Thank you very much for the thoughtful questions and kind words, Michael. I’m familiar with your writing and so a bit nervous to share much of this for the first time, but I hope it’s somehow helpful. I’m also open to improving my thinking, so please consider this all a rough draft! Please note that I use the words "invest" and "investment" to refer to non-profit donations, gifts, grants, etc. I think "investment" is the right way to think about how you place certain bets, whether for-profit or non-profit. To date, I have deliberately not made any for-profit investments in the psychedelic space.

My thoughts are inline below, I've bolded my replies, and apologies for any typos: 

Question: what is your thinking on how cost-effective, from a donor perspective, additional resources are if put towards psychedelics compared to other problems, e.g. the GiveWell-style health and development interventions? 

TIM: Broadly speaking, I’m both/and instead of either/or, as I view the nature of these “investments” as quite different. I’m a big fan of GiveWell. I view GiveWell and its recommended recipients as well-vetted “late-stage” options for donors, defined as such because so many variables are well understood: inputs, outputs, various costs, longitudinal cross-comparisons, etc.. It’s like investing in a low-cost index fund with great historical data. There’s a great place for it in your non-profit portfolio, just as you might think of your portfolio of stocks or assets. Personally, I’m donating to and through GiveWell this year, and according to the dashboard GiveWell provided me, my listeners have donated $266,526 in immediate donations, with $104,440 in additional one-year value of recurring donations. Much of that came after my interview with Will, and I’m a believer.

That said, these types of late-stage/predictable options are not 100% of my portfolio. I view my donations in psychedelics—to be more specific, psychedelic-related scientific research—as “early-stage” investments, defined as such because much of the work is on the cutting edge, and the outcomes or mass implementation of findings are seldom clear at the outset. 

Sometimes, the intended clinical applications are tested from the beginning (e.g., psilocybin for major depressive disorder at Johns Hopkins), but other times, the research is exploratory and hoping to establish fundamentals (e.g., safety and fMRI studies of salvinorin A, a lesser-known psychedelic which acts on kappa opioid receptors). Will salvinorin A have therapeutic applications? It’s too early for scientists to say, but there are clear preliminaries (the first blinded study to show its psychoactive effects is outstanding) that help get us closer to answering that question. In the realm of scientific and medical research, many of the breakthroughs that have changed our world A) weren’t obviously breakthroughs in the beginning, and B) couldn’t have been intelligibly subjected to questions of cost-effectiveness until a much later stage of development. Since these bets tend to be less crowded, and I’m very comfortable with early-stage startup investing from the for-profit world (some examples of wins and losses here), I find my skill set and temperament well-suited to this playing field. I really enjoy it.

Furthermore, I believe the potential ROI of the early-stage investments to be much greater than the later-stage investments, but you can waste a lot of money unless you approach them with good rules and follow said rules consistently. A big component of this is thinking of all of your bets—and their interactions or synergies—as a portfolio, rather than as one-off silos. I’ll attempt to explain this more in another bullet. 

Follow up: How valuable do you think additional detailed research on this would be (to you)?

TIM: When such research can be meaningfully done with larger data sets, it would be incredibly valuable. MAPS has already done some cost-effectiveness analysis of MDMA-assisted psychotherapy versus the current standards of care, but these side-by-side comparisons will be most interesting ~2–⁠4 years from now when we have actual data for both instead of actual vs. hypothetical. As mentioned above, this doesn’t affect my enthusiasm for donating to early-stage projects, as I think the opportunities to make a disproportionate impact with small amounts of capital are generally correlated with more unknowns. This requires making more assumptions, of course, and therein lies the tradeoff.

This is primarily for Tim, seeing as he's really putting his money where his mouth is!

Background: I run the Happier Lives Institute and I want us to take look, in the near-future, into funding psychedelics.* Psychedelics seems very promising, but it's unclear exactly how promising.

TIM: Of course, I’d certainly love to see the Happier Lives Institute jump in! Even though psychedelics entail many unknowns, there are some very significant knowns. Several of these knowns seem to point to entirely new paradigms for understanding and treating mental illnesses. Importantly, results have been replicated in a number of cases. 

One example: the Phase 2 and very recent Phase 3 trials of MDMA-assisted psychotherapy for PTSD. In MAPS’ completed Phase 2 trials with 107 participants, 56% no longer qualified for PTSD after treatment with MDMA-assisted psychotherapy, measured two months following treatment. At the 12-month follow-up, 68% no longer had PTSD. Most subjects received just 2–3 sessions of MDMA-assisted psychotherapy. All participants had chronic, treatment-resistant PTSD and had suffered from PTSD for an average of 17.8 years. On August 16, 2017, the FDA granted Breakthrough Therapy Designation to MDMA for the treatment of PTSD.

2–3 sessions and 68% are asymptomatic 12 months later… after an average of 17.8 years of suffering. This appears to be addressing the root causes of PTSD and not simply masking symptoms, as many maintenance drugs do. It’s actual processing instead of numbing.

The Phase 3 trials did just as well, and here are a few excerpts from recent NYT coverage:

“Two months after treatment, 67 percent of participants in the MDMA group no longer qualified for a diagnosis of PTSD, compared with 32 percent in the placebo group. [All had severe PTSD and had been diagnosed, on average, for more than 14 years.]

MDMA produced no serious adverse side effects. Some participants temporarily experienced mild symptoms like nausea and loss of appetite.

…

“An estimated 7 percent of the U.S. population will experience PTSD at some point in their life, and as many as 13 percent of combat veterans have the condition. In 2018, the U.S. Department of Veterans Affairs spent $17 billion on disability payments for over one million veterans with PTSD.
...

‘This is about as excited as I can get about a clinical trial,’ said Gul Dolen, a neuroscientist at Johns Hopkins University School of Medicine, who was not involved in the research. ‘There is nothing like this in clinical trial results for a neuropsychiatric disease.’”
###

To that extent, I think the “how promising” is quite clear, at least on an individual (e.g., “I felt like I went through 15 years of psychological therapy in one night.”) and Phase 3 basis. The question of how to scale to millions isn’t fully solved, of course, but that’s to be expected, and many smart teams are working on related problems. The fact that later-stage questions can’t all be answered now doesn’t deter me from investing in interventions that defy the odds and that could redefine psychiatry. For me, this is just like investing in for-profit startups. In the beginning, you need a good car (intervention/tool), a good driver (team), and a good map (plan), but the actual course will evolve based on changing conditions (technological, regulatory, etc.). Even if you’re driving with headlights that only shine 100 feet in front of you, you can make it across the entire USA safely if you set the initial conditions well and adapt. This is the nature of picking very attractive bets without complete information. Not everyone will be comfortable with this approach, but it’s a learnable skill.

One generic issue is that it's hard to sensibly model the cost-effectiveness of systemic interventions, e.g psychedelics, to 'atomic' ones, e.g. handing out cash transfers to one person at a time, because you have to make so many assumptions about how funding one thing might impact an entire society. The best analysis currently is from  Founders Pledge, who compared funding psychedelic research  (specifically, Usona's research into psilocybin as a treatment for depression) to funding psychotherapy for mental health (specifically, StrongMinds, which treats women for depression in Africa). This is probably the most straightforward comparison, as it's in terms of depression in both cases, and finds them about equally effective. However, the Founders Pledge analysis of psychedelics is arguably too sceptical of psychedelics because, for instance, it only considers the impact research would have in the US, rather than world.

TIM: Certainly, the more unknowns, the more assumptions one needs to make. I read the two above-linked articles but didn’t see the comparison, so I’ll speak more to your comments. I’ll try and tie two things together. One -- How do I think about funding targets like psychedelic science, when the long-term, large-scale impacts are far from certain (versus, say, the immediate impact of cash transfers to one person at a time)? And Two -- How might I think about the following that you wrote? “However, the Founders Pledge analysis of psychedelics is arguably too sceptical of psychedelics because, for instance, it only considers the impact research would have in the US, rather than world.”

Let’s first compare a few games. Putting capital into the late-stage or predictable bets with more complete information (i.e., the GiveWell example earlier) is like betting on chess. It’s a game of complete information. This might also apply to the cash transfers you mentioned. Betting on early-stage science or startups is much more like betting on blackjack or poker. These are games of incomplete information, but unlike, say, roulette, they are not games of pure chance. There are elements of skill, methods of playing, and methods of staking players that—over sufficient periods of time—have greater success rates than others. 

Next, I’m looking for asymmetrical upside potential. If I can put $100 into one startup or project with an 80% probability of $150 of impact (and, say, 20% chance of $80 of impact), that’s great, but if I can put four $25 bets into four startups or projects, each with a 20% chance of $5,000 of impact (and, say, 80% chance of $10 impact), I am more inclined to take the latter option. The mindsets and assumptions are different: the former might optimize for loss avoidance and semi-guaranteed individual returns, whereas the latter would optimize for finding bets that really swing for the fences, such that one win could “return the fund” or make other losses irrelevant. The key is doing this in a methodical rather than haphazard way.

So, how do we find $25 bets that have the potential to return $5,000? Or how have I done this in the past?

I tend to focus on selection of people over selection of projects, as I assume projects will have some incorrect assumptions and tons of problems. My bet is on someone or some team that can adapt and solve for this. One example in startups would be Luis Von Ahn, co-founder of Duolingo, who previously had two successful exits to Google. The nascent idea that his team could apply his learnings from reCAPTCHA to language learning represented a total paradigm shift, so I invested in their Series A in 2011, but it was a bet on Luis. It would either fail and my downside would be capped to a small investment, or it would win big and the likely return 100-1,000x over 5-10 years. Even though he and his team have run into obstacles and dramatically changed some of their plans and strategies, Duolingo has now become the most used language-learning software in the world (revenue has done well, too). 

But that bet might seem obvious; after all, the guy had sold two companies to Google. What if you're dealing with people who are unfamiliar?

To explore that, let’s look into the world of science, which is also more attractive in some respects. Even though science can seem to move in slo-mo, single studies often provide feedback much more quickly than startups (funding to exit). I assess scientific teams by publication record, reference checks, and by giving them a small amount of capital to see what they can do with clear deliverables and deadlines. I did this when I first gave neuroscientist Dr. Adam Gazzaley a small amount of funding for Gazzaley Lab at UCSF, where they were attempting a number of firsts. The ultimate product was the scientific equivalent of sweeping the Oscars. His study using custom video games to help reverse age-related cognitive decline ended up the cover story of Nature with the headline of “GAME CHANGER.” I got to know Adam over more than a decade, and we were in constant contact for a year leading up to his recent launch of the Psychedelics Division of Neuroscape, which I supported and which could reinvent how we think of customized “set and setting” for psychedelic treatments.

Of course, the bets and projects need to be almost absurdly ambitious for this early-stage approach (or, better put, part of the portfolio) to work over time. But ambitious projects alone are fantasy; they need excellent operators with a proven ability to execute under time pressure. Once again, my preference is to test teams with small amounts of seed capital and short deadlines. Even though I’m perhaps best known in psychedelics for helping raise the $17MM for the Johns Hopkins Center for Psychedelic and Consciousness Research, the first such dedicated research center in the US, I tested the Hopkins team years before with a much smaller amount of personal and crowdfunded capital (~$100-125K total), which I offered after meeting Dr. Roland Griffiths. Only after that was I comfortable committing $2MM+ of my own foundation’s capital. From the NYT coverage:

“Mr. Ferriss said he met Dr. Griffiths in 2015, became intrigued with the research, and began thinking about the Johns Hopkins group as he might an investment bet. He launched a crowdfunding campaign for a small depression study, to see how efficiently the Johns Hopkins team used the money. ‘Essentially it was a seed investment,’ Mr. Ferriss said. ‘I ran a beta test, and they really delivered.’”

That initial bet proved to me that the team was capital efficient and could overdeliver on a timeline. The crowdfunding also tested reputational risk and showed me that the negative blowback and PR was… zero. Eventually, when the study was published (“Effects of Psilocybin-Assisted Therapy on Major Depressive Disorder”), it had a measurable impact on national and international media and discourse. Here’s the note I received from Roland:

"I am pleased to report that JAMA Psychiatry, often considered to be the most prestigious psychiatry journal in the United States, just released the notice below showing that our psilocybin depression study ranked #1 on their quantitative assessment of attention each scholarly article received in traditional and social media (Altmetric methodology). The relative score of 2416 is substantially greater than the other high-impact articles. This is even more impressive given that our study was published in November while other articles were published earlier in the year so had a longer time to get attention.”

Parallel with all the above, I look for ways to win over time, even if a given bet fails. This might be the most important part of this long answer.

For instance, what can I learn, or who can I get to know, even if this project doesn’t pan out as we hope? If there isn’t a way for me to win, even if I “lose,” I rarely commit. In other words, there need to be benefits that reliably transcend the project. Taking this approach has consistently resulted in outsized successes, even when preceded by a string of supposed failures. The ancillary benefits accrue like a snowball over time.

Some in the EA community might view this as squishy, as it doesn’t involve much quantification, but the thought process and results are concrete for me. I view this approach as my biggest hedge against individual project risk.

For instance, long ago circa 2008-2009, I became the first advisor to TaskRabbit, back when it was RunMyErrand and only based in Boston. They were one of the first movers in what would become known as the gig economy, and I wanted to immerse myself and learn through doing. Perhaps a year before and quite separately, I had become an advisor to StumbleUpon. StumbleUpon didn’t ultimately produce a profitable exit for me, but 1) it provided me with many opportunities to partner and drive significant traffic to my blog, which had great value to me, and 2) it offered the opportunity to work closely with the founder, Garrett Camp. When Garrett co-founded Uber shortly thereafter, he invited me to become an advisor, and I was perfectly positioned to learn from my exposure to TaskRabbit. Uber ended up being the bet that returned the fund. 

I’ve funded studies and projects that haven’t yet made headlines, but relationships from those teams have led me —as expected after doing diligence beforehand—to academics, lawyers, and policy makers who seem capable of helping shape intelligent regulation of psychedelics. So, are these bets failures until they each hit the finish line or implode trying? I would argue that these are already “successes” if I view them in the context of a portfolio of bets/donations that are assembled to work together towards macro objectives. Some of my macro objectives for the last several years have been: helping to derisk and galvanize the formation of multiple psychedelic research centers at top US universities (completed); putting safeguards in place to minimize bad behavior by for-profit actors (e.g., patent trolling); helping set conditions for federal funding and large agency grants for psychedelic research; and enrolling experts to help facilitate insurance reimbursement for eventual treatments. More often than not, at least 2-3 of my early-stage bets will be chosen thematically to coalesce around one of my macro objectives. 

So, can I perfectly predict what will happen in or to society due to a systemic intervention? Not a chance! But can I think probabilistically and place bets that get me base hits most of the time, which when combined seem to contribute to my macro objectives? Yes. Moreover, I do think you can reliably predict some version of the future if you look for converging trends (tech developments, emerging scientific areas, media coverage, etc.) and place bets in groups where you can actually introduce those trends to one another. Alan Kay famously said that "the best way to predict the future is to invent it," but sometimes you don’t need to invent; you just need to push the ball in the direction it’s already moving.

Fortunately for me, looking across my 100+ early-stage for-profit and non-profit investments, simple heuristics often beat overly complex algorithms. There's definitely a place for really technical analysis, but it's easy to get lost in the weeds and mistake noise for signal.

Now, let’s shift gears and revisit one of the lines from your question that is very helpful to unpack. You wrote: “However, the Founders Pledge analysis of psychedelics is arguably too sceptical of psychedelics because, for instance, it only considers the impact research would have in the US, rather than world.”

There are multiple ways in which the impact of psychedelics -- and the value of supporting related causes -- is dramatically underestimated, in my opinion. 

First, to your valid geographic point, here is one example: if you support Phase 3 trials for MDMA in the US, you are also ultimately helping with MDMA-assisted psychotherapy in Europe, as the EMA will accept a lot of data that has been accepted by the equivalent (FDA) in the US. In other words, by helping in the US, you are substantially decreasing the costs of later expansion in Europe and beyond, as the safety studies, etc. don’t need to be replicated. FDA and EMA approvals will generate approvals in most other countries of the world without additional research. This is significant.

Second, if you care about intelligent drug policy and criminal justice reform, I believe you should care about and support psychedelic science or access. Psychedelics offer a tremendous opportunity as the tip of the spear. Generally speaking, these are drugs with exceptionally low toxicity (with a few exceptions) and little to no addiction potential. Both MDMA and psilocybin currently have bipartisan political support because of sympathetic patient populations (e.g., veterans with PTSD, terminal cancer patients with depression) and widespread indications that affect people across all socio-economic classes (e.g., opioid addiction, alcoholism). Psychedelics can be used as the wedge in the door to advance many other issues. Politically speaking, they are excellent gateway drugs. If you want to talk to both Democrats and Republicans about drug and criminal justice reform, it’s a lot easier to start with psychedelics and have a Medal of Honor recipient on your side. This opens the door to many other conversations that would otherwise struggle to get off the starting line.

Third, it’s not just about the drugs and therapeutics. As famed psychiatrist Stan Grof has said, “Psychedelics, used responsibly and with proper caution, would be for psychiatry what the microscope is for biology and medicine or the telescope is for astronomy.” Recent studies, and the associated outcomes that defy conventional explanations, are already raising questions that could reshape how we think about mind, identity/ego, and even consciousness itself. This is a big deal. It’s not an accident that the center at Hopkins is named the Johns Hopkins Center for Psychedelic and Consciousness Research.

A particular issue is that psychedelics now seems to be getting increasingly more attention, so one might wonder if all the best projects will get funded anyway, and donors seeking the biggest impact should go elsewhere. 

TIM: I can tell you with 100% certainty that the best scientific and non-profit projects I see are still having trouble getting fully funded. There is a hype-cycle gold rush on the for-profit startup side, but the best research is still uncrowded and incredibly appealing. I think this is largely because of the due diligence required. Suffice to say, I have looked at a lot of causes and consider this area to have some of the best bang-for-the-buck value I've ever seen in my life.