The Derivative - Talking Tech, VC, eSports, Uranium, Bitcoin & more with Dr. Chris Dark

Episode Date: January 20, 2022

Now we’re cooking! We’re turning up the heat and bringing an abundance of flavor in this episode with a special guest who discusses venture capital, working capital, adds in a dash of e-sports and computer games, and sprinkles in being a rocket scientist. Dr. Chris Dark does it all, retiring at the age of 39, he continues to invest his family office across all asset classes, focusing on crypto, long-term out of consensus strategic plays, and allocating to external managers with specialist strategies. This leaves us with just one question, what can’t Dr. Dark do!? In this full force of a discussion, we're talking what it’s like to be a co-founder and executive at five companies (eSports, video games, trade finance, blockchain, venture capital), investment philosophies, Bitcoin, market structure & environmental impacts, and what it was like meeting a less famous Elon Musk and introducing the idea of space elevators. Plus, we play a little game of “What Would You Invest In?” Highlights from this week’s episode include: Why most venture firms don’t make it and how they’re missing one unique component- investing in things they like Why Bitcoin is such an important asset when volatility often increases as the price goes up How to disrupt banks, then do it again Understanding we’re in an interesting time with inflation,  even though it's undeniable that technology is a deflationary force Lessons from a serial entrepreneur, and more! Where Chris would invest $1k, $100k, and $1mm Chapters: 00:00-02:23 = Intro 02:24-14:29 = The Superconductors & eSports Super CV 14:30-28:57 = A Working Capital Marketplace & Venture Capital as an asset class 28:58-38:15 = Luck or Skill? & Avoiding the Entrepreneurial Trap 38:16-01:12:09 = Investment philosophies, Bitcoin, Market structure & Environmental Impacts 01:12:10-01:21:07 = Lithium, Uranium, Meeting Elon, and AI as Snake Oil 01:21:08-01:30:49 = What would you invest in? Additional Resources: Check out Dr. Dark After Dark here. Follow Chris on Twitter here. Don't forget to subscribe to The Derivative, and follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2, or LinkedIn , and Facebook, and sign-up for our blog digest. Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

Okay, you made it to Thursday. Congrats. Today's episode is brought to you by RCM's China division. We'll talk a bit about China in this episode, with Chris having visited many times, impressed by their long-term vision. And RCM's China group is impressed with the Chinese futures markets, which have a bit more directional volatility than the commodity markets over here, making them prime markets on which to operate systematic trading models. Thank you. signals on those Chinese markets. For more info, go to www.rcmalternatives.com. Elsewhere, be sure to listen next week. We'll be talking with Stinson Dean

at Lumber Trading on Twitter. We'll talk about lumber prices back over $1,000 and if that's inflation or whether that is supply chain, whether that is climate change, a little bit of all the above. And on to this episode with Dr. Chris Dark, he of the Dr. Dark After Dark podcast, but better known to me as an investor who's interested in protecting wealth with a solid anti-fragile portfolio that includes a healthy dose of alternatives. This was a super fun chat with my imposter syndrome kicking into high gear as I tried to keep up with Chris's thoughts on everything from nuclear power to term limits and politics to esports to pretending to be a Bitcoin maximalist. Chris is a unique

mind looking at the world in unique ways. So enjoy our chat. Send it. Welcome to The Derivative by RCM Alternatives, where we dive into what makes alternative investments go, analyze the strategies of unique hedge fund managers, and chat with interesting guests from across the investment world. All right. Welcome to the podcast. How are you, Chris? I'm good. Great to be here. Thanks for having me, Jeff. Yeah, been a fan of yours. Used to listen to your stuff. And our mutual friend, Jason Bucks,

told me a lot about you. So glad to finally be talking to you. Absolutely. And so you have quite an incredible CVv there founded a bunch of companies uh studied at oxford a bunch of different stuff so give us some uh give us the quick clip notes on your background and and what you're doing these days sure so as a brit everyone should know it's impossible to give the 30 second answer to that i've got to talk for five hours but no to do it quickly um i originally basically i was um a scientist so i have a phd in superconductors from oxford um so really a physicist material scientist and then um but when i did that i i started one of the world's first

esports sites this is back in 2002 before anyone had really heard of esports so i've kind of often in my career i've done two things at once uh which i mean isn't kind of that normal but it's kind of been fun um and um and after that i so i finished i went to a good bain and company for a few years in london the consulting firm which taught me actually a lot about business and you know uh and and also analysis and how to be more rigorous with data i think that's important but i was never going to do that for too long and then i uh helped start a one of the well what is now one of the largest venture capital firms in europe called atomico with the founders of skype who are good friends of mine and um that

was great fun you know investing across um this was back in kind of 2010 for a few years um in um really web 2 and that type of stuff and and then um i joined uh well my friend had started a a company in the u.s called c2fo which is now the world's largest working capital marketplace and so i ran that across the world outside the US. I started it in about 16 different countries. That's been a real big success. And, you know, taught me a lot of, you know, I moved around the world for that and had a lot of fun.

But that was B2B, B2B payments, working capital, completely different to, you know, computer games and that type of stuff. And also at the same time, I started to get an interest in cryptocurrencies so you know they get into that at some point um and i mean ultimately i had you know i'd started a couple other businesses that were complete failures um i did some blockchain stuff which was a success until covid came. And yeah, it kind of meant that, I mean, I'm now basically retired and really just, you know,

invest from, you know, what we call our kind of family office. So that's the kind of short history. I love it. So I'm going to unpack some of that. So first of all, what tell me about superconductors? I think I know enough to be dangerous, but what's the practical use of them? I mean, as every superconducting thesis has to start, it's almost a law. They were discovered in 1911 by Kamalika Honors, I think, from memory. And he's the guy that worked out how to liquefy helium.

So what he was doing was just, and liquid helium is 4.2 Kelvin. So basically four degrees above absolute zero minus 269 celsius i've no idea what that is in fahrenheit like 6 000 yeah that'd be minus four or five hundred i guess and um so yeah he was just putting stuff into this cold liquid and then he measuring the resistance and he suddenly found, I try to remember the first one I think was lead. And he just found the resistance, the electrical resistance suddenly went to zero. So it didn't just trend down.

It literally fell off a cliff and he couldn't measure it. It was so close to zero. It's not strictly zero. But if you had a superconducting ring and put a current in it and kept it cool, it would flow for thousands of years without you being able to detect any form of reduction in current. So it's in practice zero. And then basically they weren't very useful for a long time. And then Reagan, Ronald Reagan, gave a famous speech in the 80s that how superconductors are going to change the world because they just found things that work at much higher temperatures as in liquid nitrogen which is 77 kelvin um which is still obviously very cold but it's a lot cheaper than them someone told me once you

know liquid helium costs the same as whiskey liquid nitrogen costs the same as milk so it makes a big difference and good whiskey at that yeah um and there was meant to be all sorts of applications. And really the one application that's been the killer application for superconductors is MRI scanners. So MRI machines will not work if it wasn't for superconductors, because you couldn't produce the magnetic fields you need to image inside your body. So that is absolutely the number one use.

It's in every hospital pretty much in the Western world. And, you know but in there were just as always a lot of things worked in the lab and were very hard to scale up so what i was looking into is how you could make kind of longer tapes and uh you know longer wires of these kind of high temperature superconductors and a lot of progress has been made now so now now they can do it um but this was kind of 20 25 years ago i did this so uh yeah and is there is there this sounds like a crass question but is there money in it like if you've just been a researcher and like a phd at a university probably not retired early no but what's happening more i mean oxford was very good at this uh us is very good

at this and cambridge is pretty good at it in uk and i mentioned those because they are the top universities in the world for research a lot of the time and you know colleagues of mine were spitting out businesses and so they were they remained an academic and would also have a kind of you know an entrepreneurial business and then they could use the university's equipment which was great but university took some equity in that. And every university is very different in how they approach that. And, you know, I mean, famously, was it Stanford had early shares of Google? I mean, you know, right.

And so, but most academics are not cut out for entrepreneurship. I mean, you know, it's a very different kind of ballgame, but some are. So, yeah. Yeah. We say that in the hedge fund world all the time. We're like brilliant at creating the model terrible business person they're two two separate skills uh and then well i'll leave that be so that sounds totally different than esports so how did that come about were you playing video games on the side exactly that i i played a lot of real-time strategy games so you know we're talking late

90s early noughties um things like command and conquer oh yeah um you know which was a huge franchise then you know there were a lot of blizzard games i mean starcraft being most famous world of warcraft so what warcraft 3 i guess and then a whole bunch of other real-time strategy games came out i loved them and so i i started site where... and this was pre-video so my kind of thesis was very simple. People want to get better at the games they love and online was a thing to play the game but no one could share videos of them playing because back in 2000, 2002 there was no YouTube. You couldn't... people were on dial-up still. I mean when everyone was on broadband. There was no way you could share videos.

And so there was a way you could share a little tiny file called a replay file that was about 50 kilobytes normally. So easy to share. And then people could play that through their game engine and watch other people play. And then we would let audio on top of that. And if you put the two together, it's like a video, but it was only maybe a couple of megabytes in size which was the audio taking up that space um versus you know if it was an actual video like we're filming now you know would have been maybe hundreds of megabytes yeah so they could pull that up on their what what platforms were they yeah this was on these were

when forums rained so we would highly customize at the time what was called envision powerboard uh and highly highly customize it it was all written in php and um yeah so it became popular there was millions of people using it it was never a huge commercial success um i ended up basically giving it back to the community to run and to own um and um it still exists today so that's different in my mind than some of these esports teams and whatnot but so interestingly enough one of my best friends not best friends but a good friend in london founded fanatic which is one of the top three esports teams in the world and he founded this back in the mid-naughties and of course everyone

told him he was insane and he was insane because he was too early for quite a long time and then it just worked and now it's a massive success so i didn't so a lot of people that were on my site ultimately joined esports teams but then they they had to retire right because in esports by the time you're about depending on the game you play by the time you're 23 to 25 you're getting a bit old especially if you play fps so first person shoot them by the time you're 23 to 25, you're getting a bit old, especially if you play FPS. So first person shoot them up. You've got to have super fast reactions. So that's like literally their physical abilities?

Peak is 23. Or is it the tide of the mental as well? And then most of course go and do something else, but some then become trainers and coaches. You know, it's kind of crazy you can play some games much longer up in into your 30s but uh yeah i've actually noticed that just playing against my kids of like madden and like basic stuff and they're starting to beat me i'm like what's going on like this is but look i said 20 years ago it will be the biggest sport and everyone said i was insane. And it took 20 years.

And I think now it is the biggest sport. About half a billion people watch esports roughly once a month or more. I don't think that many people even watch soccer these days. So it's pretty crazy. But revenue wise, it's nowhere near like NFL. That's why it's such an interesting you've got the eyeballs of who young people who by the way you know whether it's millennials and zoomers that they're um they're starting to get money and oh the average amount of money you make per user is

literally nothing compared to say a manchester united yeah yet the greatest esports players over the next few years will become as famous as a Ronaldo or whoever. Very interesting. But you think they'll have like those $300 million contracts and whatnot? I don't know. I mean, maybe it'll be deflationary in some ways. You've got such short careers too. It might be a bit more tricky to build that brand. But put it one way, the way people esports teams are monetizing

is um is rapidly evolving um you know far beyond just the original ways were just sponsorships simple advertising and you know just merchandise is a huge thing um and now broadcast rights um you know when literally tens of millions of people can be watching a specific stream. People care. That's more than watches any of the U S networks. Yeah. So, but you know, these people, but your people watching will be everywhere in the world. It's very hard to monetize someone in Vietnam say versus us. So yeah, it's lots of challenges, but I think it's a fascinating space. And yeah. And my brain always

goes to what like wouldn't the blizzards of the world like hey there's so much money being made there we need a piece of the action right but they do i mean that at the end of the day that i mean they've always been ahead of the curve blizzard on having good multiplayer tools from the early days of battle.net um and but at the of the day, they're selling more games. I mean, if you're Epic, right? If you have Fortnite, well, they love the fact, or if you produce League of Legends,

you love the fact it's a massive game because you're just selling, well, all right, not Fortnite. You're not selling copies. It's free to play, but you're going to have many more transactions happening in the game. Yeah. transactions users game yeah moving on you mentioned working capital marketplace what's a working capital marketplace

yeah well it's it it it's funny i see maybe one thing that does unify me is i've just tried to disrupt banks in many different ways this is this is one So this is very geeky B2B type stuff. So every business is owed money, accounts receivable. And every business owes some money, accounts payable. Broadly, the accounts payable of the world should roughly equal the accounts receivable. And traditionally, if you've been owed money, but you're not going to be paid it for 60, 90, or indeed, in some parts of Asia, 150 days. US tends to have actually quite short payment terms versus the rest of the world. You know, traditionally, you could go to a bank.

You might be able to get some form of working capital loan or you might do some factoring. Different countries have different dynamics. But it tends to be slightly cumbersome. The rates might not be great. And it just takes time. So what we built was a, but at the same time, if you're a big corporate, name any corporate, Amazon, they have treasury, right? And their treasury isn't earning much yield. And so the whole idea was, well, if you can bring together several, and we did start in US retail, several large US retailers, their suppliers will be the same. So if you supply Costco,

you probably supply Amazon and Walmart and whoever else, right? And those suppliers, yeah, they might be being paid in 45 days, 50 days, whatever it is. We wanted a way where they could, in effect, name their own rate or their own price, i.e. discount, to, say, an Amazon or a Walmart. And then, but that to be part of basically a much wider marketplace. So you might have tens of thousands of suppliers wanting to be paid early, and they're willing to offer different discounts,

which you can analyze into a rate. And then what the technology did was work out which were the good offers and the less good offers. And then the good offers tend to get paid early, but from the corporate cash that was on their balance sheet. So you didn't need to go through any banks. There were no intermediaries. There was lending there was no risk and we're directly integrated into a lot of the world's largest companies erp systems so directly into the erp system

and so it's really a giant network effect business it's it's a great business and then we scaled it all around the world and of course a lot of these companies are multinational. They have suppliers all across the world. You just have this big network of suppliers. So I think now it would be the 10th, it would be in the top 10 providers of all trade finance in the world, if I'm not wrong. Wow. And the other nine are all banks.

Yeah. I mean, literally Standard Char charter jp morgan the big chinese banks you know it's it's growing to be really quite a big company and isn't wasn't this uh brit in the news for uh what was that uh oh that was greenfield capital yeah yeah yeah he's australian actually okay but is that similar uh well I actually can't go into that too much. Okay. Sorry. It was slightly different, but similar.

But it was actually using, there was credit risk involved. Yeah. They were fronting the money, essentially. So money wasn't coming directly from a corporate's balance sheet. So in an ERP system, if you know, I don't know, just name a random company. If you know Amazon's going to pay an invoice in 30 days and they've approved that invoice, if Amazon pays it early with their own money, but pays, say, $99.50 in the hundred, so fractionally less, a good deal for everyone. There's no credit risk there.

And you don't need a bank. So the whole idea was you don't need to have risk underwriting the world's accounts payable and accounts receivable because, frankly, these are just factual things, whether they're... Yeah, it's just like a logistics problem with ones and zeros, right? And it just needed a network to be built, which is what we did. And then, so some of these groups was venture capital, which, again again is totally different

than superconductors and e-sports, maybe similar to e-sports a little bit, but how do you view venture capital as an asset class? Do you view it as a separate asset class? What do you view its kind of risk return profile as? Oh, for sure. I mean, I mean i mean i we started atomico in 2009 2010 i left in about 14 um to this day i'm there are still companies that haven't you know that are still a liquid from that first fund that are on your balance your personal balance sheet still yeah so that if you've worked in venture capital and had and atomico has been very successful whether you're there or used to be there and you have to wait a long time for carry payments, it is a totally different asset class to most because the LPs there are literally locking up money for 10 plus years. Completely and utterly locking it up.

And yes, there are ways. I mean, back in 2010, really that was when Facebook started to change how the secondary markets worked. And so you could start to cash out a little earlier of some of the most successful companies and that's the trend that's definitely carried on. But you're going to have to sell it at a discount. But yeah, I mean, it's a completely different asset class to private equity because it's, you know, the return profile is totally different. You know, people are, you know, whilst PE might be double figure APRs is very good. And eventually you're looking 25,

30 to get you into the IRRs to get you into the top kind of quartile. And it's a brutal asset class because I mean, most venture firms don't make itile. And it's a brutal asset class because I mean, most venture firms don't make it. And it's like most businesses that have started, they don't succeed. And it tends to be one where if you've had success in the past, more entrepreneurs want you to invest in them.

So you get access to better deals and it's a bit of a flywheel. You can look at this with a Sequoia or a Benchmark and the great firms in US. And then they leverage those, well, Sequoia especially around the world to build their brand. But I mean, not surprisingly,

my most successful investments were things I understood. Computer game companies like Supercell, Rovio that did Angry Birds. These were giant successes. Companies like Klarna. That's again, that's financial services always had an interest there.

It's disrupting banks and credit cards. So generally when I invested in things, I didn't really understand. It was, yeah, often it's just because you believed in the entrepreneur, but that's kind of a cheesy thing to say, I think. They didn't work as well. But again, if you're not, you've got to lose some investments to make the 100x plus gains on others. So, yeah, it's not for everyone. What does that math look like generally in your experience of like, what was your hit rate? One out of 10, one out of 20? No, it depends.

This is the thing, though. You've got to remember that most funds ultimately will be defined by one or two companies in venture. I mean, just look at the funds that invested in Facebook or Uber or whatever, or, you know, Clano, for example, you know, Clano is an investment of Atomico, that public information, and that's a giant success. So normally, you'll get one or two that will pay back the fund or multiples of and then a whole bunch in the middle that return you know 10 20 30 percent of the fund and then a whole bunch of zeros and and some of the zeros take a long time yeah some are quick but they also depend on your stage right if you're if your

seed stage versus late stage completely different return profiles so and. And you know a little bit about options and gamma and all the rest, but like, do you view it as, right? So just a big long option play like a buy in way out of the money calls. I would say it's just a long-term way to benefit from broadly deflation, the deflation nature of technology. Now I know we're in a interesting time now of inflation deflation but it's undeniable technology is a deflationary force um and you know the people that invest the limited partners and family offices investing in venture capital genuinely want to lock up a

relatively small amount they'll have far bigger allocations to you know private equity and hedge funds but they want to lock up a small percentage of their funds for a long long long time completely forget about them and it to be totally uncorrelated to anything else because whilst you could think it's correlated to technology, the point is, as I said, like most funds, the returns are driven by one or two companies. So that's not correlated to a certain thing. So you could have the right technology in the wrong company. Yeah. And so it's a nice diversifier for that, but it's,

but ultimately, you know, in 2001 too, when NASDAQ crashed 85%, of course, no one wanted to know about technology. Everyone was freaking out. And of course, that was a generational buying opportunity. Few piled in when everyone's panicking. But by around 2010, when I started in venture, I think it was becoming pretty clear that technology wasn't going away. Facebook was becoming quite dominant. It was fairly clear the large platforms were going to... The naysayers on amazon were getting fewer and fewer um and um yeah and at the end of the day it's you know we should be very thankful for technology because it only goes forwards unless there's some like really bad regulation somewhere yeah and it absolutely

has driven down the price of tons of things. And now we all have a supercomputer in our pocket that literally does the thing of 20 devices used to do. So, and I've said on here many times, like people don't think about it in terms of commodities, but the technological advances in commodities have been insane, right? Now we can drill down 3000 feet over 2000 feet and get this oil that was you know we could never get before hey a lot of that's from my degree in material science a lot of material science is how do you make things right and how do you make drill bits the harder and better and and now it's engineering too when you're going down and across and this

is incredible this is all technology right yeah um and you know it's i i it winds me up a lot when i see i i just don't have any clue why um some politicians are like seemingly anti technology except they're not anti-technology when a pandemic comes and needs vaccines which is all based on technology of course yeah um i i don't understand. I understand the skepticism that a lot of companies have got too big to fail. And I suspect Europe will lead the charge on genuinely regulating some of the tech. But to be fair, they've tried to do this to Microsoft

for 30 years and got nowhere. I view that more as like the kid who killed himself because of Robinhood, the girl's suicide rate going up because of Facebook, things like that of like, okay, maybe there needs to be more regulation around, right? The technology itself, but how it's laid out, I think is the rub and what some of those people calling

for the regulation would point out. Right. But also like the problem is normally what's happened before is if you look at most industries where there's not really network effects what happens is an incumbent gets lazy they they basically want to goose margin they're not going to innovate so much they cut costs someone else comes and out innovates them it's just a very natural cycle whatever the industry is it could be a 20-year cycle, a five-year cycle, whatever. But in technology,

because you can build network effects, it basically means you're preventing a lot of smaller companies from innovating. I think that's the angle they're going to go for. And I think we have, I mean, we're on Zoom, right? It's been relatively successful due to obviously COVID. It's existed for many years. But it was insane how little innovation there was in video conferencing for so many years because everyone was using the incumbents, Cisco and whatever.

And they were awful. They wouldn't use mobiles for years. It was the whole thing was a total disaster. And we needed a pandemic to actually get. And again, now a lot of people are working on innovations for, you know, Zoom and, you know, Microsoft started getting that. But yeah, I think, yeah. I was just going to say, how do you view that as, right? We're saying like, if it's a winner, take all network effects. But as a venture guy, isn't that dangerous to the business model, right? Of like, I need to then pick the absolute winner.

I can't just ride a rising tide. That's why late stage capital became so big because it all went into the big web 2.0 things. That it had demonstrable network effects and valuations. You know, when I started, very few companies were valued in the hundreds of millions unless they were public. And before you knew it, it was a whole bunch were valued in the billions yeah unicorn and then now you know 10 100 billion dollar businesses um and good businesses so but you know but you think that kills venture capital or no or they just have to go later stages there's a lot of smart people in venture capital yeah look the world will have innovation and now what you're seeing

though is you know you're seeing i mean someone like if you look at how arc thinks of the world of kathy wood and they're looking at different disruptive technologies and how they start intersecting and in the pop in the past with a lot of um online stuff you've had kind of silos and now you've got ai across the top interacting with all sorts of, whether it be automation and self-driving stuff and crypto and different layers. Like these are all the smarter VCs now are looking at how these things come together so that the sum is much greater than the parts. And so you have to be an expert on more than just like web two technology,

right? You're going to have to understand how gaming is interacting with cryptocurrencies because there's a whole monetization and financial layer. Oh, and NFTs and collectibles, which have been around in computer games for a long time. And

so I suspect the VCs will be okay. I'm not shedding a tear for them. No, I agree. I just wanted to think that through for a second. So I wanted to dig into your entrepreneurship roots. You've obviously had a lot of success. Like just generally, what percent of your success? I heard you mention this friend, that friend. What percent of your success do you attribute to luck versus skill?

Oh, that's a good one. Well, I mean, I think there's only one answer. You need both. I mean, anyone that says you don't need some luck is a lunatic. You need luck. I think Elon Musk would say it was 100% skill, but most others would have some balance. But, I mean, I know a lot of entrepreneurs right and a lot of serial entrepreneurs who i mean i'll sort of put myself in that category but not not as

much i mean there are some who are literally just 15 20 companies they've started and when they and when one either sells or succeeds or fails they're straight into the next one yeah um you know somebody try and systematize it. I was kind of always less like that, but you absolutely need luck. But you make your own luck, right? You do have to work hard, but you've got to be curious.

When I was hiring people, hiring is super crucial. All I really tended to care about was people that were going to be curious and I would ask kind of crazy questions and I just wanted to see how their mind works um well yeah i mean there's the classic hilarious things like how many oranges are in florida yeah i just want to see how you go about it i i honestly don't know my favorite used to be how many transistors are made in the world per second um because anyone should be able to work it out. But the problem is the number got so big that it,

because like a long time ago, it was measured in the hundreds of billions or trillions per second, but now it's just such an astronomically bigger number that you actually were disadvantaging people who weren't good at big maths numbers, which, but, but also, yeah yeah just something in the news just um you just take something that's in the news that maybe is you think is misunderstood or is different arguments on it get them to argue both sides i just want people to you know you know think on their feet yeah i think it's always good if someone's very long something or passionate about something ask them

about the opposite point of view and if they literally can't answer it then they probably haven't been that curious because nothing's a surefire set in the world oh apart from was it death and taxes yeah the uh mine was always what's the uh what do you think the most numerous man-made thing on the planet is okay interesting yeah which i transistors it's for sure transistors yeah my back in the day i was thinking like nails or screws or yeah because how many transistors are on one well now you're talking about 50 trillion so yeah all right no 50 billion sorry but but you think how many are now made yeah the new m1s are pros are about 50 billion all right um and so how so you mentioned systematizing it but did you think you purposely

tried to avoid like the entrepreneur's trap right of like oh i had success with this i'm just going to continue to have success it's really interesting i think where that comes in a lot is through advisors. So a lot of startups have advisory boards, right? And often these are people who are more experienced, have had success, and they will always tend to give you the advice that worked for them. And what I found was that sometimes that can be wonderful advice, but actually sometimes it can be terrible advice. And so you've got to be able to, and by the way, that doesn't make them bad advisors yeah they're there to give their advice because they've got experience um they tend to have very small um equity positions in the company like tiny um it's not going to be material for them in general but they're trying to give back and help and i think that's good

but after you've done it a few times you start to be able to kind of filter out um those things and you may get things wrong of course but um the the places where they tended to give more consistently good advice would tend to be things that don't change human emotion hiring these types of things you know but technology changes so fast that um you know so even something that was five years ago cutting edge could be irrelevant now so you just got to kind of watch that a little bit. And then like, but did you have hard rules against like, I'm not putting money into my friend's restaurant and this,

my wife's friends startup. I, I, I, I don't do, I honestly don't do friends and family. Yeah. I just don't.

And I'm very happy to talk to them about, you'll be one of the happy to talk to them about, um, you'll be one of the places to invest in and stuff, but I just don't want to go over that line. Yeah. And then speaking of friends and family, so this I'm bringing some personal in here. I don't think I was taught at a young age.

I was taught like, Hey, my dad IPO to two companies. One went buzz, but it was like, hey, you can be whatever you want. You can be totally successful. But it was very nebulous. I feel looking back, it would have been better to be like, hey, here's what we did on the IPO roadshow. And here's what these revenues number look like. And here, way more statistical. Do you have any feelings like what you'll pass on to children or as an advisor of like specifics or just generally like be whatever you want to be well yeah i mean i mean i do advise

few companies and i do have children so for children i i want them to i think most educational systems are beyond broken um and i i want them to learn creativity because i think that's the one thing that really is going to matter in the next well i can't say the next hundred years because i have no idea what's happening then maybe yeah computers will be way more creative but in the relative short term by the way computers just changed how chess is played after being you know by google alpha it literally made chess more creative people are now sacrificing more using the wings more like the flanks it's very interesting um computer didn't know it was being creative of course but it but it was um and so a creative creativity curiosity and understand having a basic grasp of um what money is and the financial world and all this it's just not taught

at schools anywhere really. Well, there might be some places, but, um, and entrepreneurship, taking risks, getting things wrong, not being ashamed of that. Um, but, but, you know, working hard and having a good crack. I mean, it's just, um, I I'm not that I'm not going to sit there for hours teaching my kids to write perfectly. I don't think you're going to need to write. By the way, you should still be able to hold a pencil and write but yeah i was drilled in it so much as a kid it's just not relevant now so right like if your handwriting was wrong you had to like stay in from recess what the heck was that all about

yeah um and yeah i teach mine like the jobs you might have might not exist yet. Right. So you need to learn how to learn. So like everyone under 10 or, but again, they don't realize necessarily that one in a hundred thousand people are going to build a super huge YouTube channel with millions of subs. Yeah. But you know, I don't want to kind of in the UK, I don't want to piss on their parade and say that, you know, it's not possible. Of course it's possible. It's hard. And how far out are we from like there's got to be some ai

engine somewhere that could be like hey this would be a good thing to do a youtube video about and be an influence right you could have so there are people oh there will be groups yeah but you could have a uh i'm forgetting the term it's just netflix for youtube right you're basically just what netflix would do is create content where they know it will work it's the same thing but i'm saying like a cgi influencer right like you don't even have the influencer so the company makes the money by creating the cgi influencer like i've seen some cgi that was so good yeah you basically can't tell yeah awesome uh and then as you're advising some of these guys in defy and uh wherever you're doing what's some of the lessons that you pass on or one piece of advice

that you give them well again i think an entrepreneur whatever you're doing it really doesn't matter what it is you just got to be curious you've got to be um you've got to get that balance between internal and external um some people um and again this could be different people within a company that but but if you're running the company you know you've got to be aware of what's going on outside you can't be too much in your own pigeonhole uh but again you've got to know you know the details of um uh the details of what you're doing actually you you can't say, oh, because I'm not that technical, I can't understand what the engineers are doing. It's not acceptable.

You've got to get to a certain level of competence across everything. You can't say, well, I'm not good at this HR stuff, so I don't really care about the people stuff. I mean, that's obviously crucial. So, I mean, as companies get bigger, you tend to trend towards 100% of your time being involved in just dealing with people. So I don't know if there's a law like Bedford's law or something there, but like, yeah, it's pretty much how it seems to be. Dark's law. There we go. Dark's law.

Moving on to your kind of how you view the world in investment. So it seems you're more in the stay rich business than the get rich business these days. Yeah, I would say both, but I mean, I think it's an interesting one. I mean, once you've had some success, I mean, I mean, obviously the classic is, you know, you've got to speculate to accumulate, but you've got to concentrate to accumulate. And then I don't know anyone that has made some money that doesn't diversify to some degree. There's the odd person in crypto that hasn't because they're so focused. And it tends to be, it could be bitcoin or ethereum

either way it would be one of those generally they're so convinced that that will change the world they're literally a hundred percent or more than a hundred percent long one thing i mean i personally think that's insane yeah but i don't want to be in 500 different things each have a fraction of percent allocation and I become an index. That's not interesting to me either. So I want to find a middle ground. And I also only want to invest. So I use several external managers for things that I don't like doing myself.

So you mentioned options earlier. Well, sure. I've traded options and I can bore you about what all the Greeks mean and all the different geeky things and get to third derivatives and why we should pay attention. I just realized I didn't enjoy it. And when it came to long volatility investing

or indeed volatility harvesting, I short picks with long call protections, fixed spikes and I either penny in front of the steamroller trade stuff like that very stressful to be doing it pay someone else to do it don't worry about it um so i realized you know life's too short to to get too stressed about things you don't have to and you have to pay a bit for someone else to do it but that's fine um what i enjoy investing in is um long longer medium to long term i would say kind of out of consensus strategic things like to get in before something not so early that you're waiting for like we all know the investor that thinks

something's going to be big and for like you know six years they've been saying the same thing it never has but only a great example in the last year or so has been uranium miners like you know it's to me as a scientist like it's completely obvious that i cannot believe politically or technologically we're not going to have electricity running in 10 years time the lights will be on yeah like there's just no way we're going to use less energy in 10 years to now we're just not civilization uses more we use it for all sorts of different uses and by the way life expectancy goes up and quality of life goes up so the electricity will be running in 10 years um but it seems pretty obvious it isn't going to be powered by coal and gas renewables don't solve everything. There are countries like Brazil, New Zealand,

that can have huge amounts of hydro, but that's very, very rare. There's only one game in town, and it's nuclear. And as much as some people love it and hate it, it just seemed obvious to me. And now in the last few months, that's kind of really become much more en vogue. But that's the type of stuff.

But I'll very patiently build positions, might still use some options and stuff, but long-term stuff. Another good example recently is carbon credits. It's kind of related to nuclear to some degree, but again, not an obvious thing that everyone talks about. But again, do you think politicians are going to give up? And the biggest market by far is Europe. Are European politicians going to give up on carbon? Of course they don't. I mean, it's just zero chance.

So, I mean, you know, I love stuff like that. And so by out of consensus, you don't mean that's been battered down. You're not buying the falling knife. No, well, I do that on things I have huge conviction on you don't mean that's been battered down. You're not buying the falling knife. No. Well, I do that on things I have huge conviction on. So I'm that weirdo, right? So when Bitcoin's had its massive crashes in the last seven, eight years,

as in the crash to 200 years ago, the crash to 3,100, the COVID crash, other ones like, this thing's gone down like 85%, which is what the NASDAQ went down, right 2002 in fact it's very similar i absolutely love buying stuff then when everyone is absolutely freaked out screaming the issue everyone's blood in the street because for me it's just like well okay it either goes to zero or it goes up massively. Well, okay. Don't put money in that you can afford to lose. But having said that,

I'm not afraid to take risks. I've always found that easier. If you have a conviction on an asset to buy when it goes down. And, and it's kind of, it's kind of funny. I like when it, when things go down a bit, I'm like, Oh, it's gone down. Okay. And then when it goes down a lot, I start just laughing at it and be like, oh, okay. Can we just go down even more? And when I tweet that, people get very upset with me. But yeah. I've got a good blog post.

I'll put in the show notes of we hope it goes to zero. Like in the managed future space back in 08, right? Right. We were short everything, trend following. Yeah. And just money was coming in hand over fist and was like, we hope it goes to zero. And we'd say that at cocktail parties and stuff

and people look at you like, what? What are you crazy? Like they're crying in their cocktail room. Look, you've got to buy when there's blood on the streets. And what I find more difficult is when to sell. So I've just taken the emotion out of it. And I write down, I mechanically sell, especially high vol assets.

High vol assets, and it doesn't just have to be crypto, but it could be private companies that became public that you own stock in. They can have very high volatilities, you know, in triple figures, right? You're expecting five to 6% moves every day. It's very hard not to get emotionally attached to those things in different ways um and um so i have to take the emotion out because i know that's what i'm bad at um and i would just literally agree with my wife where

we're selling some things not all of it just bits of it and then i will just mechanically put those orders in and just forget about it and that's how i found to deal with that what that looked like in bitcoin like if you're buying at 5800 or whatever on the covid crash right i feel like most people say oh then i'm gonna get out of summit 10 000 and summit 15 yeah so well the thing is that was such a um i didn't actually i actually know i did buy that dip a little bit, but I used futures. It was very short-term trade. So I was just like, well, I used futures to just, you know, it did a V and I just got out.

You don't hold the futures because of the contango issue, right? It's a whole different ball game on the kind of stupidity of having a Bitcoin futures ECF, but not a spot one, even though a spot one exists in many countries, not least Canada. But no, when it was for example the the crash to 200 or the crash to 3100 um in uh which happened in 18 i tend to wait for a higher low just to kind of i want to see a first higher low and then i'm going to come in and then it just um on a daily basis or weekly um I don't know.

I mean, I'm looking at generally that type of stuff, daily candles, because in crypto things move very fast, right? So if you're looking at weekly or monthlies, you can, like in a month, it can double or triple, right? But then when you go, you just commit. And then I'm pretty much in my mind, not thinking about that for probably two or three years. But as something like Bitcoin, Ethereum has gone up so much that it just becomes a bigger part of a portfolio. And I just think you're nuts not to sell some of it.

For me, what I say to people is I sell some because I believe in it so much. And they look at me like I'm insane. I sell some because I believe in it so much. And they look at me like I'm insane. I'm like, I believe in it so much. I want to sell some so I don't become too emotionally attached in a way that I make bad decisions. And I don't know if anyone can understand that logic, but I think, I mean, about a year ago, I did a podcast with Raoul Pal about 100X investing

and the emotions of it all. it was kind of fun and like and this can only really happen in crypto options technology it's pretty hard to get 100x in a you know a moony bar right I mean that's gonna be pretty tricky or moonies yeah moonies will be very tricky but there are plenty of ways and And, you know, I just realized that the more as you take risk and get comfortable with basically triple figure volatility assets on a 30 day basis, you, you know, and obviously you're going to lose your shirt sometimes. Right. So you, I think it's always good to take profits, always good to take emotion out of it but but having said that if you genuinely believe in something in the long run you know like there should be millions of americans the millionaires from amazon stock but there's not right right why because most sold when it doubled and there's tons of people i mean people love finding old

twitter posts about bitcoiners you know that bought for four dollars sold for eight dollars you know in like 2011 and we're super happy right and literally people love there's this whole meme of retweeting someone from back then saying how'd you feel now and sometimes the original person posts back going just like i'm just i'm still just dead inside it's like yeah literally could have been a billionaire um yeah and you know but uh but of course some people did it and still still kept a bunch um you know how do you view that in terms of like i have this issue everyone seems to be going for these 100 x's i view it as like parlay bets and football gambling right if you bet 10 bet 10 teams, you get paid whatever, 21. But the odds of that are super small.

So my brain goes, if I keep going for this large payoff, my odds of success are small, small, small, small. So you got to be careful you're not just bleeding this premium going for that huge payoff. Right. But I'm not. That's why I like Bitcoin so much because I don't need to use options. Yeah.

Well, but I'm saying even the concept, if you put some in Bitcoin and some in this coin and some in that, right? If you put it across 10 coins thinking you're going to get 100x. Right. But I've been there, right?

In 17, a lot of people went there and it was, and one could argue now there's more use of a lot of the let's just say non-bitcoin non-ethereum cryptos because yeah they're going to theorem are the big two right i mean there's no question on that i mean one can argue all day whether they will be forever more or not but forever is a long time right to the death of the universe so yeah i'm kind of careful on using words like that but um again i don't know many people that put all their money into bitcoin in 2011 let's say when it was a fraction or a dollar or whatever literally all their money and then just sat on it for 10 years right like i mean there might be the odd person on the planet that

did that but literally like as it's the same people that went into the ethereum ico at like 32 35 cents whatever it was like um but you know there are some but i think what most you know certainly what i did was put in some money a good long time ago but then increased positioning as i got more confident on it over time. It's riding your winners, right? And then having the confidence to buy big, big, big dips. When everyone's screaming, when the fear and greed index is at one out of a hundred, like flashing red, massive fear, blood on the streets. And then actually to commit more capital, much more capital over time

um and again you're not going to get like the massive massive returns that were once possible but you this is what you learn in venture capital you know you could put money into seed companies and yeah you could get a 300x now and again but if you only put 100k in that's 30 million well in a fund of 300 million it's only a tenth of the fund. It's not that interesting, really. Not bad. It's a good investment. Don't get me wrong. But if you put in 30 million pounds, dollars, euros,

whatever into something that 10Xs, that does pay back the fund. So how much capital one deploys, I just think is a very natural function of one's conviction, which is generally a function of how much work someone's put into it and and how comfortable they are yeah i just wear this new yolo type meme around there right of like all these investors are going to be just spending

spending spending trying to get that 300x right but ending up with a bunch of zeros sure but it's interesting because you now we're going to get geeky but in effect what's happening is you're getting it's almost like a vanner squeeze so like you've got so i um we're looking at how delta is changing with um volatility and so what happened with amc and stuff was volatility went... So this is why Bitcoin is such an important asset, because volatility often increases as the price goes up. And this is very rare, of course. 99% of the time, stocks trend up over a period and their volatility tends to decrease. And then when you have a crash, volatility spikes. Well,

you look at the Bitcoin volatility chart, going back bvol, going back as long as you can, and do this experiment. Print out the chart and try and guess, get rid of the years so you don't know when it is. Try and guess for each of the volatility spikes up and down whether the price of Bitcoin went up or down. It's absolutely impossible.

Now, do that with the S&P. You will do it with 100 accuracy yeah so that's why a lot of people can't model bitcoin very well and this is what happened with amc you basically got this increase in volatility with increasing price and it it drove all the deltas and you had to have all this gamma hedging and then they had to buy all the underlying and it was but it was just this i didn't spot that right i kind of worked it was, but it was just this, I didn't spot that, right? I kind of worked it out now, but it's really interesting that I've been dealing with that with Bitcoin for years and Ethereum and whatever.

But there's not really the dealer hedging mechanism in Bitcoin. There is, but it's different dealers. No, it's different, right? So because the largest options exchange is Deribit by a mile, right?

All right. You've now got the options on the futures ztf which is the you know the citadels the squad is the usual guy but with bitcoin in the futures and options space you tend to have a lot of well i mean i don't trade in that but like there's a lot of people like me that are actually performing those market maker functions um and they're obviously a crypto specific hedge funds doing it and some more traditional ones. But no, it's give it a few years. It will be the citadels of the world doing it. Yeah. But it's just fascinating. You've got, you know, I just,

I don't know whoever said it, but you know, history doesn't repeat itself, but it rhymes. Sure. I mean, there's just so much to learn of how markets are evolving and if you just you know it's like the perma bears who always want everything to crash i'm like well you know yeah you're going to be right once every 10 years but you're going to be crushed in the meantime and i remember in march 2020 they were so happy all these people that have massive twitter accounts and you then, of course, none of them, they'd always said they would flip long risk

when there's a crash. Of course, they couldn't. They didn't. I mean, very few of us saw them. I got the dip down. I did not get the V-shape up in terms of- No, me neither. Very few people did.

In fact, I don't know anyone that got both, the down and the up. I did worse than not getting the up. I was selling the up. Right. Oh, no, absolutely. So but I just think there's so much for me, like the crypto market is so interesting because there's just so much innovation going on.

It's not with the traditional players. And by the way, they're trying to regulate it and no one really knows how to do it. But it's at the end of the day bitcoin's the commodity um and if you believe that politicians want to get re-elected which is the thing i believe unifies all politicians in the world broadly they don't really care about the plebs right um but they absolutely care about being re-elected don't get me wrong there are absolutely exceptions to this where a politician is very principled on a local issue or a certain issue and that's what they do and that's fantastic and they can absolutely have change but in most of the western world you have a lot of career politicians i mean i think it really started in

uk maybe us but just people who would because you had so many advisors in the uk to people like tony blair and david cameron and so you have all these politicians who have never done a day's kind of work in their life they have no experience doing anything else apart from politics and and for them it's all about being re-elected they're never going to make tough decisions which means they don't i don't believe they care in any way about fiat currency in general. And I don't mean like about the Euro to USD exchange rate. I mean, fiat in general, I just don't think they care. They certainly not thinking about a 20 year time horizon.

I was going to say, they're not planting trees, right? They're just, I mean, somewhat, right. Don't get me wrong. I mean, I used to live in Hong Kong and I was there for six years. I went to China many, many, many, many times and all over China. And again, people can have big pros and cons about the CCP. Don't get me wrong.

But they do think long term. And they have one of the few political systems. Most of the Western world is, I would say two to five year systems because you could argue the US is a two year system because of the midterms and the whole of the house being redone every um two years um and the uk says the longer end which is five years um but without term limits and these things which most places don't have on on normal politicians they just don't they just want to get re-elected

so they're going to destroy fiat in my mind. And I just want to be long things that are priced in fiat, which is the denominator. And by the way, I'm not saying there's Zimbabwe inflation or this or that, whatever. But it's pretty obvious that when you have debt levels that are triple-figure debt to GDP, you either default or you use inflation to get rid of it eventually. And then third option of just like a global reset or a-

Yeah. Which is in effect a default, right? So I mean- Yeah, yeah. But a default with no effect. Well, it's a default where the Euro to US dollar ratio may not change. But I suspect the euro and US dollar to gold or Bitcoin or oil or whatever, you know, genuine commodity or hard assets that that would change. Politicians can't help themselves. So and I can't really see that changing. Hence why being long things that are scarce, whether it be arts, Bitcoin, um, not, not necessarily, I mean, obviously commodities have done well in last year, but they're not necessarily scarce, but things that genuinely cannot be just produced at will, um, I think makes a lot of sense.

And the intersection of this, like digital NFTs, these are all fun things. Yeah. But can't they be created at will? I mean, if they have a timestamp or whatnot, but, uh, right. like digital art nfts these are all fun things yeah but can't they be created at will i mean if they have a time stamp or whatnot but well right but if you have a collection of 100 of something and that's that and the clock the smart contract is closed you can't create more someone could copy paste it sure you're on but then they've created a separate thing it's that's not the mona lisa that's a copy we all know where the mon Lisa is. There's one. We all agree on it.

The nice thing about timestamping and digital art is you can absolutely know which one was first on the blockchain and is quote unquote the real one. But, you know, I think it's just very misunderstood by a lot of people, NFTs, because it's just digital flexing, right? I mean, people have used art to flex their wealth for literally thousands of years. People have used cars, they've used houses, they've used all these things, but you've literally now got $3 trillion of wealth generally in millennials and Zoomers, but of course, some are now institutions in the space.

And people want to flex that in different ways. one way is that's worked a lot in the last year or so is is by nfts and via profile pictures and yeah i it's i don't think it's any different to someone saying come and look at my picasso or whatever so yeah and i view it as a lot like owning a url right yeah like you could you could copy whatever's on my URL and your URL, but I own the address, I own the actual thing where it's being done there. Right. Wikipedia is still Wikipedia, right? You could literally take every word and put it somewhere else and no one will go there. But look, with these new things, it's good. They're a naysayers. And, you know, I think it, it's good having these types of debates and do I think every NFC is going to go

up in value? Of course not. That's absolutely ludicrous. I mean, the vast majority of them will be worth zero, but you know, and do you think it's rife with corruption right now? Like, I don't know about pools like bidding each other up just yeah i mean that's the obvious one new about i mean i mean i've got some nfts and i've only bought them in projects where i know the people behind them like pretty quite well and i cannot guarantee they're not bidding against others but i would be very surprised. I think most people, if you know someone has good morals, then they tend to be, tend to be okay.

But yeah, of course, if you're like some random thing you haven't heard about a week ago and it's suddenly worth whatever, and it's a bunch of people, you don't even know who's behind it. Well, be prepared for a rug pull. I mean, it's, I mean, it's just so obvious, but I just don't understand how.

And then to me the another confusing part like i'm a big star wars fan so i wanted to be like i went out i saw some of these lightsaber ones yeah but then doesn't disney come in and be like no this is trademark infringement you can't absolutely they do but then they might not know who to sue and yeah so there's lots of fascinating the same happened in the music industry right in that you had it was different but you know in the worlds of kazan napster and this stuff you had again things were being digitized in a way that meant distribution became in effect free yeah and actually some of those sites i mentioned were actually the early pioneers of sort of like blockchain type databases because you, like supernodes. It was very interesting, right? Decentralized networks. And they'll get

that. What I love about NFTs is that you can program them so the artist every time it's sold gets say 10% of it. So it can create a recurring revenue stream for the artist not the auction house but the actual artist the creator i think that's going to be one of the very powerful things that comes from this and which in effect they get royalties i think that's pretty cool there's no more starving artists yeah and literally it's locked like the beauty of it it's literally in the code like you can't change it um of course that has issues too sometimes people do bad code but you know we we learn from this and what and so you're mainly a bitcoin guy or you're like because everything you're saying is ethereum based or not so much i would say i'm a 90 bitcoin maximalist just to annoy everyone because bitcoin maximalists are literally

like there's nothing but bitcoin everything else is stupid everything's a scam or everyone's untrustworthy don't trust verify like you know it's great okay fine um and you know everything that's bad about bitcoin is a feature is what it should have it and some of the things are bitcoin fixes this yeah i mean bitcoin is slow to change it just had taproot but taproot took literally five years to happen and and most people won't even know what it does like that's the point of it it's slow to change it's like the oil tanker that you know yeah i love that in the form of hard money that's predictable and is based on math um like um so in terms of how i invest in it yeah i mean i'm not exactly 90 bitcoin but it's very very high percentage um i've always held ethereum i think ethereum's

great because i mean nfts by the way crypto punks came out in 2017 right no one cared about them people were buying them for a dollar, I mean, literally people are literally 1 million exiting on these things. And Ethereum, we had DeFi last summer. Well, you know, a lot of people are not banked in the world. DeFi starts happening. Stablecoins start rocketing up. You know, structurally, the market shifted from having Bitcoin to whatever token pairs to be the token versus a stable coin.

That was a big shift from 17 where everything was traded against Bitcoin or ETH to some degree. And, you know, you, you've had entire countries like El Salvador, which I totally get is not the biggest place in the world, but it's kind of interesting what they're doing. You know, I do believe the current system is really sucky if you're not wealthy and people can like you can be deplatformed you can be unbanked there have to be alternatives um i have no idea what people are going to be using ethereum for in three years time probably very different things

um they have to upgrade the whole network which is a huge technical task. It's like what's ahead of Ethereum is it's like flying a plane and having to change the wings and the engines at the same time. They're doing it in stages. They're moving from proof of work to proof of stake. That's just one of many, many big technical challenges and indeed potentially economic challenges. But I think it's amazing we're having this experimentation at a half a trillion dollar asset scale. Because most companies at half a trillion dollars, I mean, I think this

is like a relatively unique thought of mine, like I'm sure someone else said it before, but most companies at half a trillion dollars are pretty boring. I mean, you could maybe say Tesla is different, but most companies at that scale, they have a product, they have their revenue streams, they're going along a path. They're not massively innovative anymore. One by design. If they come out with something crazy, their stock will get halved. Yeah.

On Ethereum, we have a half a trillion dollar asset, which is still in some ways the wild west, is nowhere near as decentralized as Bitcoin. I think that's pretty obvious, but that's fine. I don't think regulators know what to even vaguely do with a whole bunch of it there's very old laws in some countries that one could argue either way whether they're relevant or not um and bitcoin just trundles along um which i do think is a feature

not a bug um but having said that with networks like lightning being built upon bitcoin suddenly you know i generally believe in 10 years, a Bitcoin on-chain Bitcoin transaction on the base layer will be considered a massive luxury that will cost people thousands of dollars and only very few will ever do it. Because everything, like Nick Bartier's book, Laird Money, money has always been layered.

And it's no different in these digital things. And the layers are just being built. Like in public with open source software. I think it's no different in these digital things um and the layers are just being built like in public with open source software i think it's incredible um yeah for everyone to see you know but i also just think i know we're running out of time but i just think like i just see a massive amount of salt online from people that have missed stuff they miss bitcoin fine and they missed ethereum because they and then they miss whatever and they every time there's just i just don't understand why an asset manager wouldn't put as long as they're allowed to just or indeed in their pas like just a little bit like because then you start to learn about it more it's like if you if you have a whatever it is an etf on your pnl and

versus a you know holding it in a paper account in effect like you're then going to suddenly start to care and i generally think whilst in 2017 people institutions investing in this stuff would have got you fired now give it a couple of years it may well be the opposite because although we're uncorrelated and it's huge. And you don't have to be a Bitcoin maximalist or Ethereum, ETH head or whatever. It's just very hard to dismiss a $3 trillion industry that didn't exist just over 10 years ago. I think the trick is how do you, how do you access it correctly? Right?

Like just do Bitcoin, like you're saying, or right. If I'm an institution, I'm looking at these, how many are there now? 17,000 coins or something. 18.8 million. Yeah. 18.8 million? Bitcoin. Yeah. No, no, no. Price.

No, no, no. I'm saying the number of coins. Oh, sure. But I'm sorry, but if you're an institution, the only thing you're looking at is bitcoin and maybe ethereum right but i think that's the hard part yeah why why like it six years ago it wasn't even ethereum was just big or whatever so it's like how do they wrap their head around it right right but like i mean bitcoin seems right i don't think i don't think if put someone puts some time into it i don't think if they're looking at a treasury asset type of thing, I'm not saying everyone is, but of course everyone is. That's different from if you're just investing.

I think if you're just investing as a fiduciary, it's pretty obvious those two have got the lowest volatility by a pretty long way. And that's where you're going to start. And they're the biggest. So I don't think it takes that much digging to get there and and frankly the how to to buy them as an institution is pretty in most well certainly in us whether it's by nidig or whoever like you know there's um pretty robust ways so a lot you know what about that beautiful view behind you and the environmental impacts? Oh, well, I just think this is one of those completely virtue-siggling pieces of rubbish. I mean, I very rarely say this, but I think Greta Thunberg's tweet after COP26 or whatever number it was, said it all.

She just said, it's just a bunch of blah, blah, blah, blah, blah. And she's like, why can't you do anything? And I say I don't always agree with her because I'm sure she hates Bitcoin mining. But my point is like, well, actually, it can solve a lot of these problems because it allows people to invest in stranded or renewable energy

that is way far away from populations that will never be used. If you're then plowing money into whether it be hydro or geothermal or just using flared gas, which is absolutely done across Texas, people are looking at this in the Middle East now, you could run the entire Bitcoin network

just by what Saudi Aramco flares every year. Literally flares, just by six. And by the way, flaring is horrible for methane. Sometimes they vent it, which is 100 times worse. And what it allows is investment in renewables. So like, okay, well, if we want to have better hydro or better geothermal, we have to go up the cost curve, right? Or down the cost curve, right? Or down the cost curve, right? We have to produce more and more and more of it. And every time we double the amount of

hydro in the world, it's going to come down in cost by a certain percentage. So it just incentivizes green investment. It is happening. And one day, just like I would argue nuclear, you know, it's very topical at the moment, Europe's looking like it's going to put nuclear in the non-carbon emitting bucket, which is to put nuclear in the non-carbon emitting bucket which yeah obvious it's in the non-carbon emitting yeah whatever i mean it's literally obvious but but that's like a it's never been in it because of some of its other issues but like um but basically finland says they'll store it all and we trust the fins and stuff like this because they're awesome and hardcore and um so i just think it's a lot of virtue signaling.

I'm about, any entrepreneur is going to be about what are the solutions to, I think we can all agree when I live in a world that has clean air, clean water, that where Tonga doesn't get flooded and all this stuff, it's fairly obvious stuff. I think that- What are we really going to solve it?

You know, it's got to be technology and economics, innovation. This is what will solve it you know it's got to be technology and economics innovation this is what will solve it um don't get me wrong I mentioned carbon credits earlier and I think things like that can again I've got good friends who love them and hate them but like um they're not going to solve it on their own although that will you know add to the economic side I'm sure um yeah I think you have a problem with the... We're having Mike Asland, you know him in the UK, of

CarbonCap. They run a fund, CarbonCap. He's coming on the pod in a couple of weeks. Okay, cool. To talk through all that, because yeah, fascinating. That's been one of the best trending markets of late too. Oh, Carbon. It's been fantastic.

When I first went in it... Actually, no, i would say that's never been one that was non-consensus i just no one knew about it yeah and and because the futures are almost all in europe that's the big market i think a lot of us people didn't like that but i'm right british i i i get the european politics of this so now there's ets you can just buy and hold. The chart on those is ridiculous. Yeah. And most of these US managers still don't, a lot of them do, but I'd say maybe half. But now there's cryptocurrencies. So there's, what is it?

Climate Dow or something. They're buying loads of carbon credits now. And it's, they're carbon backing a token, right? It's fascinating. Like I didn't know that until literally last week. And there's a thread on Twitter claiming that the recent increase in price in carbon is almost entirely due to this cryptocurrency. I don't know if that's true or not, but it's because it's only a $400 billion market, maybe 500 billion now. So I say only, but that's nothing really, right? That means the institutions are not there.

So give me the rest of the portfolio. We talked about the crypto. You talk a lot about bonds and duration and then gold, of course. Oh, so yeah. So I'm generally, I only, I used to, I don't own duration apart from in some external managers have some, um, I'm just not interested in taking whatever 30 years, but there's not really risk on the dollar. I mean, the dollar can exist, but obviously it might not be worth much, but I'm not that

interested in getting 2% a year from that. It's not pretty boring to me um gold i used to own a fair amount um i'm not a conspiracy theorist i never owned it physically just owned etfs and i know some of the executives that run these etfs and the gold is there as much as people don't want it to be it actually is um and i know people who have well they just tell you it is you haven't seen it you haven't want it to be. It actually is. And I know people who have... Well, they just tell you it is. You haven't seen it. You haven't touched it with your... I literally know close friends

who have audited these faults. And I know for certain they're not lying. In the big, well-run, like, precious metal ETFs. It doesn't mean there can't be some form of supply squeeze on these things. But I pretty much think gold's done for in the long run. it doesn't mean there can't be some form of supply squeeze on these things. But Jason, I pretty much think gold's done for in the long run. Done for.

Just because of Bitcoin, but silver, I think is a different beast. And I think it's very interesting just because at the end of the day, it is genuinely used and it's used up all the time because silver is actually used as an industrial metal and a catalyst and all sorts of interesting things in thousands of applications. Gold is never used up uh it is um and i i yeah i'm just you're speaking my language i've been saying this for years and years so i i just i just keep it that simple and

i i'm getting into as a theme uh lithium much more just be not just because i'm not like a tesla fanboy i'm just like i believe the world is short lithium structurally in a five to ten year time horizon because when solid state batteries come which they will suddenly we can have decentralized um storage of power in every home and i know i know now you could get a tesla power wall and other things but they're just not quite good enough um the next leap in technology which could be with with the liquid ones or or indeed solid state ones but it doesn't matter they both use lithium um well yeah if we can store solar then it's game over right like we absolutely yeah it solves so much stuff right and then that would be the day where I'd be like, oh, maybe nuclear is going to not be so important. That's fine.

I can change my mind, right? But so that's really interesting. And it's a bit like the rare earth space. I mean, because lithium is not a rare earth. I mean, obviously lithium is just the number three in the atomic table. But a lot of the miners are in China. there's a fair amount going on in US Australia um and there's a lot of innovation in the lithium space in South Korea Japan where there's a lot of people working on batteries and stuff um so it's kind of interesting you um you're taking a whole lot of different risks geopolitical and all of that. But I just think technologically,

I think we're underestimating how many batteries the world's going to need in a medium to long-term timeframe. Therefore, we're short lithium. Therefore, buy lithium miners. I don't think it's that complex, but I have no idea if it's going to go up or go down tomorrow,

but I'll be pretty surprised if in 10 years it wasn't a good investment. So I like stuff like that, but you know, CME launched the lithium futures. We want the futures. I hate buying the miners. There's too much, you know, hair on those dogs sometimes. Oh, completely. But it's the same with uranium miners, right? There are the big dogs and then there's a whole bunch of random,

it's the same with gold. I mean, yeah, that's good. GDX and GDXJ and then you've got a whole bunch of stuff that can't even get in gdxj i mean like um it's uh yeah so these types of things i'd never bet the farm on but they're you know um how do you i like to i like to think that there's still an edge in investing on longer time periods i suspect the zero edge edge versus computers and math on a short term period. So like a lot of the trend followers and people doing this stuff are of course basing this on, I mean, it's not human emotion. It's just algo. So I'm not going to be that.

But I put this to the algo guys we have here on the top all the time. I'm like, how come your machine learning and your AI hasn't said like buy Toronto real estate or buy uranium or like these longer term macro trends, they're no good at that because there's no... Correct. But that's the human brain has to figure that pattern out. Right.

And one day AI will, but we're definitely not there yet. Have any of your companies been ai focused or what are you no you mentioned it previously um we've dabbled in ai there's a lot of bs with ai i mean a friend of mine runs one of the largest ai funds in the world and he founded one of the largest ai companies in the world that's actually successful and um you know he's just like the amount of snake oil sold in this space. Oh my God, yeah. So many companies. I mean, it's undoubted that people like Google use AI

in a way that has genuinely changed things. I mean, they solve chess in four hours. Yeah. Literally played it differently. And now Magnus Carlsen, the best player in the world by a mile, literally plays differently. After 30 years of chess computers playing incredibly boring chess but just accurate accurate chess right like so undoubtedly there are ways it can massively help except there's a famous facebook paper from years ago that showed that um was it facebook or google

i know it was google google came out of. But Facebook reaffirmed it later, which was the amount of data you need to actually generate meaningful information from AI and machine learning is orders of magnitude more than you think you need. And of course, who got there first? The mega tech companies. And who has benefited the most from machine learning AI?

The mega tech companies. So if you think you need you think, you know, you need a terabyte of data, you probably need a petabyte of data. I'm just making up amounts. Right. But you know, it was kind of magnitudes and difference. And I thought that was kind of very interesting, which meant a lot of traditional businesses. So, you know, I don't know, I don't know what Costco does with AI. I'm just randomly naming a company, but like, yeah,

I suspect Amazon does a lot more and better because they just have a lot more data. They've kept more data. And Costco is an innovative company too, right? So I'm not saying they're bad. It's a great business. That's one of the bold cases for Tesla, right? That they just have so much of a data lead on all these other companies. Yeah. I just have no idea if that's true or not. We have one and just watching as you're driving around and like the, the visual on the screen of like, it can tell this person's tall and that's a kid and that's a dog and there's a

bike going past. So like the stuff it's ingesting, I don't know how it's coding that into that. Right. But there's real technology there, right? Hardware and software. I mean, no, look, don't get me wrong like i'm not an elon fanboy i have met him a few times when he was less famous years ago when i was an investor and asked him about space elevators and he didn't like that because that wouldn't be good for spacex right but um i'm on islands at the time but um i think take our nuclear waste shoot it up there on the space elevator, release it to the sun,

and we're all good, right? Oh, that'd be awesome. That would be. By the way, why not, right? Genuinely, one day we will. I got one more quick thing on space. No, just one very quick thing. I just think on Elon Musk,

I think it's very hard to argue that SpaceX is an incredible company, as in he's genuinely changing spaceflight and you can argue all day on tesla fine whatever but you know i think spacex is a genuinely important company and there will be many more but seeing reusable rockets and all that yeah that is and by the way their safety record is excellent they're not cutting, but he is cutting some corners, but to iterate fast, but you know, they've, they've got an excellent safety record. So I, I, I think that's a pretty fascinating company.

He lives there, right? Yeah. Like a $50,000 hut. But I've always thought, I don't understand why don't instead of airplane travel why don't we like shoot the people up let the earth spin below us and then you come back down on you well you can't do that because you you have optimal momentum right so if you go up you're you're orbiting so it doesn't quite work like that you have to move against yeah all right you blew my you blew my billion dollar idea. So if you had, and I don't know exactly how to phrase this,

you have a thousand dollars to invest and you're not you, you're just some guy on the street, thousand dollars to invest. Where are you doing with it? Am I, it depends on how old I am. If I'm a 22 year old person, not married, no kids, then, and if I can only invest it in one thing, I would probably say Ethereum. I just think there'll be more volatility on that than Bitcoin. I got four of these. All right. Thousands of Ethereum, a hundred thousand. Then again, if it's a 22 year old person, then I'll say Bitcoin.

You're all switching for totally different things. Yeah, because you've got more capital, so you don't need the volatility so much. Okay. And then a million? A million would still be Bitcoin. Really? That's it? Nothing else? You're going to start the diversity? I thought I only had to put it in one thing. No, if I did it in other things, I would put it in. Well, then I would go, again, I'm not trying to say a whole portfolio here, but like Bitcoin and then maybe half Bitcoin and half in, you know,

basically just technology in general. Like a combo of large and smaller, you know, for all the reasons we've talked about. Technology will drive the world forwards. And yeah, it's not going to go backwards so yeah and then the last bucket a hundred million well a hundred million then you're getting a little different because you're you're almost certainly going to be buying some interesting real estate um for almost certainly because you're going to want to live in a nice

place and unfortunately in the world even for a million if you're going to say put half in real estate it's not going to get you very much anymore, but putting 20, 30 million bucks into a beautiful place or places, you know, and they're having a higher quality, a hundred million, you've got to think about how do I maximize quality of my life to get rid of stress, not lose it. Sure. But you also got to think about multi-generational things with kids and their kids and education of that changes big mindset from a million to tens of millions. We'd still have a whole bunch in Bitcoin, definitely technology. And then you're getting all the interesting strategies we talked about.

And I would trust a whole bunch to external managers, probably 20, 30%, just to run different strategies and would have really robust downside protections just in case they're generally, so i.e. long volatility type stuff, which there are plenty of good funds doing that. But that's a full-time thing. You've got to be on top of that all the time. So then you're really starting to diversify, right? Very different answer. Yeah, exactly.

And how do you think about that real estate in places all over the world, the risks associated with that and like your kids, you know, not having one culture to grow up in? Yeah, I think just in general, real estate gets tokenized at some point because at the end of the day, you've got a centralized land registry in every country that in effect says who owns what. And once they allow fractional ownership of things. The recorder of deeds. Yeah. And that gets more digitized.

Then I suspect you'll just see the usual thing we've seen, which is this stuff that's premium is going to go up more because people are going to want to own a part of a condo in New York or London or wherever. And it's like, in some ways, the rich get richer again. Does that really, you know, it's the same with art, right? You know, you can't own a thousandth of the Mona Lisa, but if you could, those things would be valued a lot higher just because of the liquidity it gives. But lots of interesting things to solve on that but um but yeah i mean i would say to people like you know it like i think ralph howell says this a

lot too like you know owning your primary property where you live makes a lot of sense because you've got to live somewhere yeah um whether i would have much else uh is a separate question um but i also have a rule never build um never buy less than five meters from sea level so you've got to be more than that ideally significantly more because whether you believe in climate change or not the oceans are going up yeah and i don't have property underwater it's not cool or even i've seen before there was any talk of climate change back. I grew up in Vero Beach, Florida and the house three down from us on the beach, just a couple of hurricanes and natural erosion.

Right. And that's what a lot of people forget about. You're being flooded. It's not that the ocean's going to bug you. It's the king tide that comes in. And I've seen properties all over the world, beautiful properties that just wouldn't sell for this reason. And having said that, I don't think it's a mega issue in say miami in terms of the real estate market and i've asked people there about it and but it's interesting if that changes so

there's a great you know 10 meters or above obviously they'll be probably it's all good there's a great atlantic article about uh this guy went undercover as a condo buyer in miami basically he would ask everyone, what about climate change and the water level rising? And the answers he got were from just the ludicrous to the somewhat honest to the... I'll try and dig that up and send it to you. It's funny.

That'd be interesting. Awesome. Well, Chris, it's been fun. I think we covered a lot. Any last thoughts? Want to leave the listeners? You're not doing the pod anymore, so that's not where they can find you.

No, I just, I mean, look. What's the Twitter handle? I tweet at Darky999, D-I-R-K-Y-9-9-9. That was my nickname when I was a kid. It's kind of semi-embarrassing now of political correctness. But literally I've been called that since I was like four. Well, it's your it's not some it is my name so it's not and um

yeah so i just think in general like for listeners just you know the world whilst i think as i've got older you know experience is a thing, but always be challenging yourself and be curious about new stuff. And I used to dismiss things quickly as a venture capitalist. And then I realized I shouldn't. And actually, a lot of the time I'd misunderstood something and I miss things because of that. Which I was going to ask you before. You know a lot about a lot of different topics. Is that you taught yourself all that? Have you know a lot you know a lot about a lot of different topics is that

you taught yourself all that have you always been like that as a kid did you know a lot about everything i was that kid yeah um i mean i i would read encyclopedias back then which is what you had and then when in carter came in 1995 i think it was on a cd i was like wow there's all this knowledge and you know and like um and i loved the internet when it first came and at first it was only very good for like text right because it's so slow i mean yeah um but um just i i just believe in this world it's it's great to have there's nothing wrong with domain expertise and being an expert i i really believe in experts um but and i think everyone's probably going to get deeper on one or two things. But actually just being curious about what's going on and where innovation or capital is moving, not dismissing things, I think is a huge skill.

Hey, I still buy and sell boring ETFs and boring stuff too. But I don't find that interesting. It's more like, you know, if I think inflation is going to trend for a few years i'm going to be long energy it's like not very complex right but um but i'm not super curious in that area because i don't think it's that you know um sorry in terms of like traditional and gas stuff but you know when it comes to next generation stuff then just dive in. And I just think Twitter's your best friend for this. There's so many good people that put out stuff for free.

But again, beware of the snake oil. Beware of the snake oil. We'll end it there. I got to ask you, which we ask all our guests for old time's sake, favorite Star Wars character? Oh, well, I mean, I think it's going to have to be Yoda. I can't say Luke is boring.

It's my AirPod case. Little Yoda. Darth Vader is pretty cool. I love it. All right. Thanks again, Chris. We'll talk to you soon. Thanks, Jeff. Enjoy your day there in beautiful country. You've been listening to The Derivative.

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