The Pomp Podcast - #1343 Chris Dixon | World's Best Investor Is ALL-IN on Crypto

Episode Date: April 16, 2024

Chris Dixon is the Founder & Managing Partner at a16z crypto, and the author of “Read Write Own: Building the Next Era of the Internet.” In this conversation, we talk about the original promise of the internet, what went wrong, lack of control from companies in the digital world, how blockchains and crypto can change that, bitcoin, ethereum, how crypto will interact with artificial intelligence, regulation, and more. ======================= Buy and sell cryptocurrency in a tax-advantaged crypto IRA with iTrustCapital. Enjoy 24/7 access, lowest fees in the industry, and tax benefits for your retirement. Open an account today at ⁠⁠www.itrustcapital.com⁠⁠ ======================= Core Scientific (NASDAQ: CORZ) is one of the largest public Bitcoin miners and hosting solutions providers for Bitcoin mining in North America. To learn more about Core Scientific, please visit: ⁠⁠www.corescientific.com⁠ ======================= 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. Today's episode is with Chris Dixon. He is the founder and managing partner at A16Z Crypto, and he is the author of a brand new book called Read, Write, Own, Building the Next Era

of the Internet. In this conversation, we talk about the original promise of the internet. What went wrong? Why so few companies actually control everything you do in the digital world? How blockchains and crypto can change that? Why he's a big fan of Bitcoin, Ethereum, and many other blockchains that you've heard of. And then we get into how crypto is going to intersect with artificial intelligence and other technologies, what's going on with the policymakers. And lastly, how is the actual employee base going to grow and what we need in terms of headcount to go ahead and keep this industry rolling. I always enjoy talking to Chris. He is very thoughtful about what he's doing, where he's investing capital and how the industry is developing. This conversation

is no different. Hope you learn a ton. Here is my conversation with Chris Dixon. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast 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 iTrust Capital. Are you buying crypto on an exchange because you're excited about the bull run?

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all right guys bang bang i've got chris here with me chris has written a fantastic book called read write own building the next era of the internet uh highly suggest that you go and check it out chris uh the entire premise of the book is that there's been these three kind of eras of the internet um and uh maybe the most interesting part to me of like the history component of it was like what the internet was intended to be and you've had this you know 25 years storied career You're investing in technology. How do you look at now with the benefit of hindsight, what was the internet trying to do and how much of that vision did we fulfill?

Yeah, I mean, so the internet began as an open and decentralized network that came out of originally government and academia. That was why I was really attracted to it in the beginning and sort of the late 90s when I got involved. The idea, you know, sort of inevitable in some ways that we would connect all the computers in the world. But the fact that we did it in this decentralized way where there was no owner, no gatekeeper, No one taking a toll, no company behind it was a really exciting idea.

And that enabled I think that enabled a whole bunch of things, including a big wave of innovation in the 90s and 2000s. Right. Because you knew, you know, if you created a Web site, for example, you own that Web site, you truly owned it. There was no one sitting in the middle. There was no kind of app store taking 30 percent or Mark Zuckerberg taking, you know, charging you, charging you ads. you owned it and therefore you could build something you know you could build a personal website or or a creator could build an audience you know an audience and have a direct relationship with the audience or you could build facebook and google right and um so that so that kind of decentralized structure that enabled uh ownership people to own websites and and and own direct relationship with their audiences enabled and unlocked all this innovation

And then in the 2000s, I think a lot of good things happened. The internet got more advanced. We got social media. The reason it's called read-write-own, the read-write is a common term people use to describe the read-ear of the internet as the 90s where the internet democratized the consumption of information. In the 2000s, the internet democratized not only the consumption, but the publishing of information anyone could create a blog uh you know the rise of twitter and facebook and social media that let anyone publish um and that was a great thing in the 2000s right so we had i think the internet got very powerful we got broadband we got mobile but the trade we made is along the way is that we essentially handed power over to five to ten

companies who today control 95 of the internet traffic and the money flowing to the internet I see blockchains as a way to build a new wave of internet services that, like the early internet, enable digital ownership and let us, I hope, build a new wave of internet services that kind of combine the best of both worlds. The spirit of the early internet, open decentralized networks, but the advanced functionality we've come to know and love on the modern internet. and all of this of course and i go through in the book came out of came out of bitcoin you know bitcoin was the original um blockchain network and it still is a very important and powerful network um you know what's so special about bitcoin right is there's many things special about it um you can think of it as digital gold and sort of inflation edge but it's also it's the you know it's the first large-scale internet service that that has no no one running it i mean it's run by

the community and that's just a really profound and powerful idea that you know when i sort of fully understood it realized you know could could be the foundation of a new era of the internet so what's interesting to me is like um it feels like you know bitcoin had this big breakthrough obviously this computational um science problem that everyone was trying to solve for 40 years okay we we get it uh vitalik watches that very interested in bitcoin then says wait a minute what if i take this and you know i add more expressiveness to it and we can kind of do different things with smart contracts etc um but now it almost feels like there's like a boomerang like there's been a bunch of innovation and progress in the non-bitcoin blockchains

but now people are trying to like build back onto bitcoin right with like side chains and l2s and like all this stuff and so how do you just think about um and whether it's as a builder or kind of what the investor had on you know how much of uh these use cases can a single technical stack or a blockchain solve right or kind of service yeah like is it a thing where uh you know five internet protocols can serve tons and tons of use cases the same thing could happen with a single blockchain or actually we're going to get more specialization on these great question i mean you know bitcoin i mean so bitcoin has a lot of advantages right it's the most secure blockchain it's the most battle tested it's got a great community um there are you know the the developers

did decide to make a set of trade-offs so they kind of prioritize security and stability over things like performance so you know you see you have 10 minute block times probabilistic finality you know just sort of some limitation so if you want to build for example a social network um or something where you know the the um you know the cost per transaction on the on the on the l1 on the base layer bitcoin could be high so if you want to build something like a social network that it's you know that's probably done better done on a on a different blockchain like on ethereum l2 or solana just because those blockchains prioritize performance over the other characteristics um but for financial thing you know like for a financial application you

really want that security and there's not there's nothing as as secure as um as bitcoin um so i think of it as a trade-off space and i think this is sort of true of a lot of computing where you know you'll for different applications you may want different things and it makes sense to have you know you don't want a thousand blockchains probably but it might make sense to have it probably makes sense to have a few for different uses so games and social networks right it might be super high performance low latency um low cost um financial you'd have a different set of trade-offs and so forth right i mean it also of course depends on the bitcoin roadmap i mean what the developers decide to do if they decide to add more op codes um things like that but yeah but

there definitely has been a lot of exciting stuff happening in bitcoin lately uh you know with the things you mentioned ordinals l2s etc and one of the things i'm probably not as bullish as many other people are in uh terms of that stuff being successful it almost feels like you're trying to take the innovations elsewhere ported on top of some of it will work but you know kind of if bitcoin just becomes digital gold like that's pretty good use case and be pretty big and successful and people who hold bitcoin will you know do all right right it's kind of about my thought process i'd say bitcoin is already successful i mean in my view and it's just sort of probably gonna you know continue to be right i mean yeah it's uh yeah i mean so you know

it's it's as much as digital gold i mean especially with the etf and just sort of the brand awareness around the world like you know it seems to have replaced gold as that for that use case now when we go to these other chains one of the things that i think was the narrative was like decentralization is really important obviously this whole idea of like owning the assets and and the community was a big part of it. And then I was surprised. If you remember when like Binance Smart Chain, I think it was the first time I saw it launched.

And they basically were like, we're not decentralized at all. We're just like super fast and cheap. And some portion of developers would move over. And then we saw this happen again and again and again. And people would basically say, we're decentralized enough. Or, you know, we're not decentralized at all,

but we're using a similar technology. Like, how do you think through performance versus that security and that decentralization? and like is it use case dependent or is there some threshold that you think in order to survive and kind of be resilient these blockchains are going to have to reach technical architecture that that is different than a centralized system yeah so um it's great question so i'd say a couple of things like one with with respect to like binance like i think people don't you know people care about decentralization when it really matters um and so you know you you obviously had you know two years

ago a bunch of situations where you had bad actors um like if you look at like you compare let's say d5 to ftx or something right ftx you know because it's centralized you had you had to trust the people behind it who of course in the end you turns out you couldn't trust right whereas with truly decentralized networks like let's say uniswap built on top of ethereum it doesn't matter whether you trust the founders and things right so so some of these things like they're like they matter when they matter and it may be it may seem like binance smart chain is okay and and just as good as ethereum for a while but then at some point some some catastrophic bug happens some some bad actor happens and you really experience the difference right like that could not happen

on a well-designed blockchain um those kinds of incidents right so sometimes i think people kind of especially in like the the frothy times probably lower their you know kind of lower their their um diligence threshold or something on these things but i do think ultimately it's very you know these principles are very important because just it's just human nature that if you you know that you sort of like actually i have a section on this in the book um that when you kind of create a new network a new internet service you always start off because you're an entrepreneur and you're a startup you know whether it's a blockchain network or a website you start off kind of trying to get users on being super friendly but then as you gain power and we've

seen this over the last 20 years of the internet um more and more you start to extract i call it the attract extract cycle right um and so as you get you know as facebook got bigger as google got look at just to give you an anecdotal example you know when google started off they were famous for having no ads on the page and then they had one ad on the page and they made a big thing about it don't be evil don't put more ads you go today and it's like for many searches the whole page is google properties and ads right and that's the logic of they built a successful service and now they're extracting as much as they can out of it right one of the core concepts of decentralization is that you can't do that right it's i like to say can't be evil instead of don't be evil right

and so in the beginning sometimes these differences aren't as apparent but over time as bad things happen as as services gain power they start to exploit their users and and the big so so you really start to see the differences and the importance of decentralization i believe over time and that and that can that can kind of trick people you know because they can they can overlook it in the beginning but it really matters ultimately um longer term um how these things are built um sorry that answer your question yeah how much of those decisions they take google as an example is like because it's a publicly traded company and the like economic incentives and the shareholders wanting a return etc versus you know these blockchains like there is an economic

incentive at play but it's a little bit different because there's not quarterly reports there there's you know kind of just a different mechanism at play yeah for sure i think that's exactly right I think it's all about sort of the system and the incentives. Right. So I don't blame Google for this. Right. It's just like if you go read the Wall Street reports, the Wall Street reports will say we need them to grow 20 percent year over year to maintain their stock price. Right. And then the problem, and this is true of all the big tech companies, the problem the big tech companies have is they've run out of people like they've just, you know, they kind of they're at the top of the S curve. they've gotten all the they've gotten most of the users is growing you know the number of users growing but not at the rate that wall street wants and so the only way to get that number right that growth rate is to is to increase the monetization to put more ads on the page things like that so i don't blame you know and then that kind of and that logic flows down then the ceo

needs to do it and look the ceo might resist for a while and maybe a founder ceo like zuckerberg could resist but if you're a hired ceo you know you're ultimately going to get fired if you don't the stock price drops and then that trickles down to management and everyone's you know all the employees are paid with stock options and so they all want to see the stock go up and so the whole system is designed around just endless you need to have endless growth and and because they have full control because these centralized services have full control that inevitably leads to kind of squeezing more juice out of the stone right squeezing more and that's what we're seeing on the internet today i think i think internet services are all getting systematically worse

getting cluttered with ads um getting you know they're doing now you're seeing like you know on all these social networks they're like punishing you if you link out and if you've had this happen um that's just the same kind of logic right they just need to keep now that they've switched from because they've run out of kind of user growth they have to switch to more time on site more time in the app um and so it just leads to these really bad incentives so it's a systems problem i argue i know these people i you know a lot of these people these companies i don't think they're they have bad intentions but it's an incentive problem so blockchains switch the incentives and they lock in you you lock in the rules ahead of time right you can't go and

the bitcoin developers or the community can't they just can't go and they just aren't allowed they just the system won't let them go and and and and mess with the way the system works and be exploitive right um and again not that they would intend to do that or bad people but just like it's just better to have those those rules baked into the system right and so that lets you build a whole that's kind of my core thesis that lets you build a new wave of internet services where you know it sort of can't be evil and the rules are baked in and that has all sorts of and i talk about this in the book i have multiple sections that has economic impact that means for example there's a concept in in internet services called take rates right if you have

a market take rate in it is a the percentage of money that flows through a network that the network owner takes so like uber has a take rate and facebook has a take rate and they take a certain percentage um the take rates on the internet today are extremely high like facebook's take rate is 100 app store like any ask any app developer they're all you know they're miserable about this apple takes 30 it's very hard to run a business where where you pay 30 for just showing up we're not really doing anything right um and so you know one of the one of the interesting things blockchains can do like you can build a social network on on a blockchain for example or a game and or um a financial service where you commit to better economics for the users and for the

businesses who build on top as an example um you you can commit to rules for software developers if you build on top of a network like bitcoin or ethereum like you you can build a business right you could build like a real l2 because you know what the rules are you know there's no api that can change so any anyone who lived through the last 15 years the internet will tell you there was a huge wave of developers building on networks like facebook and twitter um i don't know if you were around for this but it was around 2012 they all kind of at the same time deprecated their apis and just killed off a whole sector of the internet economy because they decided you know there was this big i mean there were hundreds of startups built on twitter um twitter

didn't even have an app for the first six years they just had other people build clients and then they acquired an app and then shut up shut off the other apps right um and that's their right to do that like they're a company and they can control it but it but a lot of people felt a lot of software developers felt rugged um and i would argue it hurt the internet because the internet's about you know what's so cool about the internet going back to the beginning of our conversation is that you can have this sort of diverse creative um community that all kind of comes together and build software together and and and creates you know music and art and all these other kinds of things and um you know ideally you have money flowing to the edges of the network that small

businesses and creators and others can can make a good living um and and i and i think a lot of you know because we went the wrong way kind of and because we passed power to these five companies we've lost a lot of that those kind of original um uh uh promises of the internet so one of the things that's interesting to me is like you're talking about this idea of like almost like code is law right at least in practice in terms of the rules are written they can't be changed um and when the community runs the place or the community kind of owns the place um i've had the experience where you know i meet a founder and they say oh we want to do something together you want to invest you want to participate you want to whatever um and i always tell a story

that uh one time they're like let's get on a discord call with the community and i got on a call there's like a literally a thousand people on the call and i was like how do decisions get done and and so i i joke that you know if you had to put a vote to amazon employees every time amazon someone to make a decision be pretty difficult. And so where do you see the balance of like the positives around, you know, the code is law and kind of how things are governed, but there's also like decision makings where humans have some degree of decision making. And so what are the solutions maybe that you're seeing there that are working right now? Yeah, it's, it's very interesting because what, and I, and I have a chapter called network

governance on this and I opened it with the Winston Churchill quote, great quote. The only thing worse than democracy is every other system or some every other system of government so so first i'll say that you know this is a 2 000 or 5 000 year old problem offline how to get this stuff to work so it's not there's no no silver bullet here obviously i think one of the things that blockchains let you do that's interesting is you can encode the governance in software right and so you can say here are the rules right and that doesn't mean it's a silver bullet to solve governance but you can start to really kind of write down kind of constitution so to speak and people have done interesting things so you know the sort of original i mean so like you

have things like bitcoin and ethereum which are what you know called off-chain governance which means effectively it's governed by the software developers and the you know like which the nodes and the miners decide which which fork of the software to upgrade to or what features to support and then you then you had sort of this movement like five years ago or so to do what's called on-chain governance which is more like if you have a token you can vote on something um and that and that led to kind of what you're describing which is kind of a little bit of chaos you know you'd have a thousand people on discord and i think people are now you know you're sort of speed running two thousand years of human history where people are now doing kind of

representative democracies you know where you have a appointed group from the you know so it's ultimately the power flows to the people but you have a you know a representative group that that does stuff there's other people like there's a layer two called optimism that we're involved with that has kind of a bicameral system so like they have kind of the the house the house and the senate so to speak um and so the senate is sort of trusted founded so people are doing interesting experiments um again going back to the churchill quote i think i think what i do believe very strongly is having a single person you know whether it's you know just a single ceo of a social network you know like just take social networking it's just one example but or financial

networks um those are both good examples those are incredibly powerful and important services um who controls paypal who controls facebook who controls twitter like 10 years ago those seemed like not nearly as important now we've seen they can affect politics people's lives people's businesses like these are these are critical infrastructure and i don't i just very strongly believe that they should not be controlled by a very small set of people who happen to build that infrastructure it'd be kind of like if at t got to decide who made phone calls back in the 1950s or something like it just these are too important to have have them just to give all that power to those small set of people and so you know i think that you know i think that

you know again again there's no silver bullet but having systems that somehow the power flows back to the community of users feels like a much better answer and i think it'll probably land somewhere like it has in the real world where you have some kind of voting or some system like that effect you know effective voting and then some representative group who does stuff because it's just too chaotic to have a thousand people on the discord yelling at you it was learning experience for sure uh you're mentioning almost like a recreation of uh you know the united states governance kind of the political process etc and uh we got plenty of problems but also to your point uh there's no better system so far um most of the governance that i've seen and most of the

blockchains they're dealing with digital assets so these are things that are natively digital whether they're trying to recreate things that are you know in the uh kind of physical world or they literally are newly created in the digital world how much of blockchains and kind of this governance model and the idea of democratization and kind of this own component of rewrite own can be applied to the physical world right you know we see people trying to do uh deeds to homes or you know various things that are trying to tether it but what have you all seen there that's either working or do you have a thesis that maybe it won't work no i i think that's very exciting and very important i think that the big blocker honestly is regulatory it's sort of the policy

stuff um you took the example of deeds right you need you need to have a framework for like how do you adjudicate that how do you enforce it like you need you need the offline legal world to recognize those deeds uh people talk about you know tokenization of real world assets like stocks and those you know they're just look i mean and look the challenge candidly is just that the current the current regulators have just taken basically been doing everything they can to to to sort of uh stifle crypto and blockchains and so they've made it difficult and then you have these financial institutions that are that would be important players here who are you know banks and you know the black rocks of the world the goldman sachs of the world who right who up

until recently have just been kind of afraid to enter the space um i think that's starting to change and i think that's very promising and we would love to see that and work with them i think it's look i mean a lot you know the digital world's very important but the offline world is still the majority of the economy and people's assets and and i think there's a lot of benefits to to you know having those intersect and and use blockchains and so i think the earliest one we've seen is like usdc you know the stable coins i mean right that's a quote real world asset you're taking a you know a usdc uh token represents a dollar that sits in a bank account um and that and like here's the promising thing like there's a stablecoin bill that i think has a decent shot

of getting passed this year next year and that and that will just clarify all of that and then allow all of those institutions to enter that space and and i think provides a template then for like you could imagine after the stablecoin bill you have a real world assets bill right and we're working very i spend a lot of time on this we work very hard on this but i think that's the big blocker honestly i think people that say oh this is disappointing why haven't blockchains done that it's it's not really a fair critique because it's just that you know that uh it just hasn't been allowed up until now i think it will i think it's inevitable over time these systems are just clearly better ways i mean you still most tons of wall street still runs on like bloomberg chat

messages and things like it just has not been modernized and look a lot of it i think a lot of these problems are actually they're they're they're coordination problems right like like let's just say you have 10 banks who today you know they trade using like so-called dark pools um you know where they're chat you know just the sort of no exchange they're just sending messages and things um how do you get those 10 banks to to agree on a standard and work together right or or you mentioned mortgages like how do you get all the different disparate mortgage related institutions to agree on something right and to work together on a common system um one way to do that is someone creates a company but then people you know you create a startup that does

that the problem is those institutions are going to be really wary of giving over that kind of power to a company because they have there's a long history you know visa mastercard started as non-profit consortiums and now are for-profit companies that take a big chunk of of that money and so you talk to the folks like the banks and they're like we're not going to do that again And one of the beautiful things with the blockchain, right, is that you have this neutral, credibly neutral intermediary that they can all trust, that they can say, hey, I know that blockchain is not going to rug me. It's not going to change the rules. It's not going to hand power to my competitor. So I think it has it's a very powerful blockchains are a very powerful tool for that use case. We just need I think we just need more regulatory clarity and we're working very hard on it.

And I hope I'm hopeful and I think we'll in the next year or two get there. other thing i'd say is you know i think you've seen with the bitcoin etf um the bit flip a little bit where a lot of these institutions instead of looking at things out of fear are now seeing business models i mean the etf has you know has been wildly successful in terms of inflows and things and i think i think you know like wall street is very as you as you might guess very profit oriented um and i think they're starting to realize that this might be a place that they can make profits and so that i hope is sort of step one and then they sort of say hey what if we embrace blockchains more broadly could this be an important new line of business so i think that's

changed that sentiment is changing from the people i talk to one of the areas that um also is very important for these things to be successful is the funding of them and so obviously uh we kind of went from um you know bitcoin's launch there was no real kind of quote-unquote funding uh then we get the icos and i think we're trying to figure out like the ipo the crowdfunding like how do we kind of match these things together uh the venture business obviously became very big and now i think that if you go to like the other end of the extreme you have like these meme coins that are like being launched you know i think i saw a stat that there was 2500 meme coins launched on solana in an hour right just like insane you press a couple buttons you can put these things

out there they end up getting tens of millions hundreds of millions billions of dollars market cap and so how do you think about uh funding the things that actually are going to matter and how much of it is like venture capital type funding versus you actually want to use the community and there's like some incentive or governance component that uh ties into this yeah i mean the meme coin thing like i find that frustrating as well um i i look that's i actually just wrote an op-ed that i hope will come out soon it's um that i that's a regular failure so if you look meme coins are legal meme coins are completely legal there's no debate whether they're legal um if you go um the debate is when you take a meme coin and start adding

utility utility to it is when the sec would claim you're now uh at risk of being a security okay so like literally like robin hood lists dogecoin but not solana um so this is i find very frustrating that we've essentially from a policy point of view if you go look at the coinbase lawsuit stuff you know it's all about does is there a team trying to make this token useful that's the that becomes the issue so we've designed a policy system or you know or have a policy regime and and and have agencies who are enforcing a regime which um disincentivizes i would argue productive applications um which is which is very frustrating um and so and then that's the meme coin thing there's no again there's no there's no law or even here like i was just talking to our legal team

about it there's not even a theory as to how they would you know that that how you someone would stop meme points that's why that's happening is people just they're they don't want to they don't want to get you know sued by the sec so they make it as dumb as possible like this is this is the incentive and this is just and like my core argument part of why i wrote the book is that i think that with technology that you know the internet has i think it's just changed it changed a lot of things in the world and requires new policy um and and i think the right way to do policy right is to look at a new technology whether it's blockchains or ai holistically and say okay there's good things you can do with it and that's what i try to describe in the book

is like the productive use cases of blockchains and i think that's what you're describing now and then there's bad stuff you can do with it and let's design a policy that maximizes the good and minimizes the bad sort of a proactive policy instead we just have a lot of kind of tribalism and name calling and lawsuits and it's just not productive right and what does it do to entrepreneurs like if you're an entrepreneur you know entrepreneurs you know they they want to work on products and they don't want to spend their time talking to lawyers and getting you know and in the middle of lawsuits and so any kind of gray area which is what we have a lot of around blockchains now is a disincentive to work in the space and they just go off and create a chatbot

or whatever people are doing now in other areas right so so you know so that's it goes back to that uh the policy stuff which is you know i'm now spending like half my time on this stuff because i just feel like it's essential and important and i think it's i think that the you know it's important that the us be the leader in this space and and we have all the people here and all the wherewithal um we just need to just need to kind of shift the incentives um around the around the regulatory side to i think make it work what is their reception to you uh specifically in the sense of like on one hand you're an expert right and probably in their eyes and like you've invested a lot you know a lot of the different players you spend a lot of time on it on the other hand like

you're an investor and i'm sure somebody accuses you of like talking your book and you know oh you're only interested in this because uh you guys have a fund in in the space like how do you all think about the the interfacing with regulators and are there things that you've seen that can help build some common ground or common understanding that really kind of resonates with them i'd say it really varies across the spectrum just depending on the you know their politics and uh but like we work we're working a lot we have a lot of for example like people think of this as like a republican democratic issue it's not we have a lot of democratic supporters um you know they tend to be kind of pro-tech democrats um and so you know i think

generally like the kind of congress uh is you know generally open-minded in my experience and generally supportive um it's another thing to actually get a bill passed you know just all the process of all that um but the way i kind of describe it i say look of course i'm i'm talking in my book like in the sense i'm obviously i have an interest but but i argue that look my interest is you know we're we're a venture capital firm we depend on a vibrant startup economy to have a business and um and you know having an internet controlled by five companies um is not is not good for venture capital and i just argue look i you may say i'm self-interested but i would argue my interests in this case are also america's interests right i think i think we all agree that america

wants a vibrant internet a vibrant startup economy so i i you know i kind of describe it as most people in washington they sort of see you walk in the door and say oh here's tech um but i i point out that most people they meet with are actually big tech we're one of the few kind of scaled institutions that goes that interacts with policy makers who represents little tech we want to see startups succeed you know most most of our time is spent with small startups and we want to see uh you know and like venture capital depends on this sort of constant dynamic um you know sort of the wheel spinning in the u.s economy does you know the u.s economy i forget the latest stats but like it's just a constant state of you know creating and destroying jobs i mean the way

the way that we keep unemployment low you know with new and also embrace new ways of technologies is yes there will be jobs that are destroyed but hopefully we will create many more jobs and we primarily the data shows do that through startups right um so so i so yeah so i basically argue yes of course i'm self-interested in that sense but i i believe my interests sort of venture capital's interests and and society's interests align in this case how do you think about uh the percentage of money that these startups are spending on legal and regulatory and i think a about um you know big companies they have to spend a lot of money on that they have a lot to protect usually in traditional venture capital kind of backed companies they don't spend that much on

it because it's just get something into the market make sure that it works you know find product market fit and then start to scale and worry about that stuff this industry feels different and so do you guys have like a percentage in your head or do you guys just think about how many dollars are going to that i mean if you do a 10 million series a it's at least a couple million is going to legal and then but there's that and then there's the attention spent by the you know by the ceo and founders just the time spent which is hard to very hard to quantify just you know the kind of stress and mental energy and then but i think even the probably the biggest thing is in the products they can't build i would say a third if not more of a portfolio has a really interesting

product roadmap that they're just not going to build because there's too much uncertainty they don't want to take that risk and so just like all the things you're describing we're talking about there's just a lot of people who just won't won't do it because they see other people and you know spending their time in on legal stuff and people don't want to do that um so it's it's it's massive i i think it's i think my experience when i talk to people outside of the industry they don't realize how you know they sort of have this picture of this wild west and um everyone's just building and that obviously that exists but that's mostly like offshore single individuals the meme coin stuff you described like none of the stuff and the

everything in the us that we're involved with you know their first thing they do is they get a top tier law firm they hire a general counsel they do deep research and it's just a huge drag i think like i just think also like i i see like i don't work directly in ai my firm does um but you know you see like the biden executive order around ai if you saw that there's like he gives directives to 15 agencies to to do things around ai like imagine a 10 person this happens with us a 10 10 person startup getting subpoenas and requests from 15 agencies right like the us is a very complex system you've got you know 10 to 15 federal agencies that matter for most of these for ai crypto etc you've got states you know state issues um and you're talking like a 10 person

startup and you've got you know you're dealing with five or six or some sometimes you know and at the same time and again these are nothing they did nothing wrong they're just getting inquiries um they you know you have to respond to them there's no um there's no actual like wrongdoing or anything like that but it's just a massive kind of um uh you know time and energy suck how do you think about uh blockchains and kind of crypto uh as an industry interacting with some of these other areas like one of the things that um you know early on i think i got excited about was like uh bitcoin could be money for machines right the two-day settlement times of dollars is gonna be pretty difficult if you can actually send dollars back and forth

as a stable coin or bitcoin that that could be pretty interesting now with artificial intelligence it feels like uh those systems really eat on data uh living in this digital world like it feels like they should be connected in some way but are you guys seeing that or are they still pretty separate and distinct there's definitely people doing like kind of intersection of ai and and blockchains like we you know we have an we have a couple investments one is doing sort of like crowdsource gpu compute kind of like airbnb for gpu someone put their gpu online and someone else can access the network of gpu as an example there's a bunch of stuff like that but i would say generally my experience in technology is that things do very much over intersect and so the last kind of so

just very briefly the history of computing you kind of every 10 to 15 years have a major wave right you had mainframe computers many computers pcs internet mobile um you know now i think we have ai blockchains etc um but uh you know during the the last wave which i was very involved with the 2008 to 12 let's call it it really wasn't just mobile there was mobile social and cloud um and it's and by the way if we were sitting here 15 years ago people would be like oh these guys are saying buzzwords you know and i was we were accused of that but it was actually very true they were important trends um but what happened is the three really heavily intersected right like mobile to let you take devices from a couple hundred million desktops to five billion

super computers in your pocket social is the killer app for phones people spend two and a half hours a day on social networks i don't know if that's a good or bad thing but but they do and so that's sort of the thing that you know the kind of the prime driver and then cloud was the back end infrastructure that makes it possible it lets you build these services that you know let a billion people interact and so they ended up really heavily intersecting and i think the same thing will happen now i think and i think we're at a i i believe we're at the most exciting time i you know my lifetime in the sense that you have ai blockchains new devices like vr self-driving cars uh you know it's not an area i'm an expert on but from what i'm here and sort of

bio you know bioengineering and sort of the intersection of that and ai and things it sounds like amazing stuff happening there robotics like it's just going to be you know the space stuff like if you follow like the you know the sort of real world infrastructure energy it just feels like it's all you know it's like a it's like a movie where there were all of these like kind of you know uh you know building narratives that are all kind of coming together you know in the grand finale in some way and hopefully it's not the finale but you know but like you know the the big the the big kind of you know all all these things that kind of technical people have dreamed about are all becoming real and so i think they'll heavily

intersect is my view and and i think one of the challenges and opportunities is um is is is like you know ai will require all sorts of new services right there'll be new networks new you know uh ways to you know both at the infrastructure level and the application level and just all sorts of new services that you want how will those be built will they be built in a kind of older way where you have a a single ceo that controls it or they'd be built in more of a community blockchain way as an example so um so i think so i think of it from like the blockchain perspective is like we need to make sure that we have our act together we have the policy stuff figured out we have the infrastructure and all the tools figured out so that you know we can participate in a first-class

way with all these other technologies as they're growing one of the frameworks that you use that i really like is like the computer versus the casino and you know we talked a little bit meme coins and and i go back and forth on this of on one hand uh yes you want to build the computer and like forget the casino but at the same time like the casino may actually attract attention and capital into the ecosystem which then can be used to build the computer and so how do you think about maybe um aspects that you know don't look sustainable don't seem like they're kind of quote, unquote, serious, but do they have a benefit to potentially getting capital into an ecosystem and helping the builders, you know, kind of get users and the things they need to be

successful? Yeah. I mean, like the way I think about it is, I mean, you could like analogize it to other markets. So for example, you know, the housing market, right? So you have sort of the productive side of the housing market. Like why do we, why do we value homeownership as a society, right? So homeownership is important because it's, you know, emotionally to raise your family. It's important because it aligns incentives. People that own homes are more likely to contribute to their to their you know build their home and contribute to their community and then we have housing markets um and we have people speculating and and and i think we generally think speculation by the way stock market works this way right i mean you have speculation but

you also have the productive side right you have a way it's a way to allocate capital to productive enterprises right so you have sort of all these markets i think when they're healthy you have two sides to them right you do have the speculation and the um and that and that does create investment as you say and is that has to play a role but you also have the productive side and i think it's about the balance like i think when crypto fails is when it's all meme sorry if it's if it's fun meme points to fund something useful sort of like the stock market when it's working well that's that's okay right i mean i think that's generally how we as a society have landed on the balance between the productive economy and the kind of the more speculative economy um so so for me like

i talk about the computer in the casino uh you know around blockchains that's sort of referring to the sort of two communities of like the speculators and the builders i'm not anti speculators i just i'm just anti all when it's all speculation right it needs there needs to be kind of a balance right there needs to be the two need to work together i mean like speculation the reason you can see you can find out what your home's worth on zillow is because there's a liquid speculative market on homes but but again like if you don't have the actual home ownership and all the good things that it implies then it's just then it's just pure gambling right yeah that um that makes sense and then uh fred wilson wrote this nice blog post when your book first came out

and he had asked you like why'd you write the book you got a lot of stuff going on right you're spending all this time on policymakers etc like why'd you write the book and um one of the answers of the two really caught my attention which was like you wanted to explain to the moms of a coin based engineer like what basically why it was important what their kids were doing and i think use that as just like an anecdote to to kind of say to people like look there's going to be talent that flows into these industries we actually probably need more talent we need more people uh helping to build this out and so what has been the reception from maybe that crowd and like what did you learn as you kind of write in the book yeah yeah i know so i i felt strongly

that and maybe you've experienced this pump that like that uh it's just a space is very misunderstood um and and you know having the the bad incidents of two years ago ftx etc you know just a lot of people outside think it's all just speculation and scams and um and and obviously you know there's there's another side to it and a lot of you know there's tens of thousands of people who work work on this full time who believe very strongly in it and i felt their voice you know wasn't hadn't been heard and so yeah so the book was for your friends and family and i think hopefully folks in crypto will learn something i think like the younger people like the i've heard a lot they like the history um other people just like the frameworks but but

yeah but i've been very happy to hear that um you know both in our portfolio and outside of our portfolio people have said told me that this is the book they now give to new employees and recommend to others like i saw jeremy allaire who were not investors and he's a great entrepreneur unfortunately not investors in circle and he tweeted out that he's he's giving it out to every employee and we've seen like a whole bunch of that um and that that's great and i also you know i i i mentioned i do a lot of go to dc a lot literally every meeting in dc almost they say what book should i read i think you know folks in dc like books they don't like they're not as into podcasts and blog posts and things and so um and so you know now i have a book to give them so so

you know i i want it to be um so i feel like it's gone really and i keep hearing and i hope you've found that when you read it that like it's just very accessible i tried very hard to make it accessible i rewrote it many times to make it you know to give examples and there's no technical words that aren't defined i really try to avoid technical jargon i think sometimes tech books can be hypey and tech and use you know buzzwords and things and i really tried hard not to do that and just kind of tell stories and give examples um and i feel like that's worked so you know i don't know i mean the response i've gotten has been very positive so what um what are the things that maybe you're most excited about in terms of like verticals or areas that if somebody's

listening to this you're trying to find something to invest in and haven't found it yet yeah i think so i think there's things that are kind of at scale around blockchain so i mean bitcoin's the most obvious and then i think there's a lot of interesting stuff happening with stable coins um i keep hearing more and more kind of both anecdotes and seeing data supporting the growth of stable coins particularly in the developing world so people in you know argentina and places like this using uh usdc and feather and others for settlement and payments and things like that i think there were 600 billion in stablecoin transactions last month i believe um so that's interesting i think that um there's sort of these existing categories like you know the financial

things like defy and real world assets i think a lot of that will the growth will depend on um some of the regulatory things getting figured out but i think i have a very expansive view blockchains like i think anything that can be built you know any internet service can be built this way there's a there's an early but growing uh blockchain-based social network called farcaster that's interesting um that has a you know interesting feature where the sort of the economics are much better for the users if you build a relationship with your audience you can monetize you can make money however you want and the money doesn't flow to twitter or facebook flows to the creators and you can there's just it enables uh software developers to build new

features on top and so we're seeing a lot of excitement around that um gaming is interesting video games there's a bunch of interesting things there like um um we have one uh like called pirate nation it's sort of this is what's called an on-chain game and it's just it's interesting because the users can actually own the assets that they they earn i think we had a we had a first wave of games a couple of years ago based on blockchains and some of them were just sort of too much about them about the financial aspects now we're seeing a new wave where people are building really interesting games um games are always important in computing because they just if you early mobile phones games were a big driver of growth um just generally it's

it's a you know it's a great way to kind of get early users on board um the intersections with ai as you mentioned um we're investors in a project called world coin which is co-founded by sam altman which is trying to create an identity system on the internet the idea being in a world of ai you can't tell if the email you got is from a real person or the video is a deep fake or real and so you need sort of an identity system in a way to sort of attest to this is i am chris i'm a real person i can prove that cryptographically and i can also prove this video is real um so that is just a couple examples um off the top of my head but um you know i think just there's a whole wide range of things that intersect with new technologies but also that kind

of re re reimagine older technologies like social networks and games yeah one of the things that um you know i've put it out there a couple times and haven't found anyone yet but but it's kind of tangentially related is like if a blockchain is supposed to be this immutable thing that should last forever and be super resilient do we start to put like books and records and not like you know your company financials but um i joked that uh you know almost like the pioneers right you know they used to carve into a tree and say hey we were here first uh you know people start writing things into the blockchain uh so that their ancestors could eventually look at it and say hey you know uh my great great grandfather was you know early to this or something but then also as

i've talked with folks it's like you know your kid's born right do you want to actually like stamp it into a blockchain and like how do you think about using um these networks the downside to it is like you could create you know kind of spam you you could actually change the economics of these blockchains and so have you guys seen stuff there where it's not so much an economic or a governance thing but it's more so just like this immutable record and people are trying to take offline you know information and really put it onto the blockchain i've seen more in the digitally native context so for example there's a bunch of people where you know you can kind of prove that you're the first fan of this musician right or you know sort of like your your original

you know um the real og yeah the real og stuff like so i've seen more digital things like that um and kind of collectibles and like with my book we have an nft that sort of proof that you're one of the first you know it's fun it's just a souvenir but it's sort of a fun souvenir to show you're one of the first people and people think it's fun i mean it's not you know um so i think you know i think things like that are interesting um like the digital world unfortunately has become uh you know most of the uh early internet is gone the internet archive is kind of this you know attempt to save some of it but the digital world's become very ephemeral unfortunately um and like i think things like bitcoin ethereum i think they certainly will

things you write to those blockchains will certainly be around longer than most digital items and i think you can make the case will be around longer than most physical items um you know it's very you know a blockchain will be around as long as a few nodes are running and so um it seems very unlikely they'll go away and so i think it's a it's a very interesting place to to record stuff like that um but yeah so so far most of it has been uh has been the things i've seen have been these kind of digital examples the book read write own build in the next era of the internet chris it's fantastic anyone who has not yet uh gone read it bought it buy three copies why not uh send it to your friends um you did a fantastic job i learned a lot from it and i think

other people will enjoy it as well um where can we send people to find you on the internet if they want to keep up with your writing tweeting anything else yeah i'm i'm uh and twitter c dixon for like i mentioned for our caster c dixon and i'm pretty accessible so thank you and uh thanks so much for having me