The Pomp Podcast - #1308 Travis Kling | Bitcoin Saves The World From Speculation

Episode Date: February 8, 2024

Travis Kling is the Founder & Chief Investment Officer of Ikigai Asset Management. In this conversation, we talk about cryptocurrency prices & protocols, the ultimate use case, liquidity, bitcoin vs gold, Saylor vs Schiff, financial nihilism, allocating capital in today’s market, and more. ======================= Introducing Espresso - the world’s most interactive portable display. They have a portable screen that is incredibly light, comes with a nice stand, and the user interface is very easy. Anyone who listens to this podcast can go to ⁠⁠us.espres.so/pomp⁠⁠. They have a brand new offer waiting for you.  ======================= Base is making it their mission to bring a billion people onchain. But what exactly is Base? It's an Ethereum L2 offering a seamless experience for both builders and users. With near-zero gas fees and rapid transaction speeds, Base is shaping the future of the onchain world. Base is a canvas for everyone, with hundreds of apps in the Base ecosystem, whether you're an emerging creator, a seasoned developer, or someone exploring the onchain space for the first time, Base is designed to bring your ideas to life. So, if you're looking for a platform where the future of onchain is being built daily, Base is your destination. Join in and make onchain the next online. Learn more at ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠base.org⁠⁠ and follow along on Twitter at @BuildOnBase to see cool things to do onchain, everyday. ======================= Pomp writes a daily letter to over 265,000+ 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/ ======================= View 10k+ open startup jobs: ⁠https://dreamstartupjob.com/⁠ Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

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. This episode is with Travis Kling. He's the founder and chief investment officer of Ikigai Asset Management. In this conversation, Travis and I talk about if prices can go up

without any adoption of these crypto assets and protocols. We also talk about liquidity driving investor interest. Maybe crypto is just all one big global liquidity trade. And then why crypto may be the greatest video game in the world and how that actually could be the ultimate use case. We get into, is Bitcoin gold? Is Michael Saylor similar to Peter Schiff? Which is a critique that one of my friends recently said. And then also we talk about financial nihilism and eventually we get to how is Travis allocating capital in today's market? This conversation is fascinating. It has lots of taboos. We talk about it all and I hope that you learn from it. Here is my conversation with Travis Klink. Anthony Pompliano runs Pomp Investments. All views of him and the guests on

his podcasts are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any 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. Today's episode is brought to you by Espresso, the maker of the world's thinnest portable display. Now, listen up. If you're like me, you feel like you are at a command center when you sit down at your desk. I got a gazillion tabs open and different windows for different activities. There's my web browser, my text messages, I've Slack open, and I got a notes app. I normally

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on chain what exactly is base it's a layer two offering a seamless experience for both builders and users with near zero gas fees and rapid transaction speeds base is shaping the future of the on-chain world base is a canvas for everyone with hundreds of apps in the ecosystem whether you're an emerging creator a seasoned developer or someone exploring the on-chain space for the first time base is designed to bring your ideas to life so if you're looking for a platform where the future of on-chain is being built daily base is your destination join in and make on-chain the next online learn more at base.org or follow along on twitter at build on base again that's at build on base to see cool things to do on chain every single day all right guys bang bang i've got

Travis here. I think a great place to start. Is there a world where crypto prices go up, but crypto adoption does not happen and crypto products don't work? Like, can we have something where prices make people rich, products do not solve user problems? Yeah. I mean, I think that would, I mean, I think we could probably, you know, if you wanted to answer that question exactly, I think we would need to sort of define quantitatively what adoption looks like, basically. But I think what you just described is probably my base case for how this coming cycle is going to play out. And that was what I tried to lay out in this tweet thread that went so viral that you reached out to me about in

response. So what does that look like? Your base case is what? Yeah, I mean, the name of the thesis This is a lack of pretense that any of this shit does anything or will ever do anything. And I came to that conclusion by watching how last year unfolded and how it looks like this coming year is going to unfold and comparing that to, you know, prior years in six plus years that I've been in crypto full time. and that's not to say that there's you know it's my expectation there's not going to be any adoption that's not true um i think stable coins continue to be the strongest product market fit in crypto history even stronger than bitcoin and i'm sure there's some maxis that are gonna you know uh be upset about that but um i think the just the the numbers and the uh volumes and things like that would would support that i mean it's kind of ironic that

a stable coin you know is like a pseudo crypto right that it's like oh we're trying to like get off the dollar and this that and the other but it's like what is clear the product with the most demand is a digital dollar that moves around you know kyc free and settles very quickly And when you move away from stablecoin adoption, it does not look to me like this coming cycle is set up to be a cycle for, you know, mass incremental adoption. I'm just not exactly sure where that's going to come from. Um, we had DeFi summer in the 20, in 2020, um, which, you know, I wouldn't call it a flash in the pan, but cause I think that would be overly detrimental. I think what we learned in hindsight is that the tokens associated with DeFi, um, have a value accrual problem. Um, and

The next summer, we had NFT summer in 2021. And NFTs aren't going anywhere. But in my view, their current form is insufficient to kind of gain mass adoption. And I think a lot of the hype around NFT mania was also just a function of the tremendous amount of money printing that the government did. And people were just, you know, there was wild speculation across a bunch of different asset classes. But I actually struggle as we sit here today to look into the coming cycle and see where even the amount of hype that we got from DeFi Summer or from NFTs is going to come from. I mean, there are places you can look in AI. People put AI out there a lot. D-PIN, people talk about D-PIN a lot. It would be my base case, and this is certainly not financial advice. Nothing I say here is financial advice, but it would be my base case that a basket of AI names would outperform the broader crypto market over the next 12 to 18 months.

It would be my base case that a basket of deep end names would outperform the broader market over the next 12 to 18 months. But I would not expect, you know, it would not be my base case that the tokens pumping in either one of those sectors would come along with, you know, mass adoption that ends up being sustainable through cycle that drives, you know, a value accrual through cycle. You know, I think it looks like they'll probably pump to the high heavens and then pull back, you know, 95% like we've seen so many other alts do for multiple cycles historically. So let me throw a couple of ideas out there at you. Interest is driven by macro in the sense that the pump, the, you know, kind of degenerate behavior. If the Fed wasn't easing, we would be having a completely different conversation. Yes. And so if they do ease to any degree of severity, is that just crypto becomes a play on global liquidity and people now understand easing equals asset prices get separated from

fundamentals, get long, get loud, have a blast on X and chill. And so like that is the interest is actually has nothing to do with crypto. It all has to do with macro. Yes. Yeah. I mean, I definitely start from there, for sure. And it's part of the thesis, in my view, because Bitcoin has a unique, I would say, more time-tested and well-understood and well-justified relationship to macro and to global liquidity. And the way I would characterize that is that in my view, Bitcoin seems to be purpose built to sort of absorb an outsized share of central bank balance sheet growth into money supply growth. So if you're bullish M2 money supply growth, if you're bullish central bank balance sheet growth, that Bitcoin is kind of purpose built to capture some sort of multiple on the growth of those global liquidity measurements. And you combine that and we're going into an easing cycle that's highly likely to cut it at least a few times this year. I don't think we're going to get QE this year, but I think they will stop tightening the balance sheet at some point this year. And it looks like China is, you know, probably needs to ease a lot this year as well, too.

And you combine that with getting spot Bitcoin ETFs, which unlocks safe access to Bitcoin for trillions of dollars, literally trillions of dollars that didn't previously have it. You combine that with the halving. And to me, that looks like a pretty, you know, what I refer to in the tweet thread as a free walk to all-time highs. And we can have a separate conversation about how long it's going to take to get there or how far beyond prior all-time highs I think we're going to go. but this move from mid 40s up into the high 60s looks pretty straightforward to me because of all those reasons I just said. And there is a memetic reflexivity that comes into play here. And it's this meme of three up, one down. You've seen this three up, one down, right? It's really strong. I mean, that is a strong meme. And there's a lot of reflexivity that goes along with it. we're in the meat of the good part of the three up one down right now like i said you've got these these other factors that look supportive so then people take the next step to memetic reflexivity

and they go well eth btc ran last time oh eth's about to get a spot etf as well too so it looks like eth had probably has a pretty straightforward walk up to to all-time highs and then it's like oh and then last cycle, all these alt ones ran relative to ETH. So that's probably going to happen again. Oh, and dog coins had a good run last time. So that's probably going to happen again and so on and so forth. So it's just like, it's a good year. There's such strong reflexivity around this view that it's a good year to be in the casino, regardless of what the kind of underlying adoption fundamentals are for what you're gambling on in the casino. So, a second idea. What if crypto is actually just the greatest video game ever created? And what I mean by that is, you and I, when we were kids, we grew up playing Madden, NBA 2K, maybe you'd play 007 on Nintendo 64, Sonic the Hedgehog on Sega Genesis.

We had all these games and it took up an enormous amount of time for us. As we got older, many people abandoned the video games, but replaced it now with Twitter and crypto. And so much of that attention is driven by what are the little points going up or down on these screens? What's the latest narrative? where can i find the quote-unquote cheat code and rather than having to put up up down down right left you know circle triangle on the video game controller now it's basically like can i find the telegram group where someone's going to tell me about the next coin that's going to pump and so there's this very weird thing of like the gamification of society continues to happen uh and so is this just the greatest video game ever created and that is quote-unquote a use case or an adoption driver is it is about speculation it is about gaining uh a game not so much you know how many transactions or what is the the product market fit in one of these products

i agree with that um yeah no no i completely agree with that and i think you know one thing i would just say is like i didn't really get into this for that and that would be disappointing relative to my hopes and expectations for this technology and this asset class. And it's like, I run a crypto fund. It's called Ikigai. I named it Ikigai for a reason. Probably most people are familiar with this concept. You Google it, you see this Venn diagram, what you're good at, what the world needs, what you deserve to be paid for, what you like to do. You find those four things, you find your Ikigai. It's like this what the world needs concept. Well, I, you know, in the summer of 2017, convinced myself that the world needs this technology and that it does have the potential to make the world a better place and it can do it quickly.

It can do it in a single generation. And I think that the gamification of society trend is strongly present. I think it would be like a fool's errand to, you know, think that that wasn't going to happen or to try and, you know, I don't know, spend all your time fighting against that. I think that would be, you know, you would just you just wouldn't probably get very far because I think it's an offshoot of this is an offshoot of financial nihilism, which is a concept we can probably talk about later. I think what I would say is that what I see in the crypto market is that this gambling on vaporware mentality is becoming so strongly present in crypto that it i think stands to present serious risk of choking out the potential for the technology to make the world a better place like it's just like there there's there's both there's many things in crypto there's a potential to make the world a better place in these various different avenues there's and then there's lots of things to gamble on and just have a good time with and

But this thing over here, to me, is getting so strongly present that it could just choke out this other thing, which to me, that would just be a very disappointing outcome. Is it any different than traditional markets? Nikola, the EV company rolling a truck down a hill, is that any different than someone putting a partnership on their website in the crypto sector? That's not true. or people speculating on GameStop any different than them speculating on Zincoin, Trump coin, or any other token that they think could potentially, quote unquote, make them rich?

Like how much similarity is it across these markets? And it's like a society thing versus it is a crypto centric thing. I agree with that. And like I said, the underlying drivers of that are, and a large part of that is this financial nihilism concept. And I think- what is that? Explain financial nihilism. It's like, I'm going to put $500 into a dog coin

that is probably going to go to zero, or I'm probably going to lose money on, but there's a small chance that it could 50X because the $500 isn't enough to make a difference of my life anyways and neither is like a thousand dollars and neither is five thousand dollars and that's just because the american dream is uh is unavailable to a wider and wider swath of americans there's versions of that that are true in other parts of the world as well too um that upward mobility that was available uh to the prior generation and the generation before that it's not nearly as available in this current generation and then you know there's a host of statistics that that um you know support this thesis but the easiest one is just looking at

median home prices relative to median income right and and where that level is um and it just causes people to make these different types of decisions financially and it's one of the you know gambling in general is skyrocketing in popularity, skyrocketing popularity. And that is a function of financial nihilism and gambling on vaporware. I mean, dude, don't get me wrong, trying to hit some low cap shit coin and doing research to go try and hit some low cap vaporware shit coin. That is, in my opinion, a much better usage of your time than trying to put together a five leg parlay on on pick a sport you know what i mean like unequivocally so it's like you know but i think it's it's just you know and i'm not expecting that all of that is going to you know that i like

want or expect or want to try and work for all of that to get removed from crypto that's not my point i think my point is like the magnitude of that attitude the magnitude of that attitude being present in crypto? And then what does that mean for this technology's potential to fulfilling its potential to make the world a better place and have a positive outcome for a wide swath of people? So when we think about the downsides, I think you're spot on in terms of that is becoming a bigger sector or a bigger focus, changing behavior. It has potential negative side effects that people may or may not realize. What would you say are the things that are working or have a shot to change society for the better? Bitcoin, stable coins, those are two

things you've mentioned. Are there other things that you're like, hey, there seems to be some progress here. And like, if this continues, I could see this having an impact in a positive way. Or is it really just like one or two things like a Bitcoin and a stable coin? um so i find d-pin to be very interesting um using a token economy to incentivize real world behavior and actions i find that to be very interesting um explain a little bit for those that don't know d-pin and like what what it is with these like physical infrastructure yeah yeah the i think the headline project to me is helium which i think is objectively one of the most successful projects in crypto history. They ship, I don't know, one point something

million of these pieces of hardware. People set up these pieces of hardware. And then late last year, they partnered with T-Mobile. And you can now get a $20 a month 5G Wi-Fi plan that is powered by these hardware units that people get paid in these tokens to set up and operate to provide this 5G Wi-Fi network. That's very interesting. And, you know, shipping 1.something million hardware units, you know, that's just a real short list of any projects that have ever done anything like that. And providing a $20 a month 5G Wi-Fi, that's just real world use case that, you know, it's just a real short list of crypto projects that have ever done something like that. So I think that's interesting. The issue that I find with these deep end projects is that in my view,

just in my view, the, these, the, their token structures, just how does the supply and demand of the token intersect with the use case of the technology does not, it looks to me to be susceptible to blowing a big bubble and then collapsing a big and collapsing a big bubble. And, you know, Axie infinity would be kind of the, the headline name from the last cycle that had that kind of thing. And, and, you know, I've been hopeful, dude, I mean, you and I talked the first time i did a podcast with you was fall of 2018 that's a long time ago and i think we talked a lot about crypto valuation on that podcast and we have made a stunningly small amount of progress on token structures since then and i think i would i would have just

thought we could have had more interesting experimentation around token structures to try and get some innovation there to create some more sustainability in how these tokens act through different cycles of the market. Because, you know, I think the issue with a lot of these things is that you blow a big bubble and then, you know, the cycle broadly tops because the Fed, you know, starts tightening, Bitcoin goes down 50, 75%. And then these tokens do a down 95%. Tons of people lose a bunch of money, you torch a bunch of the community members. And like, in a lot of cases, the projects fall apart, and they basically can't make it out the other side of that. So there's just a lack of sustainability through there. And I would just hope that at some

point, we could get more innovation around that. But it looks like the main innovation around like token structure that we have done this cycle has been the introduction of points uh you know leading to airdrops you know which is this is just right down the middle of the fairway of ponzi shit that is not sustainable it is just not a sustainable you know go-to-market customer acquisition you know beyond a pump and dump like it's just it does not strike me as very sustainable so and it looks like that's what we've done that's what we're leading with this next cycle so So, uh, again, I think that, um, this is a perfect example. Uh, there's a lot of early stage startups, uh, who, I mean, Uber just turned their first profit. Right. And I remember, uh,

being in San Francisco, Uber and Lyft are in the war. Lyft's got the pink, uh, mustaches on the front of the cars. You could literally get across town in San Francisco for like $3. It was wild. You're like, I press the button on my phone. Somebody picks me up and takes me and they cost three dollars i'm never doing anything else like this is amazing and what they were doing is they were just burning the hell out of vc dollars it was a war of uh trying to acquire users pay whatever it took and the promise was they were going to stay forever now if you go and you use uber today it's expensive i mean the other day uh it was pouring rain outside i was being a little soft you know you know what and uh i had to go like 15 blocks i ordered an uber it's 20 bucks

and it was so expensive that it almost made me be like, you know what? I don't have an umbrella with me, but like, I might just walk and get soaking wet because it's the principle of not paying the $20. Right. And so like, there was like this unsustainable thing. And they basically were like, let's race to get enough users to get to the point where we can turn a profit. Now Uber made it. WeWork did not. Right. And we can go through a bunch of these and most companies do not make it. And so I do wonder like how many of these projects or organizations are trying to be the Uber that takes 15, 20 years, like they'll eventually get there. And this idea of like creating a token somehow gives you like a balance sheet or a treasury that then you don't have to

raise capital. Like you have this thing that you can use as a currency versus no, actually these guys are all full of shit. This is a completely stupid way of approaching it. And there is no escaping out the other side. Right. And so what you're actually doing is you're wasting time. you're burning people and like it ends up being this really negative uh kind of approach yeah i i think you bring up a good point i think my pushback against that would be you know show me the product market fit in crypto that is in the same ballpark as uber you know there's just that is just an incredibly short list and i think if we had a dozen different applications that you were seeing very real adoption on that my view around maybe some of

the unsustainability of the token structures like i would i would maybe feel differently about that but it's like it's like not only does it seem like we haven't gotten the token structures right on a lot of this stuff but also by and large the overwhelming situation is is you know either products that never ship or products that ship and have no demand or solutions that are just looking around for a problem, basically. And that that is overwhelmingly the characterization of end user applications in crypto. And there's one caveat that I did mention in the tweet thread that I want to mention here as well, too. I think there's certainly technologists in this space um more technology focused people that would say we still don't have cheap abundant

safe reliable fast block space on l1 smart contracts we still don't have that been trying to get it for eight years still don't have it but you know for x y and z reason this is the cycle that we are finally going to have cheap, abundant, reliable, fast, safe blockchain transactions. And that it's a field of dreams, if you build it, they will come type of situation. Once you have that, these use cases are going to magically appear from a cornfield, like Shoeless Joe Jackson in Field of Dreams, right? And maybe that's true. Maybe that's not. I think that I pay enough attention to this space that if that were to happen, then I would like be able to see that on the horizon because I just kind of pay attention to the space. And I don't see things

that are like super convincing from that perspective, this cycle. And maybe it just means that like, this is a cycle that we get the block space finally. And then maybe it takes the next cycle to then people be like, Oh, it's finally here. And people start building a bunch of end user applications. So then maybe, you know, you fast forward 2028 and, uh, you know, you get, uh, you know, you finally get those, those end user applications that really, you know, get product market fit. And it's like, you know, maybe that's what's going on. When you see, uh, these products, um, I think that the lack of product market fit is a, uh, uh, a good proxy for like what the actual problem is right or maybe it just is the problem um

how do you view bitcoin in light of uh that perspective and i'll give you a good example so bitcoin is a store of value i think most people are like yep check the box like seems to be working as a store of value for people both in terms of price seems to be that's why people are adopting it um and seems to now have seeped from retail institution like uh kind of corporates financial organizations and now even starting to get into some of the nation states you know slowly but but getting there electronic cash is the promise of the white paper i don't actually think that people would all agree that you can check that box yet stable coins have more transaction volume uh you know if bitcoin's price is going to go up in the future why would i use

it today like you hear all these critiques and so like does bitcoin have product market fit And if Bitcoin does or does not, I think that actually is somewhat of a telling sign for the rest of the market, because most people look at Bitcoin as like the most successful of all these tokens. Yeah, that's a good question. You know, I think the first thing I would say in response to that is that I actually wouldn't be too worried. I think of Bitcoin as being so different than any other crypto asset in existence. I really do. I just it's in a category by itself. in my view it does not compete with other you know i guess maybe you could say that it competes

with stable coins but i think it is it's firmly lost to stable coins and i wouldn't expect that to change and i think i'm still okay with that and that doesn't make me like too super worried about bitcoin i am still we're you know i am still waiting on you know it does seem like lightning you know it looks like lightning is kind of having uh you know it's not what people thought it was going to be um but i was better explain that more in terms of like where do you think it's missing the mark capital efficiency it's my understanding that the capital efficiency incentives just make it um uh you know just not as useful as the way people were thinking um but i was waiting for basically like maker built on top of lightning where you just like

it's just like you stake your btc you borrow a stable coin against it you pay some reasonable rate of interest on that as long as you pay back the stables plus the interest you get your btc back it's locked in a smart contract if it goes down you know if price and btc goes down enough against you then you get liquidated pretty straight and i've been like waiting for that product and that struck me as a massively better like that's a product that can go compete against stable coins basically i mean it is a stable coin you're right but it's like that idea made a lot more sense to me and i you know and there there is obviously wrapped btc and you know wrapped btc does have you know there's real market cap around that um but uh for for bitcoin

you know i think that the fact that it doesn't change much it's very hard to change is part of its value proposition so i don't worry about that um i think that i know that there is innovation that is getting funded for you know l2s and building on top of bitcoin to a greater degree than you know i don't know maybe ever in in bitcoin's history that like these projects are getting funded that there's innovation that people are getting interested in and that there's you know there's this modular versus monolithic blockchain um uh argument that's going debate that's going on in crypto right now, I think it's going to be one of the headline situations

for this coming cycle about modularity and this idea of sort of data availability and separating data availability from consensus. And there's this view that like, maybe you could use Bitcoin as the data availability layer. And then you do the computation on these other blockchains and Bitcoin can maybe be this kind of foundational part of this modular blockchain thesis.

You can get way smarter guys than me to come on here and talk to you about the minutia around all that. I think that's worth paying attention to. Overall, Bitcoin is pristine collateral. I like that moniker. I've liked that moniker for a few years. The U.S. dollar is the world reserve currency, but U.S. treasuries are the collateral foundation of the global financial system. And this is a debt-laden global financial system. So the collateral foundation for a debt-laden financial system makes a huge difference. And I think objectively, the investment case for U.S. Treasuries over a multi-decade timeline is a challenged investment thesis. but then when you go look someplace else where you go okay well what else could we use for the

collateral foundation of this debt-laden global financial system uh that you really run out of places to look immediately because uh the u.s is the best monetary policy house on a really shitty monetary policy block and uh like we're not going to use ecb debt we're not going to use jgbs we're not you know it's like you run out of like what else would we use and then eventually you kind of turn to Bitcoin, you know, maybe Bitcoin could be this. And it's like, that's certainly not the kind of thing that's going to happen overnight. But I think if Bitcoin just kind of makes chips away at that, you know, pristine collateral, uh, uh, competing against treasuries for the collateral foundation of the global financial system over the course of this decade and into

the next, then like, obviously if that works, then, you know, we're going to a hundred thousand and then 200,000 and then 500,000 and then a million dollars of Bitcoin. Like, you know, it's just like, whatever, you know, the market value of, of all the treasuries in existence is, you know, I don't know what the number is. It's like 15 trillion, 20 trillion or something. So, um, yeah. One thing I wanted to ask you, sorry to go back just a little bit, just cause you're a social media power user. Have you played around on Farcaster? Have you spent time with Farcaster? Not a ton of time. Um, early on, uh, I looked at it and, um, I think they did exactly what you have to do, which is, uh, do none of the growth hacks.

right like you know after being around so many of these um you know i helped uh create apps that what's number one in the app store like all these different things the number one thing that people mistake is all the growth hacks at work in fintech b2b uh you know software all that stuff you cannot do those when it comes to social networks because you have to allow the social network to actually form. It's almost like an evolution. And so if you, very similar to a company, think of an early stage company, you can suffocate a company by not giving them enough capital. You can, or I'm sorry, you can starve them by not giving them enough capital. You can suffocate them by giving them too much capital. The same thing can happen with a social network.

You can starve it by not having enough users show up, but you can suffocate a social network by having everyone show up at once. There's nothing really there yet. There's not enough content. There's not enough connections. The connections aren't real. People don't really know what is the culture of it. What is the conversations? What am I supposed to be doing here? All this stuff.

And you only really kind of get one shot. And so if you see what they've done is they have that really nice exponential user curve. And I mean, they spent years. I think Dan, I think the first time I talked to him was maybe 2018, 2019, something like that. When he was first starting this thing, there was nobody using it.

And most entrepreneurs would get frustrated by that. But I think he understood, no you have to let the community kind of build itself and allow that organic growth and then that's where you get the breakout compounding you never know when it'll hit but it hit for them and i think i saw recently like in the last like two weeks a 10x the user base or 10x like daily active users like yeah but wasn't it off of like an incredibly low base yeah of course i think now they have like 60 000 daily actives right or whatever but but the but the point being that like at one point they had 10 people on the social network and they weren't like,

let's get to a hundred thousand users tomorrow. It was like, let's go find the 11th person. Who's the right person. Yeah. Right. And, and I, the way that I found out about this, Dan literally was like, I will personally onboard you and do a call. And like, he was just methodically going through the right people, adding them to the network. And so, uh, one of the things that If I was to critique crypto in general, everyone has such impatience, which feeds into the financial nihilism, feeds into like, I need the 10x, 100x coin, et cetera. But if you're building a product, you have to understand, is this a product where urgency is the dominant posture? Or actually, in the case of social networks, patience is really important. And if you remember Facebook, yes, it grew quickly on Harvard's campus, but no one else could sign up except for on Harvard's campus.

It was like a limited growth. And then they added one other campus. And so they allowed this thing to kind of build. And then eventually it was a huge deal when they let people not with .edu emails sign up. But that was like, I think if I remember correctly, three or four years after they started. And so it's same thing here is like,

how do you just allow patients to be the dominant posture when you're building that type of product versus maybe something else, you actually want it to go as quick as possible. Now, last thing I'll say is Bitcoin actually had the exact same benefit. I do not believe Bitcoin can get disrupted today because today, if a coin launched and wanted to be a global reserve currency, electronic cash, you know, whatever, it doesn't have time to fester and kind of grow organically because everyone's looking for the next coin. So the fact that people had ignorance when Bitcoin was released in 2009 was a huge benefit.

And so it kind of like went up the ladder and then pulled the ladder up behind it for that use case. I strongly agree. Because people can't – it's just like we're too degenerate. Anyone who's creating anything is going to tell someone, and that person is going to turn around and yell to everyone else on Telegram or on Twitter, like, yo, I found it. And it actually will screw up the building out of the network. Yeah. Yeah, because I just – going back to just the use cases, I think decentralized social media is an interesting use case that is worth – innovation worth funding innovation um you know friend tech had its moment last year you know

looks like it was probably a flash of the pan at this point you know it was this kind of marginal incremental innovation relative to kind of what else had been out there so i think it's good and i wouldn't be surprised at all it would almost be my base case that at some point you know you get incremental innovation on incremental innovation on incremental innovation and then it's like you know maybe the great great grandchild of friend tech or something like that ends up being the thing that gets you know 50 million users or whatever the number is um so i you know i do find that interesting um and that just kind of the fundamentals around crypto and like you know just being able to connect with users connect with fans in this kind of unique way

um you know trying to monetize and incentivize these things like that seems like a you know a hotbed for this kind of technology and for and for you know what crypto represents i just don't see something in existence today where i'm like that's the thing that's going to be 50 million users yeah i mean if you also think um you know look there's a uh forecaster there's deso there's a bunch of these i think that um people are trying it but uh i wonder how much of crypto has the what i call the ai problem so right now there's an explosion of ai companies that uh they're smart you know hard-working uh people who say oh my god new technology i gotta go build an ai company but actually where we're seeing value accrue is companies who are solving a real problem

use AI technology internally, but it's not necessarily an AI business, right? It's kind of like a company that existed. And then all of a sudden the internet comes along, like I'm going to use the internet, but I'm not necessarily just going to go do something because there's this new tool. It's not a hammer looking for a nail, right? It's a business that says, Hey, there's a new technology that will help me do what I was already doing better, cheaper, faster, whatever. The AI companies that seem to be really winning, like, I mean, Facebook is a great example, right? You obviously Amazon, Google, like you see these companies integrating this stuff. And those are the big guys, but there's also small companies that are

figuring this out as well. Is crypto and AI actually going to fit into the same hole when we zoom out 20 years from now? And we say, man, all the people who tried to build a crypto product actually were thinking about it wrong. They should have built a product that solved the problem. And if the crypto rails made it easier, then they used it. But they made that evaluation the same way that they would make the evaluation over, should we use a SQL database or something else? It's just a toolbox. And so rather than say, I'm a crypto entrepreneur, you should say, I'm an entrepreneur in healthcare. By the way, the best database to use is a SQL database. The best hosting site is this. My cloud provider is AWS. And oh, by the way, the way we do this

feature or this thing uses crypto rails. But it's kind of in the background more so than it is like, I'm a crypto founder. I have a crypto company. Yep. One thing along those lines that definitely caught my attention was last year, Bonk, the meme coin on Solana. You probably followed it. Did you see the point where the Solana Saga phone had enough Bonk airdrops to it that it paid for the phone? Yes.

And then the phone sold out in 48 hours? like right in the midst, like, it's like, you know, I don't think they moved that many phones of this thing. Right. First. And then it just kind of sat there and nobody was really talking about it. I can't remember when they first launched the phone, but you know, we went through the bear market, people kind of stopped talking about this thing. And then it was like, bonk started running. And then at some point they were like, Oh, all the saga phones get, you know, X amount of bonk. And then this thing is, you know, I don't know, it was up like 9,000% or some shit. And it's like, at some point on the run, it was like, Oh, the phones,

the phone's a thousand bucks oh you can get a thousand dollars worth of balk on the phone and then the phone sold out in 48 hours and now it looks like i think because because now the phone's getting other airdrops as well too and now it's looking like those phones the phone costs a thousand dollars and it's gonna get like ten thousand plus dollars worth of free shit that gets airdropped on it because now it got um some nft that's now like you know you can sell this thing for like a thousand or two thousand bucks or whatever got some jito or some jupiter you know this that and the other and uh that did and they also were like oh not long after they sold out the first one they're like hey we're doing a solana saga version 2 phone and like i don't know if

they're going to do a version 2 or not prior to that happening maybe they were i don't know but But it's like, and I just was thinking that a traditional like Web2 company or any kind of traditional marketing advertising company had to have looked at that and been like, well, that's pretty interesting. So we're talking about things that Bitcoin maximalists don't talk about, right? They don't give a shit about this stuff. I think that if somebody was to talk to you and I five years ago, we would have been much closer to Bitcoin maximalist than maybe we are today. And some of that is probably driven by what is the financial return? What is the current development and adoption? And also, it's not an either or. It's not a net, like a zero sum game. It's much more of a positive sum game.

bitcoin one in this global store value game and there will be other things and i i'm at the point now where like anyone who thinks that the other things are all going to zero is probably actually doesn't even believe that they're just saying it because it sounds good right but also uh they're not paying attention so yeah are people the most ardent you know kind of hardcore bitcoin maximalists have they locked themselves into becoming the new gold bugs and like you know a friend said this to me and i can't get it out of my head is michael saylor the new peter schiff is the you know is the uh the gold bugs who are constantly saying doom is right around the corner buy gold get your physical gold you know build out your shelter uh the world is ending does

Does Bitcoin have an issue with potentially entering into that realm? Is that a possible pathway that Bitcoin maximum doesn't mean that they have to go that way. They should just be aware of not transitioning into an area where you're not mentally flexible enough to be able to evaluate everything else. well i do think that they're where bitcoin sits right now that there's certainly a real potential that it kind of i know this sounds weird that it like stops being a crypto that it just like like crypto native capital like that's not the capital that is going to take this thing from a one trillion dollars to two trillion to five trillion and that this that and beyond and then crypto native capital kind of looks at that and they're like oh like it doesn't have enough meat

on the bone like there's not enough meat left on the bone for the returns of this thing and that now that we've got spot bitcoin etfs passive flows um this thing over the next you know coming year and then years after that but it's just it's playing a totally different game in terms of of asset allocation and like asset gathering type of uh situation and that the returns and i've talked about this i've written about this before the return you know it's like bitcoin is probably levered nasdaq returns with like a call option on the world reserve currency the next world reserve currency and then it's like and you can actually look at it like you you know, you can't look at it like that. And it's, and I think it's just because that tech

stocks have this same, similar type of relationship with global liquidity that Bitcoin has. And that does just kind of put it into a category by itself. And, you know, Bitcoin maximalists, you know i mean i don't know i don't know what your viewership is exactly like these days but like you know from cycle to cycle if you rewind four years ago and then fast forward to today you know the people waving the bitcoin flag the hardest you did not get an upgrade on those people over the last four years and you can you know disagree with me about that you can get mad at me if you feel that way that's my view you know i won't go in a bunch more detail around that but like um i'll take it a step further for you you don't have to say it uh bitcoin has now escaped

the video game and when it gets pulled into the traditional financial world it gets overlaid with politics and what do you get rewarded for in politics extremism and so the more that you pull people, hard left, hard right. They yell and scream at each other. That's what happened to Bitcoin. You get rewarded in Bitcoin for being an extremist, right? And extremist, not in any other sense than like you're an extreme Bitcoin maximalist. The more extreme you are, the more that in a certain way, the way you adhere to the religion. In some weird way, it's like if you are the traditionalist, right? Then you get rewarded with social capital. And I'm not even saying that's anything that's bad right it's just it's just calling it what it is and kind of how uh it

is developed um what is funny about it or unique about it interesting is uh when you look at these surveys like 85 to 90 percent of bitcoiners hold another asset so what ends up happening is there are some people within the community that are playing the status game and then there are some people who are playing a capital allocation game right and uh when you meet people sometimes you don't know sometimes you definitely know right and and i think that there is this very unique development where again you know it just is seared in my head when my friends who by the way my friend is a uh bitcoin critic right when he said the thing about like peter schiff and michael saylor the same person but his point was if peter schiff came out tomorrow and said gold is bad

gold would tank right he's like if i sold all my gold michael saylor actually i think would be even worse. And Michael has done a fantastic job. One of the things that Michael has really done, I think, is he has helped shepherd in an entirely new cohort of people that he basically said, come in, the water's warm. It's okay. You can come check this out. And so he's been this huge net positive. But if you're sitting in Michael Saylor's seat, if all of a sudden the returns start to go down, again, I think he's buying it to protect the capital on his balance sheet. So it's still going to check that box. But now where does the future growth of the firm come from in the future? And again, it's unclear what that return profile looks like. If Bitcoin goes down to a 10% annualized return, that's probably still pretty good. It's better than holding cash. If it goes down to a 5% return, is that still good enough? I don't know. Now, I'm sure he's thinking about these things and trying to figure out, hey, what are the other things we can do to drive cash flow, et cetera.

But I do think that the ground underneath the industry has been shifting. And your point about like, does Bitcoin have enough meat on the bone? I've said for a long time, the reason why I liked Bitcoin was because when I would go talk to hardcore Wall Street people, they would say, Bitcoin is the riskiest thing in my portfolio. But then I would go talk to like the DGEN pseudonym on Twitter, and they're like, I don't own Bitcoin because that's boomer coin. Yeah. And so if you're like, I'm kind of a cowboy, but I'm also not going to go speculate on Zincoin, then actually Bitcoin is the riskiest thing in the conservative people's portfolio. It's the conservative thing in the risky people's portfolio. So that actually is pretty attractive to a public company who wants to be on the forward edge of this. So it's a very interesting dynamic that we don't have the answers to yet as to where we're going. yeah do you think we're going to get another sailor type of situation this cycle or or a tesla type of situation i think that sailor actually had an impact i don't think tesla actually had

an impact um in terms of like they reiterated the trend uh blocked it or square did the same thing but uh i think the zero to one of the first public company that wasn't a crypto company to do it was like 80 90 of the value of like that happening um and so i don't think at this point it really matters like if apple tomorrow went and said we're putting bitcoin on the balance sheet like yes there would be some short-term price you know movement whatever but i think now the market is kind of like desensitized over the medium to long term that like they just have priced in like of course every you know these companies are going to do some percentage of it i think the only really really big zero to one last one is uh a sizable developed nation either government or sovereign

right um and i i asked myself like what is that threshold obviously if some of the largest you know middle eastern sovereign wealth funds did it that'd be a big deal um but like el salvador i think rallied the bitcoin community i don't think actually the market gave it any credit outside of the bitcoin community like i think people are kind of just like whatever it doesn't work like they didn't really do anything and they just completely discount it and so it's like okay that was a small nation like what is the threshold right you know if italy did it would anyone care if spain did it if india did it right like where is that kind of tipping point where all of a sudden everyone pays attention and michael uh michael saylor and michael strategy were very unique in

like they weren't a massive company but they were a multi-billion dollar company it was big enough and he articulated it in a way that i think it was that tipping point he got to zero to one and it was incredibly valuable to uh to the community and obviously drove a lot of people uh to take a look at the asset yeah yeah great mouthpiece for sure yeah really yeah really good mouthpiece yeah i think the el salvador i mean it's my understanding that the bitcoin like things are much much much better in el salvador since bukele um got a you know got into power but i don't think really any of that has to do with bitcoin is my understanding and that and i don't have the details around that but i asked somebody the other day because i was writing about it in my monthly and i asked

somebody that you and i both know that would know like how's the el salvador bitcoin thing going and they're like it's not you know it's not basically um so but it's also like uh in that and that's actually a pretty good uh use case i think where like most of the people who were in government who went and said we are going to embrace this there was bigger talk than there was action in a lot of cases right so like i remember at one point greg abbott uh in texas the governor um mayor suarez in miami and eric adams the mayor in new york city were all like competing on who's going to be the head honcho like capital of bitcoin in america right and like you know the mayor of miami who uh to his credit was very early to it he i would argue he kicked it off

right at one point said i'm going to take my next paycheck in bitcoin and then the mayor of new york i'm gonna take my first three paychecks and it was like all right like we got a little bit of you know like a dick measuring contest going on here but like okay um when you see that happening i know for specifically in my mix i talked to him he ran into roadblock after roadblock after roadblock trying to get anything done in terms of buying bitcoin for the balance sheet paying employees in bitcoin you know any of this stuff and so like you have to remember government is still bureaucratic one person it's really hard to change but bukele as the president got a lot more executive power and so i do think that it's like kind of nation states are different than

cities and states where uh the president is able to get things done even if there is resistance from those around them in a way that you just can't do at other levels of government yeah i agree with that yeah if you look at um the macro environment you mentioned earlier bitcoin is a trade on global liquidity isn't all of crypto or do you think bitcoin is unique in a way uh no i think all of crypto is it's just that the bitcoin's relationship is more lindy a lot more lindy it's it's it's it's multi-cycle lindy like three up one down that is accurate for bitcoin it's accurate for the crypto market broadly but then when you try and drill down into specific crypto assets it's uh it falls apart

um and i think my the way i always explain this is looking at tokens that can make new highs against btc in the cycle after they started trading all kinds of tokens make highs you know they're introduced in the bear they're introduced you know at the end of the last bull or whatever and then their first bull market the first you know up three cycle they skyrocket you know bitcoins up you know whatever 500 and these things are up 9 000 or whatever the number is And then you've got the down one year. Bitcoin does it down 75%. These tokens do it down 95%. And then you come back to the next cycle and they pump again, but they won't make a new high in BTC terms. And I think Doge and XRP, ironically, are, I believe, the only two that made higher highs against BTC in the cycle after they were introduced. But, you know, there's a lot of irony that it's those two names.

But I think that's, you know, and for Bitcoin maximalists or for people that would say just have all your crypto exposure be in Bitcoin, this is like what I just described is the number one thing to hang your hat on for that, where you go, do you have the time to pick the shit coins that are going to pump and pick the right part of the cycle and sell in time? Can you do all of that while you work your day job or whatever? And that's very hard to do. And it's a great point. It's pretty crazy. For as much hype as ETH had last cycle for the returns that it had, ETH BTC wasn't higher than it was in January, 2018. It's pretty crazy. What you're highlighting is the difference between saving and investing, right in my opinion like yeah saving in bitcoin and just set it forget it right and basically just hold it uh is no different than decades ago when people would save in gold i always you know tell a story of uh in india the culture is like you never sell your grandparents gold it gets

passed down from generation to generation you just saved right same thing uh i think with bitcoin and it really is your your the line you're drawing is like you save in bitcoin and then there's like speculating and investing in everything else by the way buying berkshire stock is speculating as well right but like the investing game is very hard the saving game is all about just discipline and frankly like a lack of ego right it's just keep doing the same thing now what becomes very interesting though is as you look at let's take an eth another thing i've thought a lot about recently uh ethereum's maximalist or amateur hour compared to doge and xrp think of how think of how rabid dogecoin and xrp kind of uh maximalists are they rival the maximalism of bitcoiners

that's why i think those assets have the unique kind of performance that compared to an ethereum etc because actually what we found was the bitcoiners were missionaries the eth users were mercenaries and a lot of them jumped ship when solana came around it was cheaper and faster usdt jumped to tron yeah because it was cheaper and faster and so what you end up getting again it goes back to saving and investing you can use mercenary versus missionary right like there's all these frameworks that you can use to really uh highlight the idea that um the performance of these assets really is driven by global liquidity plus like what is the community and to a stock investor like that sounds insane but if you think of like that community component the assets that

have surprised people to the upside have tended to have a very unique culture to them and be much more missionary than mercenary. And so people don't jump. And then the other thing that becomes really interesting is like, Bitcoin is not the first digital currency. I wrote recently about like it's the product of 40 years of R&D. Ethereum actually is the first blockchain with smart contracts. And so if you said to me right now, gun to your head, pick which one's the AOL, it's ethereum bitcoin doesn't have competition to be the digital decentralized global store value it's the winner it's the king and there is nobody who's coming for it so far right you and i could spend 10 minutes rattling off all the layer ones that are coming for ethereum yeah and you can even

argue like did they lose did they lose ground you know the price can still go up but if others go up more like that's still an l to a degree yeah and so it's just a very very unique difference because again i go back five years ago you and i couldn't have these conversations because none of this was true now the world has changed drastically in the last five years yep yeah no no it's a good point i think it's going to be your solana it's gonna be fascinating to watch solana this coming cycle I think Solana has a chance to make higher highs in BTC terms this cycle to break that trend or enter into this very small club. I think Solana's community is noteworthy, and that community's ability to stick together and stick around after FTX collapsed was noteworthy and surprising, surprising to me. Um, and, you know, even characterize, you know, I think Solana was up 900% last year

and it's like characterizing how that happened, you know, it's impressive. And I'm not, I'm still not sure I completely understand it. Um, but part of it is certainly the community of users, the community of developers. um part of it is um is the uh difficulty that the space continues to have to provide cheap safe abundant fast block space um and reliable block space and because that continues to be hard to get and solana made tangible improvements to the network functionality you know their their outage yesterday notwithstanding uh but they you know they did make real improvements to it i think i think that was probably part of it as well too i don't know

this off the top of my head but my guess is that same thing i talked about with alts versus btc not making higher btc terms in the cycle after they were introduced my guess is all competitor alt ones versus eth that probably holds true uh that same situation i don't know i don't have my computer up right in front of me but um maybe tron i don't know if tron made a higher tron eth maybe that made a higher high in the cycle after but it's like it's a simple it's kind of a similar type of like you know it's it's a that is a quantitative metric that helps you tell a qualitative fundamental story about how the market is thinking through value you know assigning value accruing value across these various different names you want to hear a crazy statistic yeah

if microstrategy had bought ethereum instead of bitcoin they'd have more money right now yeah oh yeah i knew that and so if you think of it from that perspective uh the time in which we have this conversation matters because i don't actually think that'll be true if we talk about this in five years right like like like bitcoin would have been the better choice over 10 years but over the last three years it's kind of and it's not like oh they'd have 10 more like i think it's like bitcoin's up 4x and ethereum's still up like 6x or something right and so given the size of capital that they've deployed and what it's worth today like it's like a billion or two billion dollar difference um and so like if i'm a eth maximalist i'm yelling and screaming about that if i'm a

bitcoin maximalist i'm kind of saying like chill out you know give us some time right and like over the long run let's see what happens but i do think that um we've now entered a world where it's not 2017 2018 like buy crypto and like sit on your hands and like you're gonna get rich we've now entered a game of like you actually have to do some sophisticated analysis and i think that's why bitcoiners like the single greatest thing that they could tell people is like opt out of the speculation game and just save right like yeah you are not you're not warren Buffett. You're not, you know, name your favorite macro trader, just save. And that is a very, very different message than I think what is happening in the rest of the market. And to

your point, like sets Bitcoin aside, um, because the digital hyper-connected world is just making people more impatient. They're going to make mistakes, like all the issues that we know. Um, and so I think it gets a pretty interesting before I let you go, uh, how are you guys allocated today? Like, that'll tell us a lot, kind of how you think about the future. oh gosh i got to be really careful about that um or what are the themes maybe that you guys are allocating to so not actual assets but like the themes that you think are interesting yeah so uh ikigai is mostly a quant fund um and we have historically focused on btc and eth and because that's where we've been able to find you know predictive power in quantitative data

Um, and that continues to be where, uh, the large majority of our efforts are today. Our mandate is very broad. We can kind of do, you know, in terms of like what our offering documents say, we can kind of do like sort of whatever we want to with very little limitation. So we have historically, um, you know, had room for and spent time on, you know, qualitative liquid venture type of stuff that is not just, you know, combing through enormous amounts of raw data to find predictive power, you know, type of stuff. Um, and we continue to do that. Um, and you know, I find the deep end space broadly, um, very interesting. I think it's

going to be in a cycle that may have a real dearth of um actual adoption i think it has the chance to be the brightest spot of actual adoption actual you know use cases that you can see you know solving real world problems for real people um and i think that it makes sense to me that in a universe where people are starved for that kind of thing that they're going to gravitate towards these projects that can actually show, you know, real, real user adoption.

Um, yeah, I think that's, I think that's what I would say about it. Where can we send people to find you on the internet or find out more about icky guy if they want? Uh, Twitter is always good.

Travis underscore cling on Twitter. Uh, there's links to the fund and whatnot there. I write a monthly that goes out the first every month that, that, uh, people like a lot. And,

um, yeah appreciate the time enjoy the conversation man i always enjoy uh listening hopefully uh they don't come for us but sometimes you just got to talk about the things that are going on my friend all right we'll talk soon bye man