The Pomp Podcast - #1209 Dom Bei | Firefighters Are Buying Bitcoin!

Episode Date: June 11, 2023

Dom Bei is a Santa Monica firefighter, he is also the former president of the Firefighters Union, and a bitcoin author. In this conversation, we talk to him about the Santa Monica Firefighter Union being the first union in the country to not only buy bitcoin, but also hold it in self-custody. Dom describes how they did it, why they did it, what the risks were, and what the response has been. ======================= Pomp writes a daily letter to over 235,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/

What's up, everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Dom Bey is a Santa Monica firefighter. He's the former president of the Firefighters Union, and he's a Bitcoin author. In this conversation, we talked to him about the Santa

Monica Firefighter Union being the first union in the country not only to buy Bitcoin on their balance sheet, but to hold it in self-custody. There's many other pensions and unions around the country who have allocated to Bitcoin, but the Santa Monica Firefighters Union is the first to do it with self-custody. Dom does a great job describing how they did it, why they did it, what the risks were, and what the response has been. I really enjoyed this conversation with Dom, and I hope you guys enjoy it as well. Here's my conversation with Dom Bae. This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of

Bad sales. Using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify. opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I've got Dom here with me. Dom, you guys just made news out in

Santa Monica. The Santa Monica kind of fire union and kind of the entire region now is going and putting Bitcoin on its balance sheet. This is different than the fire department doing it. is different than the pension fund doing it, but it's the union. Help us explain what is the union and why are the firefighters all coming together to make this decision? Yeah. So the firefighters union, each department or members of that department have a union. That's a chapter of a state union, national union. And in the case of Santa Monica, it's 113 members that make up this union uh the step that occurred and there was a long path to kind of get there was basically a one-time assessment to explore bitcoin uh not just as an asset but as a

network as a monetary instrument as an innovation um and take a step to do that and so what occurred was a very, very small allocation one time to self-custody Bitcoin. And that, as far as I know, is the first time that a union in the country has self-custodied Bitcoin. Others have purchased it, held it on their balance sheet, pension funds, et cetera, but not in this way.

When you guys went to make the decision, walk me through, does it come up in a meeting? Somebody kind of makes a proposal. Is it just like a wild idea while you guys were out drinking one night? How does the idea first come up? And then what was the actual process when you described that you went and you actually underwrote?

What is the asset? What are the monetary properties? And what is the innovation? So there's a really long story that I'll sum up quickly for the show. Long story short, I was first exposed to Bitcoin in, well, 2011. Everyone has that story where they weren't listening. And it's like, OK, so that's when 2017. I actually worked at this conference and learned a ton about that kind of like the door got opened, learned about Bitcoin, always understood the value of Bitcoin and what it meant and that it was the first.

Of course, the long road after that and then had what I call like a re-orange pilling turn of events. And that's a long story. But basically, I was working and we had a rescue at work of an analyst. uh and it was leading up to pacific bitcoin and i was once i was working that and so we had this rescue of an individual from the bitcoin community and that kind of reopened my my eyes and got me re i say an upped uh dose of the orange pill from there wait hold on hold on describe when you say that you're rescuing a bitcoiner describe uh kind of whatever detail you can in terms of like their house is on fire and you're like going into the house to actually pull them out of the house. And then you're sitting on the curb afterwards. They're like, hey, by the way, you know about

Bitcoin? We're like, what happened? So I was working with my crew at the beach. At the time, it was the morning of like the FTX news had broke. So of course, being the Bitcoiner, I already am. I'm coming in like, all right, what is going on in this? Like, all right, You know, Bitcoin is down where it's not a question of like if it's how and what's the what's the move and how much are we talking here? So as that happens, a call goes off and it was for an individual who was hurt at the beach and we go to the beach. There's an individual kind of holding their neck or just sitting there and they had dove in the water. And for those that don't know that aren't from the West Coast or East Coast, you know, you have a sandbar that kind of goes like this. it dips down and then comes back up. So potentially this individual dove in what was deep water into

a shallow area, hurt their neck. You know, that's one of those calls where it seems like it's not a big deal. We packaged a person up. We're going in route. I like to make conversation. My crew, like unbelievable crew that they, you know, we took the precautions and we're going in route trying to make small talk. Turns out this person's an analyst for SWAN. And we're talking and I'm like dude i'm working that you're an analyst first of all stop the ambulance dude like like what's happening right like where are we at dude and i'm like i'm just kidding we're laughing uh didn't stop the ambulance but long story short uh he ended up having a broken neck in two places and when i ended up going to the conference i was like i thought you know usually you go

hey where's this guy at but you know he'll be like thanks for sending me to the hospital dude ruined my day. And like, you know, what a what a what a fiasco turned out he had a broken neck. And so that was just this crazy turn of events where I got a lot more, you know, just involved in at Pacific Bitcoin. Swan was very supportive and showed me tons of love on the journey. And and that was kind of like my start of exploration much deeper into Bitcoin. And then naturally having 10 years on the labor board and finishing that, that my two passions of Bitcoin and labor unions started coming together. And I started exploring that intersection.

So, and, and, and that, that led to this with the Santa Monica firefighters. Got it. And so when you guys start to actually look at this and the idea is proposed, do people think it's crazy or are they open to it? Like I know the firefighter community tends to kind of think a little bit differently given there's Firefighter podcast, Blue Collar podcast. There's, I think you guys have a podcast and just, they seem to be in and around

these types of technologies or these types of movements. But what was the reaction when the idea first came up? So having 10 years, you know, I've navigated, I was the president of our union. So I know the system pretty well. I've navigated some challenging times and done everything that we can imagine in the books, right? So of course, when it comes to approaching a union,

like I have a good background. What I saw in working through talking to other unions and figuring out how do you onboard unions and get them to learn about Bitcoin was there's a lot of barriers. Many we talk about, you talk about on your show that we know fear, uncertainty, doubt, right? You know, the things that have been publicized heavily is the drop from all time highs to lows that gets publicized. Luna, FTX publicized all this like fear type things. So I started looking like, how do you get folks on board the correct way? And Bitcoin was originally intended to be held in self-custody. That was part of the beauty of the innovation is you can hold it yourself in your own wallet. You don't need a third party custodian. And that's very tough to do for a union to kind of go, oh, here's this thing I don't understand. Let's put a bunch of money in that.

So the key that I kind of started seeing was, hey, I don't think any union has ever self-custodied Bitcoin. And what an amazing way to start the journey of learning by learning about the fundamentals of Bitcoin as an asset and a network. And so, you know, I just approached the board and there had been conversation, discussion on it. And, and that, that, you know, commitment was small enough to be like, let's just explore this thing in a very exploratory fashion. And, and then it kind of went to the membership and the membership supported it. And that's how it happened. So when you talk about self-custody, you bought it on a platform, you put it in self-custody. How did you guys get comfortable with that, right? I run asset management firms. I run businesses that have Bitcoin on their balance sheet.

And whenever there is more than just me as the owner or me as the kind of participant, there's always the question of like, hey, do these other people involved want me walking around with a hardware wallet in my pocket with basically our Bitcoin, right? same thing here is that yes you plus 100 plus other people have some sort of uh interest in this bitcoin um how do you get comfortable self-custody and how do you kind of deal with the dynamics there yeah so a few ways one you know the treasurer happened to be someone that has been in the space themselves so they had comfort comfort with it so that was a great thing the treasurer of any union board is kind of like uh the the manager and overseer of the funds that

financial, you know, that union's finances. The second thing, again, was making it small enough of a dollar amount to where the cost of mistakes, failures, learning is extremely low. And when I say a small dollar amount, like we're talking like something that I believe most people would be, it'd be laughable, right? You're like, oh, is this like a joke? But the thing is, is there are a lot of reasons why I think this route is beneficial for groups, unions, organizations. And we've seen some already just now. We did this prior to the SEC pursuing Binance and Coinbase. And can you imagine if a union put $1,000 a person into something they don't quite grasp? And you're seeing these headlines of the SEC, the United States is now pursuing these exchanges and saying

what you're doing is not right. You're breaking the law. Wait, what? So it has to be an amount to overcome a lot of these hurdles. Price drops. I mean, you know, right? Like, hey, when you zoom out, Bitcoin is heading in this direction. When you zoom in, it's a roller coaster. How do you overcome those drops it has to be small enough to learn you cannot put in more than your level of education on it because it then it will not become a thing that lasts it will become something that ends fairly quick so that's how we were at a comfort level is that the amount is so inconsequential that folks can be like sure let's let's do self-custody let's learn it that way and you can start that learning have you guys publicized what the number is uh or you know

say we've sent it out it will come out but but you know um let's say not this let's say for sake of conversation something like you know a dollar per member right something something that is like um so minimal that again you're you're not why would you do that not as an asset to make money it's not going to change your balance sheet and do that but if you can learn about it for the long run and set something up that's more promising in the future and explore, make mistakes. And then the value of that becomes massive, right? Because show me someone that puts a few bucks into Bitcoin early, learns it, doesn't get afraid, and they go in more and more versus someone who puts 10 million in but doesn't understand it and they kind of freak out, panic, sell it, move funds, then zoom

out 20 years and show me who the, who the winner is of that. Um, I w I would argue that it's the person that came in light. Yeah. It's like, it's like a, a crawl before you walk, before you run type, uh, type strategy. What is the conversation like, uh, kind of in the firehouse, right? So obviously this is happening at the union level. Uh, I'm assuming some people agree with it. Some people don't, some people don't care. Like what has the conversation been like though? This episode is brought to you by Accenture. When your advertising operations fall out of sync, Everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales using automation, analytics and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most.

Learn more at Accenture.com slash Spotify. Yeah, you know, that's another another benefit with the inconsequential amount is you get an overwhelming support, which it was. Also, remember, for any organization, you're never going to get 100% support. So if you do this massive step, and there's, you know, 20% of the people are not into it, they're going to dig in deeper if it really like impacts them. And they're like, Oh, my gosh, I have to now give this money for this thing we're doing. So by doing that small step, another benefit is those people that were opposed to it are still in a learning environment. They're still learning. They still have an open mind. And so just again, recently, conversation is good. It's like, hey, the way we hold it, it's not on one of these exchanges, right? I saw on the news, the SEC that, yeah, exactly. Oh, well, wow. Okay. I get that. Understanding it like, hey, I noticed there's all this negative media, but the price of

Bitcoin went down a little bit and then up. Yeah, yeah, yeah. You know, why is that? What are some of the other aspects of it? And so I think conversation is really good, which I think at the start of any person or organization's journey, you want that good conversation. It's so interesting to hear you kind of talk about this because you all are basically the epitome of this concept. A couple of years ago, I started going around saying get off zero, right?

Just get off zero percent allocation. And the reason why I was doing it from kind of institutional world was once they had some skin in the game, they would pay attention. That's basically what you're saying here, right? Is that like it doesn't matter if it's a dollar, $100, $1,000, or literally $100 million. If there's any amount of money into it, people will pay attention. And now all of a sudden you feel like – there's academic studies that show when you go to give a thing to somebody, if you give them $100 or you give them a physical item that's worth like let's say $20, usually they will put more value on the item rather than the actual economic value. And so you could literally say to someone, hey, do you want this or do you want the $100? And so it's counterintuitive.

Same thing here though, right? The amount almost doesn't matter. It's the fact that now they all feel, hey, we as a union are invested in this and therefore they pay attention and you're really using it sounds like a learning exercise. And so how do you take it from like the entry point of learning to like, where do you want to go now? Right. Is it, hey, we want to keep like dollar cost averaging in. We want everyone to become individual kind of Bitcoiners. How are you thinking about it? Well, it's an excellent what you were saying, spot on with having skin in the game.

You know, I remember when I first learned about stocks, you know, everyone starts with just a watcher thing and you're like, well, what if I invested in this? And you're like, I don't care. I forgot about it. But if you put a couple of bucks, you start checking that thing and you go, you know. So from here, you know, I think another important thing about getting in at a light level like this, we're going to have a committee built, which is going to consist of internal folks that understand Bitcoin, you know, the treasurer will be a member and external folks who, you know, can help guide and give good input. And from that committee, we can bring recommendations, different ideas, but what you want is the membership to drive the next step. And if that membership step is none, and all we did was learn, there's value to that too right because in 10 years 20 years whatever bitcoin becomes we can at least say we

took a look we learned we understood it but i'll tell you one thing about this small allocation the most common comment as this thing was being voted on and supported was why are we not doing more great let's have that conversation but let's understand you know the initial answer is because we don't understand what we can't put more into something we don't yet grasp. But the next steps, you know, unions have all kinds of missions and goals and things they want to do across the world. Maybe someone to buy a union hall one day, and they can't afford a piece of property. So they start a trust to one day put into it bit by bit, using it as a hybrid of a savings account, but also the fact that it's an asymmetrical asset, and they eventually get a

piece of property, who knows, maybe it's just a trust for a health fund, and they want to be able to pay for medical insurance. So they set up a Bitcoin, you know, medical trust, there's all kinds of options. But now as you're learning about it, as a committee is kind of providing information, you're having these healthy conversations. The next step, if the membership decides, they decide, it will be what is a model and goal that looks good for us? How are we going to move into this. It could just be more allocation. It could be something separate that's its own trust. It could be advocating for pension fund that we're a part of to kind of like explore this and in five years, look what it did for us. And so there's so many options, but it'll come

from the membership. Whereas previous examples of unions or, you know, I'm sure you saw the headlines. There was a pension in Texas that went in on, you know, years ago. Some of the comments when our news thing came out was like, they're not the first to do it. There was a pension fund in Texas that did it. Well, that was the fund managers. And that was a third party custodian. And I'm sure, I don't know what the level of understanding was at the time. This is much more bottom up. And that's where you want sustained, the most successful long-term pursuits are bottom up grassroots where everyone is on board and they can weather the storm of things like meet negative media attention price drop um you know all kinds of stuff like that what has the

response been from other unions or other types of organizations where kind of people collectively come together and they're trying to advocate for certain interests right has there been inbound um and what those conversations have that they've been like they're just tipping off got a lot of good response you know one of the things i'm working on and almost done with um that i'll probably put out on like a sub stack for anyone who's a union member organization person that wants to see this is like almost like a blueprint template of how to navigate this but also you can customize it for your union and the response has been good though because again the response has been a hunger for more information right like we're talking about like how did you guys do it

what what what did you guys get in exactly um and and that's the another benefit of the small allocation is like wait wait what did you guys do like you guys were the first to do this but it's this small amount and like and then and then do you turn to your your right and go hey hey hey joe why are we not doing this this seems like really non non non or inconsequential low risk like what's the harm where's the harm great let's spur that conversation because i've always been a believer like don't don't get involved in bitcoin after you learn about it that's fine but to just you know read a headline or two and miss it i mean you know we know this and you have all kinds of people on your show how many things have we missed in the world by just reading the

headline and not digging in um you know endless stuff where you just look at it and then five years, you hear this great story and you're like, Oh my God, what was that? Like, I wish I would have looked at that at the time. So, um, that I think, I think there's good conversation going around and sure. There's going to be people who are like, what you guys are doing. That's stupid. Um, okay. You know, that's fine. Uh, we'll, you know, let's see how things play out. What is kind of your vision, uh, for the next, you know, 12 months here? Is it, let's just see kind of what happens with Bitcoin. It's just continue educating and it's kind of almost hand to hand, right? It sounds like like literally conversations in the firehouse where

you guys are going to each other and you're saying, hey, you know, somebody asked a question and you or somebody else who's familiar with Bitcoin is there to answer and kind of guide them in the right direction. Is there anything else that you're planning on doing over that 12 month period? No, I would say, you know, providing information, educating, working at a committee level to provide different options. And again, truly going from a place of protecting the membership. That's another thing that's really important. You know, I care a lot about all these folks that I work with very much, and I want to make sure they're always in a good spot. So being, you know, responsible, educating them and letting them kind of decide what their next step is,

that's a good place to be. And I think we're in a good spot. Additionally, simultaneously, this you know i'm not on the board anymore so i have to give all credit to the board and the firefighters this is not like a me thing this is something that through my work and seeing how kind of bitcoin and unions in the workforce intersects um you know was able to pit stop and stop it with at my own home union go look i see this thing that's like very unique and can be done by any union as like a very low risk way to just learn it'd be great to work with other unions and get them, you know, to a level of comfort where they can take that step as well. And so I think, I think within my union, they're going to be fine. They're, they're, they're sharp. They're, they're committed.

They're going to learn. And probably in the next 12 months, you know, or as soon as the next meeting, there'll be more conversation, like what's next, what's the game plan, let's learn. Reading lists, info, convo, all the good stuff. Tom, this is awesome. Congratulations to you and the rest of members. This is pretty cool to see. Again, I love this strategy of like, let's get off zero, let's do a small amount, make it so that if we make mistakes, it's not going to matter. But also now people got to stay in the game, they're going to pay attention, they're going to get educated. And I think that driving education obviously is the most important thing. So congrats to you and everyone else. Where can we send people to find you on the internet if they

want to learn more if they want to reach out in terms of they have a union or another organization that they'd like to kind of follow in your guys footsteps. This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most learn more at accenture.com slash spotify yeah so uh twitter you know obviously twitter is an active spot so my my handle is baywatch1 again that has nothing to do

with the show my last name is bay i wasn't the best student in high school my basketball coach was my spanish teacher and he was like bay you're messing up the teachers are watching you they're Baywatch. So that kind of stuck. But yeah, Twitter, Substack. I might have an article coming out in Bitcoin Mag, which really dives into CalPERS and the pension and how Bitcoin can serve as a stabilizer for pensions without much risk as well. Explain what's going on there. Yeah. So CalPERS, largest defined benefit public pension in the United States, they got roughly $440 billion on the books. In June of 2022, they had a funded status of 72%. And this is something for us that are in the labor world we've seen many times, but the funded status of labor, of pensions comes up frequently. And so how do these pensions that are chasing workers living longer years, retiring later, all these actuarials that get factored in, they don't have much appetite for risk. How can they stabilize their portfolio without a bailout, which is kind of like what happens if it drops too low, right?

And they have to liquidate assets and all that stuff. so this concept of a pre-funding a lot of pensions have these pre-funding trusts which is basically almost like a side fund to help fund what's called unfunded liabilities and by involving injecting bitcoin at that level they can keep all their assets in their main portfolio not switch anything over to bitcoin and and pursue things that way you also have this look what's happening in california right you have the state senate just passed a measures uh advising they want to divest from fossil fuels and big oil fossil fuels and big oil are 10 percent of the portfolio 42 billion for calpers where are they going to go it's one of their best performing

assets what are they going to move into commercial real estate we got some issues coming up right like it's it's we got some challenges so um bitcoin is this asymmetrical asset that if they explore it outside of the pension it can be used as a stabilizer for the pension without taking much risk you know of all the funds that are involved do you think there's headline risk with them doing it that the big risk is that they just don't want to be the ones to do it yeah headline risk regulatory risk all kinds of risk you know but again there's also risk in a in in dropping to a funded status of 64% or sub 60% and kind of thinking like, all right,

so they got risks everywhere, I'll tell you, but it gets to the point where when you're looking at it, if there's no better options to stabilize and catch up and get to a funding status of over 80%, 90%, 100%, okay, we might have to start taking some headline risks. As long as the headline in 10 years is, pension funds stabilize through X, Y, and Z, and we're in a good spot, then, you know,

but absolutely there's definitely headline risk and fears for the same reasons, even at that micro level at the union, why there's fears to kind of like take that step. My last question for you is how many of the firefighters do you think are counting on their pensions? Like, are they still saying, hey, that's the thing I'm gonna retire on? Or have they now said, look, maybe it's there,

maybe it's not, but I gotta go kind of learn, you know, financial education in general and go invest? I would say all of them, you know, some of them are much more active in building things outside of that, but we're all, you know, when we all signed up, there was a defined benefit pension and firefighting, you know, like any jobs there's trade-offs. And one of the things in this proof of workforce, like concept I've, I've been exploring is, and you know, we trade time for money and, and this concept of trading time for money, we trade a lifetime. We got firefighters that get sick, they die, they maybe don't live that long after retirement. It's a sacrifice for

sure. Don't get me wrong. It's an incredible career, amazing life, amazing mission. But there are trade offs. And so you know, it's with this concept that you have a pension that for those years after you do your 30 years riding the fire engine waking up every night, you know, doing CPR running into fires, you know, on the freeway at accidents. That's, that's where that's where you're going to be afterwards. So I would say all of them are depending on it in some way. Of course, there always are some that kind of pursue things outside and get like, you know, they're building wealth like that, but definitely, you know, dependent. Dom, you're a pleasure to talk to, man. I love the fact that you have specific expertise and knowledge in obviously all of the

jobs that you do on a daily basis as a firefighter. You understand Bitcoin very well and have been able to kind of take your knowledge there and integrate it with the firefighting union, but also your understanding of the pension funds and not just for the firefighters, but also, you know, asset allocation, the underfunded status and kind of how Bitcoin could potentially be helpful there is pretty incredible. So it's obvious to me that you spend a lot of time learning and reading and stuff. So I appreciate you coming on here and share that knowledge with us and we'll definitely do in the future absolutely thanks pomp i appreciate it and uh yeah man just uh we get after it relentlessly brother