body":"And Tala doesn't lend to groups,"},{"startTime":2092.44,"endTime":2094.39,"body":"it lends you individuals."},{"startTime":2094.39,"endTime":2095.223,"body":"Okay?"},{"startTime":2095.223,"endTime":2096.1,"body":"So what kind of information"},{"startTime":2096.1,"endTime":2098.29,"body":"do you think a company like Tala wants"},{"startTime":2098.29,"endTime":2100.84,"body":"before it makes you a loan?"},{"startTime":2100.84,"endTime":2102.16,"body":"Let's ask some questions."},{"startTime":2102.16,"endTime":2104.95,"body":"So, credit history,"},{"startTime":2102.16,"endTime":2104.95,"body":"what do you guys think?"},{"startTime":2104.95,"endTime":2106.78,"body":"Yeah, yeah?"},{"startTime":2106.78,"endTime":2108.22,"body":"I see hands going up."},{"startTime":2108.22,"endTime":2109.053,"body":"Okay."},{"startTime":2109.053,"endTime":2111.223,"body":"What about jobs?"},{"startTime":2112.36,"endTime":2113.89,"body":"That be okay?"},{"startTime":2113.89,"endTime":2114.723,"body":"Yeah?"},{"startTime":2114.723,"endTime":2115.72,"body":"Salaries."},{"startTime":2115.72,"endTime":2117.31,"body":"Any others?"},{"startTime":2117.31,"endTime":2119.533,"body":"What else do you think Tala would ask for?"},{"startTime":2120.595,"endTime":2121.63,"body":"(student speaking faintly)"},{"startTime":2120.595,"endTime":2121.63,"body":"- Residence?"},{"startTime":2121.63,"endTime":2122.463,"body":"- Excellent."},{"startTime":2122.463,"endTime":2124.423,"body":"Answer is, none of the above."},{"startTime":2127.9,"endTime":2130.243,"body":"What Tala ask is very simple."},{"startTime":2131.17,"endTime":2132.49,"body":"You upload your photo,"},{"startTime":2132.49,"endTime":2135.13,"body":"you answer maybe a"},{"startTime":2132.49,"endTime":2135.13,"body":"three-question questionnaire,"},{"startTime":2135.13,"endTime":2136.39,"body":"and that's it,"},{"startTime":2136.39,"endTime":2138.04,"body":"and they make you alone."},{"startTime":2138.04,"endTime":2142.33,"body":"Wait, how are they solving"},{"startTime":2138.04,"endTime":2142.33,"body":"the adverse selection problem?"},{"startTime":2142.33,"endTime":2144.82,"body":"The answer is, when you"},{"startTime":2142.33,"endTime":2144.82,"body":"install an app on your phone,"},{"startTime":2144.82,"endTime":2147.04,"body":"the app usually asks for permission,"},{"startTime":2147.04,"endTime":2148.87,"body":"Can I access your location?"},{"startTime":2148.87,"endTime":2150.19,"body":"Can I access your camera?"},{"startTime":2150.19,"endTime":2152.26,"body":"Can I access, blah, blah, blah, right?"},{"startTime":2152.26,"endTime":2154.99,"body":"How many of us actually"},{"startTime":2152.26,"endTime":2154.99,"body":"pay attention to that?"},{"startTime":2154.99,"endTime":2156.07,"body":"Do we?"},{"startTime":2156.07,"endTime":2156.903,"body":"Many of us just say,"},{"startTime":2156.903,"endTime":2160.357,"body":"\"You know what, okay,"},{"startTime":2156.903,"endTime":2160.357,"body":"whatever, I just want the app.\""},{"startTime":2161.68,"endTime":2163.66,"body":"But during that time,"},{"startTime":2163.66,"endTime":2165.25,"body":"when you're making the loan application,"},{"startTime":2165.25,"endTime":2166.84,"body":"the first thing that Tala does"},{"startTime":2166.84,"endTime":2169.227,"body":"is to check all your contact list, right?"},{"startTime":2169.227,"endTime":2171.91,"body":"Do you have any of your"},{"startTime":2169.227,"endTime":2171.91,"body":"people on your contact list"},{"startTime":2171.91,"endTime":2173.95,"body":"borrow from Tala before?"},{"startTime":2173.95,"endTime":2177.58,"body":"If they have, have they"},{"startTime":2173.95,"endTime":2177.58,"body":"paid back the money?"},{"startTime":2177.58,"endTime":2179.71,"body":"If they had paid back the"},{"startTime":2177.58,"endTime":2179.71,"body":"money, that's good news,"},{"startTime":2179.71,"endTime":2181.9,"body":"because assumes that people"},{"startTime":2179.71,"endTime":2181.9,"body":"hang out with other people"},{"startTime":2181.9,"endTime":2183.31,"body":"who are like them."},{"startTime":2183.31,"endTime":2185.51,"body":"If your friends haven't"},{"startTime":2183.31,"endTime":2185.51,"body":"paid back the money,"},{"startTime":2186.97,"endTime":2189.22,"body":"you're not going to get a"},{"startTime":2186.97,"endTime":2189.22,"body":"loan because they assume"},{"startTime":2189.22,"endTime":2191.47,"body":"that deadbeats hang out"},{"startTime":2189.22,"endTime":2191.47,"body":"with other deadbeats."},{"startTime":2192.61,"endTime":2193.443,"body":"But that's not all."},{"startTime":2193.443,"endTime":2194.44,"body":"Maybe all your friends,"},{"startTime":2194.44,"endTime":2196.94,"body":"none of your friends have"},{"startTime":2194.44,"endTime":2196.94,"body":"borrowed in Tala before,"},{"startTime":2198.58,"endTime":2201.79,"body":"and Tala checks your"},{"startTime":2198.58,"endTime":2201.79,"body":"entire list of contacts."},{"startTime":2201.79,"endTime":2204.46,"body":"How many people do you"},{"startTime":2201.79,"endTime":2204.46,"body":"talk to on a regular basis?"},{"startTime":2204.46,"endTime":2207.49,"body":"You talk to at least 56 people a month,"},{"startTime":2207.49,"endTime":2210.88,"body":"that's a sign that you have"},{"startTime":2207.49,"endTime":2210.88,"body":"a deep, broad social network."},{"startTime":2210.88,"endTime":2214.03,"body":"You can call on people"},{"startTime":2210.88,"endTime":2214.03,"body":"to get money, maybe,"},{"startTime":2214.03,"endTime":2216.13,"body":"if you owe money to Tala."},{"startTime":2216.13,"endTime":2217.9,"body":"How many people do you talk to,"},{"startTime":2217.9,"endTime":2220.93,"body":"on the length of time,"},{"startTime":2217.9,"endTime":2220.93,"body":"to at least one person?"},{"startTime":2220.93,"endTime":2222.25,"body":"You talk to at least one person"},{"startTime":2222.25,"endTime":2224.17,"body":"for more than four minutes a day,"},{"startTime":2224.17,"endTime":2225.91,"body":"that, you have a deep social relationship"},{"startTime":2225.91,"endTime":2227.413,"body":"to at least one other person."},{"startTime":2228.49,"endTime":2229.96,"body":"It goes deeper."},{"startTime":2229.96,"endTime":2233.35,"body":"How do you spell the names"},{"startTime":2229.96,"endTime":2233.35,"body":"on your contact list?"},{"startTime":2233.35,"endTime":2237.453,"body":"For example, if you say"},{"startTime":2233.35,"endTime":2237.453,"body":"Raghu, gardner, right?"},{"startTime":2237.453,"endTime":2239.47,"body":"Many of us do that for our contact list."},{"startTime":2239.47,"endTime":2240.94,"body":"I can think of examples."},{"startTime":2240.94,"endTime":2242.68,"body":"Or so and so."},{"startTime":2242.68,"endTime":2244.6,"body":"Mechanic, something like that, right?"},{"startTime":2244.6,"endTime":2246.04,"body":"We put names down names like that,"},{"startTime":2246.04,"endTime":2247.96,"body":"just the first name and the occupation"},{"startTime":2247.96,"endTime":2249.763,"body":"to call people for their phones."},{"startTime":2250.99,"endTime":2251.823,"body":"It's not good."},{"startTime":2252.85,"endTime":2253.72,"body":"If you, on the other hand,"},{"startTime":2253.72,"endTime":2258.46,"body":"if you had typed in"},{"startTime":2253.72,"endTime":2258.46,"body":"capital R, A-G-H-U, space,"},{"startTime":2258.46,"endTime":2263.072,"body":"capital R, A-U, open"},{"startTime":2258.46,"endTime":2263.072,"body":"parenthesis, mechanic,"},{"startTime":2263.072,"endTime":2267.52,"body":"closed parenthesis, that's"},{"startTime":2263.072,"endTime":2267.52,"body":"someone who's really anal."},{"startTime":2267.52,"endTime":2270.37,"body":"That person is 16 times more likely"},{"startTime":2270.37,"endTime":2272.92,"body":"to pay back the loan"},{"startTime":2270.37,"endTime":2272.92,"body":"than somebody who writes,"},{"startTime":2272.92,"endTime":2273.853,"body":"Raghu, mechanic."},{"startTime":2275.2,"endTime":2277.918,"body":"So be very careful when"},{"startTime":2275.2,"endTime":2277.918,"body":"you're writing stuff"},{"startTime":2277.918,"endTime":2279.91,"body":"in your contact list."},{"startTime":2279.91,"endTime":2281.71,"body":"But that's not all."},{"startTime":2281.71,"endTime":2283.183,"body":"Next, we move to location."},{"startTime":2285.25,"endTime":2288.875,"body":"Every few minutes your"},{"startTime":2285.25,"endTime":2288.875,"body":"phone is calling out"},{"startTime":2288.875,"endTime":2289.99,"body":"the closest cell phone"},{"startTime":2288.875,"endTime":2289.99,"body":"tower saying, here I am."},{"startTime":2289.99,"endTime":2291.46,"body":"I want messages or I want data."},{"startTime":2291.46,"endTime":2292.31,"body":"I want something."},{"startTime":2293.2,"endTime":2296.29,"body":"So, your phone is tracking"},{"startTime":2293.2,"endTime":2296.29,"body":"you minute by minute."},{"startTime":2296.29,"endTime":2297.55,"body":"So what happens?"},{"startTime":2297.55,"endTime":2299.83,"body":"Well, if it turns out"},{"startTime":2299.83,"endTime":2301.99,"body":"that fella just checks"},{"startTime":2299.83,"endTime":2301.99,"body":"your location records,"},{"startTime":2301.99,"endTime":2304.6,"body":"if your phone is in the"},{"startTime":2301.99,"endTime":2304.6,"body":"same place every night"},{"speaker":"from 9:00 PM to 5","startTime":2304.6,"endTime":2308.11,"body":"00 AM,"},{"speaker":"from 9:00 PM to 5","startTime":2304.6,"endTime":2308.11,"body":"Tala knows you have a home."},{"speaker":"from 9:00 PM to 5","startTime":2308.11,"endTime":2309.76,"body":"Because if you are homeless,"},{"speaker":"from 9:00 PM to 5","startTime":2309.76,"endTime":2312.64,"body":"your phone are in a"},{"speaker":"from 9:00 PM to 5","startTime":2309.76,"endTime":2312.64,"body":"different place every night."},{"speaker":"What about from 9:00 AM to 5","startTime":2312.64,"endTime":2314.26,"body":"00 PM?"},{"speaker":"What about from 9:00 AM to 5","startTime":2314.26,"endTime":2316.03,"body":"If you're on the phone is"},{"speaker":"What about from 9:00 AM to 5","startTime":2314.26,"endTime":2316.03,"body":"in in the same place there,"},{"speaker":"What about from 9:00 AM to 5","startTime":2316.03,"endTime":2317.02,"body":"it knows you have a job"},{"speaker":"What about from 9:00 AM to 5","startTime":2317.02,"endTime":2318.91,"body":"and I know approximately"},{"speaker":"What about from 9:00 AM to 5","startTime":2317.02,"endTime":2318.91,"body":"where the job is, right?"},{"speaker":"What about from 9:00 AM to 5","startTime":2318.91,"endTime":2322.69,"body":"You can tell right from the"},{"speaker":"What about from 9:00 AM to 5","startTime":2318.91,"endTime":2322.69,"body":"location services on your phone."},{"speaker":"What about from 9:00 AM to 5","startTime":2322.69,"endTime":2325.03,"body":"So, I don't need anything else."},{"speaker":"What about from 9:00 AM to 5","startTime":2325.03,"endTime":2326.8,"body":"Your phone has already given me"},{"speaker":"What about from 9:00 AM to 5","startTime":2326.8,"endTime":2328.25,"body":"all the information you need."},{"speaker":"What about from 9:00 AM to 5","startTime":2329.11,"endTime":2331.24,"body":"Let me take another example."},{"speaker":"What about from 9:00 AM to 5","startTime":2331.24,"endTime":2333.1,"body":"Car insurance."},{"speaker":"What about from 9:00 AM to 5","startTime":2333.1,"endTime":2335.893,"body":"This is a company I mentioned"},{"speaker":"What about from 9:00 AM to 5","startTime":2333.1,"endTime":2335.893,"body":"earlier called Root."},{"speaker":"What about from 9:00 AM to 5","startTime":2337.36,"endTime":2339.91,"body":"Now, remember, the car insurance companies"},{"speaker":"What about from 9:00 AM to 5","startTime":2339.91,"endTime":2341.263,"body":"want safe drivers."},{"speaker":"What about from 9:00 AM to 5","startTime":2342.13,"endTime":2344.773,"body":"How does insurance pricing model work?"},{"speaker":"What about from 9:00 AM to 5","startTime":2345.61,"endTime":2347.8,"body":"Well, the way it works is,"},{"speaker":"What about from 9:00 AM to 5","startTime":2347.8,"endTime":2352.6,"body":"you have maybe a pool of,"},{"speaker":"What about from 9:00 AM to 5","startTime":2347.8,"endTime":2352.6,"body":"let's say, a hundred drivers."},{"speaker":"What about from 9:00 AM to 5","startTime":2352.6,"endTime":2356.86,"body":"Of those, 10 reckless,"},{"speaker":"What about from 9:00 AM to 5","startTime":2352.6,"endTime":2356.86,"body":"they will have accidents,"},{"speaker":"What about from 9:00 AM to 5","startTime":2356.86,"endTime":2359.23,"body":"90 of them were safe."},{"speaker":"What about from 9:00 AM to 5","startTime":2359.23,"endTime":2361.78,"body":"So what you do is you collect premiums"},{"speaker":"What about from 9:00 AM to 5","startTime":2361.78,"endTime":2363.25,"body":"from all the a hundred"},{"speaker":"What about from 9:00 AM to 5","startTime":2363.25,"endTime":2364.9,"body":"and hope that the premiums"},{"speaker":"What about from 9:00 AM to 5","startTime":2364.9,"endTime":2367.72,"body":"will pay off the reckless driving accident"},{"speaker":"What about from 9:00 AM to 5","startTime":2367.72,"endTime":2370.363,"body":"of the 10 people and"},{"speaker":"What about from 9:00 AM to 5","startTime":2367.72,"endTime":2370.363,"body":"leave a profit left over."},{"speaker":"What about from 9:00 AM to 5","startTime":2372.61,"endTime":2374.23,"body":"Root doesn't do this."},{"speaker":"What about from 9:00 AM to 5","startTime":2374.23,"endTime":2375.73,"body":"What Root does,"},{"speaker":"What about from 9:00 AM to 5","startTime":2375.73,"endTime":2377.8,"body":"it looks for traditional things,"},{"speaker":"What about from 9:00 AM to 5","startTime":2377.8,"endTime":2382.513,"body":"but it also asks you to"},{"speaker":"What about from 9:00 AM to 5","startTime":2377.8,"endTime":2382.513,"body":"download an app onto your phone."},{"speaker":"What about from 9:00 AM to 5","startTime":2383.77,"endTime":2385.933,"body":"So, what does the app do?"},{"speaker":"What about from 9:00 AM to 5","startTime":2386.98,"endTime":2389.32,"body":"Well, it turns out, they"},{"speaker":"What about from 9:00 AM to 5","startTime":2386.98,"endTime":2389.32,"body":"look at a bunch of factors."},{"speaker":"What about from 9:00 AM to 5","startTime":2389.32,"endTime":2390.97,"body":"The traditional pricing model says,"},{"speaker":"What about from 9:00 AM to 5","startTime":2390.97,"endTime":2393.883,"body":"what's your credit score,"},{"speaker":"What about from 9:00 AM to 5","startTime":2390.97,"endTime":2393.883,"body":"what's your driving record,"},{"speaker":"What about from 9:00 AM to 5","startTime":2393.883,"endTime":2396.13,"body":"what's your age, what's your"},{"speaker":"What about from 9:00 AM to 5","startTime":2393.883,"endTime":2396.13,"body":"marital status, and so on."},{"speaker":"What about from 9:00 AM to 5","startTime":2396.13,"endTime":2399.403,"body":"Root add to that by looking"},{"speaker":"What about from 9:00 AM to 5","startTime":2396.13,"endTime":2399.403,"body":"at your driving behavior."},{"speaker":"What about from 9:00 AM to 5","startTime":2400.27,"endTime":2403.3,"body":"That means, while you have"},{"speaker":"What about from 9:00 AM to 5","startTime":2400.27,"endTime":2403.3,"body":"the app on your phone,"},{"speaker":"What about from 9:00 AM to 5","startTime":2403.3,"endTime":2405.55,"body":"what you do is you download the app,"},{"speaker":"What about from 9:00 AM to 5","startTime":2405.55,"endTime":2406.75,"body":"you keep it on your phone,"},{"speaker":"What about from 9:00 AM to 5","startTime":2406.75,"endTime":2407.89,"body":"you don't have to have it open,"},{"speaker":"What about from 9:00 AM to 5","startTime":2407.89,"endTime":2409.27,"body":"you just have it on your phone."},{"speaker":"What about from 9:00 AM to 5","startTime":2409.27,"endTime":2411.04,"body":"And while you have the app open,"},{"speaker":"What about from 9:00 AM to 5","startTime":2411.04,"endTime":2412.63,"body":"while you have the app on your phone,"},{"speaker":"What about from 9:00 AM to 5","startTime":2412.63,"endTime":2414.88,"body":"Root is monitoring everything"},{"speaker":"What about from 9:00 AM to 5","startTime":2412.63,"endTime":2414.88,"body":"about your driving."},{"speaker":"What about from 9:00 AM to 5","startTime":2414.88,"endTime":2416.89,"body":"How fast you drive?"},{"speaker":"What about from 9:00 AM to 5","startTime":2416.89,"endTime":2418.35,"body":"Do you go around corners too fast?"},{"speaker":"What about from 9:00 AM to 5","startTime":2418.35,"endTime":2419.98,"body":"Do you break too suddenly?"},{"speaker":"What about from 9:00 AM to 5","startTime":2419.98,"endTime":2421.99,"body":"What is the congestion"},{"speaker":"What about from 9:00 AM to 5","startTime":2419.98,"endTime":2421.99,"body":"on the road you drive?"},{"speaker":"What about from 9:00 AM to 5","startTime":2421.99,"endTime":2423.94,"body":"I mean, that's from"},{"speaker":"What about from 9:00 AM to 5","startTime":2421.99,"endTime":2423.94,"body":"taking from Google Maps"},{"speaker":"What about from 9:00 AM to 5","startTime":2423.94,"endTime":2424.94,"body":"or things like that."},{"speaker":"What about from 9:00 AM to 5","startTime":2425.8,"endTime":2427.697,"body":"So many of us are thinking,"},{"speaker":"What about from 9:00 AM to 5","startTime":2427.697,"endTime":2430.53,"body":"\"Wait a minute, when I have the app open,"},{"speaker":"What about from 9:00 AM to 5","startTime":2430.53,"endTime":2431.95,"body":"I'll drive carefully.\""},{"speaker":"What about from 9:00 AM to 5","startTime":2431.95,"endTime":2434.56,"body":"I mean, I'll get a good rate,"},{"speaker":"What about from 9:00 AM to 5","startTime":2434.56,"endTime":2436.51,"body":"and then I'll drive normally."},{"speaker":"What about from 9:00 AM to 5","startTime":2436.51,"endTime":2438.46,"body":"Root has already thought of that."},{"speaker":"What about from 9:00 AM to 5","startTime":2438.46,"endTime":2442.96,"body":"Turns out, that when you download the app,"},{"speaker":"What about from 9:00 AM to 5","startTime":2442.96,"endTime":2447.58,"body":"you drive around like you"},{"speaker":"What about from 9:00 AM to 5","startTime":2442.96,"endTime":2447.58,"body":"normally would for a few weeks,"},{"speaker":"What about from 9:00 AM to 5","startTime":2447.58,"endTime":2449.953,"body":"not a couple of days, for a few weeks."},{"speaker":"What about from 9:00 AM to 5","startTime":2450.97,"endTime":2454.48,"body":"I can guarantee first day you"},{"speaker":"What about from 9:00 AM to 5","startTime":2450.97,"endTime":2454.48,"body":"might drive super carefully,"},{"speaker":"What about from 9:00 AM to 5","startTime":2454.48,"endTime":2456.52,"body":"second day, maybe a little less carefully,"},{"speaker":"What about from 9:00 AM to 5","startTime":2456.52,"endTime":2458.41,"body":"day three, you have totally forgotten"},{"speaker":"What about from 9:00 AM to 5","startTime":2458.41,"endTime":2459.73,"body":"there's an app in your pocket"},{"speaker":"What about from 9:00 AM to 5","startTime":2459.73,"endTime":2461.893,"body":"monitoring everything about your driving."},{"speaker":"What about from 9:00 AM to 5","startTime":2463.36,"endTime":2466.183,"body":"So, what happens if you're a bad driver?"},{"speaker":"What about from 9:00 AM to 5","startTime":2468.01,"endTime":2471.377,"body":"Root says, \"Well, we don't want you.\""},{"speaker":"What about from 9:00 AM to 5","startTime":2471.377,"endTime":2472.51,"body":"\"You're not a good fit.\""},{"speaker":"What about from 9:00 AM to 5","startTime":2472.51,"endTime":2474.28,"body":"Root isn't the right fit for everybody."},{"speaker":"What about from 9:00 AM to 5","startTime":2474.28,"endTime":2475.15,"body":"A model don't work..."},{"speaker":"What about from 9:00 AM to 5","startTime":2475.15,"endTime":2476.05,"body":"It's a polite way of saying,"},{"speaker":"What about from 9:00 AM to 5","startTime":2476.05,"endTime":2478.9,"body":"you're a terrible driver, I"},{"speaker":"What about from 9:00 AM to 5","startTime":2476.05,"endTime":2478.9,"body":"don't want you as a customer."},{"speaker":"What about from 9:00 AM to 5","startTime":2480.52,"endTime":2482.8,"body":"And the Root app doesn't need to be open,"},{"speaker":"What about from 9:00 AM to 5","startTime":2482.8,"endTime":2484.18,"body":"you basically just give it permission"},{"speaker":"What about from 9:00 AM to 5","startTime":2484.18,"endTime":2485.71,"body":"to run in the background."},{"speaker":"What about from 9:00 AM to 5","startTime":2485.71,"endTime":2487.9,"body":"Same thing, which I just talked about."},{"speaker":"What about from 9:00 AM to 5","startTime":2487.9,"endTime":2490.51,"body":"Now, what happens to these other people?"},{"speaker":"What about from 9:00 AM to 5","startTime":2490.51,"endTime":2492.25,"body":"Well, who do they go to?"},{"speaker":"What about from 9:00 AM to 5","startTime":2492.25,"endTime":2493.81,"body":"The other insurance companies"},{"speaker":"What about from 9:00 AM to 5","startTime":2493.81,"endTime":2496.03,"body":"which are not using technology."},{"speaker":"What about from 9:00 AM to 5","startTime":2496.03,"endTime":2497.47,"body":"So now the pricing model"},{"speaker":"What about from 9:00 AM to 5","startTime":2497.47,"endTime":2500.44,"body":"of the other insurance companies changes."},{"speaker":"What about from 9:00 AM to 5","startTime":2500.44,"endTime":2503.38,"body":"They started out with a"},{"speaker":"What about from 9:00 AM to 5","startTime":2500.44,"endTime":2503.38,"body":"pool of 90 good drivers"},{"speaker":"What about from 9:00 AM to 5","startTime":2503.38,"endTime":2505.75,"body":"and 10 bad drivers."},{"speaker":"What about from 9:00 AM to 5","startTime":2505.75,"endTime":2507.52,"body":"But the good drivers"},{"speaker":"What about from 9:00 AM to 5","startTime":2505.75,"endTime":2507.52,"body":"have all gone to Root,"},{"speaker":"What about from 9:00 AM to 5","startTime":2507.52,"endTime":2509.02,"body":"and the bad drivers have come to you,"},{"speaker":"What about from 9:00 AM to 5","startTime":2509.02,"endTime":2510.28,"body":"so suddenly you have a model"},{"speaker":"What about from 9:00 AM to 5","startTime":2510.28,"endTime":2514.12,"body":"where you have 80 bad"},{"speaker":"What about from 9:00 AM to 5","startTime":2510.28,"endTime":2514.12,"body":"drivers and 20 good drivers."},{"speaker":"What about from 9:00 AM to 5","startTime":2514.12,"endTime":2515.83,"body":"The only way you can make a profit,"},{"speaker":"What about from 9:00 AM to 5","startTime":2515.83,"endTime":2518.05,"body":"increase your insurance premium."},{"speaker":"What about from 9:00 AM to 5","startTime":2518.05,"endTime":2519.43,"body":"But if you increase"},{"speaker":"What about from 9:00 AM to 5","startTime":2518.05,"endTime":2519.43,"body":"your insurance premium,"},{"speaker":"What about from 9:00 AM to 5","startTime":2519.43,"endTime":2520.51,"body":"the good drivers leave."},{"speaker":"What about from 9:00 AM to 5","startTime":2520.51,"endTime":2522.94,"body":"Eventually, you get"},{"speaker":"What about from 9:00 AM to 5","startTime":2520.51,"endTime":2522.94,"body":"driven out of business."},{"speaker":"What about from 9:00 AM to 5","startTime":2522.94,"endTime":2524.91,"body":"So one of the conclusions from this is,"},{"speaker":"What about from 9:00 AM to 5","startTime":2524.91,"endTime":2527.26,"body":"if one company is introducing technology,"},{"speaker":"What about from 9:00 AM to 5","startTime":2527.26,"endTime":2528.46,"body":"everybody has to."},{"speaker":"What about from 9:00 AM to 5","startTime":2528.46,"endTime":2530.053,"body":"It becomes a Red Queen's race."},{"speaker":"What about from 9:00 AM to 5","startTime":2532.03,"endTime":2534.583,"body":"Okay, let's take another example."},{"speaker":"What about from 9:00 AM to 5","startTime":2535.96,"endTime":2537.883,"body":"Gadget insurance, Lemonade."},{"speaker":"What about from 9:00 AM to 5","startTime":2539.11,"endTime":2543.76,"body":"Now, many of us, when we pay"},{"speaker":"What about from 9:00 AM to 5","startTime":2539.11,"endTime":2543.76,"body":"our premiums every month,"},{"speaker":"What about from 9:00 AM to 5","startTime":2543.76,"endTime":2544.81,"body":"and something happens,"},{"speaker":"What about from 9:00 AM to 5","startTime":2544.81,"endTime":2546.16,"body":"like, we break our laptop"},{"speaker":"What about from 9:00 AM to 5","startTime":2546.16,"endTime":2549.133,"body":"or we break our phone,"},{"speaker":"What about from 9:00 AM to 5","startTime":2546.16,"endTime":2549.133,"body":"and it is our fault,"},{"speaker":"What about from 9:00 AM to 5","startTime":2551.29,"endTime":2554.05,"body":"do we say, \"Oh, this is my fault."},{"speaker":"What about from 9:00 AM to 5","startTime":2554.05,"endTime":2557.62,"body":"I'm not going to ask the insurance"},{"speaker":"What about from 9:00 AM to 5","startTime":2554.05,"endTime":2557.62,"body":"company to pay for this.\""},{"speaker":"What about from 9:00 AM to 5","startTime":2557.62,"endTime":2558.566,"body":"Some of us do."},{"speaker":"What about from 9:00 AM to 5","startTime":2558.566,"endTime":2559.63,"body":"We have very honest people."},{"speaker":"What about from 9:00 AM to 5","startTime":2559.63,"endTime":2561.107,"body":"But some of us will say,"},{"speaker":"What about from 9:00 AM to 5","startTime":2561.107,"endTime":2563.98,"body":"\"You know what, I've"},{"speaker":"What about from 9:00 AM to 5","startTime":2561.107,"endTime":2563.98,"body":"been paying my premiums."},{"speaker":"What about from 9:00 AM to 5","startTime":2563.98,"endTime":2566.35,"body":"I'm not going to tell the"},{"speaker":"What about from 9:00 AM to 5","startTime":2563.98,"endTime":2566.35,"body":"insurance company it was my fault."},{"speaker":"What about from 9:00 AM to 5","startTime":2566.35,"endTime":2567.767,"body":"I'll say, it's an act of God.\""},{"speaker":"What about from 9:00 AM to 5","startTime":2567.767,"endTime":2569.535,"body":"\"The dog grabbed my laptop"},{"speaker":"What about from 9:00 AM to 5","startTime":2569.535,"endTime":2572.23,"body":"and dropped it into the commode"},{"speaker":"What about from 9:00 AM to 5","startTime":2572.23,"endTime":2573.7,"body":"or something like that.\""},{"speaker":"What about from 9:00 AM to 5","startTime":2573.7,"endTime":2577.99,"body":"So, that moral hazard,"},{"speaker":"What about from 9:00 AM to 5","startTime":2577.99,"endTime":2580.72,"body":"and Lemonade want you"},{"speaker":"What about from 9:00 AM to 5","startTime":2577.99,"endTime":2580.72,"body":"eliminate that moral hazard."},{"speaker":"What about from 9:00 AM to 5","startTime":2580.72,"endTime":2582.97,"body":"The likelihood of you claiming for stuff,"},{"speaker":"What about from 9:00 AM to 5","startTime":2582.97,"endTime":2585.4,"body":"which is really your"},{"speaker":"What about from 9:00 AM to 5","startTime":2582.97,"endTime":2585.4,"body":"fault and you know it."},{"speaker":"What about from 9:00 AM to 5","startTime":2585.4,"endTime":2586.93,"body":"So what does it do?"},{"speaker":"What about from 9:00 AM to 5","startTime":2586.93,"endTime":2589.393,"body":"Well, this pricing model works like this."},{"speaker":"What about from 9:00 AM to 5","startTime":2591.002,"endTime":2594.31,"body":"When you sign up for Lemonade,"},{"speaker":"What about from 9:00 AM to 5","startTime":2594.31,"endTime":2596.77,"body":"it asks you for what do you care about?"},{"speaker":"What about from 9:00 AM to 5","startTime":2596.77,"endTime":2598.367,"body":"For example, you might say,"},{"speaker":"What about from 9:00 AM to 5","startTime":2598.367,"endTime":2601.27,"body":"\"I care about saving the dolphins"},{"speaker":"What about from 9:00 AM to 5","startTime":2601.27,"endTime":2603.7,"body":"or saving a whale,\" something like that."},{"speaker":"What about from 9:00 AM to 5","startTime":2603.7,"endTime":2608.387,"body":"So what Lemonade does is basically says,"},{"speaker":"What about from 9:00 AM to 5","startTime":2608.387,"endTime":2612.91,"body":"\"Look, we pay your claims,"},{"speaker":"What about from 9:00 AM to 5","startTime":2608.387,"endTime":2612.91,"body":"and if you do not claim,"},{"speaker":"What about from 9:00 AM to 5","startTime":2612.91,"endTime":2614.41,"body":"we will give the remaining money"},{"speaker":"What about from 9:00 AM to 5","startTime":2614.41,"endTime":2619.27,"body":"after we take our cut to"},{"speaker":"What about from 9:00 AM to 5","startTime":2614.41,"endTime":2619.27,"body":"causes you care about."},{"speaker":"What about from 9:00 AM to 5","startTime":2619.27,"endTime":2623.299,"body":"So the hope is, if you're making a claim"},{"speaker":"What about from 9:00 AM to 5","startTime":2623.299,"endTime":2625.39,"body":"for something, which is your fault,"},{"speaker":"What about from 9:00 AM to 5","startTime":2625.39,"endTime":2626.71,"body":"you're actually taking money away"},{"speaker":"What about from 9:00 AM to 5","startTime":2626.71,"endTime":2629.83,"body":"not from Lemonade, but from"},{"speaker":"What about from 9:00 AM to 5","startTime":2626.71,"endTime":2629.83,"body":"something you care about,"},{"speaker":"What about from 9:00 AM to 5","startTime":2629.83,"endTime":2633.04,"body":"so you might be more"},{"speaker":"What about from 9:00 AM to 5","startTime":2629.83,"endTime":2633.04,"body":"reluctant to make that claim."},{"speaker":"What about from 9:00 AM to 5","startTime":2633.04,"endTime":2637.63,"body":"Lemonade tries its best"},{"speaker":"What about from 9:00 AM to 5","startTime":2633.04,"endTime":2637.63,"body":"to really emphasize that"},{"speaker":"What about from 9:00 AM to 5","startTime":2637.63,"endTime":2639.857,"body":"by putting all the stuff"},{"speaker":"What about from 9:00 AM to 5","startTime":2637.63,"endTime":2639.857,"body":"on his website like,"},{"speaker":"What about from 9:00 AM to 5","startTime":2639.857,"endTime":2643.63,"body":"\"We provide life saving care"},{"speaker":"What about from 9:00 AM to 5","startTime":2639.857,"endTime":2643.63,"body":"to so many rescued animals."},{"speaker":"What about from 9:00 AM to 5","startTime":2643.63,"endTime":2644.56,"body":"We planted so many...\""},{"speaker":"What about from 9:00 AM to 5","startTime":2644.56,"endTime":2645.43,"body":"Good stuff, right?"},{"speaker":"What about from 9:00 AM to 5","startTime":2645.43,"endTime":2648.01,"body":"So you're more reluctant to claim"},{"speaker":"What about from 9:00 AM to 5","startTime":2648.01,"endTime":2649.813,"body":"if you are working with Lemonade."},{"speaker":"What about from 9:00 AM to 5","startTime":2651.19,"endTime":2654.16,"body":"Now, let's invert the"},{"speaker":"What about from 9:00 AM to 5","startTime":2651.19,"endTime":2654.16,"body":"moral hazard problem."},{"speaker":"What about from 9:00 AM to 5","startTime":2654.16,"endTime":2655.993,"body":"This is Coventry First."},{"speaker":"What about from 9:00 AM to 5","startTime":2657.43,"endTime":2659.26,"body":"Usually, more hazard means,"},{"speaker":"What about from 9:00 AM to 5","startTime":2659.26,"endTime":2662.41,"body":"these guys are doing something"},{"speaker":"What about from 9:00 AM to 5","startTime":2659.26,"endTime":2662.41,"body":"which is bad for society."},{"speaker":"What about from 9:00 AM to 5","startTime":2662.41,"endTime":2664.12,"body":"For example, you're driving fast,"},{"speaker":"What about from 9:00 AM to 5","startTime":2664.12,"endTime":2665.32,"body":"you're driving recklessly,"},{"speaker":"What about from 9:00 AM to 5","startTime":2665.32,"endTime":2666.49,"body":"could have an accident,"},{"speaker":"What about from 9:00 AM to 5","startTime":2666.49,"endTime":2667.57,"body":"hurts people,"},{"speaker":"What about from 9:00 AM to 5","startTime":2667.57,"endTime":2668.403,"body":"that's bad."},{"speaker":"What about from 9:00 AM to 5","startTime":2669.28,"endTime":2671.08,"body":"Coventry First is a different model."},{"speaker":"What about from 9:00 AM to 5","startTime":2672.67,"endTime":2676.99,"body":"In America, one of the"},{"speaker":"What about from 9:00 AM to 5","startTime":2672.67,"endTime":2676.99,"body":"things with American life"},{"speaker":"What about from 9:00 AM to 5","startTime":2676.99,"endTime":2681.01,"body":"is that your medical"},{"speaker":"What about from 9:00 AM to 5","startTime":2676.99,"endTime":2681.01,"body":"insurance is tied to your job."},{"speaker":"What about from 9:00 AM to 5","startTime":2681.01,"endTime":2682.33,"body":"If you don't have a job,"},{"speaker":"What about from 9:00 AM to 5","startTime":2682.33,"endTime":2685.12,"body":"your medical insurance, not so good,"},{"speaker":"What about from 9:00 AM to 5","startTime":2685.12,"endTime":2687.133,"body":"or non-existent in some places."},{"speaker":"What about from 9:00 AM to 5","startTime":2689.41,"endTime":2691.33,"body":"But if you're working for a company,"},{"speaker":"What about from 9:00 AM to 5","startTime":2691.33,"endTime":2693.4,"body":"you have medical insurance"},{"speaker":"What about from 9:00 AM to 5","startTime":2691.33,"endTime":2693.4,"body":"and in some cases,"},{"speaker":"What about from 9:00 AM to 5","startTime":2693.4,"endTime":2694.54,"body":"if you're important enough,"},{"speaker":"What about from 9:00 AM to 5","startTime":2694.54,"endTime":2697.96,"body":"the company will take out a"},{"speaker":"What about from 9:00 AM to 5","startTime":2694.54,"endTime":2697.96,"body":"life insurance policy on you,"},{"speaker":"What about from 9:00 AM to 5","startTime":2697.96,"endTime":2699.76,"body":"It's called key man insurance,"},{"speaker":"What about from 9:00 AM to 5","startTime":2699.76,"endTime":2701.29,"body":"and what happens is,"},{"speaker":"What about from 9:00 AM to 5","startTime":2701.29,"endTime":2703.507,"body":"if something happens to you,"},{"speaker":"What about from 9:00 AM to 5","startTime":2703.507,"endTime":2705.43,"body":"you have a heart attack or something,"},{"speaker":"What about from 9:00 AM to 5","startTime":2705.43,"endTime":2708.64,"body":"the company has been paying"},{"speaker":"What about from 9:00 AM to 5","startTime":2705.43,"endTime":2708.64,"body":"the premiums on your behalf,"},{"speaker":"What about from 9:00 AM to 5","startTime":2708.64,"endTime":2711.1,"body":"they collect the money on"},{"speaker":"What about from 9:00 AM to 5","startTime":2708.64,"endTime":2711.1,"body":"the life insurance policy"},{"speaker":"What about from 9:00 AM to 5","startTime":2711.1,"endTime":2715.36,"body":"and use that either to treat"},{"speaker":"What about from 9:00 AM to 5","startTime":2711.1,"endTime":2715.36,"body":"you or replace you or whatever."},{"speaker":"What about from 9:00 AM to 5","startTime":2715.36,"endTime":2716.193,"body":"So here you are,"},{"speaker":"What about from 9:00 AM to 5","startTime":2716.193,"endTime":2717.7,"body":"medical insurance through your job,"},{"speaker":"What about from 9:00 AM to 5","startTime":2717.7,"endTime":2719.71,"body":"life insurance, through your job."},{"speaker":"What about from 9:00 AM to 5","startTime":2719.71,"endTime":2721.69,"body":"Now, suddenly you're fired."},{"speaker":"What about from 9:00 AM to 5","startTime":2721.69,"endTime":2724.15,"body":"Or in American parliament,"},{"speaker":"What about from 9:00 AM to 5","startTime":2721.69,"endTime":2724.15,"body":"they let you go."},{"speaker":"What about from 9:00 AM to 5","startTime":2724.15,"endTime":2725.44,"body":"I mean, it's not like,"},{"speaker":"What about from 9:00 AM to 5","startTime":2725.44,"endTime":2727.03,"body":"we've been holding you"},{"speaker":"What about from 9:00 AM to 5","startTime":2725.44,"endTime":2727.03,"body":"back all those time,"},{"speaker":"What about from 9:00 AM to 5","startTime":2727.03,"endTime":2729.7,"body":"and now you can fly free to new places,"},{"speaker":"What about from 9:00 AM to 5","startTime":2729.7,"endTime":2731.05,"body":"new adventures, right?"},{"speaker":"What about from 9:00 AM to 5","startTime":2731.05,"endTime":2733.03,"body":"That's terminology."},{"speaker":"What about from 9:00 AM to 5","startTime":2733.03,"endTime":2735.91,"body":"Anyway, so they've let"},{"speaker":"What about from 9:00 AM to 5","startTime":2733.03,"endTime":2735.91,"body":"you go and they're like,"},{"speaker":"What about from 9:00 AM to 5","startTime":2735.91,"endTime":2738.67,"body":"and you're like, \"Man, I"},{"speaker":"What about from 9:00 AM to 5","startTime":2735.91,"endTime":2738.67,"body":"need medical insurance.\""},{"speaker":"What about from 9:00 AM to 5","startTime":2738.67,"endTime":2739.503,"body":"And they're like,"},{"speaker":"What about from 9:00 AM to 5","startTime":2739.503,"endTime":2742.27,"body":"\"Oh, well we have this"},{"speaker":"What about from 9:00 AM to 5","startTime":2739.503,"endTime":2742.27,"body":"life insurance policy."},{"speaker":"What about from 9:00 AM to 5","startTime":2742.27,"endTime":2743.86,"body":"We are not going to keep up the premiums."},{"speaker":"What about from 9:00 AM to 5","startTime":2743.86,"endTime":2745.63,"body":"It's useless to us, so here's the present."},{"speaker":"What about from 9:00 AM to 5","startTime":2745.63,"endTime":2746.463,"body":"Farewell present."},{"speaker":"What about from 9:00 AM to 5","startTime":2746.463,"endTime":2748.87,"body":"You can keep it up and you"},{"speaker":"What about from 9:00 AM to 5","startTime":2746.463,"endTime":2748.87,"body":"keep paying the premium,"},{"speaker":"What about from 9:00 AM to 5","startTime":2748.87,"endTime":2750.4,"body":"you're totally fine.\""},{"speaker":"What about from 9:00 AM to 5","startTime":2750.4,"endTime":2752.2,"body":"But you don't want that, right?"},{"speaker":"What about from 9:00 AM to 5","startTime":2752.2,"endTime":2755.92,"body":"You want medical insurance,"},{"speaker":"What about from 9:00 AM to 5","startTime":2752.2,"endTime":2755.92,"body":"not life insurance,"},{"speaker":"What about from 9:00 AM to 5","startTime":2755.92,"endTime":2758.5,"body":"so you can go to Coventry First."},{"speaker":"What about from 9:00 AM to 5","startTime":2758.5,"endTime":2759.88,"body":"In this particular case,"},{"speaker":"What about from 9:00 AM to 5","startTime":2759.88,"endTime":2762.97,"body":"this guy had a life insurance"},{"speaker":"What about from 9:00 AM to 5","startTime":2759.88,"endTime":2762.97,"body":"policy of 1.5 million,"},{"speaker":"What about from 9:00 AM to 5","startTime":2762.97,"endTime":2764.68,"body":"and he went to Coventry First,"},{"speaker":"What about from 9:00 AM to 5","startTime":2764.68,"endTime":2765.737,"body":"and Coventry First said,"},{"speaker":"What about from 9:00 AM to 5","startTime":2765.737,"endTime":2768.973,"body":"\"You know what, we'll"},{"speaker":"What about from 9:00 AM to 5","startTime":2765.737,"endTime":2768.973,"body":"pay you $196,000 for it,"},{"speaker":"What about from 9:00 AM to 5","startTime":2770.23,"endTime":2773.08,"body":"we will keep making"},{"speaker":"What about from 9:00 AM to 5","startTime":2770.23,"endTime":2773.08,"body":"premiums on your behalf,"},{"speaker":"What about from 9:00 AM to 5","startTime":2773.08,"endTime":2775.08,"body":"and when you die, we collect the money.\""},{"speaker":"What about from 9:00 AM to 5","startTime":2775.99,"endTime":2779.203,"body":"These are called debt"},{"speaker":"What about from 9:00 AM to 5","startTime":2775.99,"endTime":2779.203,"body":"bonds for obvious reason."},{"speaker":"What about from 9:00 AM to 5","startTime":2780.52,"endTime":2782.38,"body":"So what you do is submit a questionnaire,"},{"speaker":"What about from 9:00 AM to 5","startTime":2782.38,"endTime":2784.63,"body":"authorization to Coventry First,"},{"speaker":"What about from 9:00 AM to 5","startTime":2784.63,"endTime":2787.36,"body":"along with carry illustrations,"},{"speaker":"What about from 9:00 AM to 5","startTime":2787.36,"endTime":2789.43,"body":"medical records over the last five years,"},{"speaker":"What about from 9:00 AM to 5","startTime":2789.43,"endTime":2792.91,"body":"Coventry First determines"},{"speaker":"What about from 9:00 AM to 5","startTime":2789.43,"endTime":2792.91,"body":"the value of there policy,"},{"speaker":"What about from 9:00 AM to 5","startTime":2792.91,"endTime":2795.25,"body":"and then there's a change of ownership"},{"speaker":"What about from 9:00 AM to 5","startTime":2795.25,"endTime":2797.29,"body":"or beneficiary forms"},{"speaker":"What about from 9:00 AM to 5","startTime":2795.25,"endTime":2797.29,"body":"for insurance company,"},{"speaker":"What about from 9:00 AM to 5","startTime":2797.29,"endTime":2801.01,"body":"and then it continues making"},{"speaker":"What about from 9:00 AM to 5","startTime":2797.29,"endTime":2801.01,"body":"payments on your behalf,"},{"speaker":"What about from 9:00 AM to 5","startTime":2801.01,"endTime":2803.263,"body":"and when you die, they collect insurance."},{"speaker":"What about from 9:00 AM to 5","startTime":2804.1,"endTime":2805.9,"body":"Now what's the problem?"},{"speaker":"What about from 9:00 AM to 5","startTime":2805.9,"endTime":2808.3,"body":"The problem is, what kind of customers"},{"speaker":"What about from 9:00 AM to 5","startTime":2808.3,"endTime":2809.743,"body":"this Coventry First want?"},{"speaker":"What about from 9:00 AM to 5","startTime":2810.91,"endTime":2814.0,"body":"Health insurance companies"},{"speaker":"What about from 9:00 AM to 5","startTime":2810.91,"endTime":2814.0,"body":"want healthy customers."},{"speaker":"What about from 9:00 AM to 5","startTime":2814.0,"endTime":2816.73,"body":"These guys want unhealthy customers."},{"speaker":"What about from 9:00 AM to 5","startTime":2816.73,"endTime":2818.02,"body":"The ideal customer"},{"speaker":"What about from 9:00 AM to 5","startTime":2818.02,"endTime":2820.6,"body":"is someone who sells an"},{"speaker":"What about from 9:00 AM to 5","startTime":2818.02,"endTime":2820.6,"body":"insurance policy to you,"},{"speaker":"What about from 9:00 AM to 5","startTime":2820.6,"endTime":2821.56,"body":"walks through the door,"},{"speaker":"What about from 9:00 AM to 5","startTime":2821.56,"endTime":2824.2,"body":"and drops dead of a"},{"speaker":"What about from 9:00 AM to 5","startTime":2821.56,"endTime":2824.2,"body":"heart attack right there."},{"speaker":"What about from 9:00 AM to 5","startTime":2824.2,"endTime":2825.193,"body":"Perfect customer."},{"speaker":"What about from 9:00 AM to 5","startTime":2826.87,"endTime":2829.93,"body":"And talk about doing"},{"speaker":"What about from 9:00 AM to 5","startTime":2826.87,"endTime":2829.93,"body":"things for social, right?"},{"speaker":"What about from 9:00 AM to 5","startTime":2829.93,"endTime":2833.05,"body":"So these guys, in normal life,"},{"speaker":"What about from 9:00 AM to 5","startTime":2833.05,"endTime":2835.63,"body":"if there's car accident"},{"speaker":"What about from 9:00 AM to 5","startTime":2833.05,"endTime":2835.63,"body":"and stuff, bad for society,"},{"speaker":"What about from 9:00 AM to 5","startTime":2835.63,"endTime":2838.72,"body":"but these guys are going"},{"speaker":"What about from 9:00 AM to 5","startTime":2835.63,"endTime":2838.72,"body":"to use their $196,000"},{"speaker":"What about from 9:00 AM to 5","startTime":2838.72,"endTime":2841.03,"body":"to buy medical insurance"},{"speaker":"What about from 9:00 AM to 5","startTime":2838.72,"endTime":2841.03,"body":"to keep them alive,"},{"speaker":"What about from 9:00 AM to 5","startTime":2841.03,"endTime":2842.77,"body":"which you don't want either,"},{"speaker":"What about from 9:00 AM to 5","startTime":2842.77,"endTime":2843.97,"body":"but you can't stop them."},{"speaker":"What about from 9:00 AM to 5","startTime":2843.97,"endTime":2847.66,"body":"I mean, that's why it's such a weird"},{"speaker":"What about from 9:00 AM to 5","startTime":2847.66,"endTime":2849.25,"body":"and interesting, innovative model."},{"speaker":"What about from 9:00 AM to 5","startTime":2849.25,"endTime":2851.89,"body":"Anyway, point of course"},{"speaker":"What about from 9:00 AM to 5","startTime":2849.25,"endTime":2851.89,"body":"is, that's one problem."},{"speaker":"What about from 9:00 AM to 5","startTime":2851.89,"endTime":2853.09,"body":"These guys are doing tough,"},{"speaker":"What about from 9:00 AM to 5","startTime":2853.09,"endTime":2853.99,"body":"which you don't want them to do,"},{"speaker":"What about from 9:00 AM to 5","startTime":2853.99,"endTime":2856.0,"body":"keeping themselves alive."},{"speaker":"What about from 9:00 AM to 5","startTime":2856.0,"endTime":2857.56,"body":"The second problem is,"},{"speaker":"What about from 9:00 AM to 5","startTime":2857.56,"endTime":2859.81,"body":"how do you find out when the guy is dead?"},{"speaker":"What about from 9:00 AM to 5","startTime":2859.81,"endTime":2862.3,"body":"Because nobody, and I guarantee,"},{"speaker":"What about from 9:00 AM to 5","startTime":2862.3,"endTime":2865.427,"body":"nobody on that deathbed,"},{"speaker":"What about from 9:00 AM to 5","startTime":2862.3,"endTime":2865.427,"body":"on that dying breath say,"},{"speaker":"What about from 9:00 AM to 5","startTime":2865.427,"endTime":2868.48,"body":"\"Call my insurance company, I am dying.\""},{"speaker":"What about from 9:00 AM to 5","startTime":2868.48,"endTime":2870.79,"body":"Nobody does that, unless"},{"speaker":"What about from 9:00 AM to 5","startTime":2868.48,"endTime":2870.79,"body":"they're collecting the premium."},{"speaker":"What about from 9:00 AM to 5","startTime":2870.79,"endTime":2872.26,"body":"These guys aren't, right?"},{"speaker":"What about from 9:00 AM to 5","startTime":2872.26,"endTime":2875.41,"body":"So Coventry First has a"},{"speaker":"What about from 9:00 AM to 5","startTime":2872.26,"endTime":2875.41,"body":"line in their contracts,"},{"speaker":"What about from 9:00 AM to 5","startTime":2875.41,"endTime":2877.067,"body":"which says something like,"},{"speaker":"What about from 9:00 AM to 5","startTime":2877.067,"endTime":2879.94,"body":"\"We have the right to call you"},{"speaker":"What about from 9:00 AM to 5","startTime":2877.067,"endTime":2879.94,"body":"on the first of every month,"},{"speaker":"What about from 9:00 AM to 5","startTime":2879.94,"endTime":2881.35,"body":"and you better pick up the phone."},{"speaker":"What about from 9:00 AM to 5","startTime":2881.35,"endTime":2882.58,"body":"If you don't pick up the phone,"},{"speaker":"What about from 9:00 AM to 5","startTime":2882.58,"endTime":2884.56,"body":"we're going to assume you're dead, right?"},{"speaker":"What about from 9:00 AM to 5","startTime":2884.56,"endTime":2887.309,"body":"So, you have picked up the"},{"speaker":"What about from 9:00 AM to 5","startTime":2884.56,"endTime":2887.309,"body":"phone and you call you,"},{"speaker":"What about from 9:00 AM to 5","startTime":2887.309,"endTime":2888.142,"body":"and they say, \"How are you feeling?"},{"speaker":"What about from 9:00 AM to 5","startTime":2888.142,"endTime":2888.975,"body":"You're still alive."},{"speaker":"What about from 9:00 AM to 5","startTime":2888.975,"endTime":2889.808,"body":"Oh, dear.\""},{"speaker":"What about from 9:00 AM to 5","startTime":2889.808,"endTime":2890.83,"body":"They don't say that out loud,"},{"speaker":"What about from 9:00 AM to 5","startTime":2890.83,"endTime":2892.42,"body":"but you know what I mean."},{"speaker":"What about from 9:00 AM to 5","startTime":2892.42,"endTime":2895.873,"body":"Well, that's an inverting"},{"speaker":"What about from 9:00 AM to 5","startTime":2892.42,"endTime":2895.873,"body":"moral hazard problem."},{"speaker":"What about from 9:00 AM to 5","startTime":2896.98,"endTime":2898.53,"body":"Let's talk about another model."},{"speaker":"What about from 9:00 AM to 5","startTime":2899.38,"endTime":2901.48,"body":"Reducing adverse selection."},{"speaker":"What about from 9:00 AM to 5","startTime":2901.48,"endTime":2904.09,"body":"This is a company based in Germany,"},{"speaker":"What about from 9:00 AM to 5","startTime":2904.09,"endTime":2906.28,"body":"which is about 600 million Euro turnover,"},{"speaker":"What about from 9:00 AM to 5","startTime":2906.28,"endTime":2909.79,"body":"3000 employees, operations"},{"speaker":"What about from 9:00 AM to 5","startTime":2906.28,"endTime":2909.79,"body":"in 20 countries."},{"speaker":"What about from 9:00 AM to 5","startTime":2909.79,"endTime":2911.86,"body":"Now, what was interesting"},{"speaker":"What about from 9:00 AM to 5","startTime":2909.79,"endTime":2911.86,"body":"about this company"},{"speaker":"What about from 9:00 AM to 5","startTime":2911.86,"endTime":2914.02,"body":"was that its banks were exposed"},{"speaker":"What about from 9:00 AM to 5","startTime":2914.02,"endTime":2917.473,"body":"to the Asian financial crisis in 1997."},{"speaker":"What about from 9:00 AM to 5","startTime":2918.55,"endTime":2920.597,"body":"So what happened was the bank said,"},{"speaker":"What about from 9:00 AM to 5","startTime":2920.597,"endTime":2924.85,"body":"\"Look, we have the big crisis,"},{"speaker":"What about from 9:00 AM to 5","startTime":2924.85,"endTime":2925.96,"body":"we have lost a lot of money,"},{"speaker":"What about from 9:00 AM to 5","startTime":2925.96,"endTime":2928.3,"body":"so we are cutting off any funds"},{"speaker":"What about from 9:00 AM to 5","startTime":2928.3,"endTime":2930.46,"body":"going to the firms in Germany"},{"speaker":"What about from 9:00 AM to 5","startTime":2930.46,"endTime":2932.95,"body":"who are not exposed to the crisis.\""},{"speaker":"What about from 9:00 AM to 5","startTime":2932.95,"endTime":2934.9,"body":"So the CEO of this company got mad."},{"speaker":"What about from 9:00 AM to 5","startTime":2934.9,"endTime":2936.01,"body":"He said, \"You know what,"},{"speaker":"What about from 9:00 AM to 5","startTime":2936.01,"endTime":2939.709,"body":"I spent all my time trying"},{"speaker":"What about from 9:00 AM to 5","startTime":2936.01,"endTime":2939.709,"body":"to get firms and stuff"},{"speaker":"What about from 9:00 AM to 5","startTime":2939.709,"endTime":2941.5,"body":"filled up for the stupid banks,"},{"speaker":"What about from 9:00 AM to 5","startTime":2941.5,"endTime":2943.69,"body":"they won't gimme any money"},{"speaker":"What about from 9:00 AM to 5","startTime":2941.5,"endTime":2943.69,"body":"when I really need it,"},{"speaker":"What about from 9:00 AM to 5","startTime":2943.69,"endTime":2946.6,"body":"I'm never going to deal"},{"speaker":"What about from 9:00 AM to 5","startTime":2943.69,"endTime":2946.6,"body":"with the bank again.\""},{"speaker":"What about from 9:00 AM to 5","startTime":2946.6,"endTime":2947.433,"body":"So what he did?"},{"speaker":"What about from 9:00 AM to 5","startTime":2947.433,"endTime":2949.0,"body":"Put an ad in the local papers."},{"speaker":"What about from 9:00 AM to 5","startTime":2949.0,"endTime":2951.94,"body":"He said, \"Guys, the bank"},{"speaker":"What about from 9:00 AM to 5","startTime":2949.0,"endTime":2951.94,"body":"is paying 4%, I'll pay 5%."},{"speaker":"What about from 9:00 AM to 5","startTime":2951.94,"endTime":2952.777,"body":"Give me money.\""},{"speaker":"What about from 9:00 AM to 5","startTime":2954.43,"endTime":2955.397,"body":"And the German regulator said,"},{"speaker":"What about from 9:00 AM to 5","startTime":2955.397,"endTime":2956.847,"body":"\"You can't do this, you're not a bank.\""},{"speaker":"What about from 9:00 AM to 5","startTime":2956.847,"endTime":2958.487,"body":"And he said, \"Well, what can I do?\""},{"speaker":"What about from 9:00 AM to 5","startTime":2958.487,"endTime":2960.206,"body":"\"Well, you can issue bonds.\""},{"speaker":"What about from 9:00 AM to 5","startTime":2960.206,"endTime":2961.72,"body":"He said, \"Well, bond,"},{"speaker":"What about from 9:00 AM to 5","startTime":2960.206,"endTime":2961.72,"body":"that's like a fixed deposit."},{"speaker":"What about from 9:00 AM to 5","startTime":2961.72,"endTime":2962.56,"body":"Fine.\""},{"speaker":"What about from 9:00 AM to 5","startTime":2962.56,"endTime":2964.097,"body":"Put an ad in the paper saying,"},{"speaker":"What about from 9:00 AM to 5","startTime":2964.097,"endTime":2967.189,"body":"\"I'm offering bonds for 5%.\""},{"speaker":"What about from 9:00 AM to 5","startTime":2967.189,"endTime":2969.4,"body":"Now, who are the most likely"},{"speaker":"What about from 9:00 AM to 5","startTime":2967.189,"endTime":2969.4,"body":"people to buy the bond?"},{"speaker":"What about from 9:00 AM to 5","startTime":2969.4,"endTime":2971.71,"body":"This is a small town in Germany."},{"speaker":"What about from 9:00 AM to 5","startTime":2971.71,"endTime":2974.2,"body":"So, local people, right?"},{"speaker":"What about from 9:00 AM to 5","startTime":2974.2,"endTime":2975.97,"body":"They walk by your plant every day,"},{"speaker":"What about from 9:00 AM to 5","startTime":2975.97,"endTime":2978.19,"body":"they talk to your employees,"},{"speaker":"What about from 9:00 AM to 5","startTime":2978.19,"endTime":2979.42,"body":"they have beers with your employees,"},{"speaker":"What about from 9:00 AM to 5","startTime":2979.42,"endTime":2981.25,"body":"they know how healthy the firm is,"},{"speaker":"What about from 9:00 AM to 5","startTime":2981.25,"endTime":2983.5,"body":"so they're more willing"},{"speaker":"What about from 9:00 AM to 5","startTime":2981.25,"endTime":2983.5,"body":"to give the firm money."},{"speaker":"What about from 9:00 AM to 5","startTime":2983.5,"endTime":2987.49,"body":"Unfortunately, that seems like"},{"speaker":"What about from 9:00 AM to 5","startTime":2983.5,"endTime":2987.49,"body":"a particularly small market."},{"speaker":"What about from 9:00 AM to 5","startTime":2987.49,"endTime":2990.19,"body":"I mean, small town in Germany,"},{"speaker":"What about from 9:00 AM to 5","startTime":2987.49,"endTime":2990.19,"body":"how much money can you raise?"},{"speaker":"What about from 9:00 AM to 5","startTime":2990.19,"endTime":2994.48,"body":"These guys have been doing"},{"speaker":"What about from 9:00 AM to 5","startTime":2990.19,"endTime":2994.48,"body":"this from 2002 to 2013."},{"speaker":"What about from 9:00 AM to 5","startTime":2994.48,"endTime":2995.313,"body":"That's last year."},{"speaker":"What about from 9:00 AM to 5","startTime":2995.313,"endTime":2996.7,"body":"We have data, but they've been going on"},{"speaker":"What about from 9:00 AM to 5","startTime":2996.7,"endTime":2997.75,"body":"for a very long time."},{"speaker":"What about from 9:00 AM to 5","startTime":2998.83,"endTime":3000.76,"body":"What really enabled them to survive"},{"speaker":"What about from 9:00 AM to 5","startTime":3001.83,"endTime":3006.27,"body":"was the development of what"},{"speaker":"What about from 9:00 AM to 5","startTime":3001.83,"endTime":3006.27,"body":"we call evangelical investors."},{"speaker":"What about from 9:00 AM to 5","startTime":3006.27,"endTime":3007.623,"body":"That's a form over there."},{"speaker":"What about from 9:00 AM to 5","startTime":3008.79,"endTime":3012.3,"body":"Now, what turns out, that"},{"speaker":"What about from 9:00 AM to 5","startTime":3008.79,"endTime":3012.3,"body":"when people give money"},{"speaker":"What about from 9:00 AM to 5","startTime":3012.3,"endTime":3013.133,"body":"to things which are..."},{"speaker":"What about from 9:00 AM to 5","startTime":3013.133,"endTime":3014.67,"body":"This is an unlisted company."},{"speaker":"What about from 9:00 AM to 5","startTime":3014.67,"endTime":3016.26,"body":"It's an unrated company."},{"speaker":"What about from 9:00 AM to 5","startTime":3016.26,"endTime":3017.25,"body":"It could be risky."},{"speaker":"What about from 9:00 AM to 5","startTime":3017.25,"endTime":3018.9,"body":"We don't know."},{"speaker":"What about from 9:00 AM to 5","startTime":3018.9,"endTime":3021.75,"body":"So what do you do?"},{"speaker":"What about from 9:00 AM to 5","startTime":3021.75,"endTime":3024.54,"body":"You give money to this company"},{"speaker":"What about from 9:00 AM to 5","startTime":3021.75,"endTime":3024.54,"body":"and you're nervous about it,"},{"speaker":"What about from 9:00 AM to 5","startTime":3024.54,"endTime":3026.31,"body":"so you tell your friends."},{"speaker":"What about from 9:00 AM to 5","startTime":3026.31,"endTime":3029.19,"body":"You're like, \"Hey, look,"},{"speaker":"What about from 9:00 AM to 5","startTime":3026.31,"endTime":3029.19,"body":"why don't you invest"},{"speaker":"What about from 9:00 AM to 5","startTime":3029.19,"endTime":3030.72,"body":"in this company too?"},{"speaker":"What about from 9:00 AM to 5","startTime":3030.72,"endTime":3032.94,"body":"My friend invests, they've"},{"speaker":"What about from 9:00 AM to 5","startTime":3030.72,"endTime":3032.94,"body":"done their own investigation,"},{"speaker":"What about from 9:00 AM to 5","startTime":3032.94,"endTime":3034.86,"body":"it reassures me a little bit.\""},{"speaker":"What about from 9:00 AM to 5","startTime":3034.86,"endTime":3038.07,"body":"So these guys started talking"},{"speaker":"What about from 9:00 AM to 5","startTime":3034.86,"endTime":3038.07,"body":"about it to other people."},{"speaker":"What about from 9:00 AM to 5","startTime":3038.07,"endTime":3040.65,"body":"They were what we call"},{"speaker":"What about from 9:00 AM to 5","startTime":3038.07,"endTime":3040.65,"body":"evangelical investors,"},{"speaker":"What about from 9:00 AM to 5","startTime":3040.65,"endTime":3045.0,"body":"and these guys expanded"},{"speaker":"What about from 9:00 AM to 5","startTime":3040.65,"endTime":3045.0,"body":"and expanded and expanded"},{"speaker":"What about from 9:00 AM to 5","startTime":3045.0,"endTime":3046.71,"body":"year after year after year."},{"speaker":"What about from 9:00 AM to 5","startTime":3046.71,"endTime":3051.09,"body":"So until 2013, they're all over Germany."},{"speaker":"What about from 9:00 AM to 5","startTime":3051.09,"endTime":3054.96,"body":"One company over there raising"},{"speaker":"What about from 9:00 AM to 5","startTime":3051.09,"endTime":3054.96,"body":"money all over Germany,"},{"speaker":"What about from 9:00 AM to 5","startTime":3054.96,"endTime":3057.09,"body":"almost entirely word of mouth."},{"speaker":"What about from 9:00 AM to 5","startTime":3057.09,"endTime":3059.733,"body":"They never went back to a bank after 2013."},{"speaker":"What about from 9:00 AM to 5","startTime":3062.55,"endTime":3064.92,"body":"But these are just the beginning"},{"speaker":"What about from 9:00 AM to 5","startTime":3064.92,"endTime":3067.44,"body":"of all the things we're"},{"speaker":"What about from 9:00 AM to 5","startTime":3064.92,"endTime":3067.44,"body":"going to be talking about."},{"speaker":"What about from 9:00 AM to 5","startTime":3067.44,"endTime":3069.39,"body":"We have been talking"},{"speaker":"What about from 9:00 AM to 5","startTime":3067.44,"endTime":3069.39,"body":"about alternative ways"},{"speaker":"What about from 9:00 AM to 5","startTime":3069.39,"endTime":3070.68,"body":"of raising finance."},{"speaker":"What about from 9:00 AM to 5","startTime":3070.68,"endTime":3072.15,"body":"We've talked about direct issue bonds,"},{"speaker":"What about from 9:00 AM to 5","startTime":3072.15,"endTime":3075.66,"body":"where there's also crowd funding"},{"speaker":"What about from 9:00 AM to 5","startTime":3072.15,"endTime":3075.66,"body":"and peer-to-peer lending."},{"speaker":"What about from 9:00 AM to 5","startTime":3075.66,"endTime":3078.39,"body":"We can talk about alternative"},{"speaker":"What about from 9:00 AM to 5","startTime":3075.66,"endTime":3078.39,"body":"wealth management systems,"},{"speaker":"What about from 9:00 AM to 5","startTime":3078.39,"endTime":3080.58,"body":"advisory services, global advisors."},{"speaker":"What about from 9:00 AM to 5","startTime":3080.58,"endTime":3082.95,"body":"We've just talked about debt bonds."},{"speaker":"What about from 9:00 AM to 5","startTime":3082.95,"endTime":3086.37,"body":"Alternative payment systems, so mPesa,"},{"speaker":"What about from 9:00 AM to 5","startTime":3086.37,"endTime":3087.72,"body":"alternative remittances,"},{"speaker":"What about from 9:00 AM to 5","startTime":3087.72,"endTime":3089.46,"body":"alternative Visa, SWIFT,"},{"speaker":"What about from 9:00 AM to 5","startTime":3089.46,"endTime":3091.26,"body":"inter-bank transfers,"},{"speaker":"What about from 9:00 AM to 5","startTime":3091.26,"endTime":3093.54,"body":"Bitcoin, distributed ledger systems."},{"speaker":"What about from 9:00 AM to 5","startTime":3093.54,"endTime":3097.29,"body":"Why are all these"},{"speaker":"What about from 9:00 AM to 5","startTime":3093.54,"endTime":3097.29,"body":"technologies taking off now?"},{"speaker":"What about from 9:00 AM to 5","startTime":3097.29,"endTime":3099.75,"body":"Well, back in 2000,"},{"speaker":"What about from 9:00 AM to 5","startTime":3099.75,"endTime":3101.197,"body":"when my students would come to me and say,"},{"speaker":"What about from 9:00 AM to 5","startTime":3101.197,"endTime":3102.9,"body":"\"I want to start a new business,\""},{"speaker":"What about from 9:00 AM to 5","startTime":3102.9,"endTime":3105.27,"body":"how much money do I need to raise?\""},{"speaker":"What about from 9:00 AM to 5","startTime":3105.27,"endTime":3108.84,"body":"I'd say, you need about $5"},{"speaker":"What about from 9:00 AM to 5","startTime":3105.27,"endTime":3108.84,"body":"million from a venture cap fund"},{"speaker":"What about from 9:00 AM to 5","startTime":3108.84,"endTime":3110.88,"body":"or an angel investor,"},{"speaker":"What about from 9:00 AM to 5","startTime":3110.88,"endTime":3112.77,"body":"but in 2005,"},{"speaker":"What about from 9:00 AM to 5","startTime":3112.77,"endTime":3115.822,"body":"the rise of open source"},{"speaker":"What about from 9:00 AM to 5","startTime":3112.77,"endTime":3115.822,"body":"software like GitHub"},{"speaker":"What about from 9:00 AM to 5","startTime":3115.822,"endTime":3117.96,"body":"where you can just download"},{"speaker":"What about from 9:00 AM to 5","startTime":3115.822,"endTime":3117.96,"body":"the modules you need,"},{"speaker":"What about from 9:00 AM to 5","startTime":3117.96,"endTime":3120.303,"body":"drop the price to $500,000."},{"speaker":"What about from 9:00 AM to 5","startTime":3121.83,"endTime":3124.08,"body":"Beyond that, the"},{"speaker":"What about from 9:00 AM to 5","startTime":3121.83,"endTime":3124.08,"body":"introduction of the cloud,"},{"speaker":"What about from 9:00 AM to 5","startTime":3124.08,"endTime":3126.24,"body":"the Amazon Web Services here meant"},{"speaker":"What about from 9:00 AM to 5","startTime":3126.24,"endTime":3128.4,"body":"that you could start a"},{"speaker":"What about from 9:00 AM to 5","startTime":3126.24,"endTime":3128.4,"body":"business with just a laptop."},{"speaker":"What about from 9:00 AM to 5","startTime":3128.4,"endTime":3130.02,"body":"You just need to be"},{"speaker":"What about from 9:00 AM to 5","startTime":3128.4,"endTime":3130.02,"body":"connected with the cloud."},{"speaker":"What about from 9:00 AM to 5","startTime":3130.02,"endTime":3132.3,"body":"You could rent hard disk space."},{"speaker":"What about from 9:00 AM to 5","startTime":3132.3,"endTime":3135.783,"body":"Today, the cost to start"},{"speaker":"What about from 9:00 AM to 5","startTime":3132.3,"endTime":3135.783,"body":"a new business is $5,000."},{"speaker":"What about from 9:00 AM to 5","startTime":3137.399,"endTime":3139.32,"body":"This is incredibly cheap."},{"speaker":"What about from 9:00 AM to 5","startTime":3139.32,"endTime":3141.17,"body":"Let me give you a couple of examples."},{"speaker":"What about from 9:00 AM to 5","startTime":3142.35,"endTime":3145.8,"body":"Both my students, one of them"},{"speaker":"What about from 9:00 AM to 5","startTime":3142.35,"endTime":3145.8,"body":"came to me a few years ago"},{"speaker":"What about from 9:00 AM to 5","startTime":3145.8,"endTime":3147.81,"body":"and he had said he had started"},{"speaker":"What about from 9:00 AM to 5","startTime":3145.8,"endTime":3147.81,"body":"a new blockchain company,"},{"speaker":"What about from 9:00 AM to 5","startTime":3147.81,"endTime":3150.36,"body":"blockchain for initial public offerings."},{"speaker":"What about from 9:00 AM to 5","startTime":3150.36,"endTime":3152.31,"body":"I said, \"How many people"},{"speaker":"What about from 9:00 AM to 5","startTime":3150.36,"endTime":3152.31,"body":"are in your company?\""},{"speaker":"What about from 9:00 AM to 5","startTime":3152.31,"endTime":3153.63,"body":"He said, \"Three.\""},{"speaker":"What about from 9:00 AM to 5","startTime":3153.63,"endTime":3155.37,"body":"I said, \"Who are these three people?\""},{"speaker":"What about from 9:00 AM to 5","startTime":3155.37,"endTime":3157.29,"body":"He said, \"Hey, I'm the CEO,"},{"speaker":"What about from 9:00 AM to 5","startTime":3157.29,"endTime":3158.4,"body":"my wife is the co-CEO"},{"speaker":"What about from 9:00 AM to 5","startTime":3158.4,"endTime":3160.77,"body":"because she doesn't want"},{"speaker":"What about from 9:00 AM to 5","startTime":3158.4,"endTime":3160.77,"body":"to be working under me,"},{"speaker":"What about from 9:00 AM to 5","startTime":3160.77,"endTime":3162.57,"body":"and, of course, I have this third guy"},{"speaker":"What about from 9:00 AM to 5","startTime":3162.57,"endTime":3164.22,"body":"who's the chief operating officer.\""},{"speaker":"What about from 9:00 AM to 5","startTime":3164.22,"endTime":3166.201,"body":"I said, \"Who's this third guy?\""},{"speaker":"What about from 9:00 AM to 5","startTime":3166.201,"endTime":3171.03,"body":"And he said, \"Well, we met"},{"speaker":"What about from 9:00 AM to 5","startTime":3166.201,"endTime":3171.03,"body":"him and he has this team,"},{"speaker":"What about from 9:00 AM to 5","startTime":3171.03,"endTime":3172.92,"body":"so it's like 'The Magnificent Seven'.\""},{"speaker":"What about from 9:00 AM to 5","startTime":3172.92,"endTime":3175.08,"body":"There's one guy who"},{"speaker":"What about from 9:00 AM to 5","startTime":3172.92,"endTime":3175.08,"body":"deals with web services,"},{"speaker":"What about from 9:00 AM to 5","startTime":3175.08,"endTime":3176.64,"body":"there's one guy who deals with the banks,"},{"speaker":"What about from 9:00 AM to 5","startTime":3176.64,"endTime":3178.32,"body":"one guy who deals with technology,"},{"speaker":"What about from 9:00 AM to 5","startTime":3178.32,"endTime":3180.42,"body":"they go to new businesses like this,"},{"speaker":"What about from 9:00 AM to 5","startTime":3180.42,"endTime":3182.85,"body":"they take the company, make it successful,"},{"speaker":"What about from 9:00 AM to 5","startTime":3182.85,"endTime":3183.96,"body":"and then collect the money,"},{"speaker":"What about from 9:00 AM to 5","startTime":3183.96,"endTime":3185.43,"body":"and then move on to the next village"},{"speaker":"What about from 9:00 AM to 5","startTime":3185.43,"endTime":3187.26,"body":"to save them and so on and so forth,"},{"speaker":"What about from 9:00 AM to 5","startTime":3187.26,"endTime":3189.21,"body":"exactly like the \"Seven Samurai\","},{"speaker":"What about from 9:00 AM to 5","startTime":3189.21,"endTime":3190.56,"body":"if you guys have seen that."},{"speaker":"What about from 9:00 AM to 5","startTime":3191.67,"endTime":3194.37,"body":"The other example is, actually,"},{"speaker":"What about from 9:00 AM to 5","startTime":3191.67,"endTime":3194.37,"body":"another of my students"},{"speaker":"What about from 9:00 AM to 5","startTime":3194.37,"endTime":3199.37,"body":"who was from Zambia and"},{"speaker":"What about from 9:00 AM to 5","startTime":3194.37,"endTime":3199.37,"body":"he got two job offers."},{"speaker":"What about from 9:00 AM to 5","startTime":3199.95,"endTime":3201.79,"body":"One job offer was from a mining company,"},{"speaker":"What about from 9:00 AM to 5","startTime":3201.79,"endTime":3203.775,"body":"which is old company,"},{"speaker":"What about from 9:00 AM to 5","startTime":3203.775,"endTime":3205.05,"body":"which is involved going to a mine,"},{"speaker":"What about from 9:00 AM to 5","startTime":3205.05,"endTime":3206.66,"body":"digging for mine or ore,"},{"speaker":"What about from 9:00 AM to 5","startTime":3206.66,"endTime":3209.31,"body":"or refining it and selling it abroad."},{"speaker":"What about from 9:00 AM to 5","startTime":3209.31,"endTime":3212.1,"body":"The other one was an"},{"speaker":"What about from 9:00 AM to 5","startTime":3209.31,"endTime":3212.1,"body":"educational technology company."},{"speaker":"What about from 9:00 AM to 5","startTime":3212.1,"endTime":3214.95,"body":"Financial literacy in"},{"speaker":"What about from 9:00 AM to 5","startTime":3212.1,"endTime":3214.95,"body":"Africa is a big problem,"},{"speaker":"What about from 9:00 AM to 5","startTime":3214.95,"endTime":3217.05,"body":"and so the educational technology company"},{"speaker":"What about from 9:00 AM to 5","startTime":3217.05,"endTime":3222.05,"body":"was to try to get people more involved,"},{"speaker":"What about from 9:00 AM to 5","startTime":3223.02,"endTime":3225.063,"body":"more financially literate in Africa."},{"speaker":"What about from 9:00 AM to 5","startTime":3225.96,"endTime":3228.6,"body":"He said, \"Which company do"},{"speaker":"What about from 9:00 AM to 5","startTime":3225.96,"endTime":3228.6,"body":"you think I should join?\""},{"speaker":"What about from 9:00 AM to 5","startTime":3228.6,"endTime":3229.86,"body":"I said, \"Educational technology"},{"speaker":"What about from 9:00 AM to 5","startTime":3229.86,"endTime":3231.6,"body":"sounds more interesting to me.\""},{"speaker":"What about from 9:00 AM to 5","startTime":3231.6,"endTime":3232.95,"body":"He said, \"Yes, but I have a son."},{"speaker":"What about from 9:00 AM to 5","startTime":3232.95,"endTime":3234.3,"body":"I mean, he's just one year old."},{"speaker":"What about from 9:00 AM to 5","startTime":3234.3,"endTime":3235.687,"body":"I need a steady paycheck.\""},{"speaker":"What about from 9:00 AM to 5","startTime":3235.687,"endTime":3238.74,"body":"\"The ed tech company is"},{"speaker":"What about from 9:00 AM to 5","startTime":3235.687,"endTime":3238.74,"body":"not giving me a paycheck."},{"speaker":"What about from 9:00 AM to 5","startTime":3238.74,"endTime":3240.48,"body":"What should I do?\""},{"speaker":"What about from 9:00 AM to 5","startTime":3240.48,"endTime":3243.0,"body":"I said, \"I can't give you any advice,"},{"speaker":"What about from 9:00 AM to 5","startTime":3243.0,"endTime":3243.833,"body":"I'm not in your shoes,"},{"speaker":"What about from 9:00 AM to 5","startTime":3243.833,"endTime":3244.86,"body":"I don't have any kids.\""},{"speaker":"What about from 9:00 AM to 5","startTime":3244.86,"endTime":3247.74,"body":"So he said, \"Okay, fine,"},{"speaker":"What about from 9:00 AM to 5","startTime":3244.86,"endTime":3247.74,"body":"thank you for nothing,\""},{"speaker":"What about from 9:00 AM to 5","startTime":3247.74,"endTime":3249.42,"body":"and then, you know."},{"speaker":"What about from 9:00 AM to 5","startTime":3249.42,"endTime":3251.857,"body":"I met him a few months ago and I said,"},{"speaker":"What about from 9:00 AM to 5","startTime":3251.857,"endTime":3253.68,"body":"\"Which job did you end up taking?\""},{"speaker":"What about from 9:00 AM to 5","startTime":3253.68,"endTime":3254.91,"body":"Let's take a show of hands."},{"speaker":"What about from 9:00 AM to 5","startTime":3254.91,"endTime":3257.41,"body":"How many people say he"},{"speaker":"What about from 9:00 AM to 5","startTime":3254.91,"endTime":3257.41,"body":"went to the mining company?"},{"speaker":"What about from 9:00 AM to 5","startTime":3259.32,"endTime":3260.58,"body":"Couple of hands out there."},{"speaker":"What about from 9:00 AM to 5","startTime":3260.58,"endTime":3261.413,"body":"Okay."},{"speaker":"What about from 9:00 AM to 5","startTime":3261.413,"endTime":3262.44,"body":"Few hands at the back."},{"speaker":"What about from 9:00 AM to 5","startTime":3262.44,"endTime":3263.273,"body":"How many people say he went"},{"speaker":"What about from 9:00 AM to 5","startTime":3263.273,"endTime":3265.5,"body":"to the educational technology company?"},{"speaker":"What about from 9:00 AM to 5","startTime":3265.5,"endTime":3267.27,"body":"Several hands up here, excellent."},{"speaker":"What about from 9:00 AM to 5","startTime":3267.27,"endTime":3269.493,"body":"Hands up there, beautiful, beautiful."},{"speaker":"What about from 9:00 AM to 5","startTime":3270.69,"endTime":3272.463,"body":"The answer is, he took both."},{"speaker":"What about from 9:00 AM to 5","startTime":3273.84,"endTime":3275.46,"body":"I said, \"What do you mean you took both?\""},{"speaker":"What about from 9:00 AM to 5","startTime":3275.46,"endTime":3277.83,"body":"He said, \"Well, I work in"},{"speaker":"What about from 9:00 AM to 5","startTime":3275.46,"endTime":3277.83,"body":"the mine during the week,"},{"speaker":"What about from 9:00 AM to 5","startTime":3277.83,"endTime":3279.48,"body":"in the evenings, on the weekends,"},{"speaker":"What about from 9:00 AM to 5","startTime":3279.48,"endTime":3281.76,"body":"I work on the educational"},{"speaker":"What about from 9:00 AM to 5","startTime":3279.48,"endTime":3281.76,"body":"technology company.\""},{"speaker":"What about from 9:00 AM to 5","startTime":3281.76,"endTime":3285.03,"body":"I said, \"Where is this education"},{"speaker":"What about from 9:00 AM to 5","startTime":3281.76,"endTime":3285.03,"body":"technology company based?\""},{"speaker":"What about from 9:00 AM to 5","startTime":3285.03,"endTime":3286.59,"body":"And he looked at me like I was crazy."},{"speaker":"What about from 9:00 AM to 5","startTime":3286.59,"endTime":3289.02,"body":"I mean, I said, \"Where's"},{"speaker":"What about from 9:00 AM to 5","startTime":3286.59,"endTime":3289.02,"body":"the headquarters?\""},{"speaker":"What about from 9:00 AM to 5","startTime":3289.02,"endTime":3290.67,"body":"He said, \"What headquarters?\""},{"speaker":"What about from 9:00 AM to 5","startTime":3290.67,"endTime":3292.44,"body":"I said, \"Where do you people meet?\""},{"speaker":"What about from 9:00 AM to 5","startTime":3292.44,"endTime":3294.33,"body":"He say, \"I haven't ever met them.\""},{"speaker":"What about from 9:00 AM to 5","startTime":3294.33,"endTime":3296.58,"body":"One guy's in Singapore,"},{"speaker":"What about from 9:00 AM to 5","startTime":3294.33,"endTime":3296.58,"body":"one guy's in Manchester,"},{"speaker":"What about from 9:00 AM to 5","startTime":3296.58,"endTime":3298.56,"body":"one guy's in Australia, I'm in Zambia."},{"speaker":"What about from 9:00 AM to 5","startTime":3298.56,"endTime":3301.68,"body":"We just connect on Slack and"},{"speaker":"What about from 9:00 AM to 5","startTime":3298.56,"endTime":3301.68,"body":"we work on the thing together."},{"speaker":"What about from 9:00 AM to 5","startTime":3301.68,"endTime":3303.87,"body":"We don't physically have to be there."},{"speaker":"What about from 9:00 AM to 5","startTime":3303.87,"endTime":3305.13,"body":"That's one of the reasons"},{"speaker":"What about from 9:00 AM to 5","startTime":3305.13,"endTime":3306.72,"body":"why these technologies are taking off."},{"speaker":"What about from 9:00 AM to 5","startTime":3306.72,"endTime":3310.23,"body":"It's so cheap to start new technologies."},{"speaker":"What about from 9:00 AM to 5","startTime":3310.23,"endTime":3312.81,"body":"And I'm, as Wendy"},{"speaker":"What about from 9:00 AM to 5","startTime":3310.23,"endTime":3312.81,"body":"pointed on the beginning,"},{"speaker":"What about from 9:00 AM to 5","startTime":3312.81,"endTime":3315.36,"body":"I run the Cambridge Centre"},{"speaker":"What about from 9:00 AM to 5","startTime":3312.81,"endTime":3315.36,"body":"for Alternative Finance."},{"speaker":"What about from 9:00 AM to 5","startTime":3315.36,"endTime":3317.94,"body":"This was established in January, 2015."},{"speaker":"What about from 9:00 AM to 5","startTime":3317.94,"endTime":3320.76,"body":"We are looking at all"},{"speaker":"What about from 9:00 AM to 5","startTime":3317.94,"endTime":3320.76,"body":"these research themes."},{"speaker":"What about from 9:00 AM to 5","startTime":3320.76,"endTime":3323.19,"body":"Our website is available here"},{"speaker":"What about from 9:00 AM to 5","startTime":3323.19,"endTime":3325.65,"body":"and all the information was published,"},{"speaker":"What about from 9:00 AM to 5","startTime":3325.65,"endTime":3327.0,"body":"is free on our website"},{"speaker":"What about from 9:00 AM to 5","startTime":3327.0,"endTime":3330.39,"body":"and we talk about FinTech and"},{"speaker":"What about from 9:00 AM to 5","startTime":3327.0,"endTime":3330.39,"body":"how it's changing the world."},{"speaker":"What about from 9:00 AM to 5","startTime":3330.39,"endTime":3333.387,"body":"Next time, next month, I'm"},{"speaker":"What about from 9:00 AM to 5","startTime":3330.39,"endTime":3333.387,"body":"going to talk about blockchains,"},{"speaker":"What about from 9:00 AM to 5","startTime":3333.387,"endTime":3336.36,"body":"and I'm going to talk about"},{"speaker":"What about from 9:00 AM to 5","startTime":3333.387,"endTime":3336.36,"body":"why blockchains succeed,"},{"speaker":"What about from 9:00 AM to 5","startTime":3336.36,"endTime":3337.95,"body":"and I'm going to talk about them"},{"speaker":"What about from 9:00 AM to 5","startTime":3337.95,"endTime":3340.92,"body":"without any technical"},{"speaker":"What about from 9:00 AM to 5","startTime":3337.95,"endTime":3340.92,"body":"knowledge whatsoever."},{"speaker":"What about from 9:00 AM to 5","startTime":3340.92,"endTime":3344.52,"body":"So, we talk about how blockchains work"},{"speaker":"What about from 9:00 AM to 5","startTime":3344.52,"endTime":3347.79,"body":"using the example of Romeo and Juliet,"},{"speaker":"What about from 9:00 AM to 5","startTime":3347.79,"endTime":3349.04,"body":"but that's for next time."},{"speaker":"What about from 9:00 AM to 5","startTime":3350.778,"endTime":3353.945,"body":"(students applauding)"},{"speaker":"What about from 9:00 AM to 5","startTime":3355.274,"endTime":3358.35,"body":"- [Student] When I'm going to"},{"speaker":"What about from 9:00 AM to 5","startTime":3355.274,"endTime":3358.35,"body":"do business with a company,"},{"speaker":"What about from 9:00 AM to 5","startTime":3358.35,"endTime":3359.88,"body":"one of the first,"},{"speaker":"What about from 9:00 AM to 5","startTime":3359.88,"endTime":3363.42,"body":"I have a series of questions"},{"speaker":"What about from 9:00 AM to 5","startTime":3359.88,"endTime":3363.42,"body":"I ask myself are then,"},{"speaker":"What about from 9:00 AM to 5","startTime":3363.42,"endTime":3365.79,"body":"one is, what is your business model?"},{"speaker":"What about from 9:00 AM to 5","startTime":3365.79,"endTime":3368.61,"body":"Particularly, if it's a free"},{"speaker":"What about from 9:00 AM to 5","startTime":3365.79,"endTime":3368.61,"body":"company, a free service."},{"speaker":"What about from 9:00 AM to 5","startTime":3368.61,"endTime":3372.18,"body":"Secondly, what is your liability model?"},{"speaker":"What about from 9:00 AM to 5","startTime":3372.18,"endTime":3374.76,"body":"In other words, if it goes wrong,"},{"speaker":"What about from 9:00 AM to 5","startTime":3374.76,"endTime":3378.003,"body":"who do I shoot and where do I find them?"},{"speaker":"What about from 9:00 AM to 5","startTime":3379.68,"endTime":3380.91,"body":"- Those are good questions."},{"speaker":"What about from 9:00 AM to 5","startTime":3380.91,"endTime":3382.29,"body":"The point in think about this"},{"speaker":"What about from 9:00 AM to 5","startTime":3382.29,"endTime":3384.93,"body":"is most of these are the"},{"speaker":"What about from 9:00 AM to 5","startTime":3382.29,"endTime":3384.93,"body":"initial stages, at least,"},{"speaker":"What about from 9:00 AM to 5","startTime":3384.93,"endTime":3386.97,"body":"they're just that, the business ideas."},{"speaker":"What about from 9:00 AM to 5","startTime":3386.97,"endTime":3391.08,"body":"It costs you almost nothing"},{"speaker":"What about from 9:00 AM to 5","startTime":3386.97,"endTime":3391.08,"body":"today to experiment."},{"speaker":"What about from 9:00 AM to 5","startTime":3391.08,"endTime":3392.4,"body":"And it works,"},{"speaker":"What about from 9:00 AM to 5","startTime":3392.4,"endTime":3397.17,"body":"then you take it to a"},{"speaker":"What about from 9:00 AM to 5","startTime":3392.4,"endTime":3397.17,"body":"more traditional route."},{"speaker":"What about from 9:00 AM to 5","startTime":3397.17,"endTime":3400.71,"body":"But at the beginning, it's"},{"speaker":"What about from 9:00 AM to 5","startTime":3397.17,"endTime":3400.71,"body":"much easier to experiment."},{"speaker":"What about from 9:00 AM to 5","startTime":3400.71,"endTime":3401.97,"body":"Play with it, see if it works."},{"speaker":"What about from 9:00 AM to 5","startTime":3401.97,"endTime":3404.16,"body":"If it doesn't, abandon it and move on."},{"speaker":"What about from 9:00 AM to 5","startTime":3404.16,"endTime":3405.9,"body":"I think that is the difference."},{"speaker":"What about from 9:00 AM to 5","startTime":3405.9,"endTime":3407.1,"body":"And a lot of these things"},{"speaker":"What about from 9:00 AM to 5","startTime":3407.1,"endTime":3410.25,"body":"do not actually have to be regulated yet"},{"speaker":"What about from 9:00 AM to 5","startTime":3410.25,"endTime":3411.99,"body":"until, for example, DeFi models,"},{"speaker":"What about from 9:00 AM to 5","startTime":3411.99,"endTime":3413.85,"body":"which I'll talk about in January."},{"speaker":"What about from 9:00 AM to 5","startTime":3413.85,"endTime":3415.683,"body":"Most of them are unregulated,"},{"speaker":"What about from 9:00 AM to 5","startTime":3417.45,"endTime":3420.3,"body":"and the people working in"},{"speaker":"What about from 9:00 AM to 5","startTime":3417.45,"endTime":3420.3,"body":"these areas don't exactly know"},{"speaker":"What about from 9:00 AM to 5","startTime":3420.3,"endTime":3422.22,"body":"how regulation is going"},{"speaker":"What about from 9:00 AM to 5","startTime":3420.3,"endTime":3422.22,"body":"to be applied to them,"},{"speaker":"What about from 9:00 AM to 5","startTime":3422.22,"endTime":3424.62,"body":"so they have never dealt, in many cases,"},{"speaker":"What about from 9:00 AM to 5","startTime":3424.62,"endTime":3426.78,"body":"with the formal financial intermediaries."},{"speaker":"What about from 9:00 AM to 5","startTime":3426.78,"endTime":3429.27,"body":"That's an interesting issue,"},{"speaker":"What about from 9:00 AM to 5","startTime":3429.27,"endTime":3432.729,"body":"and we'll talk more about"},{"speaker":"What about from 9:00 AM to 5","startTime":3429.27,"endTime":3432.729,"body":"that two lectures from now."},{"speaker":"What about from 9:00 AM to 5","startTime":3432.729,"endTime":3437.04,"body":"- (indistinct) asks, \"The"},{"speaker":"What about from 9:00 AM to 5","startTime":3432.729,"endTime":3437.04,"body":"app use that you've described"},{"speaker":"What about from 9:00 AM to 5","startTime":3437.04,"endTime":3439.53,"body":"contradicts Data Protection law."},{"speaker":"What about from 9:00 AM to 5","startTime":3439.53,"endTime":3441.69,"body":"How on earth do they get away with it?\""},{"speaker":"What about from 9:00 AM to 5","startTime":3441.69,"endTime":3442.523,"body":"- Which app?"},{"speaker":"What about from 9:00 AM to 5","startTime":3442.523,"endTime":3443.61,"body":"Sorry, the Tala app?"},{"speaker":"What about from 9:00 AM to 5","startTime":3443.61,"endTime":3444.63,"body":"- I think he means the,"},{"speaker":"What about from 9:00 AM to 5","startTime":3444.63,"endTime":3446.364,"body":"or she means the Tala app."},{"speaker":"What about from 9:00 AM to 5","startTime":3446.364,"endTime":3447.39,"body":"- Yes."},{"speaker":"What about from 9:00 AM to 5","startTime":3446.364,"endTime":3447.39,"body":"- The app, yes."},{"speaker":"What about from 9:00 AM to 5","startTime":3447.39,"endTime":3449.04,"body":"- Well, they ask you for your permissions."},{"speaker":"What about from 9:00 AM to 5","startTime":3449.04,"endTime":3450.75,"body":"I mean, you've given them permission."},{"speaker":"What about from 9:00 AM to 5","startTime":3450.75,"endTime":3452.16,"body":"If you do not give them the permission,"},{"speaker":"What about from 9:00 AM to 5","startTime":3452.16,"endTime":3453.72,"body":"they do not give you a loan."},{"speaker":"What about from 9:00 AM to 5","startTime":3453.72,"endTime":3455.571,"body":"- [Student] It's also a"},{"speaker":"What about from 9:00 AM to 5","startTime":3453.72,"endTime":3455.571,"body":"function of where it operates."},{"speaker":"What about from 9:00 AM to 5","startTime":3455.571,"endTime":3456.404,"body":"- I'm sorry?"},{"speaker":"What about from 9:00 AM to 5","startTime":3456.404,"endTime":3458.294,"body":"- [Student] It's also a"},{"speaker":"What about from 9:00 AM to 5","startTime":3456.404,"endTime":3458.294,"body":"function of where it operates."},{"speaker":"What about from 9:00 AM to 5","startTime":3458.294,"endTime":3461.31,"body":"It wouldn't be able to"},{"speaker":"What about from 9:00 AM to 5","startTime":3458.294,"endTime":3461.31,"body":"do it in the US or the..."},{"speaker":"What about from 9:00 AM to 5","startTime":3461.31,"endTime":3462.15,"body":"- I don't know."},{"speaker":"What about from 9:00 AM to 5","startTime":3462.15,"endTime":3464.67,"body":"Root, for example, gets"},{"speaker":"What about from 9:00 AM to 5","startTime":3462.15,"endTime":3464.67,"body":"a lot of permission"},{"speaker":"What about from 9:00 AM to 5","startTime":3464.67,"endTime":3466.68,"body":"to track exactly where you're driving."},{"speaker":"What about from 9:00 AM to 5","startTime":3466.68,"endTime":3467.733,"body":"- [Student] In the US,"},{"speaker":"What about from 9:00 AM to 5","startTime":3467.733,"endTime":3470.465,"body":"we just pretty much prevent"},{"speaker":"What about from 9:00 AM to 5","startTime":3467.733,"endTime":3470.465,"body":"asking their permissions,"},{"speaker":"What about from 9:00 AM to 5","startTime":3470.465,"endTime":3471.298,"body":"do they?"},{"speaker":"What about from 9:00 AM to 5","startTime":3471.298,"endTime":3472.131,"body":"- [Wendy] That's interesting, isn't it?"},{"speaker":"What about from 9:00 AM to 5","startTime":3472.131,"endTime":3473.817,"body":"- It could be."},{"speaker":"What about from 9:00 AM to 5","startTime":3473.817,"endTime":3477.24,"body":"But do note that a lot"},{"speaker":"What about from 9:00 AM to 5","startTime":3473.817,"endTime":3477.24,"body":"of apps, even in the UK,"},{"speaker":"What about from 9:00 AM to 5","startTime":3477.24,"endTime":3479.04,"body":"do ask for a lot of permissions"},{"speaker":"What about from 9:00 AM to 5","startTime":3479.04,"endTime":3481.26,"body":"and you have no idea where it's going."},{"speaker":"What about from 9:00 AM to 5","startTime":3481.26,"endTime":3483.72,"body":"You don't know what they're"},{"speaker":"What about from 9:00 AM to 5","startTime":3481.26,"endTime":3483.72,"body":"doing with the data."},{"speaker":"What about from 9:00 AM to 5","startTime":3483.72,"endTime":3486.608,"body":"So, in this particular case..."},{"speaker":"What about from 9:00 AM to 5","startTime":3486.608,"endTime":3488.332,"body":"- [Student] If you are in United States,"},{"speaker":"What about from 9:00 AM to 5","startTime":3488.332,"endTime":3490.001,"body":"you have to actually stipulate"},{"speaker":"What about from 9:00 AM to 5","startTime":3490.001,"endTime":3492.082,"body":"the purpose of your data collection."},{"speaker":"What about from 9:00 AM to 5","startTime":3492.082,"endTime":3493.32,"body":"- Fair enough."},{"speaker":"What about from 9:00 AM to 5","startTime":3493.32,"endTime":3494.67,"body":"I'm agreeing with you there."},{"speaker":"What about from 9:00 AM to 5","startTime":3494.67,"endTime":3495.96,"body":"All I'm trying to say is,"},{"speaker":"What about from 9:00 AM to 5","startTime":3495.96,"endTime":3498.84,"body":"in a lot of cases, these"},{"speaker":"What about from 9:00 AM to 5","startTime":3495.96,"endTime":3498.84,"body":"guys collect information"},{"speaker":"What about from 9:00 AM to 5","startTime":3498.84,"endTime":3501.9,"body":"and you still don't know why"},{"speaker":"What about from 9:00 AM to 5","startTime":3498.84,"endTime":3501.9,"body":"they're using that information."},{"speaker":"What about from 9:00 AM to 5","startTime":3501.9,"endTime":3503.31,"body":"- Do you think some of the big banks"},{"speaker":"What about from 9:00 AM to 5","startTime":3503.31,"endTime":3505.92,"body":"and financial institutions will go under"},{"speaker":"What about from 9:00 AM to 5","startTime":3505.92,"endTime":3508.713,"body":"due competition from linear tech startups?"},{"speaker":"What about from 9:00 AM to 5","startTime":3510.54,"endTime":3512.49,"body":"- That is an excellent question."},{"speaker":"What about from 9:00 AM to 5","startTime":3512.49,"endTime":3515.64,"body":"As I answered in that"},{"speaker":"What about from 9:00 AM to 5","startTime":3512.49,"endTime":3515.64,"body":"previous answer over there,"},{"speaker":"What about from 9:00 AM to 5","startTime":3515.64,"endTime":3517.23,"body":"one of the issues which happening is,"},{"speaker":"What about from 9:00 AM to 5","startTime":3517.23,"endTime":3519.09,"body":"many of these people with these startups,"},{"speaker":"What about from 9:00 AM to 5","startTime":3519.09,"endTime":3522.21,"body":"they don't know how the"},{"speaker":"What about from 9:00 AM to 5","startTime":3519.09,"endTime":3522.21,"body":"modern financial world works."},{"speaker":"What about from 9:00 AM to 5","startTime":3522.21,"endTime":3525.48,"body":"So, there is this friction right now"},{"speaker":"What about from 9:00 AM to 5","startTime":3525.48,"endTime":3527.827,"body":"where the traditional financial"},{"speaker":"What about from 9:00 AM to 5","startTime":3525.48,"endTime":3527.827,"body":"intermediaries are saying,"},{"speaker":"What about from 9:00 AM to 5","startTime":3527.827,"endTime":3529.11,"body":"\"Well, we are regulated,"},{"speaker":"What about from 9:00 AM to 5","startTime":3529.11,"endTime":3531.18,"body":"the government is allowing"},{"speaker":"What about from 9:00 AM to 5","startTime":3529.11,"endTime":3531.18,"body":"us to do this stuff,"},{"speaker":"What about from 9:00 AM to 5","startTime":3531.18,"endTime":3533.97,"body":"these guys are doing stuff"},{"speaker":"What about from 9:00 AM to 5","startTime":3531.18,"endTime":3533.97,"body":"which is not allowed.\""},{"speaker":"What about from 9:00 AM to 5","startTime":3533.97,"endTime":3536.91,"body":"How is that friction going to be resolved?"},{"speaker":"What about from 9:00 AM to 5","startTime":3536.91,"endTime":3538.29,"body":"It's an open question."},{"speaker":"What about from 9:00 AM to 5","startTime":3538.29,"endTime":3540.6,"body":"I don't know what's going to happen,"},{"speaker":"What about from 9:00 AM to 5","startTime":3540.6,"endTime":3543.9,"body":"but there are lots of"},{"speaker":"What about from 9:00 AM to 5","startTime":3540.6,"endTime":3543.9,"body":"fascinating developments"},{"speaker":"What about from 9:00 AM to 5","startTime":3543.9,"endTime":3545.643,"body":"in this world, in this space."},{"speaker":"What about from 9:00 AM to 5","startTime":3546.528,"endTime":3548.37,"body":"- Raghu, thank you so much"},{"speaker":"What about from 9:00 AM to 5","startTime":3548.37,"endTime":3550.08,"body":"and we're very much looking forward"},{"speaker":"What about from 9:00 AM to 5","startTime":3550.08,"endTime":3553.17,"body":"to the subsequent lectures in your series."},{"speaker":"What about from 9:00 AM to 5","startTime":3553.17,"endTime":3555.51,"body":"Thank you, everyone, for joining us."},{"speaker":"What about from 9:00 AM to 5","startTime":3555.51,"endTime":3559.013,"body":"- Thank you, Wendy."},{"speaker":"What about from 9:00 AM to 5","startTime":3555.51,"endTime":3559.013,"body":"(students applauding)"}]}