My First Million - #11 - Clawing Back From $250K Debt at 20

Episode Date: September 4, 2019

Aleks Svetski (@AleksSvetski) wanted to be a millionaire by 20... and he was on that path. He turned his $5K textbook money into more than $50,000 in the stock market! Until the 2008 global financial crisis hit... he didn't just lose all his money, he was negative quarter of a million. This setback ignited his entrepreneurial spirit where he started a door knocking hustle to get out his debt and make that cool million. Again, until the government betrayed his business and he went back to square one becoming a hippie on a sabbatical... and now he's back again with the lessons he's learned with his newfound passion: Bitcoin.  See acast.com/privacy for privacy and opt-out information.

So you take $5,000 from textbooks, you invest it, you get a run up up to $60,000. What happens from there? August the 16th, 2007 happened there. The stock market is now down 21%. 43%. What in the world is happening on Wall Street? In the blink of an eye. I have never seen a 600 point loss.

Who knows where this is going to end up? Completely wiped out. The Dow traders are standing and watching an amazement. I don't blame them. There's apples under pressure. Yahoo down. 8.5%, Cisco, 6.5%. Every day, they're pounding it. What started in America last year has now spread to every part of the world.

And I woke up that morning and everything was in the red in my account was down about 70%, something ridiculous. It was the worst day on Wall Street since the crash of 1987. And that means life, as most Americans know it, is about to change, in some cases dramatically. Within four, five months, I was about a quarter of a million in the hole. All right, I just sat down with Alex Svetsky, or angry Alex, as he's known. in the Bitcoin world. And we talked about a whole bunch of things ranging from Bitcoin itself, his story, trading stocks and ending up a quarter million dollars in debt, as well as how he got out of the hole, built himself back up, made his first million, and what he's doing in the

crypto space today. It's a pretty fun conversation. I think you'll enjoy it. Thanks for coming, man. I appreciate you. You came a long way. I like to think you just came for this podcast. I did. I know there was also that other little conference, the Bitcoin 2019 conference What's going on? No, no, no, no. I just came for this. I swear. So this is going to be an interesting one because so far, the people I've talked to are people

that I know super well. Like we hang out on the weekends, we blah, blah, blah. I met you five minutes ago. And you came highly recommended. So I said, okay, let's do it. Let's chat. And the thing that I find interesting is I know that you're pretty heavy in the Bitcoin space. And so we'll talk about that.

But I just want to know a little bit about you first. What's the TLDR on your life story? So give me the one minute version first. And then I know we'll go obviously. We'll touch on. Unless the one minute's good and then we'll just end the podcast. That can also work. Done.

Shortest podcast in history. The TLDR. Went to uni, really academically strong, dropped out, thought I was a genius on the stock market. I got taught a few lessons in the GFC. Dugged my way out of that door knocking, built like a successful business when I was 22, 23, made my first meal. Then got taught another lesson from government mismanagement of money. I lost a lot of money there. Sort of went on this random sabbatical.

I said, never going to do business again. I became a hippie. Are we talking? Silent retreats, yoga. Yeah, that kind of stuff. Exactly. I went and did yoga. I went and did, like, meda, all that stuff.

Before it was kind of like, cool. This is, you know. Before Jack Dorsey did it? Yeah, exactly. So about seven, eight years ago. And then, and then, yeah, while I was in the States, so I spent a bit of time in Venice Beach and up in San Francisco, I sort of, I ended up going to Singularity University for a couple days for like a little short course thing there.

Thought tech's the way to go, went back, muddled around in tech, built a few little software things. And yeah, and then ended up down the Bitcoin rabbit hole about three and a half years ago. And never came back. So we're going to go through each of those in order because I think that's the way to do it. But how old are you? 31. I look younger.

I'm 31 as well. Oh, really? I look older, I think. The last startup, when I started, I was fresh 24 years old, baby-faced. and now I have this like grizzly beard and gray hairs and all kinds of things The shit ages you man

Like if you think I've got a slight baby face now If I show you my photo when I was 20 Just before I'd gotten down the path of running businesses I look six Right Yeah I saw a picture of Obama Before and after and I was like damn Yeah

They got to him Yeah dude it kills you man No one gets out alive All right so So you went to university You said you dropped out Which university were going to University of Wollongong, so it was kind of like...

Oh, I've been to Wollongong. I went to a party in the University of Wollongongong. It was an epic night. So Wollongong is like a party school. It is. I mean, that was my rationale, right? So it was the one offering me the lowest scholarship, but it was the beach and it was girls. Yeah, perfect.

Okay, cool. So you had your priority straight. So you go there, you're studying. What are you studying? Civil engineering. Civil engineering. Okay, cool. And you dropped out.

Why drop out? Oh, this is going to sound arrogant, but I just thought everyone was an idiot. I was like, they're not here to study. engineering because they want to do engineering. They're just here because they got the appropriate final year of school results. That was sort of disillusioning. So I was like, I want to do more. I want to be better. So I took that money that I had for the scholarship that they gave me to buy textbooks. I was like, fuck it. I'm going to do two things. I'm going to beat everyone with no textbooks. And I'm going to take that money and I'm going to trade derivatives.

Your textbook money? Yeah, basically. And it wasn't much. It was like five grand. But within six months, I turned it into like 60. So like from a percentage return standpoint, I thought I was. And how do you even know what a derivative is at this point? I didn't. I was on ASX.com.com.com. Trying to learn how to trade shares. And my family was like totally anti that. So gambling this, that. So I kind of ran away from home and did my own thing, right? And yeah, I literally just self-taught myself. The first trade I actually placed was not a derivative. It was a, it was this small company called GYG. It was like some genetic bull crap that I got sold by this broker. And this was back in the days before your, you know,

online trading became, you know, mainstream. And yeah, I lost money on that. And I was like, this guy's an idiot. So I just went and did my own thing. And I was just trading options and warrants. And what was the goal? The goal was like, I want to get rich? Or what were you trying to do? I'm going to make a million by the time I'm 20 and I'm going to go back to my family and prove. I had this vision in my head that I'd turn up on their front door with a Ferrari and I'd be like, Told you so. You know, 19-year-old kids dream. It's kind of amazing how much motivation people have of proven other people wrong.

I know, man. I know. What did your parents think you were going to do? They thought you were just, you know, fuck up or what did they think? Well, no, look, they all wanted me to be a civil engineer. They wanted me to, you know, because I didn't live with my parents at the time either. So, like, my parents had split when I was young, so I sort of moved out and went and lived with my grandmother and my uncle.

So, and my uncle was very patriotic. and he wanted me to be a civil engineer, so then we'd go back to Eastern Europe, to Macedonia, where I'm from, and then we would, like, sort of build a town there and all this sort of stuff. Wow. I mean, it was really appealing.

Yeah, I know, right? And it was really appealing when I was young. But I read rich dad, poor dad, and some other book when I was like 16, 17. It sort of made me view the world a little bit broader. Yeah, it was a good book. Okay. So if somebody hasn't read that book,

what was the epiphany you had when you read it? I think that EBSI, the square was really important. and just figuring out which side of the quadrant you wanted to be on. Yeah, the way I understood it or the way, you know, just explaining it if you are lazy and don't want to read the book is there's these four boxes that you can belong to. E is like employee, which is everybody sort of knows. And in fact, society sort of steers you to. It's like, you know, go to school, get a degree so you can get a good job. And you want to go from a good job to a great job.

So that's the E bucket. Yep. Then there's the sort of like self-employed, which is basically like doctors, lawyers, that's. sort of thing where civil engineers that see that's exactly where my family wanted me to be and so considered you know it's like a better version of a job yeah and then you get to sort of business owner which is good because at that point you're not trading hours for dollars you're you own some entity and but you still have to operate it and you still own it a better quadrant to be in and the last one I and this is the goal you know the story of rich dad poor dad is that his real dad who he calls

the poor dad yeah tells him go get a job and his rich dad which is his friend's dad is making all this money and living a different lifestyle and seems to be working less and earning more. And so he was looking at him like, how do you do that? And basically it was you take the money from a business you own and you jump into the eye bucket. You start investing and then your money makes you money, which is even better than your hours or your ideas making your money.

And so I think when you read that book, you sort of can't help but you put yourself in one of the buckets and ask yourself, you know, do I want to be here? Correct. And he paints a pretty good picture where you're like, hell no, I don't want to be in any bucket, but the eye bucket. But the eye bucket. And that's why I think that was the thing that drove me down thinking about the stock market.

I just wanted to, you know, in my infinite wisdom at the time, right? I'm an eye. That's what I'm going to do. Right. And here we are. So you take $5,000 from textbooks. You invest it. You get a run up up to $60,000.

What happens from there? August the 16th, 2007 happened there. I still remember the date because I woke up. It was a week before my birthday. About a week before that I placed all these trades and I thought I was, this is it. I'm going to make, I levered the hell up. You know, if my trades go the right way, I won't be a millionaire by the time I'm 20,

but I'll have about a quarter of a million. And I woke up that morning and everything was in the red, and my account was down about 70, 80%, some ridiculous amount. And I was sitting there, like, sitting there, like, refreshing the fucking page, thinking there's something wrong with that. And what had gone wrong?

What was the issue? Oh, I can't remember if it was Bear Stearns or Lehman or something like that, but one of those collapses happened, right? And then the entire market tanked. And I was levered long financial institutions. A kid sitting in Australia. who's, you know, trading textbook money derivatives ends up feeling the burn of something happening in Wall Street.

And I had no idea, right? I had no idea because the way I was trading at the time was I was just, I didn't give a shit about the companies or the macro situation or any of that. All I looked at was these charts. Yeah. And I was just swing trading. And I was just looking at things if they were too overextended. I'd go, I'd buy a put option.

If they were too underextended, I buy a call option. And, you know, if they were breaking out of a patent or something, I'd go long or short or whatever the case. was. And that's how it was. And I mean, I'm listening to a book now called Thinking in Betts by, I think, Annie Duke or whatever her name is. poker player yeah yeah that's it exactly really really good book and she talks about um the idea of resulting which is confusing a good decision with a good result yeah and and looking back on it that's what i was doing i was thinking i'm a genius i know how to make money right you know this is how it works so then on the way down what did i do i just doubled down the whole way until i lost everything

and then i you know got some loans because i had okay history of trading so then yeah within within in four, five months, I was about a quarter of a million in the hole, so I kind of went the wrong way. So how old are you at this point? Well, I just turned 20, yeah. So you're 20 years old, a quarter million dollars in the hole. Yep. This is not the game plan. This was not the game plan.

I wanted to drive up on my Ferrari to my parents' house and tell him I made a million bucks before 20, and instead I'm down a quarter million bucks. What is that realization like when you wake up that day? Because, you know, thank God, knock on wood, I have not felt that. I felt a lot of things, but I haven't felt that. Yeah. Well, I mean, that morning when, you know, the chaos started happening, I remember walking around this, because I was living in this little shitty apartment because I was putting all the money on in the trading account. And I walked around and I kicked the hole in the wall. And I was like, oh, fuck now. I need to pay for that as well and fix it. So that's sort of my memory of it. I was like, work up shit and kicked a hole in the wall and it felt worse. And, and yeah, and just, I mean, I just think I was in reactionary mode for the next three or four months. just trying to like you know i couldn't fathom how and i mean this is one of the the downsides of paper wealth right is that you don't appreciate it as much and and you know i was running around

trying to figure out how to get back to where it was you know and then you know i i remember as i was going below the zero mark i was like oh i wish i could just get back to zero you know like i was thinking in my head i don't want the 60 you know the 60 grand that i made not even the 20 grand that i made just get me back to zero and then when i you know got down to a hundred underground, I'll be like, look, I'll be happy if I just lost 50. Right. And then all the way down until like, well, this is, have you ever, have you heard Chris Saka tell his story about, um, do you know who Chris Saka is his sort of legendary investor now? Um, you know, he was, he has, I think probably the best early stage investment

portfolio of all time. Like he has Uber, Instagram in there. Um, he has, uh, oh my God, a whole bunch of companies, kick starters in there. He's got maybe eight of the billion dollar companies that came out during that era in his portfolio. Yeah. But he tells us where he did almost the same thing, went to law school, started trading stocks. And, you know, at one point, he had levered his way up to where he thought he was going to be up about 12 million bucks. And he had turned a few hundred thousand dollars into 12 million dollars. And then in the course of about a week swung down to negative $4 million. And from there, like, clawed his way back. And he has this great line, which you remind me of, which was, I've never felt richer than when

I had $0 of net worth. Like when he got out of the debt and got back to zero, he's like, I've never felt richer. Yeah. And the guy's a billionaire now. So, like, is that kind of resonates with you? Yeah, yeah. The contrast, man. There's nothing like that sort of contrast because it was the same.

So my reaction, you know, despite being initially very reactionary was, you know, I then dropped out of uni and I looked for the first thing I could do to make some money. And I got myself what's called an ABN in Australia, which is kind of like, I went into the S bucket. So I got myself, my own little business number. Yep. And I went in Dornon. for any company that would have me.

And I just went in, there was one that I did basically all the work for was selling pay television in Australia. So door-to-door sales. Basically, door-to-door sales. And maybe this was also inspired by Rich Stad Poor Dad. I don't know. But, you know, I was very introverted, but it was the only thing I'd get on short notice that I could make some money straight away without having a skill, without having to do anything.

So how does that work? Because I've never met anyone who actually did door-to-door sales. So what happens? You wake up, you just drive to a neighbor. I don't know, no, no, how does it work? You come to the office in the morning at about 9 o'clock. You've got, so door-to-door companies are effectively two types of businesses. They do sales and they do recruitment.

Okay. Because they have the highest turnover of any kind of business you can imagine. Right. Because you're getting paid commission, right? That's it. Well, it's not only you need more salespeople, but everyone leaves after the first two weeks, basically. It's only a rare few that actually stick it through. I see.

Because it's such a shit job. If you could go out and work all day and get nothing. But it's a really good primer for business. And I think that's why, you know, Kiyosaki talks about it. thing, which is you can go out and you get paid for the result, not for the time you put in it. Right. And so, yeah, so you go to the office at 9 o'clock, you know, people are recruiting and then, you know, you as, uh, if you've been there for, you know, long enough and you're a good enough salesperson,

you become what's called a leader and, you know, all this sort of stuff. And then you, when you started, what was it like? You go there. What happened? I went there. I'm like, what fuck do we do now? And then, you know, there's some dude coming in training salespeople in the morning. And then sort of revs everyone up by about 11 a.m.

We go out. We get a map. This was sort of before we had smartphones and GPS and shit. And, you know, get sort of, you draw out, you mark out with the texter, sort of the blocks that each person has. And then, you know, we all go out and you're not allowed to step on each other's turf. You know, so we all had our own turf. And we'd go, you know, knock on doors and it was just luck of the drug. And did you, what's the sales pitch?

So knock, knock, I open up. Oh, did. What would you say? I think the reason I was successful was because I never, I never had the same pitch. So what they taught us there was there was this five steps, this eight steps principle of, you know, smile and this and this and this is how you take people through it. I threw all that shit out the window. Yeah, no smiling. Yeah, exactly.

No, but I spent some time really digging deep on like neurolinguistics, NLP, and all that sort of stuff. And I managed to go to a Robbins conference just around the time when just before I lost everything, like the last bit of money I had, I went to a Robbins conference and then I paid for an NLP certification. and practitioners thing. So I use that and that is all about not... So give us an example. How do you use that in a sale? I'd knock on the door and someone would say, get the fuck out of here.

You know, and I'd be like, I'll get the fuck out of here in a minute. And I would match their tonality, match the speed at which they said something. And I'd say something that would shock them. They were like, what? And I'd be like, you heard me? And then they'd come to the door.

And then I'd start a conversation. I used to use a lot of body language. So instead of standing face to face, I'd lean on the door to the side. So, you know, slightly more on their side. and then just ask them about themselves. Or I'd pick something out about, you know, what they were wearing or, you know, the neighborhood that they were in. Exactly.

And I'd open up. So it was all, it had nothing to do with the product. And I got to learn this in the early days about sales having very little to do with products. I didn't have a TV. I didn't know what was on the channels. I didn't know any of that shit. I just could pick things out and just talk really quickly and build, the key thing was to build rapport inside 30 seconds. So I'd, yeah, match their body language.

match, doing a lot of mirroring and matching at the door with whoever the person was, and be suggestive in the process of letting them, letting me inside the house. And that was sort of the key. As soon as you got inside the house, it was game over. You could make the sale. Gotcha. Yeah. So what sort of thing gets you in the house? What do you, hey, you've got some water. The water was a big one. Fuck, it's cold out here. It's hot out here. It can use the bathroom. So that was sort of like the sneaky tactics. But then also, when I was younger now, I'm an old, ugly fucker, but when I was younger, I was kind of half good looking. And that used to always work. So most of the people ended up buying off me were moms. And I really played up the sort of

the sun sort of card. It's like, hey, how you doing? You know, this stuff. Okay. All right. So you start selling. Were you good at it? It sounds like you were pretty good at it. Dude, I, within three weeks, I was the third best in the country. And I was living on some dude's lounge, you know, paying 20 bucks a week rent. And my sort of motto was this. I'd carry two cans of tuna in each pocket. So four cans of tuna. I would only eat if I sold something.

And I would sprint between doors because then I could get the doors faster. Did you want to eat like warm tuna in your pocket? Was that like a motivating thing? I didn't give a fuck. I was just like, I'm getting the sale. Then I get to eat. And yeah, my cost of food budget daily was $4 because it was a dollar a can of tuna.

And I just funneled everything towards paying, paying the debts off. And during the day, I would knock on doors. And at nighttime, I would read and study economics, markets, and what the hell did I do wrong? And how was I so stupid to have lost so much money? Right. And so how much were you making doing door to our sales?

Two grand a week. Yeah. And the average person would make about four or five hundred. So like I was about four times above average. So you start paying off the debts and you, sounds like you sort of, because you got humbled, you started looking at the science of business and how this thing works. How do you actually make money reliably and repeatedly? Correct.

And what came out of that? So that period ends. What happens after that? Well, I ended up, so I do not for somebody else for a little while. And then I was like, why am I building this guy's business? So I kind of moved myself from the S to the B, if we're going to use this mental model. And then I set up my own sales company. And then I got a lot of the people that were selling under me that I would get a com off if I trained them.

They came and worked for me. I gave them better commissions and all this sort of stuff. And we started competing with that company. And we did really well because I just had a different style, a different method of teaching people to sell and all this sort of stuff. And we've got our hands on more products. And yeah, and then, like, I went from leaving that place with two or three people that came and followed me to about, you know, within six months we had 30 people running around door knocking for me. And you're selling the same thing, pay TV or something else? We were selling like a little bit of pay TV.

We were selling this car wax stuff. And then that was sort of the segue that I said, I want to sell things that are more. meaningful. So we looked at renewable energy, so selling solar systems. That was a real culture shock because, you know, going from selling a $40 product at the door to like, hey, do you want to give me $12,000 for a solar system? Who the fuck are you? Get out of here. Even the charming, good-looking sun is not going to do a great job of selling that one. I remember the first couple weeks of trying to do that, zero sales. And I'd never in my life gotten zero sales, like more than two or three days in a row.

Like, I was so disillusioned. I was like, fuck, this ain't going to work. We're going to be stuck selling fucking. Yeah, yeah, dude. I was like, we're going to be stuck selling shit to people for the rest of my life. And then it just happened over four, like four or five sales just came back through like from people who were thinking about it all in one day. And that was like, 100 grand in turnover.

And I was like, holy shit. And that sort of changed it for me. And then from there, I transformed that sales company into actually, because the solar the companies that I was selling for, again, I have this recurring theme in my life. I felt they were incompetent, you know, so I was like, I can do this better. And so I went and met with different suppliers, with installers. And because I also had an engineering background, I was able to design the systems like bespoke for people's houses. And so we went for quality of quantity. And we built a really good business. So by the time I turned 22 and a half, 23, roughly that,

But everything was paid back. I'd made my first million. I had about 30 staff across three different states. We were turning over maybe, you know, in a really, really good week, maybe half a million a week at about a 10, 20% margin. So we're making good money. That's a really good business. And so this answers the question of the podcast, right? This podcast is a promise where I basically said, I'm going to go study the rich.

Because from a young age, I've wanted to be rich. I know a lot of people want to be rich and I know that there's two things that come out of when you talk to rich people. You do understand strategies, tactics, tips, those sorts of things, but more than that, you hear the stories and the ups and downs and started from not knowing anything

and just worked my way forward. So I want those stories to come out and I appreciate you telling yours. But this answers the question, right? How did you make your first million? And for you, it was you were selling solar panels. That's it. Yeah. Seriously.

And we got a really big boost from the government. So they came in and they started handing out rebates to everybody. And I mean, in typical government fashion, incentivizing the wrong layer of the stack. Like what they should have done, in hindsight, was they should have gone and incentivized manufacturers or importers or whatever to bring the stuff in.

And as a result, that would have trickled down to the consumer via natural competition. They instead gave the money to the consumer. And then what ended up happening was all of these morons who had never been anywhere near solar, didn't understand electronics, that they were literally just either random electricians or even roofers or even just morons had never had a job before became solar companies. And we went from being one of two companies, our entire region, to being one of 30 in like X amount of months.

And so, I mean, that ate into margins and things like that. But what the, you know, and this is what I call the next big lesson of my life is don't trust the government. Now we're getting to the crypto part. Yeah, very, very shortly. is they it was June I think oh man I think 2012

I can't remember it was 1112 13 it was one of those years and they sort of made an announcement in June that they realized that this thing had taken off like way too way too fast in terms of what they were anticipating and they said alright anyone who hasn't done their installation

by the end of this month which was three weeks away misses out on the rebate and so from a consumer perspective they were going to miss out on all this money so everyone went apeshit like I mean, that day that they announced that, like, I sold, like, I think probably a million and a half worth of systems on the phone in my fucking desk. I didn't even get up. Like, I just called through everybody and just close, close, close, close.

It was the best day I've ever had. And I thought, fuck, we just made it killing. Like, you know, we're high-fiving each other. We're like, you know, all we've got to do now is install these over the next three to six months. And, I mean, whilst the solar industry wouldn't go away, like, it would be subdued, this would give us enough to, you know, manage our way through. So everything was all good. So we went ahead and the way it worked was basically the customer would pay half the money up front and the

government would effectively pay the other half in about, you know, two, three, four, five, six months later whenever, you know, all the certification, all that sort of stuff went through. So we got the money up front. We would basically carry the cash flow until we got that money in. Marins were about, you know, say at that point in time, because of the competition was probably about a thousand bucks a system. So we were waiting on all this money. And then when it came time to pay the money, the government was like, we're going to give you all 50 cents to the dollar. And we're like, what? And like overnight, every job that we'd done just became negative. Yeah, became negative. And like, it was a fucking kick in the nuts. Like, I was lucky because I was like trying to build an empire

here. So I hadn't spent money on stupid shit. So I was, um, I had enough money there to like pay everything out. Um, where I had made some mistakes was I bought a, half a container of LEDs, LED lighting, because I thought that was going to be the next big thing. It didn't need rebates and everything. And that was sort of half paid for and it was sitting on a dock in China. I didn't have the money to pay that off. So I kind of burnt 150 grand there. I had a half-built gym because I was trying to sort of get into the 24-7 fitness craze at that time as well. And we couldn't finish the gym because we didn't have enough money. So I was lucky in some senses because I had enough sort of cash to sort of wind up the solar business. But then I didn't

have enough. So I kind of had to make this decision of what I was going to keep, I wasn't and what I was going to try and do. Anyway, about a year and a bit of torture, I ended up shutting everything down and I kind of had a little bit of money left. This is where you went on the sabbatical. This is where I went on the sabbatical. So just before I went on the sabbatical, I'd put the balance of my money because during this entire time of running this business and building this business, I didn't take my eye off

the ball with respect to the markets and what was going on there. So I was very, very early in gold and silver, you know, studying Austrian economics and understanding how money works, inflation and QE and all this sort of stuff. And so I could see that the US dollar was going to get pummeled and that, you know, we needed something. It was a prudent decision to invest into some more sound sort of money. So I bought a shitload of gold and silver. And my brother and I made a lot of money out of that.

Like that sort of saved my ass during that period. And that's sort of what funded my sabbatical. And yeah, I came to California, spent some time here. I was in Venice Beach, California for a little bit. That was an experience. saw some interesting things Yeah enough said Some parts of bodies

Yep basically And I was actually living right on the boardwalk For about a month And I couldn't handle it after like that month Like it was this cool loft It was like funky and shit And it was you know when I got there It was like typical tourists

You know like came to Venice I thought oh yeah Muscle Beach Go to gym around the corner I thought I was in heaven And I realized it was such a shit hole One night I remember walking back in From the boardwalk

There was some dude Inside my fucking apartment and he's like sitting there like shaking on the floor I'm like what the fuck are you doing he's like you got some money man and I was like get the fuck out of my apartment like it was like the weirdest thing because like that kind of stuff doesn't happen in Australia right welcome to America I know man I was like

holy crap so yeah man and that sabbatical was like an interesting period so you when you came in you handed me this I'm looking at this thing if you're listening you can't see it obviously but it says it says breaking news blockchain is dead and it looks like this is a, is this real? Is this a mock newspaper? What is this? Is this your business plan?

Like, I see an ad for your company at the end. What am I looking at? Because this looks kind of genius, but I don't know what it is. All right. So about... Is this what you were giving away at the conference? It is. Not this conference, though.

At another conference. This conference, I gave it away to a couple people because I had a few printouts left. But basically, at a conference earlier this year, I'm sort of known as either angry Alex or contrarian Alex back in Sydney or back in Brisbane. or Australia, whatever you want to call it. And that's because I generally have a very contrary in viewpoint to norms that I find stupid. And one of the latest norms that I find stupid is this whole blockchain thing. The norm that I found stupid before that was crypto and ICOs.

So there's this capital raising conference called wholesale investor that happens, you know, they do multiple events and they basically get investee companies who are looking to raise capital in front of, you know, wholesale, high net worth, angels, et cetera, and funds, right? So you get the opportunity to get up on stage and pitch your business. And as part of that, some of the more well-known people in industry get to also do it what's called an educational session. So, you know, this little publication actually started the year before, which was I got invited to speak at that event. And it was right during the ICU craze, right? Everyone was making money off ICOs.

And we consciously made a decision not to fucking do an ICU with Amber because I just found it fraudulent, stupid. moronic and every other word I could give it because people are effectively using the narrative of what Bitcoin is, which is about creating symmetry in society and being the money of the people. They were using that sort of narrative to print money and do what the bankers just did in, you know, just to dump, you know, worthless tokens on people. And that pissed me off so much. So I was like, we are categorically not doing that. So I got up at this conference. Well, so I want to pause for a second because I want to have a, I want to test the contrary in Alex or what was the first one? Angry Alex. I want to trust anger. Okay, so for people who are listening, I want to hear your views,

okay, on a couple of things. I'm going to give you the prompt. You give me the answer. Hit me. Prompt is, why should I care about Bitcoin? The world needs a better form of money. And fundamentally, if money is the basis of society, the current form within which we know it is is fucked up. Okay, cool. How's it fucked up? What's wrong with money today? Money is owned and controlled by a few. and if we look at money as a form of communication,

we all believe in freedom of speech. We should all believe also in freedom of owning and doing what we want with money because it is a fundamental form of human – it's a tool of human collaboration. That's what money was designed for, and you cannot have a collaborative, cooperative, complex society without having money. So in today's day and age, the way money works is it's owner-controlled by the few. Who are the few here? The few is like the central banks and basically sovereign nations.

That's the lever that they use to basically run society. And we all know that society has some fundamental problems. You know, you don't have to walk far in San Francisco to see some issues, right? So in business, you and I know we go out and we set up a business, we do something. If we fuck up or if we get it wrong, the consequence is you lose money, you go bankrupt, you have a negative consequence. If you get it right and you do well and the stars align and you're lucky. and all this sort of stuff, you get a nice payout. Something good happens.

In government and central banking and, you know, that sort of side of the world, and this is the asymmetry that you get when you own money, when you own the world's most important resource, if you make a good bet and you invest and you do the right thing, you make a bunch of money, if you fuck it all up and you do dumb shit like 2008 or if you're a government and you just print your way, you know, into as much debt as you want, it doesn't matter. Guess who pays for it? Everybody else. So it's all the power without the consequences. consequence. So there's no, so what happens is you get this asymmetry in society where the very few,

the rent seekers effectively get to do whatever the fuck they want and there's zero consequence. And the rest of us, we either pay for it in taxes or through a hidden tax of inflation. You cannot do that in a sound money type society, something that would potentially be built on Bitcoin. And here in America, you know, inflation is not, we're not hyperinflation, right? It's 3% a year, that sort of thing. what if I'm an American I'm sitting here I'm saying what's the big deal money seems fine money's never did me wrong I don't have enough money but but money itself is not sort of dream wrong I think most people don't feel the consequences of what you're talking about but in some

countries that's different so like give us an example of well I mean Venezuela Zimbabwe you know people have heard about that I mean I don't have my wallet here but I've got like a Venezuelan like I've got a hundred million you know bolivars or whatever it is so so like like a bill yeah it's a bill exactly right and and what happened there a government government? That's, well, hyperinflation is a function of the loss of confidence in the currency of a, um, of a jurisdiction, whether that's a nation state, whether it's whatever. Right now, I mean, in the, in the world we live in, the jurisdiction is always the nation state, effectively.

So money's supposed to be this thing that performs three functions, store of value, medium of exchange, and a unit of account. Now, when people lose confidence, it loses the first one, that idea that it's, that it's a representation or a store of value. And if it loses that, the fact that it's a medium exchange or a unit of account basically goes out the window and people don't trust it anymore. They don't want to hold it because what it's supposed to do, like you would rather than hold goods or you would rather hold anything else other than this worthless paper. And that happens more so in countries that, you know, have weak governments or a weak social system or, you know, all that sort of stuff. It hasn't happened in a place like the US. And I don't think it's likely to

happen here because of how entrenched the US dollar is. I mean, maybe not for another 50 or 100 years, right. So that's sort of not the argument, but I want to touch on the thing that you mentioned how, you know, 3% inflation, right? So, I mean, I think M2 money supply inflation is like 6%. But irrespective, it's an amount that not many people feel that much. But a friend of mine puts it, he calls it crystallized life force. It's like we in society as human beings, we perform work or we add value. It's the, you know, by inputting energy of some sort into the world. And what that's measured in is this unit, which we decide to call money. And then we trade this unit around and that's how we built society right that unit it doesn't make sense for

that unit to just depreciate for some you know nonsense because it's it's um if you go and work for 20 years and you've saved that money the money that you worked for at the beginning of that 20 years is now worth less in purchasing power if you compound that 3% it's worth about 60% less than it was when you began but is your work technically worth less 60% than it was it's not and i was talking with this lady who was not a Bitcoin and we were talking about all sorts of stuff and she sort of brought up Trump and all this sort of stuff. Anyway, I kind of, you know, got me down the Bitcoin rabbit hole and she mentioned a show and I think it's Seth, Seth Rogan, is he the dude that does those, funny guy? Yeah, the funny guy, yeah. So it's, I can't remember if it was him or someone

else, but it's a Netflix show and it's like a parody of Star Trek. And, and, you know, they're all on this ship and they've got that machine that can replicate anything, right? And, you know, whether it's a, you know, wallet or this or that, whatever they want. So they have a, so they have abundance, but the only thing they cannot replicate is the value or the contribution to their mini-society, because that's the one thing that's unique. That's the one thing that's fundamentally scarce. So when she said that, I was like, holy shit, you have just basically described what money is at its fundamental, the basis of what money is. It's something that cannot be replicated, cannot be diluted, and it's a measurement of work. It's a management, it's a management,

measurement of energy. And what Bitcoin represents is this uninflatable unit that cannot be compromised or confiscated or changed by any particular party with asymmetric power. And as a result, we can map that directly to the input that human beings put into society. So the only way in a sort of Bitcoin denominated system, let's say in the future, that's what it looks like, or at least a parallel economic system that's sort of run on Bitcoin. The only way to get ahead in a world like that would be to add more value or to put more time in. That's it. And that's how an economy should function, exactly, not rent-seeking. Right. Okay. I'm with you on all those things. Part of why I'm interested in Bitcoin, but I like hearing it from you. And so you've got this app that's, is it coming out or

already out? It's already out in Australia. It's called Amber. And tell us about Amber. Because I think it's pretty clever. There's like an equivalent app like that for Fiat currency, but it looks like you're doing it for cryptocurrency or for Bitcoin specifically. But tell us what is Amory? Really simply, I believe that everybody should be buying and holding some Bitcoin at the moment. Because when a new asset emerges, there is incredible upside. So, you know, and what you want to do is you want to, if you picture,

I'll give you a really good example to picture Bitcoin. There's going to be 21 million Bitcoin, you know, and that's sort of like a fixed upper limit. It's infinitely divisible. which means everyone can hold some at some point in time, but the upper limit is fixed. So if you look at it, kind of like the planet, there's so much land. It's kind of like holding some territory in Bitcoin is like holding some territory in the physical world. Right. So you want to accumulate now while the fucking thing's cheap. You don't want to hold minimal territory in 100 years from now when everyone's got a large chunk.

So what Amber does, it helps you dollar cost average into Bitcoin by, you know, you download it, you link your bank account, and you forget about it. And you've got options, whether you want to just do spare change or whether you just want to do a recurring sort of buy. But it effectively just purchases an amount of Bitcoin from as little as five bucks a day, whatever it is. And it stores it for you in cold storage. So this is for the person that says, I'm interested in Bitcoin. I don't have a ton of money to go buy, you know, 10 G's worth Bitcoin right now, which would, as of today's price, gets you less than one Bitcoin. Correct. So don't have a ton of money to go invest in this, but I don't want to sit on the sidelines.

I'd like to be in the game. Correct. This is about accessibility. And so you're trying to put people in the game by saying, do no work. Just download the app. Yep. And it will passively say the spare change use cases, I buy something, you know, let's say for $5.60 and it can round up and take the last 40 cents and buy some Bitcoin

with it. Correct. So that's one thing you can tell it to do. And cool, you'll just accumulate little by little. Every time you're buying something, just round up. The spare change you kind of would have forgot about anyways. Correct. The other thing you can do is set up a recurring buy, five bucks every Monday type of thing.

That gets you in the game. And so you're trying to help the person who is interested, but on the sidelines today, get in the game. Well, there's three main reasons. It's too risky. It's too volatile. It's too hard. So we alleviate all of those. Volatility is smoothened out via dollar cost averaging.

That's what it does. So what happens is when you're dollar cost averaging, when the price is exorbitantly high, you're buying a little bit less. When it's exorbitantly low, you're buying a little bit more. And particularly in emergent asset classes, they're all over the place. So if you're not a finance nerd, dollar cost, cross-averaging just means you don't have to time, when's the right time to buy. Correct. You're just always buying a little bit.

Exactly. So as things swing, you're sort of, you're writing the ups and downs. It smooths out the problem of trying to time the market, which nobody can do. 100%. So it's about, so you nailed it there. So it's about time in the market instead of timing the market. So the only thing you've got to do in that sense is you've got to look for opportunities, which have long-term upside.

And ideally, you want to look at the opportunities with not only long-term upside, but with asymmetric upside. So Bitcoin is the only asset that I know of today that is likely has an opportunity to be worth 100x. We don't have many of those today unless you're a Chris Sarker and you can get yourself into over. Exactly. Yeah.

So the most you can lose is the five bucks you put in. Correct. But the most you can gain is 1,000 times the $5. Exactly. That's the asymmetry you're looking for. Exactly right. And that's how most people should invest. So after all the years of trading

and all the years of stuff that I've done, if I just dollar cost averaged into things that had some asymmetric upside, I would be 100 or a thousand times further ahead than I am now instead of trying to be a genius and try and fucking trade my way through. Right, okay, well, that's the wisdom. All right, so how's the app doing?

Are people using it? It's great, man. So we actually, what's today? Today's Friday, so it's Saturday in Australia. So we just finished our public beta yesterday, which is so we go like fully fully live on Monday next week. And why only Australia? Why not the rest of the world?

It's dealing with a product like Bitcoin. It's, you know, it's lesser tech problem. There's the tech problem of connecting to the bank and getting direct debit services because, you know, banks inherently don't like Bitcoin because you're pulling money out of their system into a new economic system, right? So number one, so they're not very friendly. Number two is, you know, governments don't like it. So they're like, you know, make it jurisdictionally difficult.

So, you know, compliance, licensing and all this bullshit is different in every single place. Like, we might not even come to the U.S. because here you guys have a different set of rules for every single state. It's a complete nightmare. So, you know, we might just, like, skip over to your friends in Canada and give them the service. They get all the nice stuff now. I know, right? So, yeah, man, so it's, that's sort of the lay of land. Gotcha.

And so the price today is what? Like, we looked it up on our Uber right over here. It was 12,000, I think 361. I know you're not trying to time the market, but I'm curious what you think the price trajectory looks like. Do you think this is a temporary rally? Do you even care about the price?

How do you think about the price? Because everybody's focused on the price, price. Yeah, correct. Look, I try and be a little bit more long term in my viewpoints, right? So everyone has this tendency to gamble. So there's a popular website called Bitmex, which lets you trade leveraged versions of Bitcoin,

you know, long and short and all that sort of stuff. I've had a play on Bitmex. You know, I started with one Bitcoin, got down to 0.2 Bitcoin, traded my way back to one Bitcoin. And, you know, I've been like, I ain't touching that shit anymore. Because it's just unnecessary, right? So short term, I don't think it matters. Like if I had to take a guess, I'd say short term, we're probably a little bit overextended.

But, hey, I could be wrong. You know, I personally think in the medium term, or during this wave or during this run-up, we'll probably see Bitcoin peak somewhere between 150 to 200K, maybe even more. US. And then it will probably correct from there. So we're probably going to see another mania. It'll correct from there probably to 20. And then it'll probably do another run up, you know, during the next cycle, four-year cycle that it has. And it might go to a million. Now, things are never that clean. But if you can sort of anticipate like a broad brush of cycles, I think this round right now, Bitcoin is cheap as shit.

What's what percentage of your own personal net worth are you putting in Bitcoin? I lost all my Bitcoin in a boating accident. Okay. but it was traditionally traditionally speaking it was about attachment man doesn't listen to this podcast yeah yeah yeah

I was probably closer to 70% oh wow okay so I'm very bullish yeah yeah yeah okay yeah somebody's got to be bullish about this right dude there's a lot of people out there

who will will say all the right things and then they put you know 2% of the net worth and they're already rich and so it's sort of that's a nice to have sort of proposition and that might be the correct conservative way to do it but for most people that is correct exactly yes so i i believe so i think that the the level of um so i don't look at bitcoin as a risk asset i actually look at as a risk off asset so but that just comes from my level of understanding of what's actually going on

here and and that that's the same as someone who might say oh yeah investing in uber in you know the first couple years was a risky thing to do whereas people who understood it were close to it had a very different view and a very different picture of that. So those founders obviously had a much larger stake. So to them it was a risk not being a part of it. So I think that the more you peel the onion and the closer to the core of what you're involved and you get, the more that profile changes.

So if people don't understand it, one or two, three percent, that's enough. But the more you understand it, the more you'll find that you want to put more into it. And what have you noticed Australia versus Silicon Valley the opinions on Bitcoin, because you spend time at both places. Yeah. Do you feel like it's the same viewpoints, or do you see anything drastically different?

Look, I haven't been back here for a while. And this week was obviously skewed because of the Bitcoin 2019 conference. Who goes to that? Is that guys like wearing a Bitcoin outfit? Like, is it the nuts? There was actually a really good turnout. So there was, I mean, you know, you had like blockchain capital there. They were sort of like one of the first funders of Coinbase and things like that.

So you had everyone from VCs. They had Snowden telecast in. Oh, wow. So that that was really cool. Where is he living nowadays? I don't know. I mean, he's not going to kind of tell us. What region of the world do you think he's living in?

I know. Isn't he still in Russia or something? I don't know. I don't know. But, I mean, that was really cool. So they had that. They had speakers from like, you know, all different startups in the Bitcoin space, people that are working on lightning.

And all, there is, there is so much happening there. And it's really interesting to be, like, being in the Bitcoin space right now is, like, being part of this cool club. that very few people know about. And sort of tying it back to that little newspaper thing that I gave you is, you know, I got up and I opened that talk. So that little newspaper started off as a talk that I was supposed to give. And that was the second talk at this wholesale investor thing.

Like it was a year after the first talk that I gave were I bashed the shit at ICOs. At the second talk, they were like, oh, look, can you not do what you did last year? Because you, you know, scared a bunch of people away telling people that ICOs were scams. And I was like, well, was it right? And they're like, well, you were. But can you not? And I said, all right, this time I'll be nice. So this time I got up and I said blockchain was a load of shit that, you know, Bitcoin is where it's at, not this term blockchain, which is just this ephemeral term that someone's picked out of the fucking hat that has nothing to do with anything.

And they've sort of made it seem like blockchain can give you security and mutability when those two functions come from something like Bitcoin, which is an amalgamation of the blockchain architecture along with economics, game theory, incentive, disincentives, networks and all this other stuff that you don't get. So I got up and I said, you know, I had Peter Thiel's quote on the screen. And I said, you know, what truth do very few people agree with you on? And kind of, I told the organizers that the talk was going to be entitled, you know, how lightning is going to deliver on what blockchain promised. But then I got up and I said, the real name of my talk is blockchain is dead. The future is on lightning. And mind you, this is a blockchain conference where people are raising money for blockchain companies.

Right. So, yeah, that's angry Alex and contrary and Alex at work. But I think, and the contrarian bet, which I'm personally, like, sold that is going to win is that Bitcoin and the layers built on Bitcoin, much like the internet and the layers that were built on the internet are where the game is at. Not in trying to build, and the analogy that I give to people is trying to compete with Bitcoin is like AOL trying to compete with the internet. The companies that succeeded were the ones like Google, Netscape, et cetera, who built on the internet, which was this really dumb, basic package. routing network. And it didn't do anything except for route packets of data and it didn't give a shit what was on that data. It was the value-added services and the businesses and the layers that were built on top of that where everyone converged to use the internet. Same thing's going to

happen with Bitcoin. Bitcoin is this really basic, basic is maybe not the right word, but this really robust fundamental network that routes value. And it's unstoppable at routing value. You cannot stop it. You can't turn it off. You can't turn it on. That's what it does. It's this autonomous network. No one owns it. No one controls it. Exactly. So it routes value the same way as the internet routed data. And what's going to happen is people are going to realize that, hey, I can provide the service of what traditionally a bank with hundreds of millions of dollars of resources is required to, like what a bank needs to do to provide a simple service of a freaking checking account and the ability to send money to your friend requires hundreds of millions of

billions of dollars of infrastructure. I could provide the same guarantee of funds and the same guarantee of send, store, receive that a bank can with a little app that we can build with a couple hundred grand. Love it. Like, tell me that's not revolutionary. And people are still here running around trying to look for the killer app on blockchain. The killer app is here. It's it. It came in the bundle. That was the zero to one moment. Yes. And now, so, and that was sort of my argument and that's sort of in that paper there, I make this whole argument. I sort of display what blockchain was what's promised for blockchain. And then I talk about how that's a broken promise. And that, you know, out of all the stuff that came out of the ICO craze, like 99% of it

was all just bullshit. Like, you know, autonomous, drone powered, you know, a token that's going to wash your clothes and make you rich overnight, right? All this shit. But there might have been 1% of the stuff which made sense. That stuff is going to be built on Bitcoin. It ain't going to be built on its own blockchain. It makes sense. There's really, I'd say three schools of thought. There's the, let's give four schools of thought. School of thought number one, what the hell is Bitcoin? People who just

don't understand yet, too fuzzy of a concept, cool. That's where a lot of people live. Number two, Bitcoin is snake oil. This is, everyone, you know, even Warren Buffett, Charlie Munger are out there saying this thing, it makes no sense. It's a Ponzi scheme. Stay away from it. It's poison. Number three

is where I think you and I live, which is Bitcoin is the thing. Bitcoin is the killer application of this technology breakthrough. We had this computer science breakthrough, which enabled a really amazing thing, which is, like you said, we can route value as easily as we routed data and packets for the internet. Now we can route money the same way. And money can be something that's as open, secure, and uncontrolled by a single entity in the way

that the internet is. And then there's a group of people that say, blockchain, not Bitcoin. And I think that's where you stepped in and said, no. Yeah. I also feel like that's sort of the, it's the hedge stance. It's the stance that says, I don't want to be anti this whole crypto thing, but I don't want to be in on Bitcoin and the price and the money-making side of it. So I'm going to just sit on this technology side because that's safe.

Who can argue with the breakthrough technology? That sounds smart. That sounds safe. Those are the people who say, it's all about blockchain, not Bitcoin. And I think that the two are paired together. They're bundled in, as you said, where blockchain made some. something like Bitcoin possible and something like Bitcoin is a huge breakthrough and should be sort of celebrating on a show. I'm going to actually push back on one of those things. It's actually

not blockchain that made Bitcoin possible. It's Bitcoin that made blockchain possible. Because see, the word blockchain never even existed. It's not even in the white paper. It's not even in there. So Bitcoin is actually, and this is technically correct, it's actually a time chain. It's got nothing to do with being a blockchain. It's just that a group of bankers who missed out on Bitcoin and were bitter about it came up with the name. It was kind of, I think, think the R3 consortium, which sort of, you know, had a bunch of banks and all this sort of stuff, came up with the term blockchain in 2012, about four years after Bitcoin came out. Is that right? Okay. I didn't know this. It didn't even exist. You're saying, forget all the

noise. Bitcoin is the thing. It's the thing. There's nothing else here. And if you were, I'll give you the last minute of the podcast to basically speak to, you know, there's a lot of people that are going to listen to this, some of which already are in the Bitcoin game, some have heard of it, and some have never heard of it. I would say their ears or yours. If you had a minute to just say anything to that group of people, you know, what would you tell them? Because you have the chance to reach a lot of people and share a little bit of what you believe to be true. Okay.

Whether you're as a fervent believer as me that, you know, the system needs to get better and we need to bring some more symmetries and whether you've gone down that rabbit hole and you really believe in Bitcoin, whether you're on that side of the spectrum, or whether, you know, you think it's okay and you don't really give a shit. Or even if you're even further on the spectrum, you like the current system the way it is. you should still buy some Bitcoin because of the asymmetry that it represents, that contrarian bet. I don't give a crap where you are. Buying and holding some is actually game theoretically sound because if you don't,

you're just going to end up in the bucket of having been left behind. And if you do, and you only do a little bit, so if you just manage that percentage, depending on which part of the spectrum you're on, you do it intelligently that the worst case is not so bad. You will have lost a little bit and life will go on depending on where you are in the spectrum. But if it does happen, this changes everything. So it's kind of like buying a domain name 20 years ago. Just buy one. Maybe the internet wasn't going to be anything.

Right. All right. This is not investment advice. This is not investment advice. Exactly. Yeah, yeah. All the normal disclaimers. Listen, man, I appreciate you coming in.

It's a pretty fascinating conversation. Like I said, we had never met before. And so for me, I liked hearing, I really liked hearing the story of the ups and downs trying to make a quick buck, got burned. Learning sales and building a real business the hard way, and then getting burned at the mercy of the government who changed their mind and how that led you to Bitcoin.

I think that's a pretty cool, pretty cool story. I think that for a lot of people, some of the stuff that we talked about may go over their head, may not understand a lot of the terms. And for them, I would kind of just ask you, what's a good starting point or resource or when you do want to go down the rabbit hole, where's the surface of that hole? What's a good place for?

somebody to start. There's a couple good places. If you like listening to podcasts, there's one of my favorite ones is a dude called Marty Bent and Matt O'Dell. It's called TFTC, so Tales from the Crypt. It's really, really cool, like, conversational sort of podcast. They do a show every week. It's really, really cool. So they're based up in New York. So that's one. If you want to, if you want to learn more about the economics element of it, particularly the Australian economics, there's a friend of mine called Stefan Levera. He runs a podcast there. That's if you're prefer podcasts. If you prefer reading, I mean, you know, I'm going to toot my own horn here. I do a lot of writing on Medium. I've got quite a decent following. I write for Hackanoon, so I'm one of the top

Bitcoin writers on Hackanoon. Where can people find you? They just want to hear more from you. Where do they find you? Just find me on Twitter. So at Alex Swetsky. And my name's spelled different. So it's A-L-E-K-S-V-E-T-S-K-I. So, Alex Svetsky. So on Twitter, you'll find me on Medium as well. Or if you just Google my name, you'll find me. It pops up all over the place. So a lot of my resources, I've done a couple long-form articles,

and the probably two you want to look for is Homersapians, Evolution, Money, and Bitcoin. That sort of is a journey of how we started and sort of, you know, why it's important. So that sort of sets a good foundation. And then I do why Bitcoin matters. And in there, I sort of talk about how, they have some similarities, because I talk about society, evolution, all that sort of stuff. but then I talk about the fundamental tenets of money and why this is a better,

and a superior form of money. So that's those two. If you want to read that publication online, so we've got an online, Sean has the last printed version that I ever did for that event, right? So it's still a draft. That's a three-day job there.

But we fixed it up, it's online. It's BitcoinTimes. News, N-E-W-S. Got it. Don't put the WWW. So, yeah, so that's all the resources, I think. I hope that all helps. Great.

I appreciate you coming on the show, bro. Thanks, bro. Really appreciate it. All right.