Original Title: What's That Smell in San Francisco?
Original Author: Spencer Yen
Original Translation: Peggy, BlockBeats
Editor's Note: San Francisco is once again becoming the intersection of technological revolution and financial bubbles. AI companies, research labs, venture capital, outdoor advertisements, and gossip networks collectively shape a highly exhilarated urban atmosphere: some are propelled forward by valuations and equity packages, others immerse themselves in apocalyptic visions of AGI, and some view math competition prodigies as the gateway to the next generation of outsized returns.
Drawing from the line "I smell money" in *The Big Short*, the author records observations after moving from New York to San Francisco: the density of technology, wealth creation, and information asymmetry in this city are real, and so are the anxiety, comparisons, and Big Bubble Behavior. When AI becomes San Francisco's only status game, innovation, speculation, belief, and fear begin to blend, forming the most immediate on-the-ground sample of this wave of AI fever.
The interest of this article lies not in hastily judging when the bubble will burst, but in showing *how* the bubble happens: how people talk, compare, invest, become anxious, and seek their own place within the narrative of "the future is coming." The music is still playing, the party isn't over, but the author concludes with a reminder to himself and all those within it: you can dance, but don't get drunk.
Below is the original text:
One of my favorite movie scenes is the Jenga scene in *The Big Short*: Ryan Gosling's character pitching a trade to short the US housing market to Steve Carell's hedge fund team.
In that conference room, with an obnoxiously confident, jerk-like aura, he has three props: his sidekick Chris, his quant Jiang, and a Jenga tower printed with mortgage bond ratings. His opening line is also brilliant: Do you smell that? What is that? What's that smell? Perfume? No. Opportunity? No. It's money. I smell money.
https://www.youtube.com/watch?v=YgF98vyn2fY
A few months ago, I moved from New York to San Francisco to join a friend's startup. Before moving, everyone told me: "You have to go to San Francisco," saying that's where everything is happening. So I've been grappling with this question: Is San Francisco really that important? Was I really missing something staying in New York?
My answer so far is: If you want to be at the center of this massive technological revolution and bubble, then this is indeed the place to be. The density here is real, the gossip networks are real, and consequently, the information asymmetry is also real.
During this time in San Francisco, I've accumulated some observations and thoughts. Here's what I've been 'smelling' in San Francisco:
1. People are trembling.
2. There's only one status game here.
3. A city that's always crying wolf.
4. Obsession with math prodigies.
What's struck me is how vastly different the human experience can be within the same city—walk on some streets and you'll feel like you're in hell; turn onto another and you'll see the bay, distant cypress trees, and beautiful scenery. The most techy, futuristic moments here are probably watching various autonomous vehicles roaming the city streets. Every time I see one of those new, friendly light-blue Waymo cars, I can't help but smile. Or, you might feel surveilled by Ava the AI BDR (AI Business Development Rep). I hate that ad. But credit where it's due, they successfully got me still talking about it with 'rage bait.' Every morning, right outside my apartment door, I see this monster:
Why do people graffiti friend.com but not this garbage ad? Also, if you live nearby, let's grab ice cream sometime!
People in San Francisco are trembling
A few weeks ago, I was hanging out with my friend Jared (@imjaredz). He lives in New York but recently joined Cognition. We had lunch and coffee at the Cognition office. Nice vibe, good coffee, great rooftop. I asked him what he thought about the vibe in San Francisco.
"Have you noticed how people in San Francisco are all trembling?" I laughed, thinking: What? Trembling? Then I realized I had cold brew that morning, 300mg of caffeine, and was indeed a bit jittery. "Yeah, literally trembling. I'm not against people going full ADD, but next time you have a coffee chat, pay attention—see if they're trembling."
Bubbles and boom times bring this frenetic energy, as if if you don't 'make it' now, you'll never have another chance. I'm not immune either—after Jared's reminder, I noticed I seem to tremble sometimes too. That whole "grind to escape permanent pleb status" meme is overdone, but every meme gets popular because it captures a zeitgeist. If nightlife is a city's heartbeat, a thermometer for its culture, what does it say when a 'dog startup' 24-hour cafe becomes the de facto nocturnal grind haven?
Trembling is part of the process of technological revolution and financial bubbles. Forgive me, I used AI for part of this writing; if you want to kill me for that, I apologize in advance. But I was looking up Carlota Perez quotes, and I liked Gemini's summary of the 'Frenzy Phase':
Frenzy Phase: The peak of the installation period, where market psychology abandons fundamentals. Financial participants stop pursuing dividends and switch to capital gains, causing a decoupling of the 'paper economy' from the 'real economy.'
Source: https://stratechery.com/2021/the-death-and-birth-of-technological-revolutions/
A friend of mine coined a term: "Big Bubble Behavior." It's a beautiful phrase, and I've been using it the past two weeks to label everything characteristic of the frenzy phase. Market euphoria sometimes makes people do irrational things. Trembling is Big Bubble Behavior. I've seen trays of lobster tails twice in my life: first at a crypto party on a Venetian Island mansion in Miami in 2021, and second at ClawCon in 2026.
Big Bubble Behavior
There's only one status game in San Francisco
David Foster Wallace, *This is Water*: https://fs.blog/david-foster-wallace-this-is-water/
In San Francisco, this water is AI. Outdoor ads are everywhere—billboards, buses, bus stops, shared bikes, even the blue sky seems occupied by them.
My issue with San Francisco is this: there's only one dominant status game—tech. You go to dinner, or hang out in a park, and hear the same vocabulary. You also see all sorts of 'alpha farming' (hunting for informational edge) because those gossip networks really do exist. And I can't even get mad because I'm that person too. Don't hate the player, hate the game.
The problem is, when a city has only one dominant status game, it becomes far too easy to compare yourself to others.
We increasingly measure and compare each other by vanity metrics, like how much funding someone raised, or what letter in the alphabet your company's round is at. I truly hope someone raises a Series Z, because that would directly prove how absurd the private markets have become. You hear the gossip: which hot startup is getting chased by finance players, what crazy valuation level they're at. Then you can't help but start doing those disgusting, Blind-style back-of-the-envelope calculations: how much is so-and-so's equity package worth now.
I told a friend, if you saw the kind of reverse salary math, offer-optimizing math on Blind, you'd cringe so hard. Blind is that anonymous big-tech social network, famous for memes like: "Having a life crisis, my wife might leave me, but should I take Meta L6 or Google L9? TC: $969k." So why are we doing the same thing here now? Go touch grass. Or maybe that's just my cope.
In New York, there are at least 7 status games simultaneously. Finance, big law, music, fashion, celebrity circles, old-money family offices, media/news, sports, entertainment. Because the scope is so broad, some games are so distant they're almost inaccessible, making them interesting to talk about and learn. It scatters the attention of all ambitious people.
I enjoy asking law school friends which top firms are most prestigious and the subtle differences between them; I enjoy learning about the fashion and luxury world and what it takes to survive there; I enjoy understanding the cushy lives of quant elites and their garden leave arrangements.
San Francisco is creating unprecedented wealth, which brings a weird energy. A research friend mentioned people around them are already looking into buying land and diversifying into scarce resources. There's a feeling: you're either someone with lab equity, or you're not. There's also the joke that San Franciscans don't know how to spend money; this weird energy comes from massive new wealth being created, but people don't know what to do with it. First-time rich? Let the experienced rich kids teach you how to enjoy life.
*Super Rich Kids* — Frank Ocean: https://www.youtube.com/watch?v=0XCQNpjWmRE
A city that's always crying wolf
My first impression of San Francisco was this doomer sentiment. Maybe the researchers in the labs truly see some 'second coming'; if so, their calls for slowdowns and safety emphasis make sense. But I have no real way of knowing. All I know is how doomerism makes *me* personally feel—not great!
I've already had several nihilistic conversations, roughly along the lines of: "If Mythos could wipe all this out in one go, or crack everything, then what are we even doing here building software?" And "Will AI ruin our lives?" And "AI will create massive inequality and cause society a lot of pain."
My one-sentence take is: humans will always find something else to do, work will migrate to higher levels of abstraction, and new things will become valuable.
We're terrible at predicting what future society will look like. I think those anti-capitalists I read in college were angry at the wrong things—imagine their reaction seeing humans derive joy from AI-generated fruit trash videos or 'Tung Tung Tung Sahur' in Italian brainrot.
"The problem isn't that AI makes content dumb, [sniff], it's that we enjoy this dumbness as a kind of sacred junk, a digital fetish object, [sniff], isn't it?"
From my friend Samir. His resume: not a researcher, but he has a 'fish guy.'
Anyone else have their own 'someone guy'? Please tell me.
A friend working at a lab pointed out that GTM (go-to-market/sales/growth) teams and research teams within the same company are having completely different lived experiences right now. That doomerism gets balanced out by: "Come hang with the GTM team, have a beer, touch grass." There's something interesting about the pessimism of the model creators versus the optimism of the people closest to deploying the technology. Time to get Forward Deployed!
Reality has a surprising amount of detail: https://johnsalvatier.org/blog/2017/reality-has-a-surprising-amount-of-detail
Six years ago, in college, I wrote about how AI reshapes social structures, titled *Polanyi and the Second Great Transformation* (No Pangram AI detection needed, pre-2023 Medium was like an organic pasture for human writing).
Let me explain the reference: Karl Polanyi was an Austro-Hungarian-born economic sociologist whose magnum opus is *The Great Transformation*. Written in 1944, it critiqued the rise of modern market capitalism in 19th-century Britain. So, the 'First Great Transformation' was the shift to capitalism, and my 21-year-old smart-aleck self called AI the 'Second' Great Transformation... you get it.
Polanyi's most famous concept is 'The Double Movement,' describing a historical push-and-pull phenomenon: on one hand, the free market's relentless expansion; on the other, society generates a counterforce trying to protect itself through regulation. The first movement is capitalist elites trying to expand free markets and commodify society; today, that's commodifying intelligence. The second, opposing movement is people reacting to market-driven destruction and trying to protect society; today, that's anti-AI, anti-data center rhetoric.
Here's my naive college-aged writing from 21:
Polanyi explains that the development of machinery for production led to the 'fictitious commodification' of labor (people) and land (nature). While the Fourth Industrial Revolution has already occurred within a market system, the advent of the mechanical mind presents a different threat: taking over jobs. As computers can perform more 'human' cognitive tasks with greater efficiency, many ordinary people may lose their jobs.
Polanyi wrote: "Nothing saved the common people of England from the impact of the Industrial Revolution. A blind faith in spontaneous progress had taken hold of the minds of men..."
https://medium.com/@spenceryen/polanyi-and-the-second-great-transformation-6d6364b5d3c6
So on second thought, maybe the people constantly crying 'wolf' have a point. Blind faith in spontaneous progress might not end well. Polanyi's critique of market capitalism is that for most of human history, economic activity was subordinate to social, cultural, and religious institutions. But later, market capitalism inverted this relationship, subordinating society to the economy.
How do we ensure society isn't subordinated to a nation of geniuses in data centers? As Ben Thompson accurately pointed out in his article about Anthropic's Mythos, the punchline of *The Boy Who Cried Wolf* is that the wolf eventually does come.
But what would the capitalist in me say? Then invest in social, cultural, and religious institutions! If you have any good trade ideas, feel free to DM me your pitch deck.
Obsession with math prodigies
Another favorite gag from that *Big Short* Jenga scene is when Ryan Gosling points to the Chinese guy beside him and says, "That's my quant." The vibe weirdly parallels a recent batch of hot founders being chased by investors—they're often prodigy kids who dominated math competitions from a young age.
Again, Ryan Gosling, responding to Steve Carell's skepticism:
"So you're saying if the default rate hits 8%, these bonds blow up, and we're at 4% now? If they go to 8%, that's the end of the world?" "Yeah, that's correct." "Why is nobody talking about this? You're absolutely certain of this math model?" "Look at him. That's my quant." "Your what?" "My quan-ti-ta-tive, my math specialist. Look at him. Don't you notice anything different about him? Look at his face." "That seems a little racist." "Look at his eyes. I'll give you a hint, his name is Yang! He's a national math champion in China, doesn't even speak English! So yes, I'm very certain of this math model."
To some investors, the key predictive indicator for a fund's DPI (Distributed to Paid-In Capital, a measure of actual returns) seems to come from the founder's childhood—either they were a math competition prodigy as a kid, or they have some childhood trauma. Growing up in the Bay Area, my perception of my own math abilities was shattered early because my genius peers were all in the math competition circles. Now, they've mostly become quant traders or researchers at big model labs.
I distinctly remember a moment from seventh grade: my dad and I were flipping through sports channels on TV at home, and I saw my middle school classmate on ESPN2... he was competing in the Mathcounts competition. In that moment, I knew my path was over. I often joke that when I started playing the 'grind for college apps' game in ninth grade, I knew I couldn't compete with those Intel STS, RSI, AIME, USACO kids, so I had to find my own game.
I deeply admire many of these standout CEOs, founders, and researchers, and I have personally made a financial bet on one of them. But what I find funny is that an entire asset class and investor narrative has now formed around 'cultivating the smartest math competition kids and treating them as tickets to alpha.' When you think about it, it's not fundamentally different from scouts looking for the next Wemby (Victor Wembanyama). Though, I also want to believe in the Jalen Brunson story—hard work, persistence, and heart can win too.
Hyperliquid.
Party like it's 1999
https://x.com/elonmusk/status/1656326406618619910
A very wise investor once gave me two pieces of advice:
First, you will live through three bubbles in your lifetime.
The first bubble you experience, you'll be completely immersed in the euphoria. You have no experience, you attend the party, get swept up in the fervor.
The second bubble you experience, you remember what happened the first time, so you can exit with some wins, but you'll still get drawn in a bit.
The third bubble is your chance to create generational wealth—you've accumulated enough experience from the first two to know how to manage risk, emotions, and exit timing.
The second piece of advice is: When the music is playing, you dance, but don't get drunk.
Right now the music is deafening, maybe even about to blow the speakers. But bigger backup speakers are being manufactured, and this party clearly isn't over.
This is a reminder to myself, and to anyone who needs to hear it: remember to touch grass, cook your own meals, don't let Big Bubble Behavior warp your judgment. Borrowing wisdom from my friend Samir: Let's barbecue soon. Do you know a fish guy?
From Peter Thiel's *Zero to One*
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