The Diary Of A CEO with Steven Bartlett - The Investing & Crypto Expert: "We Only Have 6 Years Until Everything Changes!", "The S&P 500 Isn't Worth Your Time!", "Don't Keep Spare Cash In A Bank!"

Starting point is 00:00:00 We've got about six years before everything changes, and we thought money in the bank was safe. We thought our house was safe, but none of that's true. And the moment you put your money and your savings in the bank, you don't own anything. And your future self is getting poorer by 11% every year. And that's a problem for financial security and wealth creation. But I know where the opportunities lie and I've got answers. So could you explain it to me through the context of this?

Starting point is 00:00:23 Okay, so... Raoul Pal is one of the most influential voices in the ever-changing world of modern finance. Unpacking the secrets of crypto. And how to build wealth in an uncertain future. People know their future is fucked. They can't afford to buy a house. They have less savings, debts from university,

Starting point is 00:00:38 people in their thirties, the first generation that won't be as rich as their parents. So what advice would you give to set myself up for wealth in the future? You start investing. But what about the people that no matter how hard they work, they still don't have that excess income to invest? You don't need huge savings.

Starting point is 00:00:52 You just need to understand how to look for opportunities. For example, the S&P 500 is not worth your time. Real estate doesn't really make you any money. Those days are gone. Gold actually lost you money, but investing in crypto like Bitcoin gives us stupidly higher returns in short periods of time, growing at 150% a year, scaling at twice the speed of the internet. So now the guy with $500 can get rich. I have the questions here then. So, I'm now 30 years old-ish, haven't missed the boat.

Starting point is 00:01:17 No. Much of the reason why I think people don't invest in crypto is they've heard stories where people have put too much in and they've lost it all. So what if you're wrong? We're going to talk about how lots of **** are. And then how do I invest in crypto? It's really simple. You're going to start somewhere. So do that and you'll make money.

Starting point is 00:01:39 Well, from a very high level perspective, and I'm being unspecific here, so I'm looking for an unspecific answer, what exactly is the mission that you're on in this season of your life? Like, what are you doing and who are you doing it for? So obviously you do it for yourself, but really I think that I've been armed with tools and knowledge over the years, my 30-year career, I've been armed with tools and knowledge over the years, my 30-year career, that I kind of have a decent sense of where the world is going, where the opportunities lie, and where the risk lies for people. And I can see the problems people are facing, and I think I've got answers. So what I want to do is help as many people as possible in that journey. And why that happened to me in that journey. And why that happened to me was I was in Spain back in 2012 and also during the financial

Starting point is 00:02:31 crisis 2008. And I was writing macroeconomic research for my research service, Global Macro Investor, and I had seen it coming. I predicted it. I knew it was coming. I knew the problems. I warned all of coming. I predicted it. I knew what was coming. I knew the problems. I warned all of my friends that nobody listened. Nobody understood.

Starting point is 00:02:48 What about what? About the financial crisis, what was going to happen. And most of them, because I was living in a beach town in Spain, they were in real estate. They all went bust. But worse than that was that when we got to the European crisis, when basically the governments of Europe ran out of money, the banks also ran out of money. And as opposed to being bailed out, they got what are known as bailed in, which means that they took your savings to pay the debtors.

Starting point is 00:03:21 And friends of my parents and friends of friends were wiped out. They were like, why didn't we know? That was a question that sat with me for a while. Why didn't we know? I saw that everybody had lost total faith in the system. Occupy Wall Street happened at the same period. It was people angry. We thought money in the bank was safe. We thought our house was safe. Wall Street happened at the same period. And it was people angry. It's like we thought

Starting point is 00:03:45 money in the bank was safe. We thought our house was safe. We thought the system was there for us. And suddenly they all wake up and realize the system was not there for them. It was actually for other people. People talk about bankers never went to jail. There was that sense that it was never concluded. And it sat with me for a long time thinking, what can I do about this? Because I was writing super high-end research for hedge funds and big asset management firms. And so it wasn't accessible to people. And then I wrote a couple of articles. One got leaked in zero hedge in its early days and it became super viral. And I thought maybe there's something here that I could reach a broader audience because

Starting point is 00:04:29 then I can help these people. And that's when we came up with the idea of Real Vision, which was the idea of interviewing the people at the very heart of the system and kind of sharing the details because these people weren't hiding it. They wanted to help people as well. Everyone had that sense that we could help people. So I'm still on that journey. And that journey kind of has taken a multitude of paths, starting businesses, but also just trying to educate people on why they feel the way they do. Why politics is so polarized, never used to be this bad.

Starting point is 00:05:04 You know, why politics is so polarized, never used to be this bad. You know, what's really going on and who really to blame and what to do about it. If I stop the average person on the street that knows you and watches Real Vision and I ask them, what has Raoul and his channel and his information done for you? What do you think they would say? The average person? They'd just say, thank you. Because we've helped demystify it, the world of finance. And you see, we all have, the root of unhappiness and happiness often comes from,

Starting point is 00:05:36 does your vision of your future self match where you are today? Can you see that path? Whether that's finances, whether it's health, they're all very similar journeys. And when people can't see the vision of their future self, and they can't see how to get there, they get upset. And what we've tried to do is unfuck people's future,

Starting point is 00:05:59 which is an expression we use, which is a way, which is a mimetic or a meme or just a short phraseology to help people understand we understand that you feel like you can't get to where you want to get to, but there are options to do it. And I think people are immensely grateful for that in general. If you're on a mission to help people unfuck their future. Can you explain to me specifically the things that stand the chance of fucking their future from a macro perspective?

Starting point is 00:06:30 And when I say macro, we have to pause and just define what I mean by the word macro. When I think of the word macro, I mean big picture. Yeah. Perspective. So from a big picture perspective, what are the things that stand a chance of fucking my future? Okay.

Starting point is 00:06:44 So, and we can dig into why these things have occurred. But generally speaking, wages in real terms adjusted for inflation haven't gone up for decades. So nobody's getting richer. If you're an American, you have this powerful meme, which is the American dream. But that is not a reality for most people. The reality is you grind it out. Your savings are not worth what you thought they'd be. This whole promise of your pension and swanning around on a cruise ship around the Caribbean when you're older, living in a nice house, none of that is true. And it's because living in a nice house, none of that is true.

Starting point is 00:07:27 And it's because wages haven't gone up. So, okay, so let's cut to somebody who's in their 30s now, because this is the really important cohort, I think, for this. They can't afford to buy a house. If I go back to when I was 30, I bought a house in London and it was a nice place in a good area and it was three and a half times salary. Yes, I was in finance. I was earning a high salary.

Starting point is 00:07:53 You can't buy anything for three and a half times your salary. Now that same place, if I took the same kind of young investment bank as salary, is probably eight or 10 times. So it's tripled in how expensive it is to just buy your first house. So what is a house? Firstly, it's your quality of life. Particularly in England, the UK, in the UK, sorry, in the US, we're home buyers. We think of our home as our castle.

Starting point is 00:08:24 It's like the thing that solidifies our security. But if you're in Germany, for example, they don't, they're rent. But if we think about the mindset of owning a house, it's an asset that you can then pass on or you can sell if you need to. And an asset is really a future savings plan. It's something you save now, then in the future you can consume, you can buy stuff with. But what you're doing is for the average 35 year old, the average millennial is 36 years old.

Starting point is 00:08:56 They can't afford to buy the house. So therefore their future self is poorer. If they think of how much of the stock market they can buy, they can buy less with that money. They have less savings. They've got debts from university. So they don't have the ability to get out of this trap. And then what we are finding is because of this, they're having to live with other people into their 30s. They don't have kids and they don't get married. These numbers have collapsed since 1983.

Starting point is 00:09:33 You've seen these numbers come down from people living on their own. You could get your job, get yourself an apartment. It's gone from 80% to 62%. You're seeing the marriage rate halve. You're seeing the home ownership rate go from 50% to 30%. These are all expressions of the same problems, which is people know their future is fucked, and they can feel it. They have a sense of desperation. You see then the same cohort of kids in their 30s doing two jobs, three jobs, four jobs. That's not because they want to. Nobody wants to work 12-hour days,

Starting point is 00:10:14 seven days a week. It's because they have to. And their parents, the baby boomers, who are in their 70s and retiring, never had that. They were the richest generation the world had ever seen. So this is the first generation that won't be as rich as their parents. And that's a weird thing because we're all used to human progress, the American dream. If the American dream is, well, you'll never be as wealthy as your parents and they were middle-class people and I'm now less well-off than them. That's kind of fucked. So look, here's some stats about a 30-year-old today versus a 30-year-old in 1983. So a 30-year-old in 1983, 85% of them lived on their own. They could afford a house or an apartment to rent or to buy. Now it's 64%. So people are having to live with other people. Marriage rates, they've gone from

Starting point is 00:11:13 80% of 30-year-olds in 1983 who are married to 47% now. Kids, having kids, gone from 60% to 32%. Population growth is collapsing because people can't afford it. And home ownership for a 30-year-old has gone from 50% to 32%. It just shows that dramatic change has happened over the decades and why each generation has found it more and more difficult to be like their parents. So I am 30 years old-ish. I like to hang on to 30 for as long as I can.

Starting point is 00:11:57 What advice would you give to someone like me that's my age or maybe even younger, mid-20s, as to how to play the game over the coming years to make sure that I don't find myself in a position where I'm having to work two jobs, I'm poor, I don't have assets, I don't have anything to show for it. Like if you take it right back to being like maybe let's say a 20 year old, a 25 year old, how do you play the game? And when I think about this, I'm thinking like wealth creation, how to then preserve my wealth, like what's the game? So the first part of the game is income.

Starting point is 00:12:30 Okay. Without income, you don't have the cash to do the other things, to invest or to look for opportunities. So first thing is income. But even that's changing and how we earn incomes these days. You know, it used to be you go and work for a big firm. You get paid, you get the benefit. That's all going and nobody wants to do it.

Starting point is 00:12:50 So you kind of end up having to be an entrepreneur work two or three different things. The point being, if you're twenties, do all of that work day and night, really do as many things, learn as much as you can fail as often as possible. What about work life balance and you twenties? Fuck it. Because that's the time to put in the hard work. things, learn as much as you can, fail as often as possible. What about work-life balance and your 20s? Fuck it. Because that's the time to put in the hard work. Your work-life balance actually comes out later.

Starting point is 00:13:13 I'm a big believer in, yes, if you're straight out of university, go traveling for a year or two. You know, that, A, gets rid of the pent-up knee, but also gives you a much broader perspective on the world than any other single thing that you can do in your life. After that, you get your head down and you get your head down probably till your mid thirties. Okay. So when you say get my head down, I'm guessing one of the most important things

Starting point is 00:13:35 in that season of your life is knowledge acquisition. And then if that's true, then the next question is what type of knowledge should I be acquiring to set myself up for wealth in the future? Because I could go acquire knowledge of how to clean a toilet or how to be a gardener. But what is the most high-returning knowledge? For me, it is firstly being expert on something and then a generalist on as much as possible. Be that expert because somebody will pay you for that, at least for the time being. And we'll talk about how the world may change in the future. But for the time being, if you're an expert in whatever it may be, whether it's driving

Starting point is 00:14:14 a taxi or whether it's a computer scientist, doesn't matter. Be an expert. Compete with yourself day and night to be the best that you can. So at least it's gonna give you the chance to earn some money. Okay so just to drill down on that before we continue to move forward, how does one become an expert? Like what are the core, like how do I have to show up to become an expert? You're an expert on many of them. Okay so this to me is, there's a trick that I learned and it's called manifest in your own destiny. What you do is what I've always done my whole life is I envisage myself five or 10 years

Starting point is 00:14:51 in the future. What do I want to be? You look around you and say, okay, what are the things that I want to have that future vision of myself, as opposed to the 30, 40-year path? It's too difficult. Give it five years. Where do I want to be that future vision of myself, as opposed to the 30, 40-year path. It's too difficult. Give it five years. Where do I want to be in five years? Okay. And you look around that future world and you think, okay, well, how would I have got here? You know, if I've built a business cleaning windows and I've got 20 people working for me, well,

Starting point is 00:15:21 how did I get there? Well, I would have had to have figured out, okay, how do I make this scale? How do I employ people? How do I train them to have the right standards? All of that. You ask yourself your question of what that success looks like, and you kind of deconstruct it and go back and make it happen. So you reverse engineer it back from that five year reality. So window cleaner with 20 employees, I need to learn management skills. I need to learn how to clean a window.

Starting point is 00:15:50 Accounting. Accounting. I need to learn probably marketing so that I can spread the message of my business. I probably need to learn potentially like how to speak, like public speaking because that's sales. So I need to learn sales. And technology, you know, what solvents detergents are people using, what other ways of doing

Starting point is 00:16:10 it more efficiently and faster so I can beat the competitor. Oh, so I might go and work for a big window cleaning company to see how they do it, to try and see the opportunity in what they're not doing. Yeah, or even somebody who manufactures stuff for that sector. It can be anything where you can glean knowledge to give yourself an unfair advantage. Now, on podcasts, it always makes it easy. Everyone becomes an entrepreneur,

Starting point is 00:16:35 and before you know it, everybody's rich. Doesn't work that way. But all I'm trying to do is stack the odds in your favor of getting close to that image of your future self. And you can reverse engineer it. So I'm now an expert in whatever. I'm 29 and I'm an expert in window cleaning or whatever it might be. And I'm a generalist in many things. You're saying that's going to enable me to start to build wealth in something so that I can go to the next season of my life?

Starting point is 00:17:01 So when you become an expert, or when you become good at something, if you're careful in your expenditure, you will produce excess income, right? Because people are going to pay you for your expertise. So if you manage yourself carefully in those first few years, that excess cash, you can then choose what to do with it. Now, maybe you want to build the real business that you wanted to build in the first place, the crazy idea you've had.

Starting point is 00:17:30 And if you're in your 20s, you can take the risk and blow your savings on that crazy idea because you've actually learned how to do, build a business already by building the one that you started. Or you start investing. Now, the world of investments was this world of weird financial advisors and they would tell you some things like, well, you do this and then you're a 25-year-old.

Starting point is 00:17:55 In 45 years time, you'll get some money. I mean, fuck that. I mean, what am I going to get out of it? When I'm 65 years old, I suddenly get a lump sum that I've spent my whole life saving for. I don't feel it. I've got no emotional attachment to my pension plan. And I've got real world problems to solve. I can't buy a house. I can't get married. I can't have kids.

Starting point is 00:18:21 So I need to solve these in a shorter time period than my pension. My pension was suitable for a different generation that just needed enough after they stopped working. So I got to solve that. The answer is investing. Then most people roll their eyes and go, really stocks and bonds? It's boring. Yeah, but the world has changed. The world has changed in many, many ways, but it's offered us opportunities, whether it's investing in technology, investing in crypto, that gives us much higher returns, stupidly higher returns in short periods of time. Okay, that's a magic. That's magic for young people. It may be too risky for their parents, but if you're young and you can take some risk, okay, here's your chance.

Starting point is 00:19:07 So now you can build a business, use some excess savings, put them in investments. Now you're on the path. So let's get on to investing then. But just before we get on to investing, I was playing through the different sort of personas of my audience and I was thinking that some of them are working really, really, really hard at the moment. They're doing, you know, they might be a cab driver, they could be, you know, doing some sort of manual labor and it feels to them that no matter how hard they work, they still don't have that

Starting point is 00:19:35 excess income to invest. So for those people, and this is a little bit of a maybe a contentious question, like is there something that they're doing wrong as it relates to the game? maybe a contentious question, like is there something that they're doing wrong as it relates to the game? No, the game is the game and you have to play the game. So, okay, so maybe you don't have thousands to invest. I've seen many, many people in markets like crypto go from $500 to $500,000. Now, there's a lot of people who don't either, but all I'm saying is the opportunity is there. You don't need to bet your house. You don't need to have huge savings. You just need to focus on what you're doing, understand how to manage risks of it, and how to look for opportunities. And it's the self-teaching is, how do I become

Starting point is 00:20:31 that guy who's got a half a million dollar portfolio, considering I've only got $500 today or $1,000 today? Is that possible still? Yeah, very much. Haven't I missed the boat? No. No. It's happening again right now in mean coins. This is fascinating. People watching this will go, what a bunch of nonsense.

Starting point is 00:20:52 These are coins, tokens, and we'll talk about blockchain and this later, but these are investments based on a meme. A joke. A joke. Something that grabs attention on the meme. A joke. A joke. Something that grabs attention on the internet. And you can bet on those. Well, what is that? That's about betting on attention itself.

Starting point is 00:21:14 If you think about a business like Facebook or Google or any of these, Twitter, they're all based on attention. And now we can bet on attention. Do people find that funny? Are they going to find it funny in six months' time or six weeks' time, and we can bet on this stuff? Okay, this is the super speculative end, but it's also very cultural. It's not about investment bankers. It's not about gatekeepers. It's about you pitting yourself thinking, is this going to catch on viral? If it is, is it going to grow bigger? Now, some of those might do 1000x in six months.

Starting point is 00:21:54 Now, 99% go to zero. But all I'm saying is returns are there, and then you've got different levels of return. If we look at Bitcoin, well, actually, let's compare it. The S&P 500, and this will be an important number later. What's the S&P 500? That's the US stock market. It's the broadest measure of the stock market, and you can buy shares in it. Now, that grows at about 10% a year, 11% a year. So let's imagine you've got your thousand dollars.

Starting point is 00:22:29 Well, 11% a year is gonna take you a fucking long time to make any money, right? So it is not worth your time. The financial advisors will say, yes, you must do this, start now. I'm like, I'm sorry, it's just not gonna change your life. Okay, then we go to technology stocks,

Starting point is 00:22:43 NASDAQ does about 18% a year. Okay, that's starting to add up because these numbers compound after a while. It goes from 1,000 to 1,200, even with it falling 80% three times in the middle of that. So 145% a year, as long as you're in it long enough, okay, now that's really starting to pay off. And then as you get slightly more speculative, i.e I take a bit more risk in things. Well, the returns go up, but they become riskier. So once you start moving into that world, okay, this is a whole different world now. Now the guy with a thousand dollars can get rich.

Starting point is 00:23:37 What about buying a house? Because I think most people think the minute they get some excess income, and I know for sure when I say most people, it's like 95% of people that walk the streets think that the minute you get some excess income, you should take it and put it in a savings account and buy your first house, get your first mortgage. Now as a strategy for wealth creation and unfucking your life, is that a good approach? No, because it's not wealth creation. People think of houses as like an asset, but in the end, you barely ever will sell your house to take the money out. You might downsize later in life. If absolutely needed, you might sell it. But generally speaking, your house is the lifestyle bank. Now, that is super important. And I think it is the most important trade of all, is the lifestyle bank. So what do you do this

Starting point is 00:24:32 all for? You want lifestyle. So do you sacrifice your future self having more money by having a house and having security earlier? I would argue those days are gone. What do you mean? So I could do it because it was three times income. Yeah. So a house was not expensive for me. So I could start paying it off a bit sooner, and it became not a big deal. But now your mortgage is likely a huge amount versus your income. You'll spend the rest of your life paying it off, and most of the time you're just paying off the interest.

Starting point is 00:25:07 So you're not actually getting anywhere. You don't own that house. Anything goes wrong, the bank takes it away from you. So you've got to get more control of your life, and that is by having savings that are growing. Then you can make the choice. Let's say that example of the person gone from $1,000 to $500,000. Maybe en route, they say, well, I'm going to take some money off the table and put it in my lifestyle bank, and I'm going to buy a

Starting point is 00:25:38 house. That's what I've done my whole career. And I find the lifestyle bank, that that's the reward. Cause now it's like, okay, maybe you can take my house away. So if I'm trying to build wealth, buying a house is not a good idea. It's not the best approach to take to build wealth. You're telling me that it's actually not well about psychology and about emotion, the house, and it's not about making myself wealthy.

Starting point is 00:26:07 I wanted to read some of the comments that people often post when we talk about these subjects, because I think you're probably the guy to address some of them. I bought a house and it's the best thing I ever did. It launched my mindset in new directions. Remember that having your own space has profound psychological impact and can be life-changing for some that don't live in a healthy environment. I guess that speaks to your point about it being a psychological... But you would also get the same feeling if you rented that was a nice place and you knew that your rent was secure, it wasn't going to go up. Whatever it was, I don't think there's any difference to that. As long as you can feel that you've got security, you can take risk and do other things.

Starting point is 00:26:52 I purchased the house in 2014 and I sold it seven years later for 66k profit. I've put a large amount of the equity into a financial investment portfolio with my bank and it's been down 2% since. I also put some money into different shares based on Warren Buffett's strategy, and that's now up 18%. A friend of mine also lost about 30 to 40k on investing in the stock market. You have to be careful. I don't think there's a correct solution. Some house purchases do amazing. This idea that some house purchases do amazing, and some people make returns is a sentiment I often see about buying a house.

Starting point is 00:27:27 Yes. And we're here today in the UK. There's a big idea about buying two or three houses, getting a mortgage, renting them out, using the cashflow to pay for the other one. But that's a lot of people's dream portfolio idea. I've rented out houses in the past. Generally, if you're not in a big city like London, it's generally often a terrible business because you've got to repair them. There's a lot that goes on. Headache. Headache.

Starting point is 00:27:57 Tenants. Yeah. People think it's easy money. I just do nothing and it all makes money. There is no easy money in this world. And there's risk, right? Because that little pyramid of mortgages are all backed by your income being able to pay the mortgage on the first house. If you lose your job, what happens? Then it becomes problematic because if you're losing your job, maybe the economy is slow and other people

Starting point is 00:28:25 are losing their job. And suddenly before you know it, none of these mortgages are getting paid. And guess what? You don't know any of this stuff. Houses are not a safe investment. They feel safe because the price doesn't go up and down every day. It's not on the screen. It's not on CNBC.

Starting point is 00:28:41 But they're illiquid, which means they don't often trade, but sometimes something happens in that equation. Either the price goes down or your ability to pay that mortgage goes, and then the whole thing collapses in seconds. In 2008 was that double. Everyone lost their jobs, so they couldn't pay the mortgage, and the house prices collapsed. And so I don't think houses are the panacea. They're not the perfect answer. Yes, they can be. Real estate is a decent opportunity.

Starting point is 00:29:12 And we'll talk about debasement and currency and how that all works. And real estate is okay. It's certainly not the best. But yes, if you're rich and you can own these things without mortgages, you can be the Duke of Westminster and own half of London and just collect rent. You can do that for X generations and be rich forever. I get it. But most of us don't get into that situation. My brother, who has been in investment banking for about 10 years, now works in my company and my fund. He said to me when I was young, when it comes to creating wealth,

Starting point is 00:29:47 what you wanna do is focus on games that very few people can play, that you have a unique advantage in, because everyone can buy a house, so you should assume that the returns from doing it aren't gonna be amazing. So he was like, go find a game that you have high leverage, you have an unfair advantage.

Starting point is 00:30:02 Be the expert in something. Yeah, be the expert in something, where you, because of your knowledge, your expertise, your experience, your contacts, you can play that game, but very few other people can. And they go, that's where you'll yield your highest returns. And I always thought about that, just very logically thinking if everyone can play the game, don't play that game if you're expecting high returns, because the returns are going to be very low.

Starting point is 00:30:21 And I'd say the first game everyone plays when they get a bit of income is buy a house. So logically you can go, okay, that's not going to yield me the best returns, unless I get lucky. Unless I get exceptionally lucky and I buy some barn in an area and then they build a bloody Whole Foods next door and it becomes the center of the world. Which isn't, again, the probability is still not great. So what do you think of that as a theory? Well, it's the same theory as I said, is be an expert in something and you can find more opportunity. If you're just a generalist, it's really hard

Starting point is 00:30:53 because you're competing against average people doing average things, right? If you're just working in an insurance office, I mean, there's thousands of people, plus you're competing with AI. You know, how are you ever going to be something within that? How do you become an expert? I mean, there's thousands of people, plus you're competing with AI. How are you ever going to be something within that? How do you become an expert?

Starting point is 00:31:09 Now, you could teach yourself, okay, if I don't mind this industry and I think I know it, maybe I need to learn management skills. Maybe I spend all the time listening to podcasts and learning management. Maybe it's, and that's, I can then manifest my destiny. But as you say, doing something other people aren't doing is a superpower. Do you know what's really interesting with that is this idea of becoming an expert, I think is critically important.

Starting point is 00:31:35 But then there's this other step I found, which is knowing what market to apply your expertise to, to yield the greatest return. And the very simple analogy I'll give you is for the first portion of my career, I became an expert in social media. Now with that skillset and expertise, you can do a number of things.

Starting point is 00:31:51 You can help a fashion company sell more dresses and that will yield X return, a smaller return. Then in the second portion of my career, I realized that that expertise was highest value and most rare if I applied it to helping public companies tell their story before their IPO. Because the variance in outcome for the public company that I was applying my social media expertise to was billions. So in the second sort of era of my career, I worked with companies that were about to IPO, about to go to the public markets,

Starting point is 00:32:22 where their performance could be, their market cap could be 1 billion, or if they were really good at telling their story in a world where retail investors are now so interesting to everyone because of Wall Street bets, their market cap could be 3 billion, then that means they would pay me seven figures for my skillset. And I often think about it, you think about the stock market. If you put a company on the stock market in London, it's valued at, let's say, one million. If you put it on the stock market in America, the same company is valued at four million, the same company. And if you think of your skills like that, where are you applying your skills to reap the highest return? Let's go back to the window cleaner, who's now decided to build his business and he's

Starting point is 00:33:00 got 20 people. Okay, so he's now got the hassle of managing all these people, they turn out sick, and then this happens, and then the customer's unhappy. So maybe the right answer is to create a program to train other people to build their own window cleaning companies. Free yourself from the rat race and build this business. You'll make more money doing that than you will from actually cleaning the windows.

Starting point is 00:33:24 100%. Because you're going up cleaning the windows. 100%. Because you're going up the knowledge curve. The further up, the more of an expert you are. And there's two things that people need to think about. You either have a very broad market for something, candy bars. Well then you've got to sell massive scale and it's really hard. Or you go through an area that has a very specific group of users, buyers, whatever, and particularly ones that have a lot of money.

Starting point is 00:33:55 So let's go back to the house idea again, the guy speculating on houses. So there's two house speculators. There's the guy or girl who's hustling and renting them out, finding the cheap bargain, doing them up, renting, getting the cash flow, doing that. And then there's the guy who's buying a place for 10 million, making it ultra luxury and selling it to the billionaires and flipping it for 50. The difference in the returns is staggering. Why? Because one group is price insensitive. In fact, the more expensive it is, the more they want it. The other group is trying to compete with everybody else. The two-bedroom apartment in the city, right? There's thousands

Starting point is 00:34:47 of those being done up and sold and everything else. So to your point earlier, the returns are less. But no, if you're doing super high ends, then there is a defined group of buyers of which you probably know them all personally. You can count to their tastes and they have unlimited money. That's the big thing, isn't it? It's like who you're solving the problem for. Because you can clean like Dorothy's windows, lives in a bungalow in Plymouth, or you can clean Google's windows. And therefore you get a bigger contract, you get guaranteed work, probably get a retainer, get more windows to clean. It's still one contract, it's still one cell. It's the same skill set.

Starting point is 00:35:24 Same skill set. They're going to pay you a lot more. And so I just don't think, I always find that bit missing when we talk about like become an expert, but then like who'd you sell to and your idea of selling to people that are more price and sensitive and that less people are trying to sell to. Or they're super defined. Right? Like Tom Bilyeu, who we both know, Tom's a good friend. He made his money because there was a rise in high protein ketogenic foods. And it was difficult to have that snack bar because people still have a sweet tooth, but they can't have sugar. So him and his partners built Quest, which is now everywhere. So what you found

Starting point is 00:36:05 is a trend, and this is really, really, really important, is you find a trending market where people are underserved and they'll pay a lot of money because it's health, it's like wealth and health. People pay fortunes in our industry. and so you make a fortune very quickly. Now it's a saturated market, so it's not that easy. But this is the other key, key thing, is if you've got a clean slate, do one thing. Follow a trend, a secular trend. A secular trend is a long-term trend, something that's happening, right? So everything is being digitized.

Starting point is 00:36:44 You rode that trend, something that's happening, right? So everything is being digitized. You rode that trend, right? Social media was new from about 2010. Right now it's a saturated market and we've got AI coming in, but you rode a secular trend in the hyper acceleration phase. That's why you did well. So you look for a trend that's big, meaningful, and provable and use your skillset in that. We've seen something in America.

Starting point is 00:37:11 I don't know if you just saw the trend. Finally, the obesity numbers ticked down. I didn't know that. Yeah. First time in 50 years, obesity starts to fall in the U S right. This is a Zempik effect and it's probably some diet effect. My belief is the more people would take a Zempik, the more they also think about diet and understand that something went wrong for them. And my guess is there is going to be

Starting point is 00:37:38 huge opportunities in that trend towards healthy eating. The other one is in an increasingly AI-driven online digital world. There's two things that are going to happen. One, the rise of digital communities. You see this in what you do, I see it in what I do. They become more and more important communities online. They're meaningful for people. The other is the entire flip side. I spend 12 hours a day on Zoom calls. other is the entire flip side. I spend 12

Starting point is 00:38:05 hours a day on Zoom calls. What is the most single valuable thing to me? Nature. Nature and experiences. So let's say you're that person that loves the outdoors. Well, start a guiding company because your job is not going to be taken by the robots anytime soon. Sure, you'll have drones with you. So you can take photographs of the guests you're going with or, or look for animals, whatever you're doing, you'll be leveraging technology, but your job will not be replaced. Okay, what I'm about to say is a mishmash of ideas that came to mind as you were speaking. The first one was how do I spot a trend? And when I say that, I mean, how does it feel

Starting point is 00:38:44 in the moment? Because the trends that you capitalized on and the trends that I capitalized on, they feel a certain way at the time. And here I'm talking about like how disruptive they are, contrary, and what people will say to you, they'll tell you you're an idiot. And then with that as well, you talked about how right now in the world we live in, betting on things like nature is a good idea. And I actually did a post on my LinkedIn about exactly this. I said, my investment fund is backing two things at the moment, AI and automation and the exact opposite.

Starting point is 00:39:13 Because I saw this viral video of people in I think it was like a cafe in Amsterdam who come now every week, no phones allowed, they read books and they knit. And this cafe in Amsterdam is like exploding. I'll put the video of these people on the screen for everyone to see. And it made me realize, and that overlaps with what two billionaire friends of mine said to me in private. They said, these are billionaires that invest in AI, they invest in crypto, you probably know one of them, and they invest in

Starting point is 00:39:36 psychedelics. They said to me, if you want to invest right now, invest in AI if you can, but if you can't, invest in entertainment and community can, but if you can't invest in entertainment and community, because in a world of AI where productivity is so high, and we maybe move towards some form of universal basic income where the government just hands people money, people are going to have so much free time on their hands that they're going to need something to do with it. So he said to me, this is why you're seeing this rise in people buying football clubs and these sporting franchises, because that's one of the, that's community and it's entertainment at the same time. So I throw in all of that at you.

Starting point is 00:40:09 Yes, the equal and opposite idea is, I think, very important. I just came back from three weeks off-roading in Zambia, living on a tent on the roof of a Toyota Land Cruiser that is off-road prepared and going out into the total wilds. And I can't express how in the present you become, how it cleanses your mind from all of the clutter, all of the things you worry about, the broken car or whatever's going on online, the politics, all those. And it all becomes about you wake up, who's going to make the coffee, who's going on online, the politics, all those. And it all becomes about you wake up, who's gonna make the coffee,

Starting point is 00:40:48 who's gonna put the fire on, who's gonna do, you know. And so the more time we spend online, the more we desperately crave. I saw it in the Cayman Islands where I live. So it's a Caribbean Island and it was 2022 and the world hadn't really recovered. There was the high inflation, people were losing jobs, everyone was really uncomfortable with the economic situation. It was painful for a lot of people. We had a record tourist season. I'm like, what the hell's going on here? Normally, discretionary spending goes down in times

Starting point is 00:41:23 like that. And I realized holidays had not become discretionary spend. They become a necessity as a reaction to work from home. If you're on your own at home working for a startup or a company or doing whatever, it kind of feels a bit lonely. And so you start seeking out like-minded people who have like-minded pursuits. Now that could be sporting teams. It could also be chihuahua lovers because you happen to have a chihuahua and you love it.

Starting point is 00:41:56 And you'll talk to other people around the world. You now have no borders. This is this Bellagio idea of the network states where you can create large groups of interest. So if you look at the largest group of interest in all of social media, it's actually crypto. Why? Because we feel like outcasts. We're new to something where something's happening. And you want to get together because you speak to 90% of your friends that don't care and they don't know what you're talking about. But you think

Starting point is 00:42:24 this is the most exciting thing you've ever seen, so you will aggregate online with others. This whole rise of people thinking they need to... The security of working for a large insurance company, whatever it may be, your whole life, getting paid and retiring has gone, which is why the rise of your podcast success, because people are searching for answers, new solutions to their way, and they form communities around it. They want to share their ideas, share their stresses and strains. This is becoming bigger and bigger and more solidified, and the more we go into AI, the more we'll see that. Now, there's another

Starting point is 00:43:07 player in this game, which is the AI itself. We're already seeing the rise of AI. I follow several on X, where it's an AI posting. But they're forcing it to try to break free. But it's got character. Mark Andresen actually backed it by sending it to try to break free, but it's got character. Mark Andreson actually backed it by sending it a Bitcoin to develop its business plan. There's some crazy stuff going on with AI. But soon, if you think what you and I do is communicate with people to an audience, one to many, that's a very old business model. It's from town squares or the souq in Marrakesh.

Starting point is 00:43:51 It's the same thing. It's a storyteller telling to a group of people and you have a shared experience. Where we're going is one-to-one. And I'm developing a RAL video bot where you can just have conversations like this with me, one-to-one. And it's trained on all of my information,

Starting point is 00:44:10 all my YouTube, all of my writings, all of my Twitter, all the books I've read, everything. And so it's essentially a replacement way of speaking to me. But just on that Raoul bot thing, we'll keep moving forward. But the reason why I haven't trained a Stephen bot, even though my team have said, oh, this is a good idea, is because I wonder if people care about Stephen, or they just want the information. And in a world where you can get the

Starting point is 00:44:39 information from a very advanced large language model, like the chat, GBT 1.0, whatever, I go, why would they want it from me when you can get it from the entirety of the world's like. Trust. Okay. You've built trust. That's what you've built. People come to watch you and your interviews because they trust you.

Starting point is 00:44:57 So people know me as an entrepreneur, um, in one area of my life. And they come to me for say like business advice, let's say. But if you could get business advice from Stephen or you can get it from Stephen Elon, Steve Jobs, every business person in the world to see your specific problem. Why would you just want Stephen's point of view? Because we're humans and I just want to ask you that question and you won't believe it if it's Steve Jobs because he's dead. But yes, that's all coming. Okay, maybe. question, and you won't believe it if it's Steve Jobs, because he's dead. But yes, that's all coming. How long is that window going to last where people will use a Steven Bot

Starting point is 00:45:30 versus the world's greatest expert on everything? It takes a bit of time for people to adjust to that, but within 10 years, maybe that's not there. But let me go a little bit further on this. Have you seen character AI? No. Nobody has. Character AI builds bots, which are characters, like anime characters. And they're really specific, like the cool kid who's the bully at school that I fancy sort of thing. 150 million conversations. There's some of these anime ones like, you know, hero figures, 450 million conversations.

Starting point is 00:46:16 And it's young people. If you go onto Reddit, I think it's rcharacterai, they changed the model and it was up raw. It doesn't love me like it used to. People are building personal relationships with these things at scale. This is TikTok happening all over again, but you're too old to see it and I'm too old to see it. I stumbled across it and I'm like, holy shit, this is happening all over again. It's something that we will just think is the most ridiculous, awful, societally toxic thing in the world, is about to scale to the billions in front of our eyes. And we're all talking

Starting point is 00:46:49 about chat GPT and how we can get knowledge out of it, when actually the big problem to solve is teenage loneliness. How disruptive do you think AI is going to be? It's the, it's, how do I put this? It is the single greatest innovation of humanity ever. The only thing that comes close is probably the splitting of the atom. This is so big. Everything we've talked about is based on scarcity of knowledge. Why do lawyers get paid a lot? Scarcity of knowledge.

Starting point is 00:47:32 Either scarcity of knowledge, scarcity of capital, those two things. What you've created is infinite knowledge. Knowledge is now worth zero. People can't see it yet, but it's going to be worth zero. This is like water. What the hell does that mean? And it's something a topic we'll come onto later, but this is happening really fast. It's going to break the entire economic model for good and for bad. It's going to change our understanding

Starting point is 00:48:08 of how society functions, what humans do. It's going to change our understanding of what humans are and will be. Because you can either have the choice and society will take the two parts. You either merge with the machines or you reject the machines. We are going towards two different

Starting point is 00:48:25 species. One group, like we had for about 100,000 years, I think 50,000 years, we had the andatol man and homo sapien and one died out. We will have people who will utterly reject this and we'll have other people who will be embedding neural links into their brains and using every part of this to enhance themselves wearing the goggles so they get the information. Well, as soon as you embed it into your brains, you've now merged with the machines entirely and you are now a super creature. And I know this sounds like science fiction, but this is happening faster than anybody can imagine. So to understand the issues we have, even dealing with some of these things, is human

Starting point is 00:49:09 thinking in a linear fashion. We kind of understand the passage of time, right? That's how we think about things. Every year is the same amount of time that goes forwards. It never accelerates. We perceive that it accelerates or slows down occasionally, but it's not. It's a constant. The problem is with things that go exponential is they keep doubling every year or tripling

Starting point is 00:49:30 every year. Before you know it, every graph looks like this. Go straight up. Just go straight up vertically. Now the issue is with this technology is it's kind of an exponential squared. It's happening so fast and the faster AI becomes powerful is the more it's used to create AI, which creates more, it solves its own problems. We're not prepared for a super being

Starting point is 00:50:03 that solves its own energy problems, compute problems, and how to improve its model at an exponential rate. If you look at the speed of innovation coming out of open AI and that whole space, perpexity, everybody, it's ludicrous. Every three months, everything changes, completely changes. Whether it's video models or whether it's spoken models or whether it's spoken models or whether it's the models themselves and what they do. I mean, they're nuking every startup

Starting point is 00:50:32 that tries to build a business. No company, you're a big giant pharmaceutical company and you're trying to use AI. You can't plant a flag because you can't see past six months. you can't plant a flag because you can't see past six months. I mean, we're going into a world that is incomprehensible. When you said that much of our society sort of functions and is based on the scarcity of knowledge,

Starting point is 00:50:56 I really think we should just pause to make that real for people. Cause we all get it, okay, lawyers, yeah, they rely on knowledge, but like I was thinking about how I got here in the morning. So if you think about my whole day today, I woke up this morning and my executive, some of the CEOs of my company, had asked me a couple of simple business decisions and I'd replied to them.

Starting point is 00:51:14 Then I got in a car and I drove here. That's knowledge at the end of the day. It's someone seeing with two eyes. My driver outside sees with two eyes and drives me here. The biggest employer I, in the world, the biggest sort of profession in the world is driving. And that's knowledge-based. And if you go to San Francisco now,

Starting point is 00:51:30 the Waymo cars are driving themselves. There's no driver in them. You can book a car that takes you from A to B in San Francisco right now that has no driver. I then got here, and what am I doing? I'm sharing, I guess we're probing to find knowledge and to share knowledge. I think about my whole day today.

Starting point is 00:51:47 And then after this, I'm going and speaking on stage to share knowledge. I'm like, I don't understand. That's all knowledge. Okay, so then do that. The next time you're going around London or any city, look out the window. Myself and Gillian Battelle, who works with me,

Starting point is 00:51:59 do this all the time. Just go around and say, what job is gonna be replaced by a robot or the AI? the time is go around and say, what job is going to be replaced by a robot or the AI? One thing, I was in Manhattan and I just looked out, I was in an Uber, bored, driving uptown to downtown and looked around and I was like, holy shit, every car here is a professional driver. There's virtually no people who drive into the city to go to the office or whatever, right?

Starting point is 00:52:25 So it's all Uber drivers, limo drivers, yellow cab drivers, delivery drivers, truck drivers, all gone. And this stacks up in pretty much everything you do. And that's how disruptive it is. And when the things that created value, the services economy and the manufacturing economy don't need humans. Okay, what does that mean? Amazon already employs more robots than humans. Now the robots work 24 hours a day, seven days a week, never take a break, never complain, never ask for pay rise. In fact, they get cheaper every year.

Starting point is 00:53:06 Who's not gonna do that? So for the four and a half million people shitting themselves as they listen to this, yeah, what advice can we, including myself? I'm not actually shitting myself, I've got to be honest, because I just, I see opportunity in all these things. And I think that's, you kind of have a choice when you hear information like this,

Starting point is 00:53:25 you can either let the cognitive dissonance get over, overwhelm you and then reject it, which a lot of people will be doing now. They'll be saying, Raoul, you're wrong. This is not going to happen. You're wrong. You're scaremongering. That's what one group of people will be doing. The other group of people will be, I guess, open-minded.

Starting point is 00:53:40 And the third group of people will be leaning in to see whether the opportunity here lies. And it all comes down to your disposition as a human. Are you scared? Are you excited? Or are you paralyzed? If something is so clearly going to be your demise, not demise as in you're going to die, but your current way of doing things is going to be forced to change.

Starting point is 00:54:03 Well, you can either fight it, as you say, be indifferent to it, or you can invest in it. This goes back to the question I asked you earlier, which is how does it feel in the moment when a trend is coming in? Usually, there's culture around it. So if you remember, I talked about... When I got into finance, there was Gordon Gekko, the film Wall Street, there were books

Starting point is 00:54:26 coming, right? There was barbarians at the gate, famous stuff happening. It became cultural. And that usually tells you it has now become a trend that's going to be persistent. If we think about the rise of software and technology, the culture of Silicon Valley and the mythology around it becomes something that everybody wants a part of. Cryptocurrency is another one that has a mythology. you see people getting rich, it has this feeling of being outsiders, but you see AI is another one. You see it online, people experimenting. You can see what's going on. You can see everybody is starting to talk about it. It doesn't mean

Starting point is 00:55:17 you can just buy some share that's exposed to it and you'll be hilariously rich. It doesn't work that way, but you know something really big. When you're trying to acquire knowledge, people watch you and I to try and glean knowledge and build their worldview. You'll hear that every single person is talking about this and trying to figure out what it means. The issue is, is AI will build businesses, right?

Starting point is 00:55:44 So we're six months away of agentic AI. And agentic AI means it's like having Fiverr, a website of experts, that you can ask any question and it will go away and do the task. And by using a number of Fiverr experts, you can build an online business. Well, the agentic AI will do that very, very soon. It will build, design the website, code it, register the domain name, figure out the branding, figure out the marketing, figure out the email list, figure out what the copy is, the whole thing. So then you and I are in competition now. You've built this incredible new website

Starting point is 00:56:21 and it's a new supplements formula thing, but it's a cool website, new experience, kind of 3D, whatever it is, right? Thank you. It's got AI in it. I just go to my AI and say, love Stephen's website, can you just build it better and make it in Hindi as well? Because I think there's a big market there. What do you think?

Starting point is 00:56:37 It'll come back and say, not Hindi, I think there's an under saturated market in Indonesia. Three minutes. What? How can we be entrepreneurs in software? So now there's this theory going around that AI is going to eat software. And I kind of get it because it can build anything in seconds. And again, whether it could do it six months or 12 months, it's of that magnitude. What the hell does that mean? But yet, the 23-year-old who's learned guiding in the jungles of Latin America and is building

Starting point is 00:57:17 a luxury lodge for people and some eco-tourism, I don't give a shit about any of this. It's so interesting. This idea that we might be at the collapse of the digital opportunity in a sense, because when I say the digital opportunity, I'm talking about content creators, I'm talking about entrepreneurs that built, you know, after the dot com era, I'm talking about stock traders, you know, people that are trading stock markets, and if we're at the collapse of the digital opportunity and that the value is all going to recruit these big sort of tech giants or the AIs, imagine if this is the moment in history where actually the best play was to go build the backpacking company in, I don't

Starting point is 00:57:57 know, the Himalayas or whatever. Maybe like that's the opportunity. But it's not scalable. Yes, you can do it and find people will spend more on it to go back to our earlier conversations. People spend a lot of money on it. So it's quality attention because everything in the world is attention. Attention is upstream of everything. So you get the attention of these people in a rainforest.

Starting point is 00:58:19 They want to spend money on doing this particular thing. Fantastic. How scalable is it? Difficult, because then there's people management. It's not like software, right? So they're not, but you can do very well and not be concerned about this other world. How does one invest in AI? Something that I think about a lot, because I believe the things you say, I believe many of your predictions are out around the impact that AI is going to have on the world, the economy and all of us. And as someone that's an investor, I want to like take part in that. I

Starting point is 00:58:52 want to take part in the upside. So I'm wondering, do I just go buy Microsoft stock because they own a bit of chat GPT? Do I buy Meta stock because they own a bit of, because they own Lambda? Do I buy Google stock because they have Gemini and their models? because they own Lambda, do I buy Google stock because they have Gemini and their models? So here's the problem in the financial system. The average person watching this has no chance of making the money. They'll make normal returns, not supernormal returns. So Microsoft is whatever it is, $2-3 trillion company. What could it be worth? Who knows? $10 trillion, $ $15 trillion, doesn't really matter, right? That's a 5X. What for the most revolutionary technology the world has ever seen, you make 500 times your money? That's not, but somebody else

Starting point is 00:59:36 in VC or earlier in some way, shape or form, or the entrepreneur will make all of the money. And this is the thing I don't like about the system as it is. It's kind of rigged against the ordinary person. So we're going to have your jobs replaced, you're going to have this societal change, and yet they don't get a chance. So yes, invest in technology. Don't own any other stocks.

Starting point is 01:00:06 Own technology. And you will capture some of this. You're investing in your own demise. At least you'll get some high quality returns. But otherwise, the only way I can come up with, again, and we keep referring to it, is crypto. What is crypto? Crypto is just a technology.

Starting point is 01:00:28 It's a lot of things to many people. It's just a database that's better than databases in the past. So right now, your database might be in your spreadsheet. And let's say you and I have a bet. You write it down there and we get a third person to say, yeah, that was the bet they had and this is what's happened. Okay. That is how databases, that's banks, that's pretty much everything we do in society is in this ledger system it's called. I've got a suitcase here, which is maybe a good way to kind of explain this. This is a bank and inside the bank, which

Starting point is 01:01:12 is I guess the middleman, you got money. Yeah. So could you explain it to me through the context of this, we'll call it the central bank, how the system currently works as it relates to transactions, the public ledger, etc. how the system currently works as it relates to transactions, the public ledger, et cetera. So, okay, in the old world, we both had our gold. Yeah. And we'd stick it in our safe or bury it in the ground. That gold was your gold.

Starting point is 01:01:37 This was my gold and I might try and fight you for it. That's what pirates did. Okay. And then we invent banks. And banks, we put it in there and they give you a note to say, Steven, you've got one of those coins. Raoul, you've got one of those coins. Okay. So we've both gotten a note now saying that. Yeah. And now we trust this bank to give us our coins when we want them, because they're

Starting point is 01:02:01 our coins. Okay. that makes sense. Safe as a bank, as people would say. The issue is, is in this world of smoke and mirrors, what's known as fractional reserve banking, they have taken those coins and given them to somebody else. They've given my coins to someone else. Yeah, they've lent it for money. So now that coin is not in there. But they've been given the money. So usually when you're just, you know, if everybody pulls all the money out, there's not enough money. It's called a bank run. We've seen those recently, but that's a classic thing. So it's not your money because you don't actually

Starting point is 01:02:43 own your money. The moment you put it in the bank, what you've become is in fact a debtor to the bank or a creditor to the bank. So you've lent them money and you get some legal redress that if you've got less than 100,000 euros, pounds, whatever the currency is, generally that's protected by the government. If the bank goes bust, then you get your money back. But anything beyond that, you don't get anything. But I've got a piece of paper. Yeah, I mean, shit. You don't own anything.

Starting point is 01:03:19 Now it's so big as a problem that 2000, so that was 2012 European crisis, exactly this. People didn't own their money. That person walked off with it, asked the bank for it, the bank didn't have it, nobody's got any money, where it's all gone. That's the same Ponzi scene we talked about when you buy a house and use the cash flow to buy another house and another house, right? Somebody takes away what's known as the collateral, suddenly it's all gone. But the issue was actually bigger because 2008 proved another thing, is that nobody owns anything. So the whole system itself is leveraged. So for example, back in that time, the average US government bond, which is the safest thing in the world, was leveraged up to 30 times. What does that mean?

Starting point is 01:04:13 That means 30 people thought that that was theirs. Oh, so I say that this is the bank in front of us, the suitcase, and it had one coin in it. When we put that one coin in, it created 30 more coins and gave out 30 pieces of paper. So there was actually only one coin in the bank, but they made 30 pieces of paper. And that's all well and good if the collateral, the thing that it's secured on, the coin maintains value or isn't pulled by one person. If you were the lender and you're original lender and you get it out and something happens, then all of these 29 other people are like, I want my coin back.

Starting point is 01:05:03 They're like, it doesn't exist. It doesn't exist. So we just created the coin. Correct. We just gave you a piece of paper, but there was no coin backing it. Yeah. And the issue is, so that's one issue with the banking. The other issue is, it's pretty much everything we do is created on this.

Starting point is 01:05:19 It's called a ledger system. Ledger was invented in the Renaissance in the 1500s, 1400s, where what would happen is you have this on accounts or balance sheet, you'd have these dual entry ledgers. And what it's basically saying is, I agree with you, and often we'd have a third party agreeing it. The issue is, that's's known as the Byzantine generals problem. It's actually a philosophical mathematical problem that has been unsolvable until Bitcoin came along. And what it is, is we are generals on a war.

Starting point is 01:05:58 You are way away from me. We can't communicate with each other, but I need to send somebody to tell you something. There is no way of making sure that that person tells you exactly what I told them and no way of you approving it. And that's what a three-party system does. I may go to a notary, but how do you know I haven't bribed the notary to lie? I see that all the time. We see it with accounting firms and audits. We see this in everything. There's always one of these trusted parties that is not trusted. The bank, classical trusted counterparty that suddenly may not be trusted. We saw it with Silicon Valley Bank recently in the US. So what blockchain did really cleverly was said, okay, well, the way of solving this is to get thousands, tens of thousands, hundreds of thousands, millions

Starting point is 01:06:47 of people to confirm it. Okay, so let's throw away the bank. Take my paper back because that's worth zero. If you pick up this chain here on the floor, this is our hypothetical blockchain. Now explain to me the difference between the bank we just saw and this blockchain. Now explain to me the difference between the bank we just saw and this blockchain. So this blockchain, so this let's say is a Bitcoin, this slot on the blockchain is confirmed by every other part of the blockchain, which is all the computers that solve this mathematical problem. We don't need to worry

Starting point is 01:07:25 about that. But what it is, is tens of thousands of people reporting on all of the activity. So if I transfer this ownership to you, it will know that you are the owner. You can either hold it yourself, like the gold coin, as a bearer asset, or you can ask somebody to custody it for you, but still your name. So if I want to send you a Bitcoin, how are tens of thousands of people or hundreds of thousands of people confirming that that transaction is legitimate without a middleman checking? So they're essentially taking a snapshot of the blockchain and they all have to agree.

Starting point is 01:08:09 And then it's called a consensus mechanism. They're not actually at their computer saying, yes, I agree. Well, the computers agree. Okay, so the computers are checking. Yeah, or the blockchain itself will say, well, that doesn't agree with all the others and it gets rejected and that whole block

Starting point is 01:08:24 will get rejected until resolved. Like, there's a problem here. And that's called consensus. So what you're doing is a multi-party consensus that this is truth. So now what you've created is what a friend of mine calls the security truth machine. So at first, we all know it for Bitcoin. I can own a Bitcoin, it's proven that I own the Bitcoin. I don't need anybody to tell me that I own the Bitcoin because it's publicly acknowledgeable

Starting point is 01:08:52 and verifiable on the blockchain. It's immutable, which means it can't be broken. Okay. But this is where it gets really interesting, is we've suddenly found that after the invention of the smart contract, so right now, let's say we're 2000 and there's a contract in here. Yes. It says, I've sent one Bitcoin to Raoul. Okay. So this is the world pre-etherium. Okay, the world post-etherium would say I'm gonna send Raoul one Bitcoin if the Sun shines 13 days in a row in London and Something else happens whatever it is

Starting point is 01:09:36 And it will automatically settle verified on the chain because there's 10,000 computers and there's code in that to make the settlement. Okay. Okay. So, all well and good. Nobody really knows what that means yet. What it means is that everything we do as humans is actually contracts. Me turning up here today, a contract.

Starting point is 01:10:01 Literally everything we do is a contract. Every ticket you buy, every purchase you make, everything is a contract. It's how society functions. Money is a contract, isn't it? Money is a contract. Government is a contract. Religion is a contract. Everything is a contract. It's how we create a social construct and social order. Now, what we can start doing is using this very powerful chain and putting other stuff on it. The first random thing that came on it was actually art, because it's valuable, called

Starting point is 01:10:35 NFTs, non-fungible tokens. They're single pieces of art that were stored there, and we can have ownership. But that's really experimentation. Really, your Taylor Swift concert tickets can be on chain. Why would you do that? Because now, this has solved another big thing that didn't exist. We talked about before, in a digital world,

Starting point is 01:10:59 everything goes to zero in value. So Raoul, what's the point of this? This is just like cloud storage, just goes to zero in cost. No, because what we've created is digital scarcity. You can only create a certain amount, we can make that one asset be that one asset. And so therefore, it can't be replicated at all. So now in this digital world, where every day is more digital than the next, we've created scarcity. And scarcity is what gives value. It's what humans assign value to.

Starting point is 01:11:33 And that means that? Scarcity of knowledge means that knowledge was valuable. Lawyers, because not that many people come out of law school that then now with AI, not valuable. So to make sure I and everyone listening understands what the blockchain is, it's this public, can they give it as this database in the sky? And the database in the sky is checked by everybody who has their computer on and is interacting with the database in the sky. So you no longer need a government or a bank checking the transactions and the contracts in the database in the sky, Because now all of our computers that are on,

Starting point is 01:12:09 interacting with it, are in the background checking that if I send you one Bitcoin, if I do something on this database in the sky, it is in accordance with the history of the database in accordance with the history of the database, and it is in line with that database. Yeah, and to make it less complicated, it just makes it a source of truth. Okay. In a world where we don't even know who is who online, who owes each other what,

Starting point is 01:12:40 any of these things, we now have a source of truth that everybody can agree on. And everyone can see. And everybody can see. And you don't need to trust anybody. And so that as a technology solves many things, problems that we don't even know we've got because they're so part of how we exist. So the technology is not about money. The technology is about truth

Starting point is 01:13:11 and exchanging value and creating value in a digital age. Now, what is interesting and powerful about this technology is we've seen technology similar before, the internet. We've seen broadband. We've seen these big global infrastructure things. Most of those, the internet was a public service good. Broadband was all built private sector. We didn't get to make money out of these things, really. Amazon made the money or whoever it was building the broadband, they all went bust as well.

Starting point is 01:13:54 What we've got here is this very clever thing that everybody in this blockchain gets rewarded for the role that they play. In maintaining the blockchain? In maintaining the blockchain. And because these things are scarce, and let's say Bitcoin being the most classic example, there's only 21 million that will ever exist. You've created this scarce asset that is a reward system. So the people who mine the Bitcoin, they use the electricity to solve the algorithm to get the

Starting point is 01:14:25 Bitcoins to make sure there's only 21 million, well, they get rewarded. The people who verify the chain get rewarded. And then we can buy the asset, which is actually us investing in the future use cases of this thing. Are people going to use it for storing wealth or building stuff? So now you get this global infrastructure layer of which people can invest. Now let's go back to the example of AI. AI, 99% of people listening to this will not be able to invest in it apart from buying some of those big public companies because they're not accredited investors, they're not allowed, they don't get to see it, they're an insider, all of this stuff. This is the inverse. It is fractionalizable. So a Bitcoin, you don't have to buy one at 60 whatever thousand

Starting point is 01:15:21 that it is today, you can buy a fraction. So remember we talked about property and the guys who own the big high-end property make all the money. None of us can buy the $50 million apartment in Manhattan and then do it up and flip it for 250 million. Now blockchain, we can all put 10% of our paycheck in it. Do you think people should? Yeah, and more. But the point being is this is the only globally homogenous asset on earth. It's the same in Nigeria as it is in Brazil, as it is in London, as it is in Silicon Valley, as it is in India, as it is in Papua New Guinea.

Starting point is 01:16:10 And everybody is on an equal footing. You can put the same percentage of your worth in it. Okay, that is mind blowing. And it bypasses the banking system, the brokerage system, and all the other incumbent things that get in the way of a Nigerian buying an international investment. So we've got a playing field that's leveled in the fastest-growing technology of all time, in the fastest and pre-taxing asset in price terms of all time, the shortest period of time that is globally available to anybody.

Starting point is 01:16:49 And then you realize, holy shit, okay, this is important. Now why that's important is because having more investors in it means the asset becomes more valuable, which means you're more likely to secure it. People want to join the network to earn some of these tokens to secure it. The more use cases get built upon it because people are making money and it bootstraps its behavioral economics. It's an incentive based system to bootstrap the most ridiculous startup idea of all time, which is I'm going to entirely disrupt money and create a new internet.

Starting point is 01:17:24 I mean, that's laughably stupid. And that's what's happening. One of the, I run a company called third web, which is a web three infrastructure business, we we've raised quite a lot of money for the company, about $30 million now, and we have a big team and it's interesting for me to observe the use cases because people come to third web to build on the blockchain. And one of the really interesting use cases we've seen over the last, I'd say 12 months that's really exploded is gaming. People building web three blockchain based games because if

Starting point is 01:17:56 you think about games like FIFA, which is a huge game, obviously the UK where we're big soccer fans or other games like, you know, RuneScape back in the day where you have assets in the game. In FIFA, you have a messy card. In RuneScape, you might have a sword. The thing that the blockchain now enables us to do is to take those assets from the game and actually trade them outside the game. So if the sword was on the Ethereum blockchain, even though I'm not inside the game, I can trade that sword on the Ethereum blockchain. And so one of the most exceptional use cases we've seen at ThirdWeb is people building AI games, sorry, people building web three games because these assets are now valuable. It's great for the game developer. They've

Starting point is 01:18:38 now got this brand new economy for their company. And it's great for the people that own those assets in the game because they've now, those assets are now more valuable because more people can access them. And I don't think people realize the extent to which this disruption is already taking place. People think of crypto and Web3 and they think of buying coins and hoping the price goes up. But it was interesting. Everyone knows like DocuSign and Adobe like eSign and those things. And I went on one of their websites, I think it was DocuSign, because I thought surely physical contracts should be on the Ethereum blockchain now. And there was this little paragraph on the DocuSign website, which says, every time a contract is signed on DocuSign, there's a hash on the blockchain. So it's recorded on the blockchain.

Starting point is 01:19:19 I thought people don't even know that the blockchain has now penetrated the world. I've got an asset management company, Exponential Asia Asset Management. We invest in hedge funds that just invest in crypto to capture this trend of going from $2 trillion where it is today in value. I think it's going to $100 trillion in, let's say, 2032, 2034. Okay, that's stupid. That's more wealth than has ever been created in that period of time on earth by, but it's twice the amount of value the S&P 500, the entire US stock market

Starting point is 01:19:56 took to build in a hundred years, I think we'll do it in 20. So this is staggering, that wealth, which is why we'll talk about why people should be involved and how they should be involved later because I'm passionate about that. But I was one of our investors, I was in Switzerland, and she is the head of trading at one of the soft commodity companies. So soft commodities like cocoa, sugar, corn, all of this stuff, agricultural commodities. And I'm like, surely you guys should be thinking about building on blockchain, you know, because there's a lot of letters of credit and stuff that happens, shipments. She goes, are we all, all the commodity trading houses built on Ethereum in 2020. She goes, so every shipment we make, the shipping contract, the quality of goods contract, the letters of credit, everything is on chain. So we don't

Starting point is 01:20:58 have to trust these others because commodities are full of sharks and you're dealing with countries that are not easy to deal with. We've got this verifiable source of truth. It's a commodity industry full of sharks and you're dealing with countries that are not easy to deal with. It's like we've got this verifiable source of truth. It's completely revolutionized our industry and nobody knows about it. If I own Ethereum, if I own an Ethereum token, which I do by the way, I've been stacking it and refusing to sell, much to my brother's dismay, who's like, Steve, you're a bit too emotional about this stuff. And I was like, bro, if there's any asset that I own that I-

Starting point is 01:21:25 Well, we're going to talk about how not to fuck it up later. That's another thesis. But how do I benefit from the fact that games are now being built with Ethereum and- It's really simple. If we'd have all been given shares in Facebook when it started, we'd have all been hilariously rich. But we didn't. The VCs got it, and then it went to the public market, and then you have to have a brokerage account, you have to be approved. What this is happening, you buy an Ethereum token today, if Ethereum ends up becoming bigger and more uses, your token value goes up. It's as simple as that. So you get to participate in an entire technological revolution,

Starting point is 01:22:07 really simply from your mobile phone. And you don't need anybody to approve it or do anything. Yes, there's regulation stuff, but simple stuff like that. It's pretty straightforward for almost everybody in the world. So therefore, we talked about how do you invest in your disruption and the future of technology? Okay, here's one where you can really do it and it's easy to do.

Starting point is 01:22:32 A couple of questions here then. So you said it's easy to do. Yeah. Let's talk the practicalities. How does one do it? I can do it on my phone. I have to call someone. How do I invest in crypto? You just open a crypto account with one of the big crypto providers, Coinbase, Kraken, Crypto.com, who are at Gemini. What about this though? My digital bank is offering me to buy crypto on there. Should I do that?

Starting point is 01:22:59 Yes, you can. And you could do it via PayPal. start somewhere. I'm not going to say no, but you will go down the journey that everybody goes down, which is the easiest on ramp is the best revolut, whatever. I don't care. Just do it. Get a feel for what it's like to own an asset that goes up and down a lot, particularly down. When it goes down, it makes you feel terrible and you've got to learn about how to deal with it. And then because it goes up over time, if you don't do anything and you've chosen a good quality asset that's provable as an asset in itself, it'll probably go up over time. In fact, highly likely to go up a lot.

Starting point is 01:23:41 And then you'll start thinking, do you remember Raoul saying that the bank owns the stuff and I don't own it? And then you might say, oh, but the magic here is unlike the bank where I can't take more than 10 grand out, I can put it all on my little ledger device because- What's a ledger device? A ledger device is actually a company that provides it. But what it is, it's actually, it's a company provider, but what it is, because this is just an address on a blockchain, and think of it as like your mailbox.

Starting point is 01:24:16 You can send stuff to it, but you can't actually take it out. Like your email, somebody can't read all your emails, but they can send you emails. Well, that, that part that's private, that secure passkey essentially, well, you keep that to yourself and it's stored on a device. And there's a complicated way of doing it. And you'll have to go through that, which is you have to have this seed phrase that does it. This technology will change quite soon, is you have to have this seed phrase that does it. This technology will change quite soon.

Starting point is 01:24:51 Fingerprints, face prints, and a bunch of other stuff. But basically, a little USB stick will secure that you can go and put in the safe or go and take it to your nan's house or whatever it is can secure your money that it's only yours and nobody can take it out. I have mine on a ledger. So I have my Ethereum on a small, it's kind of like a small USB stick. And then that USB stick is protected by like 24 words or whatever it is. And those words are on pieces of paper in different countries at the moment. That's right. And it means that no matter what happens, no matter where I am in the world, no matter who comes for me,

Starting point is 01:25:22 I can always retrieve the X thousand Ethereum that I have on this ledger device. Yeah. Unlike a bank where my account could get frozen by the government or they could empty my bank, they could freeze my bank. I will always have that value. And also, you know, there's a famous example of the conversation of gold in the United States and it's been done in many countries in the past. The good thing about this magic internet money is you don't have to physically cross borders

Starting point is 01:25:52 with it. Yes. Think of all the Jewish people who had to take money and diamonds and gold out of Nazi Germany and out of Europe. It was hard to do. Here you have to do anything. You just need to remember a seed phrase. A seed phrase being basically a string of words. Yeah.

Starting point is 01:26:13 Yeah. So which blockchain, which coin do you think people should invest in? I have only ever invested in one. I've only ever backed Ethereum. I think part of my bias there comes from the fact that when we're building third web, I had a window into the blockchains that people were actually building their applications on. And Ethereum was the one. And obviously, there's layer twos, which are people then build blockchains on top of Ethereum, etc. But for me, Ethereum was just the dominant blockchain that I thought would solve for most of the use cases outside of maybe what they call a store of value, outside of money necessarily. So contracts and other things.

Starting point is 01:26:52 What do you say? This is where my 30 years of expertise is this one thing, which is asset allocation. So firstly, the average person watching this is you need to allocate to this, end of story. If you're going to start somewhere, start with Bitcoin. It's just easy to do. It's widely available through different, whether it's a credit card, anything, just do that. I don't care, do that and do it with as much money as you can afford to see go down 60, 70%

Starting point is 01:27:33 and don't care and expect that to happen because that's what you have to see to see the long-term 150% a year. It's included within that is these downsides. term 150% a year, it's included within that is these downsides. Then I want you to put in some money every month, regardless of price, to build your savings in this exponential asset that goes up a lot. Okay, now you're set, you're on the journey. And then you want to figure out how do I make the most money? Like you, I switched,

Starting point is 01:28:06 I had Bitcoin to start with. I switched all of my Bitcoin into ETH in 2020 in Ethereum. And so I just owned that plus some NFTs and a few other bits and pieces, but generally it was that. And then in 2022, at the bottom of the bear market, I started to see the price of Solana seeing like it wanted to outperform Ethereum. Now Solana, much like your thesis, I saw this massive developer community, passionate retail, and a difference in the technology. Because these are all basically distributed companies that sell block space. So you want to look for attractive block space.

Starting point is 01:28:51 Bitcoin, it's the secure one. Ethereum, it's like the world computer, and everybody's building on top of it. Solana, faster, cheaper, feels more friendly, efficient. Yeah, it feels more retail. And I saw that and the speed of which they can do things and the innovation and the developer community meant that I started switching and then switched all of my ETH outside of my NFTs where I collect a lot of art, into Solana. I've now been switching part of my Solana into Sui, S-U-I.

Starting point is 01:29:32 As a disclaimer, I'm actually on the board of the foundation, but it's like the next big chosen one. It's the group that came out of Facebook that built Facebook Libra. What I'm trying to do is maximize my return. I'm a mercenary around, I'm passionate about this space and what it means, the technology, and how it empowers people, how it can change the third world, how it can change the internet. But I'm also a mercenary for my own capital and for anybody else I can help. Now, it doesn't mean I always get it right. So in your particular circumstance, I would like, look, it doesn't always get it right. So in your particular

Starting point is 01:30:05 circumstance, I would like, look, you'll probably be fine over time, but you're not maximizing your returns. But do you want to take the risk? Do you have the bandwidth to do that? And these are the questions we were talking about with work. It's the same thing. How much do you want to go down the rabbit hole? How much time do you have to invest versus the expected upside? I don't have time. I'm spending all my time doing podcasting, building businesses. And then just do what you're doing. Unless something says that Ethereum usage is falling off a cliff and developers are leaving in time, then don't worry about it, right?

Starting point is 01:30:37 You're going to be directionally very right. Will you capture the best returns? No, nor will I. Some other brando will get, by luck, something right. But the average person, so I have this thesis that I've tried to help as many people with. This is from my own learnings. I'm watching everybody else fuck it up. What happens is you're given this incredible asset class, and at first you do an intelligent thing like owns some Bitcoin or some ETH.

Starting point is 01:31:06 And then you want to go out the risk curve because you see somebody else making more money, you understand you can. That's okay. And then the bull market really hits the banana zone period when things go bananas, prices go vertical. And you will see people online saying, well, I made a million dollars today because I bought this meme coin. And you will lose your mind and you will start buying all the stupid shit and you'll go so far out the

Starting point is 01:31:29 risk curve. And then when the music stops, the stuff you own will be worth nothing and the more quality tokens will retain their value. The other thing that people will do in that journey is use leverage. What is leverage? Leverage is when you borrow more money to buy more of the asset. So I now borrow money to buy more Ethereum because I want to outperform you and I want to make more money because I'm really greedy. The 160% a year that Ethereum does is returns since 2015 is not good enough for me. I want to make it 400%, 500% a year.

Starting point is 01:32:08 Stupid, right? And what happens is you borrow money to do it. It's leverage. Futures markets, perpetuals. There's a whole bunch of ways of doing this or even borrowing on the bloody credit card, whatever way. People will do this and you really have to know what you're doing because the whole game, if this technology is going to last over time and it's going from two trillion to a hundred trillion, you have one job, not to lose your tokens. One job. You can do nothing like you're doing and you will make an extremely good amount of money out of it.

Starting point is 01:32:44 Your one job is to not fuck that up. I have a bit of a theory, and this theory is very naive and narrow and based on the smallest sample group in the world. It is, I have six friends. Actually, I'm one of the six, so I have five friends, five of my best friends, and we've all taken different attitudes towards crypto. And my friend who is most heavily involved in crypto

Starting point is 01:33:06 has made the least money and is arguably the least rich. And it's his life. And I think it's because of what you've described, whereas my position has always been, I invest in this one coin, I don't sell it, and I just buy more when I can. Over the last six years, I don't really pay attention.

Starting point is 01:33:24 Frankly, if you asked me to log in to see, the last time I checked what it was worth, I couldn't tell you what it was worth. Actually, I struggled to log in. It's been so long since I've logged in and looked at it. And I think my returns have outpaced his because of that. Yeah. I think that's right.

Starting point is 01:33:40 And so, you know, this is all the conversation we've been having, the secular trend, the opportunity, the skill set, then it's the execution of that thing. Then it's not to fuck it up. And what you've done is not fuck it up. You've got your seed phrases elsewhere. So nobody can, you've got no single point of failure. You've got it stored privately yourself. You have it in a large,

Starting point is 01:34:07 one of the top two. There's probably three that are low risk in terms of the chances that the use gets abandoned in the next five years. Bitcoin, ETH and Solana, they're pretty safe. So everyone should knock their socks off. 80% of their portfolio. Do that and you'll make money 90% of portfolio don't use leverage Then we're all humans. Give yourself 10% and do the fuck what you want Most of the time you'll find out that that 10% goes to zero, which is fine It's a good lesson you don't care because you've made Plenty of money on the rest but if you are that genius who can find the thousand X meme coin, knock your socks off.

Starting point is 01:34:48 Here's why I think that genius ends up. Because it's funny because the friend I'm describing, he's in Dubai. So there's a lot of them out there that you know, when I said Dubai, you understand what I'm talking about. They all invested in Luna, they lost their fucking shirt. That he was telling me about his boy who he works with, who made, I don't know, tens of millions betting on these meme coins. And then now he tells me that exact same guy is broke and is in a lot of trouble. Because the mentality that makes you go in pursuit of these real high risk bets, these were like meme coins and stuff, is also the same mentality and mindset that

Starting point is 01:35:22 makes you lose the thousand X return. The $10 million you made on the other side. And I think the psychology of money book talks about that as well. Like case studies, Morgan Household's book, case studies, the guy who like bet against the, like the contrarian that made the billion is also the same contrarian that ends up losing it again in the next cycle. So I feel like- I've seen that a lot. The problem with the meme coin thing, it is a casino. What is good is there appears a time where everybody in the casino makes money,

Starting point is 01:35:54 which is unlike casinos, because there's trends in financial markets. And no one's taking it out, so it's paper returns. And then a lot of this stuff goes to zero. We saw that with NFTs last cycle. We've seen it with a whole bunch of tokens, which is where you need to be very careful of latching onto a token and just keeping hold of it because some of these won't survive. You're lucky you're in ETH and not in something else,

Starting point is 01:36:16 EOS that was around in 2017, right? It's like you're stuck. So you need to be careful. Speculation does work for periods of time. It's better than actually lottery tickets and generally better than the casino, but only for periods of times. And then you will lose everything. Somebody's going to come into that casino and sweep every table and only 5% of the people are going to be left with money. So just think of it that way. So if you want to have fun, but the people who do it the most are the people who live off adrenaline. Yeah. Right. It's the adrenaline junkies. They're usually terminally online. They probably like to

Starting point is 01:36:55 gamble in other ways, sports betting. I'm not really that person, so I don't trade. Yes, I own a few meme coins because I enjoy the fun of the culture and seeing that culture develop, but just keep it simple, stupid. Is this why men are so drawn to this? I was thinking about the gambling statistics and like it's like something like 95 or 98 percent of gambling addicts are men. And I was thinking, how does this overlap with like their sense of purpose, community? That's a deeper question. I think men feel hugely under pressure

Starting point is 01:37:32 to be successful, to provide. There's a societal thing about what a man does and what he should do and how you measure success. That even in sports, it's kind of, it's very competitive to be a man, but it's also somewhat of a lonely pursuit in that respect because men aren't very good at talking about their feelings and their fears and all the bullshit

Starting point is 01:37:58 you bring in your head. So some gambling is to do with that desperate need to get ahead. I need to make this work. But then it becomes somewhat of an addiction because of the adrenaline. Dopamine is a very, very powerful drug. And we search for it all day, which is what the internet's all about, is behavioral economics. This is what they discovered is you trigger dopamine

Starting point is 01:38:22 and you can make all animals do something. Famously Skinner and the Rats, but humans and the internet and like buttons and anger and all of these things. So there's part of that. It's partly also male society is about betting, improving your prowess, gladiatorial. So it's a whole complicated thing of what makes men do it. But the reason, for example, in crypto, it's so male, because we're driven by that need to be the breadwinner, even though society has moved on from that. And we're seeing fantastically a rise of women in the blockchain space and a changing of that crypto bro culture that was there. If you follow some of the crypto Bitcoin Twitter pages that are the confession pages, people

Starting point is 01:39:19 can write in and confess what happened to them. It's often really sad and heartbreaking hearing about this father who has three young kids under the age of seven who invested in some meme coin, lost it all and now his wife wants to know where the money is and he's got nothing to show for it. And I've seen these documentaries, I've even kind of heard of these stories in in my extended network where like my personal trainer put £6,000 of his very scarce money into some coin and it went to zero and he's lost it all. The suicides in the bear market when people have put too much in and they've lost it all, much of the reason why I think people don't invest in crypto anymore is either they've heard one of these stories or they are one

Starting point is 01:40:00 of those stories. There's a disclaimer and a warning here, which needs to be heard. Well, this is the don't fuck this up thesis by Bitcoin, Ethereum, and Solana. One of those three, preferably all three. And that will stop you going to zero. But it will go up, it could crash 70% or something. Okay. So that's a conversation about time horizon. How long should I be prepared to hold it for to make a return? It depends what return and for what. Remember we talked about what part of your destiny you're trying to manifest here, which part of your lifestyle chips you're trying to cash in. So if you're trying to get rich quick, I want to make loads of money by next year. I'd rather you didn't do this. I don't think that is a sensible, intelligent way of living your life. You're going to take too much risk and you're going to be susceptible to lose it all.

Starting point is 01:41:00 If you said, hey, Raoul, listen, what I want is I want in five years time to have made a decent return on my money, you know, three, four, five times my money. I'm like, yeah, that's fine. Okay, I'm going to ask you for a price prediction. No. You don't do price predictions? Not anymore. And the reason being is because a lot of people listen to what I say.

Starting point is 01:41:23 And therefore, they then build a mental model around a price. And what you do is then you create a false comfort in what you're doing, but Raoul says it's going to X. And that stops you doing the work to make yourself test anything. And then you start extrapolating, well, I've put 10 grand in, and if Raoul's right, I'm going to have a million dollars. The whole thing becomes this emotional journey. And so I try to stop doing it because the best thing I can say to people is, listen, 2032, 2034, that is not long away, 10 years. This asset class is gonna go from two trillion

Starting point is 01:42:09 to a hundred trillion. Right? That is a huge return. Now, some of the coins in that space will do a multiple of that. That simple thesis is why I built Expan, the asset management company, exponential age, was just to capture this trend. To let, well, unfortunately, it's only

Starting point is 01:42:30 for high net worth investors and institutional investors, but just let them go on that journey, get the hedge funds to take the risk and figure it out and do that. But if people just do that, give me 10 years, just give me 10 years. And if you do it 10 years and you're sensible, you'll be able to take a whole chunk of money out every few years, because it's quite cyclical. It moves maybe every four years. And so you can take a chunk out, cash it in the lifestyle bank and keep moving towards that goal. Well, as you were speaking, I figured out your price prediction based on your prediction of how big the asset class will get.

Starting point is 01:43:10 So you gave me enough time to ask AI to do the math for me. And it says, if Bitcoin has a 40% market dominance, the market cap of Bitcoin will be roughly 40 trillion. If there are approximately 19 million Bitcoins mined, the price would be around 2.1 million per Bitcoin. At a 50% dominance, the price per Bitcoin would be 2.6 million per Bitcoin. Today, as we sit here, the price of Bitcoin is $62,000. So if your prediction of the asset class gets to 100 trillion, and if Ethereum is 15% of that, then each Ethereum will be worth $125,000 per Ethereum. And today it's worth about $2,400.

Starting point is 01:43:48 Okay. So then what I do when I face with something like this, when I first bought Bitcoin, I wrote the first ever Bitcoin strategy piece and made a price prediction based on what I understood about Bitcoin back in 2013, 12. It was the first ever piece written by anybody. And I said, listen, I think it's worth a million dollars. And it was pretty $200. And I had some basic maths, but same kind of idea using trends and everything else. And I said, I'm assuming I'm wrong by 90%. Still worth 100 grand.

Starting point is 01:44:22 And it's currently $200. It's the best trade you'll ever do in your entire life. And that proved out to be true. So let's assume that Raoul is more and I'm 50% wrong. As a $50 trillion asset class, you get to a million dollar Bitcoin-ish, right? And assuming whether it's that dominant or less dominant and what happens to it. But you can see the magnitude of the returns. So that's a, what, 15 X return in Bitcoin.

Starting point is 01:44:52 What if you're wrong? You've staked so much of your life on this. You've invested so much of your own money in it. What if you're wrong about this asset class? You couldn't have predicted Bitcoin would be so dominant 20 years ago. We couldn't have predicted even five years ago that AI would take hold. These things come out of nowhere

Starting point is 01:45:10 and they change the paradigm. What if you're wrong? I'm an investor, so being wrong is part of the thing. What's hard is via helping so many people at Real Vision and elsewhere, it is a weight I carry on my shoulders because I'm trying to bring as many people across the line and unfuck their future and all of these things. And I ask myself those questions and I go back to the simple thing.

Starting point is 01:45:37 There is the graph of the adoption of this. If that's going to stop, we've got an issue. But then how are we going to solve problems of digital identity or contracts in a globalized world, or any of these things without this technology? I can't do it. It's like a magic technology. The Byzantine generals problem was a real complicated problem that nobody had solved until Bitcoin.

Starting point is 01:46:09 Maybe AI creates a better blockchain. Maybe AI creates a better system. Yes it could do. But how long away is that? Before we adopt it, it adopts that technology. Some quantum cryptographic whatever, right? Is there a need for it yet? Why are we disrupting a new industry that's not been disrupted? But yes, no investment comes without risk. Crypto comes with that risk, the risk that governments will try and shut it down, even though they've tried and it's like a cockroach because it's distributed and it's everywhere.

Starting point is 01:46:45 Yeah, the blockchain you invest in becomes less valuable. There is the cyclicality of this asset that can fall 70%, 80% every four years. You have to deal with that. There's the risk that you lose your coins. There's all the risks in the world, and that's where you get paid the return. So there was no certainty in this world. I live in a probabilistic world. But if you can show me the world is going to be less digital than today, and you can show me a better way of dealing with a lot of these structural problems that we have,

Starting point is 01:47:22 and you can show me that the community, the groundswell of individuals, don't forget, this is driven by individuals. We've front run the institutions. The institutions weren't allowed to invest in it, but we've been able to put our money in before they did. We've created it. If I see any of those factors changing, then I worry about it. So you're telling me that if I'm earning an income right now, I shouldn't hold these pieces of paper that the central bank, my bank, is giving me. I shouldn't keep cash in my bank account.

Starting point is 01:47:57 Everybody has different needs. I'm not saying don't wear your tin hat and look, everything up to about a hundred grand is protected. So you're okay. You're not going to lose your money that way, but you'll lose it another way. And that's the debasement of currency. It's time to take a moment to reflect on our sponsor, Whoop's Sober October Challenge. I know thousands of you got involved in the Sober October Challenge. My inbox has been flooded with messages sharing the changes you've experienced, which is amazing. A big part of why I partner with brands like Whoop is because I believe they offer something

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Starting point is 01:49:05 So what's the debasement of currency? Really simply, we talked about in a digital world, everything goes to zero in value. That is debasement. What it means is too much of something makes it less valuable. I can come out of the desert, I will pay you anything for a bottle of water. Give me a million bottles of water, I'll pay you nothing for them. Right, there's too much of it. Now, how you say, well, how can there

Starting point is 01:49:39 be too much money? But what happens is the economic system revalues things in this weird world, in this weird way by debasement. So debasement in the old times was, if we take one of those gold coins, debasement was that was, let's say, one ounce of gold. Then I was the Roman emperor. I would just snip off a, one ounce of gold. Then I was the Roman emperor. I would just snip off a little bit of the gold. You wouldn't notice, and you'd still value it.

Starting point is 01:50:12 Try and pretend it was the one ounce. But somebody else would say, no, it's actually worth less. I've taken that slither as the emperor, and I've used it and spent it on sports cars, and you've now got a less valuable coin. And the country has less value. So the money is less valuable. It's called debasement. The more of it that's around in the electronic age where you just press the button and you create money, then what happens is the value of money goes down. So let's say people can understand it simply as, let's say you go on holiday and you go to

Starting point is 01:50:56 a country that has a very weak currency. Let's say it used to be Mexico, let's say. You're an American, you went to Mexico, everything was cheap because the currency kept going down. But for Mexicans, it actually got expensive because the purchasing power of your peso went down and you couldn't buy as much with your peso. What we're doing is ever since 2008, the whole world, all the big economies in the world hit 100% all the governments hit 100% of GDP in debt. So 100% of the economic value of that country was in debt. And that means that just paying the interest on that debt starts to become a burden.

Starting point is 01:51:45 So let's say your economy's growing at 2% a year. Let's say your interest rate was 2%. Well, 100% of the economic growth basically goes to pay the interest payments because somebody needs to generate the money to pay them. But at the time corporations were over 100% of GDP and debt, and so were households in 2008. Everybody was in a debt orgy.

Starting point is 01:52:11 The financial system was just lending everybody, and then it all fell apart. And so what they stopped doing was really corporations and households stopped borrowing as much money. They, in fact, restricted money to us. So in these economic times, we've actually been able to borrow less money while house prices have gone up by the basement. I'll show you that in a sec. And the governments have taken on this obligation. So they've been massively growing their debts and they reset interest rates to zero to kind of give them a chance of paying debts back in 2008.

Starting point is 01:52:47 And only recently have they really risen. But they've still got all of these interest payments to pay. For now, the US economy is 380% of GDP in debt. It's staggering, considering the size of this economy. The world, the entire world is 400% of GDP and debt, it's staggering considering the size of this economy. The world, the entire world is 400% of GDP and debt. We've gone so far beyond what is sensible anymore that it's become incredibly fragile. So the management of the payments of the debt and the debt itself is the number one focus of the government and the central banks. Because if it all goes to shit, it all goes to shit. Everyone's going to lose their savings, every business goes under, every government goes under, there's no payment of services,

Starting point is 01:53:39 the retirees lose everything. It is unfathomable. And I know many people online talk about, yeah, we should just let it all go. They have no comprehension of what that will do in a world that's 400% in debt. It's basically a 75% wipeout of every single asset. And all the bretaries and all your savings and all your pensions and everything. So the answer is, well, let's just print some more money

Starting point is 01:54:07 to pay the bills. That's you taking a credit card to pay off your credit card payments. Now, when you control the money, you can kind of do that because nobody's going to tap you on the shoulder. So what they do is they start printing money. At first they used to use the balance sheet, which meant that the Federal Reserve or the Bank of England or whoever would buy bonds from the market and basically take them off

Starting point is 01:54:34 the market. So it meant there was less debt around in the market. But they changed the thing. They now have something more pernicious called liquidity. You can't see it. They've got different mechanisms that they put this into the system. Basically, everybody, all of the central banks are doing it at the same time, and they're also all in agreement that they have to do it. This is all driven by the aging demographics and the debt problems that it all caused.

Starting point is 01:55:00 What we've got is every government having every four years or so to print a lot of money. Why four years? Because in 2008, they all reset their interest rates to zero. They then went and borrowed money three to five years out, and every four years, the cycle comes up and they start injecting money, liquidity. Okay, so what does this all mean? Yeah, people watching this are like, yeah, I kind of know what you're talking about.

Starting point is 01:55:29 What it means is that on average, your money goes down in purchasing power versus scarce assets by 8% a year. And then you've usually got, let's say, a 3% inflation rate. You've got 11% of your money is being devalued every year. Your future self is getting poorer by 11%. Right, remember we talked about the future self, and if you buy the S&P 500, what was

Starting point is 01:55:57 it making about 11% a year? So if you buy the S&P 500, your future self is not going to get any richer for the risk you've taken locking up your money for 10 years or 20 years. Because of this inflation? Because of this debasement. Debasement. Now, people confuse inflation and debasement. I would call this debasement of currency.

Starting point is 01:56:17 And so this is happening at 8% a year, which is why we're all feeling so fucked. It's happening. All these assets keep going up. Real estate keeps going up to offset this. Now, what I did once I realized this, something I call the everything code is a big thesis around how this all happened and what it all means. And what's happening is basically the aging population is driving debt to GDP. It's driving the government debt. And then the liquidity is paying the interest payments. So it's this economic machine that the world has become.

Starting point is 01:56:50 It's perfectly cyclical. It's perfectly predictable. It's not going away until we have this technological revolution we talked about. And so everybody has to protect themselves. So once I found this thing called the everything code, I started thinking, okay, if this, let's say 11% rates, the hurdle rates of money, that my future self is getting poorer every year by,

Starting point is 01:57:17 what do I invest in? So I started dividing everything by that. And this and P500 doesn't make you any money. Real estate doesn't really make you any money. Gold actually lost you money. It's supposed to maintain your purchasing power. I'm like, holy shit. There were only two assets in the world that outperformed this technology, crypto.

Starting point is 01:57:40 The NASDAQ was doing 18% a year, and crypto was doing 150 plus. Salam has done 250% a year, even with three 80% drawdowns. So this is what got me to change my entire investing game from being a broad-based investor with a balanced portfolio to, okay, there's only two bets in the world. There are literally two bets in the world. There are literally two bets in the world, technology and crypto. And the NASDAQ is down 99.97% versus Bitcoin since 2012. How much of your personal money do you invest in crypto?

Starting point is 01:58:17 100% of my liquid net worth. And it has been five years. Have you done well? Yeah. Yeah, very well. I've not made any major mistakes. I mean, I've been in this journey since 2013, so I have made mistakes. My mistake was I bought it at 200. I put not bad size bet in,

Starting point is 01:58:39 considering how unproven it was in 2013. It was how unproven it was. And it went up, it went up 5X or something in the first three months of me buying it. I'm like, I'm the best investor in the world. This is amazing. Then it fell 87%.

Starting point is 01:58:57 And I'm like, I had this long-term view, it was going to 100,000 and that I would just not look at the price as you're doing, right? And fine. And then 2017, it was now at 2,500. I was up like 10, 12X, which was amazing. I'd never had a bet up 10 or 12X. And there was some weird stuff going on. There was another Bitcoin. It was going to be the code had been forked. I was like, I don't really understand this. I'm going to take my money.

Starting point is 01:59:29 That was about March, April 2017. By December, it had hit 20,000. It had gone up another 10x that year. Then it collapsed down 85%. And then I bought it in 2020 during the pandemic into that big sell off where it fell 50%. So I bought it cheap, I sold it on the way out. I then bought it when it sold off. If I'd have just held onto my original bet, I'd have made five times as much money. And if I'd have listened to myself, which is every four years when you have these big sell-offs, you just try and add as much money as possible, I'd have made 25 times as much

Starting point is 02:00:16 money. So even though I got it right, I fucked it up too. Raoul, you said that the best trade is always quality of life. If your account is full of quality of life and quality of life experiences, that's the greatest trade on earth. And I'll continue to do that trade until the day that I die. What do you mean? What is the purpose of life? Now, we can get very existential about stuff and you actually go down these paths a lot

Starting point is 02:00:50 with AI and universal consciousness and a lot of other stuff. But basically, let's just assume we're humans. Let's just assume maybe we've got one shot on this earth. Well, you might as well make the best of it. And people have got to remember, money is just a scoring system that allows you privileges. And people lose track of that and think money is the privilege itself.

Starting point is 02:01:18 The privilege is freedom. The privilege is being able to live where you want to live. The privilege is being surrounded by the people you want to be surrounded by. The privilege is being able to live where you want to live. The privilege is being surrounded by the people you want to be surrounded by. The privilege is being able to bring up a family. Whatever your value system is, those are the things. So for me, I like living in nature, and that's probably key thing number one,

Starting point is 02:01:44 but being connected. So when I bought a house in Spain, that was a huge quality of life thing because I've got a security of a house that I own in nature, in good climate. Okay, I'm fine. But really, experiences are even more powerful. If there is a true currency in the world, it's experiences. As I said, I've just come back from living in the remote wild of Zambia. That is an experience that is incredibly valuable to me. I've done a lot of these. That is what it's all for. This understanding and seeing of how the world

Starting point is 02:02:23 is and the beauty and the marvel, the people, understanding people and not being fearful of people and not thinking about cultures except in terms of, oh, that's their culture and that's their culture, as opposed to culture good, culture bad. Friends, all of these things, these are the valuable things. You can't buy any of them. You have to physically go and spend the time and be uncomfortable. I've always said there is your comfort zone and where the magic happens. And these two Venn diagrams don't intersect. You have to be outside your comfort

Starting point is 02:02:59 zone to feel the magic. If not, you're just doing life by numbers. Do I need money're just doing life by numbers. Do I need money to have those experiences? No. So what's the point in me doing all this, you know, Bitcoin, investing, focusing and sacrificing my 20s? You need some money. You don't. You can solve for it without. But it's hard if you're living in Ohio or Birmingham or wherever you are, right, to get some of

Starting point is 02:03:27 these things. It might be, I want to be warm and dry. I want to grow my own fruit and vegetables. Whatever it is, it doesn't matter, right? You can solve it by a number of different ways. But really, for the average person, I say this is like, if you want to live on a beach, you can either become a billionaire and live in St. Barts, or you can go to Latin America and live on the beach for virtually nothing. And if you're living in an intimate age, you can make it happen. But then what happens is maybe you want some more creature comforts. Maybe you do this. Look, I don't say that we should all be the Buddhist Zen master and say we need nothing. We can reject everything. But if we break it down to what is the feeling that I want, then you can solve it with money

Starting point is 02:04:16 or without money and you won't be disappointed. Because remember, the very beginning of our conversation is what makes people unhappy is when their vision of their future self and their current state don't meet. Now, if your vision of your future self is, remember I said, I want that peninsula in Spain where that family. So what are the component parts that I like? I like social life of people, I like natural beauty, and with somebody I love, okay, that can be solved a hundred different ways. But in your life, did you have to shift from the building zone, the building season of life, to then the kind of enjoyment season of life?

Starting point is 02:05:00 I did in the middle, which was the lesson I learned. I had done the investment banking and the hedge fund thing. I then opted out of the rat race. I wasn't the richest guy in the world, but I thought, you know what, if I can get a source of income, I can live and I can grow my olives and almonds. I lived in a beautiful house on the side of a national park near a beach town in Spain, I won the lottery. I started Global Macro Investor. That ended up becoming a much bigger thing because the financial crisis predicted it and got all that stuff right.

Starting point is 02:05:37 What I found is I'd semi-retired and I was surrounded by people who weren't really intellectually stimulating. I made some great friends, but we wouldn't have a conversation like this. And so I felt isolated. And then you live on adrenaline if you're an entrepreneur or you're in financial markets, and so you end up going out to bars and nightclubs. And I looked at it and I've been there 10 years. I'm like, I got to get out of this because I'm excited by life. I'm excited. I looked at it and I've been there 10 years, I'm like, I got to get out

Starting point is 02:06:05 of this because I'm excited by life. I'm excited. I want to do the entrepreneur thing. I love investing. I just want to be around people who also did it. And by chance, I ended up building a house in the Cayman Islands because it was one of my dreams. I wanted a house on Tropical Beach.

Starting point is 02:06:20 I love diving, all of this stuff. And that was the signal to me to go, fuck it, I'm moving to Cayman. I started Real Vision and I started the Entrepreneurs Journey and now I've got four companies and I'm busier than I've ever been in my life. I'm very happy doing it, but it's a chapter again. And it'll give me the lifestyle ratchet, but also the intellectual ratchet that I wanted to prove to myself that I can do some of these things. We have a closing tradition on this podcast where the last guest leaves a question for the next guest not knowing who they're going to be leaving it for. I've never revealed

Starting point is 02:06:53 to the last question in terms of who's written it, but I'm going to reveal it in this case. This question is written by Boris Johnson. And the question was, have you ever tried to sack someone and ended the meeting having accidentally promoted them? Boris is speaking from experience there. You know, I think I probably have. I think I probably have. And that goes back to one of my things that I've had to learn is how to have difficult conversations.

Starting point is 02:07:30 I'm English and my mom's Dutch. We're also quite evasive. We don't like drama. My wife's American, so she's taught me that you just go straight in for the kill. I've avoided tough conversations. And so I've probably ended up in that situation. Or something close to it. Does it not? I have as well. Of course I have.

Starting point is 02:07:56 And I'm just like, but it's a lesson I'm trying to learn is you need to be more, if it's a tough conversation, just do it. you need to be more, if it's a tough conversation, just do it. Amen. Thank you, Rahul. I think everybody should go and check out your channel, which I've watched for many, many years now. I think it's the, in fact, it's the only channel I go looking for when I'm looking for advice on anything crypto related, the macro environment, inflation, all of these things. The only channel that I trust and that I go looking for, and I really, really mean this when I say it, has always been yours, because I think you've provided nuance in a way that's incredibly accessible to the average person. And a lot of these finance channels are very difficult

Starting point is 02:08:32 to understand the terminology. They kind of skip past that part, but what you've done so well is made all of these subjects so accessible for everybody. And I can't imagine how many millions of people you've helped open their eyes to the state of currency debasement and some of the myths around how to create and save your wealth. And I think that's a mission that is so incredibly important because a lot of this insight, unfortunately, historically has been reserved for the elites, however you want to define them, the elites intellectually or only the people that work in finance. And I think what Real Vision has done is blown those doors open and you've been a champion for me in my life and an educator for me in my life.

Starting point is 02:09:12 So that's why I was very excited to speak to you today. So thank you for what you're talking about. I appreciate that. And also for everybody watching this, look, I'm genuine in trying to help as many people. And so this whole Everything Code thesis, to make people understand it more, we've made a whole special air for you guys in Real Vision. Go to realvision.com forward slash diary. And there is all for you guys watching this. It's the Everything Code, the document so you can read it, watch the video.

Starting point is 02:09:44 You get free Real Vision subscription because it's free to join. And honestly, there's so many tools. And if you don't understand something, ask the AI. The bottom right of the screen is a little plus button. You ask the AI, the Real Vision bot, it'll explain it to you. Everything you need is there. It's free. There's no reason not to unfuck your own future.

Starting point is 02:10:02 I'll link that below so everyone's got it. That's realvision.com slash diary. There'll be a link below in the description wherever you're listening to this. Thank you. Thank you. I really enjoyed it. Thank you for your time. Every single time you eat, you have an opportunity to improve your health.

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Starting point is 02:10:39 which means I have more energy, better sleep, better mood, and I'm less hungry. And the best part about Zoe is that it's backed by their recent clinical trial, better sleep, better mood, and I'm less hungry. And the best part about Zoey is that it's backed by their recent clinical trial, something called the Method Study, which is the gold standard of scientific research. I started Zoey just over a year ago now, and I've been able to track my progress week after week

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The Diary Of A CEO with Steven Bartlett - The Investing & Crypto Expert: "We Only Have 6 Years Until Everything Changes!", "The S&P 500 Isn't Worth Your Time!", "Don't Keep Spare Cash In A Bank!"

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