The Pomp Podcast - 279: Chandan Lodha on Building Products in Crypto

Episode Date: April 25, 2020

Chandan Lodha is the Co-founder of Cointracker, a digital product that provides cryptocurrency tax and portfolio assistance across thousands of cryptocurrencies and hundreds of exchanges & wallets. In this conversation, we discussed working on Project Loon at GoogleX, tax strategies for crypto traders to save money, the difficulties in building a portfolio tracking product, and what it was like to go through the PPP loan process. Sign-up for CoinTracker with a 10% discount at www.cointracker.io/a/pomp.  Other relevant links Follow CoinTracker: https://twitter.com/CoinTracker Follow Chandan: https://twitter.com/cglodha Project Loon: https://loon.com/ =============================== Crypto.com is the only all-in-one platform that allows you to BUY / SELL / STORE / EARN / LOAN / INVEST crypto all from one place. Join over 1 million users currently using the Crypto.com app. Download and earn $50 USD using my code ‘pomp2020’, or use the link http://platinum.crypto.com/r/pomp2020 when you sign up for one of their metal cards today. ===============================  Ledger hardware wallets empower you to optimally secure, own and control your crypto. Visit ledger.com and give yourself peace of mind by knowing that your cryptocurrencies are safe. ===============================

This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast. Simply the best podcast out there. Let's kick this thing off. Chandan Loda is the co-founder of Cointracker, a digital product that provides cryptocurrency tax and portfolio assistance across thousands of cryptocurrencies and hundreds of exchanges and wallets. In this conversation, we discussed working on Project Loon at Google X, tax strategies for crypto traders to save money the difficulties in building a portfolio tracking product and what it was like to go through the ppp loan process i really enjoyed this conversation and i hope you do as well before we get into the episode though i want to quickly talk about our

two sponsors the first is crypto.com crypto.com is a pioneering payment and cryptocurrency platform that seeks to accelerate the world's transition to cryptocurrency they have a vision to put cryptocurrency in every wallet, which is frankly why we are all here. The Crypto.com app offers a full range of financial products with competitive pricing, well-designed user experience, and high security. It is the best place to buy, sell, and pay with crypto. These guys have been longtime supporters of the POM podcast and keep launching new product after new product. So do yourself a favor and go to Crypto.com to check them out. Again, Crypto.com, the place where mass adoption is occurring. Our second sponsor is Ledger. They've got a number of hardware wallets that

empower you to optimally secure, own, and control your crypto. That's right, Ledger has hardware wallets to keep you secure. You can visit ledger.com, again, ledger.com, and give yourself peace of mind by knowing that your cryptocurrencies are safe. Go visit ledger.com, get a hardware wallet, and start using Bitcoin the way it was intended. All right, let's get into this episode. I hope you guys enjoy it. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a

particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I've got Chomdon here. I'm super excited to cover this and hopefully I'm going to learn some alongside everyone else today. So thanks so much for doing this. Yeah. Thanks so much for having me, Pop. Excited to be here. For sure. Let's start with your background. You've done a bunch of cool shit in the tech world. Kind of walk us through how we get to you being in crypto? Yeah, for sure. So my first job out of school was as an associate product manager at Google. I had basically come out of an internship at Microsoft and wanted to do literally anything other than go back. Had a great time there working on search

and Android. Spent some time at Google X working on Project Loon, launching stratospheric balloons and working on internet connectivity in rural parts of the world. And then basically caught the crypto bug, went down the rabbit hole, and have been a co-founder and been working on CoinTracker, a cryptocurrency tax and portfolio solution since then. Got it. So we got to talk about Google. The two things that I'm really interested on is the APM program, the Associate Project Manager.

Describe a little bit about just like what that process was like and kind of what you took away after having gone through it. I think it's probably one of the more highly sought-after programs at the large tech companies in Silicon Valley. It's a great program. The idea is basically, I think it was Marissa Mayer's bet back in the early days that you could basically take new grads and mold them into product managers versus trying to take people who had, let's say, lots of business experience

or kind of come from the traditional business world. and so it ended up being a cohort of about 30 of us who were either recent grads or new grads or people who had recently come out of graduate school some really smart colleagues of mine and kind of a whirlwind tour of just dumping you into a project whether that be search or android or youtube or chrome whatever part of google and basically having all the responsibilities that you would have a product manager so that could rain from range from working on design related things to doing queries and back, you know, back office kind of analytics type of stuff to working with engineering teams, privacy, marketing. So I ended up working on Knowledge Graph, which is

kind of the tool that basically powers the results on Google search. When you search for a question that has kind of an explicit answer, like how tall is Barack Obama, or more recently relevant is the COVID stats, and you'll see a box with a bunch of information. So I kind of worked on the team that would power those kinds of structured language queries. And then I also worked on Google Now, which was like a third-party assistant type of precursor product to help people figure out relevant information about them at the time that it was relevant.

So really, really cool experience. Lots of really smart people in the program. Yeah, and I guess as you go through that program, is it something where they give you a lot of leeway and they kind of say, hey, go pick a team that you want to work on? Or is it more of, hey, we think you're going to be great on X or Y team and we're going to place you in that? It's a bit of a magic black box. So the first year, it's a bit more of they choose and they

put you on something. And then the second year, you get to basically go through this interview matching process where you can talk to different managers and pick the team or the area that you're most excited about. Yeah. And when I was at Facebook, every product manager that joins for the most part doesn't know what team they're going to work on, which people always find really weird. And it sounds like that second year of the interview match process where you go interview all the managers and all the managers are simultaneously interviewing you and then you kind of pick and you got to have like a double opt-in to join the team right yeah it's like residency matching for sure and so then let's talk a little bit about uh google x and project

loon uh maybe just start with what google x is for those that don't know basically uh i think that yeah rebranded as x um it's like this what self-described moonshot factory some of the larger bets that Alphabet largely wants to take on kind of these pretty crazy out there wild ideas that could potentially turn into big businesses. So they have a framework about how they think about this. It's kind of technological solutions applied to really, really big problems in kind of these crazy scalable ways. So some examples of projects that have come out of there are Waymo, the self driving car project. I believe Google Brain started there at one point. Loon is another big one and there's some other examples too. Got it. And Project Loon is the whole idea of using

balloons to basically beam the internet down and increase internet coverage, correct? That's exactly right. Especially focused on, at least at the time when I was working on it a few years ago, rural areas where it's often not economical or difficult to reach really far out coverage because the cell phone towers don't have enough range, or you need a really expensive backhaul to get into the middle of Amazon, you know, jungle or things like that. Got it. And I guess as part of this, like, what are the steps, right? So everyone's sitting around like, hey, I wonder if we could beam the internet down. And I'm assuming that it looks like each major tech companies taken different paths, right? When I was at Facebook, they were looking at all

sorts of like, essentially drones that could fly for really long periods of time with low energy consumption and go ahead and beam it down. Project Loon wanted to use balloons. What does that kind of just the platform decision look like? I mean, it's a wild and wacky process and people are taking all different kinds of approaches from satellites to drones. I think Aquila did that. And then Loon has this kind of unconventional balloon approach. It's kind of a launch and iterate type of thing. You try a bunch of different things, you see what works, you see what doesn't work, you see what's going to be economically feasible or not. There's lots of different pros and cons to each platform satellites are really really expensive balloons are relatively speaking much

cheaper but with a satellite you know you put it in orbit you kind of reliably or at least semi reliably know where it's going to be balloons you have are at the whims of the wind so you kind of try these different platforms see what the pros and cons are you see how feasible they are and then you know you take the ones that are the most promising um i think having a kind of launch and iterate approach is valuable here because you don't want to lock yourself into one solution early on that may not end up working versus trying to actually have a problem or a pain point you're trying to solve in this case making internet connectivity better and then iterating on the solution that works the best yeah and and uh did you work on all of this from california or

did you actually go out to some of the locations where they were testing it i was one of the lucky ones who actually got to go out so i spent i think over 45 days in peru um both in like lima but also in some really rural places that were super cool and awesome i went to to kenya um so yeah i got some field experience too and they also have a launch site for these balloons um both in the middle of the nevada desert and another one in puerto rico so um yeah just a lot of cool field stuff yeah and i guess when you're there and you're about to launch the balloon like how does that work i'm just fascinated by the fact of like all right we're gonna take this balloon and it's really big and we're gonna put it in the air and then just let it float around and beam the internet

down like what does that launch process look like so in the early days it was literally just you know a couple guys um in a truck drive out to the middle of nowhere mojave desert and you know have a makeshift like kind of in your building your garage type of balloon but now they've gotten to the point where they're getting ready for production rollouts and things like that so there's actually a huge basically construction crew of people that are experts in their field that have built a launch crane that is enormous it's like six stories or taller and it automatically like fills up the balloon gets you know the necessary helium puts it in the balloon fills it up launches it automatically it's a pretty autonomous process it's pretty amazing to watch

that happen and there's some videos you can you can google them and then uh there's basically an ex-military crew of ops people who are uh like responsible for all the logistics of getting that up in the air and making sure the launch is happening on time and there's a air traffic control team flight ops that basically 24 7 365 is talking to flight controllers around the world during christmas during holidays like during every day all the time so there's they just they have like a pretty complex operational process but it's nailed down top to the point where you know it's automated it's a machine yeah i love the fact that somebody was like this is such a big important deal. We're going to literally build a crane to do it, right? Like launch crane.

And then I guess last thing on this is I'm assuming this is like somewhat competitive with the SpaceX's Starlink and kind of the satellites that they're building. Any thoughts there or kind of looked at that at all? I'm not an expert on that specific program, but yeah, again, there's different approaches to solving internet in different parts of the world, satellites, balloons, et cetera. I don't know which solution will end up being the winner, but But basically, from my perspective, getting more people Internet access is a great thing. And so, you know, the more competition in the space, the better it's going to be for end users. For sure. And I guess how do you go from working on what many people I think would consider like some of the coolest technology products in the world at Google to then like, oh, this Bitcoin and cryptocurrency thing like that seems cool.

What was the first time you ever came across any of the crypto stuff? So, I mean, Bitcoin had been on my radar for a while. I had done some college projects around Bitcoin and things like that. But the first time I actually seriously got into crypto at all in any regard was actually also at Google. In 2014, I worked on and launched a small integration between Coinbase and Google Search that would basically send you these Google Now cards every time you had a transaction, like a receive or a send or a trade, things like that. So I had a Coinbase account.

the team actually gave me a super small amount of bitcoin um at the end of that integration and i didn't really think much about it um for a couple years and then in 2017 i went back to that and i was like oh my god holy shit like this microscopic amount of bitcoin like has you know gone up by over an order of magnitude like maybe i should pay more attention to this thing um so that got me more interested in in crypto and i was largely already quite interested in fintech and finance i felt like it i'm sure you've talked about this before with your audience and I've seen a lot of other people mention this, but the internet had totally transformed massive multi-billion dollar industries. We'd seen that at Google, certainly in advertising and

it was starting to happen in retail with Amazon and in transportation with Uber and Lyft. It just, it didn't seem like that same impact had taken over finance yet. A lot of the financial tools I was used to using were the same tools that I had always used and the same tools that even my parents were used to using and sure my you know my bank account now had a mobile app cool but it was the same bank running the same currency doing the same processes running the same ACH system so I was kind of excited about fintech generally and it was actually going through the process of trying to start a fintech startup that had absolutely nothing to do with crypto that made me sort of fully realize some of the pain points of building on traditional

financial rails like ACH transfers and at that point I was like okay I have this crypto thing I had started kind of exploring the crypto space more I think by the summer of 2017 I had like 15 different wallets and like you know all these different currencies all these different exchange accounts and I was sort of already going down the crypto rabbit hole and at the same time I was super frustrated with the fintech tools that we were building for traditional finance and so those kind of push and the pull totally sucked me down the crypto rabbit hole. Got it. And I guess what was the original genesis for CoinTracker itself? Was there like one specific problem or did you kind of have this vision of let me go build an entire suite of

products for this kind of niche of finance? No, it was actually not meant to be a company at all. It was kind of a personal pain point of my co-founder, John, and of myself. We basically had these crypto portfolios. We had all these exchanges, all these wallets. It was a big mess. we started by just creating a spreadsheet like you know everyone does you know i'm gonna copy and paste you know one type you know one key at a time here's the bitcoin i bought on this date at this time with this basis for this amount and eventually you're transferring it to a cold wallet and then you're trying to keep track of that and then you have google app scripts running and next thing you know you've you've built a database in your spreadsheet and it takes two minutes to load

So it was kind of the process of just keeping track of our own cryptocurrency that we realized, damn, we need a better solution for this. And so that was kind of the initial genesis of the idea for Cointracker. It turns out other people had the same viewpoint. Yeah. And so what have you guys built today and kind of how does it work in terms of your relationship with customers? So Cointracker today basically has two major functions. One is a cryptocurrency tax software solution, and the other is a portfolio assistant. So the portfolio assistant basically allows you to, in real time, track everything that's happening in your crypto ecosystem. And that could be trades, it could be purchases, buy, sell, it could be DeFi interactions, loan interest, it could be margin trading.

You can see basically everything that's going on in your crypto ecosystem in one place with automatic integrations with Coinbase and Binance and Compound and all the top different crypto exchanges and platforms. The second product, the tax service, basically reconciles the unified ledger of all your transactions and gives you your tax reports. And that works in the UK, Canada, Australia, et cetera, with the local tax rules based on that jurisdiction helps you become tax compliant. Got it. And I guess as part of this, like there's the keeping track of everything, and then there's a lot of people out there who that is a huge problem for them. But the second problem then becomes like, okay, what do I do, right? Like I have all this stuff and all these different exchanges. Do I buy some? Do I sell some? Are there certain times of the year

should I sell right before the end of the year? You know, how do I harvest loss? Like all of these very complex things that in traditional finance, either there's financial advisors that are helping people do it or they're professional traders, right? They actually are spending all day long thinking about this. In crypto, that doesn't seem to be the case in many cases. How did you guys, you know one think through that and two try to help solve that problem yeah the good news is you know we don't have to reinvent the wheel there's lots of very intelligent people who have been thinking about this outside of crypto excuse me for regular finances for a long time and many of those things and those strategies and tools can be built for the crypto ecosystem and

that's a lot of what we're doing there are certainly lots of new sort of nuances and idiosyncrasies about cryptocurrency specifically and that is what makes it challenging to build a in this space, but also what makes it really valuable. So I'll give you some concrete examples. You mentioned like figuring out what times of years you might want to make transactions and using strategies to basically optimize your portfolio. So one thing that Cointracker offers that can help people save a lot of money, I've used this myself to help save tens of thousands of dollars in capital losses, is basically using tax loss harvesting. And for listeners who might not be familiar with that. Basically, before I go into this, just take that this is informational

only. It's not menace tax advice. But there's basically a tax rule that will allow you to sell a cryptocurrency asset that you have at an unrealized loss and then buy it back. So the effect of that is you maintain the exact same cryptocurrency positions as you have before. But your tax bill is lower because you've internalized and realized a loss that happened. So just to make that even more concrete, let's say you bought Bitcoin at $10,000 a coin. Prices dropped to $7K. You can sell the Bitcoin for $7K, realize a $3,000 capital loss, and buy back the Bitcoin. You have the same one Bitcoin.

you have a $3,000 loss, and you can use that to offset other capital gains, or if you have net losses, even ordinary income, and then therefore pay less taxes at the end of the year. Yeah. And I guess as part of this, there's the tax harvesting. And I think it's important for a lot of people to understand that this is actually different than the traditional. When I talk to a lot of traditional investors, they basically say, oh, there's something called wash trading, or kind of the loss at the end of the year, you can't have a loss on unrealized an Amazon stock, let's say for the year, December 30, sell the stock, and then just buy it back January 1 or 2, right, that wouldn't count as actual tax harvest of losses. Here in crypto,

that's different. Maybe kind of explain like why that is. Yeah, so this is the kicker. This is why it's super interesting in crypto specifically. So as you mentioned, normally, there's wash sale rules that make it so that basically the IRS says your loss is disallowed if you buy back the same asset 30 days before or after the disposal. So with, let's say the Amazon stock example, if you were just selling the Amazon stock at a loss and then buying it back right away, you wouldn't be able to claim that loss. And the idea there is, you know, you don't want people basically taking advantage of this tax loophole. What normal financial advisors would do in this scenario to still allow you to do this is either wait 30 days so you get beyond that period or

find another asset that is sufficiently similar in terms of your diversification of your portfolio to replace that asset with. So typically it would be if you have one ETF on, you know, let's say Vanguard that you're then selling and then buying back a similar ETF on Schwab instead so that your overall risk allocation is the same, but you can still take advantage of not having to get your wash sales disallowed. In crypto, the reason why it's different is because the wash sale rule is specifically written in the tax code for securities. And because Bitcoin and other cryptocurrencies are classified by the IRS as property, they don't fall into the wash sale rule. Now, there are some exceptions. Some people would argue that certain cryptocurrencies are security tokens or the SEC

might rule that certain long tail coins are clearly securities. And so for those, they may fall into the wash sale rule. But for Bitcoin, it's clear. Bitcoin is not a security. This would not apply to it. Ether is also likely not a security. This would not apply to it. So for like these head coins, you can basically take advantage of this loophole that doesn't exist for, let's say, stocks, for example. Yeah. And how important is it? Let's say that I buy, you know five bitcoin but i buy them all at different price points over a period of time uh and at the end of the year or when i go to sell uh two of them um uh currently at a loss but three of them i am uh i have a game do i need to make sure that i sell the two uh bitcoin

specifically that have the loss or can i just sell any two bitcoin and then basically say oh no those are the two where i'm gonna take a loss and the other three are fine like how important is it to get the exact Bitcoin. You're now getting into an advanced but really, really useful topic that people can use to save a lot of money. Accountant's dream. Basically, what you're touching on

is different kinds of cost-based accounting methods. And the IRS typically requires people to use one of two different methods. One is first in, first out, meaning the first coin you get is the first coin you sell. So if you bought five Bitcoin, Bitcoin number one that you got is the Bitcoin number one that you sell.

They also have a more advanced method called specific identification that is also allowed. And in that method, it's kind of like what you suggested. You can pick exactly which Bitcoin you're disposing of as long as you meet certain criteria, like keeping detailed records of what date and time it happened, which coin it was, which wallet it was coming from and going to, what the timestamp, what the basis was, etc. And all of these are things that CoinTracker would help you optimize and create records for. And the difference between kind of using FIFO versus doing some kind of optimization here can be huge in terms of cash flow and in terms of tax optimizations. Because if you bought, again, one Bitcoin at a really low price and then got another one later at a very high price, you definitely are going to have a massive tax difference in terms of which one you dispose or which one you trade for altcoins. Yeah, it's really interesting. And then maybe talk a little bit about kind of on the portfolio side of what you guys do. How much of it is what I'll consider just like understanding what's

happening versus are you guys making any kind of predictive recommendations or suggestions or anything? Okay, so that the base thing for sure table stakes is reconciling what has actually happened already. So what are all my positions? What is all my return? Which coins am I holding? which wallets are they in. And that is updating on a real-time basis. Every single day, you'll have it synced. So it's with API connections and OAuth integrations with thousands of different cryptocurrencies and hundreds of different exchanges and platforms. Now, where it gets interesting is how can you actually act on this information to improve your portfolio or more proactively become a better trader or build wealth in a more efficient way? So we already talked

about tax loss harvesting. We'll also send you daily notifications about any new transactions that happen in your account and your daily return. So you might discover that a certain limit order that you set up has executed or that you got airdropped a coin. It's super common for people to realize that they got airdropped that they didn't know existed. And they'll figure that out with CoinTracker. Some people have gotten these transfer alerts and then realized someone was trying to move money out of one of their accounts that they didn't authorize or they didn't know about. So it'll keep you on top of that for security purposes. If you're about to make a trade, let's say, and you're not exactly sure which coin to sell or when the right time is,

CoinTracker can help you understand if you're going to incur a short-term capital gain or loss or a long-term capital gain or loss, meaning whether you've held the coin for more than a year or a year or less. And again, there's big tax implications for that. So it can help you optimize those things. And again, you're making the exact same trade. It's the same exact positions. It's just you're deciding which coin to move. So from a financial perspective, you are making the same ultimate trade, but you are basically saving yourself a tax bill. So there's lots of optimizations there that the portfolio tracking will help you with. And ultimately, the idea here is we want to make people more financially educated, more savvy about the tax code, about finances, about

cryptocurrency. Another example of this is around custody. Where should you actually store your coins? And it's common for beginners and new folks getting into the space to use an exchange or a hot wallet that's custody by a third party. But for people who have been in the space for a long time, you've seen lots of exchange hacks, lots of problems with not holding your own keys and therefore not actually owning your own coins. And so we'll have tools that will show you what percentage of your portfolio is self-custodied and things like that to help you have better i would call it crypto hygiene yeah it's really interesting too because i think part of this is um you're building feature parity with traditional financial products but then there's

specific nuances to crypto as well right so like the idea of uh hey you should understand your balance you should be able to audit where things are what their value is how did that change over time, like that's pretty much available in any asset class type product. An airdrop is very specific to crypto, right? So maybe talk about as you guys were building the product, what some of those technical hurdles were and how you had to kind of build something very customized to this industry versus other financial assets or markets. Yeah, that's absolutely right. So again, like there's tons we can learn from people who have built this before. There's tons of products for tracking other kinds of assets. The fun comes in the interesting nuances of crypto. And there are

so many. And since it's so cutting edge and changing so rapidly, there's always a new thing that, you know, someone who's more advanced than me is teaching me about. So airdrops is an obvious one. There's forks. That was a huge thing when Bitcoin cash forked. You know, how do you treat this? Where is this income coming from? How does this affect the cost basis? That is something that's fairly unique to crypto. There's dividends and stock splits and things like that. But a fork is somewhat unique in terms of coming from crypto. Another example of this is around DeFi. So there's so many DeFi products now where you can earn interest, you can do lending, you can do derivatives. And the weird thing is those platforms oftentimes are decentralized in

a way where there's no company that's providing you financial statements. So you can't just go to some C Corp or LLC and say, where's your 1099 form? You have to actually integrate with the ethereum blockchain or some smart contract and actually understand what are the financial mechanics here and then map that into something that's kind of human understandable so that's another example um i'm trying to think of some other fun interesting things that have happened recently so yeah i think some of the like futures contracts and derivatives like on bitmex and are quite interesting because they're settled sometimes in usd or some kind of fiat currency but sometimes they're settled in that commodity or that coin itself. And then you're basically

incurring capital gains, not only from the transaction, but from the fees that are being paid in that coin itself. So traditionally with margin trading, you would be speculating on some kind of financial derivative, but typically the fees are paid in US dollars. But in some of these margin accounts, you're paying fees in crypto itself. So it's not only the regular transaction, but the fees themselves that are incurring capital gain. So there's all these kind of weird nuances that we have to integrate with and keep track of. Yeah, it's super fascinating. Is there anything that you guys kind of looked at and said, hey, we don't want to try to service or just something that had no regulatory clarity or any challenge that you just said, hey, look,

it's just not worth going there? Yeah. So unfortunately, a lot of things here don't have regulatory clarity, so we don't have the luxury of just turning things that are in a gray area down. When that does happen, which it happens often, we try to basically make it clear, you know, here are the different positions, here's a conservative opinion, here's a liberal opinion, you know, here's the default approach we take, but you have ultimate user control on whether you want to take a different position or not. There are an infinite number of complexities, though, in terms of new platforms that people want us to support, or new DeFi protocols, or some kind of just new cutting edge thing that is pretty niche and so we're not gonna be able to support

everything but i think ideally we want to support every kind of interaction transaction type platform user flow that is popular and so we've kind of prioritized things based on user demand that way actually since you asked the question let me think so one example of something that recently came up that was quite interesting was we had a user who was living they were living near the u.s mexico border. And they were basically crossing the border every day and using crypto for arbitrage between US dollars and pesos based on some exchanges or some exchange point right on the US border and right on the Mexico side of the border. And they sent us a screenshot where they just had stacks and stacks of receipts in an entire room full of receipts that they were manually

typing in one at a time on spreadsheet after spreadsheet, just hundreds of hours. So there's just some like niche cases like that, which are tougher for us to support, um, until it becomes more popular. I don't know how many people are going to go back and forth on the border to arbitrage, but that's a pretty damn cool story. Yeah. Um, and then let's talk a little bit about, uh, speaking of regulation, uh, the traditional financial world, uh, you guys have applied for the, uh, payroll protection program, uh, act or loan there. Maybe talk a little bit about that process and kind of how it went? And I'm assuming there was a lot of bashing of your head against the wall and it wasn't as fun as people wanted to think, but maybe just talk about that a little.

Yeah. So loan applications turns out are never fun. So on the one hand, I want to say I'm quite grateful that the government is doing something. I think Congress has probably done more in the last couple of weeks than it has done in the last several months or years before that. So I think it's good that they're trying to do something. That said, the execution of the actual loan application process was less than smooth. So for those who don't know, there's this payroll protection program from the SBA government agency around, basically the goal is to try to help ensure that small businesses have funds that they need to maintain payroll for their employees. And there's a bunch of sort of nuances around what qualifies as small business, but kind of

at a high level, it's companies that are less than 500 people. And that could be restaurants, construction companies, could be a variety of different types of businesses. And there was $350 billion allocated for this payroll protection program. The reason why it was a bit of chaos is because the actual loans come through banks that you work with, not the SBA themselves, which means you basically go to your bank and you say, hey, I would like a loan. and they basically have a unique loan application process from each bank. We work with First Republic and they actually ended up doing a relatively great job. They were working around the clock.

I think it took 18 days from our initial application to getting funded. We heard some horror stories from some other banks where they were prioritizing large clients or they were prioritizing clients who already had pre-existing loans with them or they were prioritizing or they were just dropping loan applications on the floor entirely. And that is a huge disaster when you have a huge cash flow problem. For example, this year, the tax season, which is one of our primary drivers of revenue, moved from April 15th to July 15th for most Americans. And the implication of that is a lot of the revenue that we expect in April is now a little bit delayed. And that definitely has big consequences for our business.

A lot of restaurants are really struggling right now. Often they're totally closed or maybe they can only take a few takeout orders. And so for these people, waiting 18 days may not be an option at all. And we're kind of fortunate. A lot of these people are in really desperate situations. So to kind of explain how the process worked, basically, April 3rd, 2020 rolled around. That was the day that this process was supposed to start. Every bank was kind of running their own process.

So I think Bank of America, for example, launched their applications early that day. We used First Republic. They launched that afternoon or that evening. Some of them had no loan application process set up at all that day. Everyone is kind of frantically watching webinars from every VC, every Twitter person, you know, every legal firm is running their own webinar, every HR provider and payroll provider, Gusto, Pilot, Rippling, et cetera. Everyone had all these webinars.

Everyone is kind of trying to understand the rules. And then on top of that, the rules are changing every day. So each day, every night you would see on CNBC, you would see from like what's going on Twitter, you'd see from Congress, House, Senate, they've published either more clarification or more guidance or more nuances or exceptions as to who's allowed to apply or what the forgiveness policies are or what documents are even required. And so it's just total chaos. And what ends up happening is we ended up applying that same day. I think it was around two and a half hours between when the loan application opened. and when we submitted our our materials but then there's a bunch of back and forth because you basically have to provide a ton of documentation showing how many employees you had what the average payroll was over the past 12 months have the records on how you computed that and then there's a bunch of calculations that go into it for example you can't include foreign employees

but you had non-us-based employees you can't include contractors you can't include salaries above a hundred thousand dollars there's just all these different kinds of rules you have to apply And it's not like we have this complicated calculation sitting around in some software. It's like the calculation is changing every single day. So we were basically frantically trying to compute that. Luckily, some people like Pilot and Rippling and others made tools to help automate these calculations. But then it was back and forth with a loan officer to explain why we needed a loan, how much loan we needed for, how the process would work, what kind of proofs we had that um you know that documented that we actually had a financial need

because of covid related reasons things like that and so that process took 18 days eventually we did get the funding and i'm super grateful to first republic and again to sba for making this possible but it was it was a bit of a process and i think again we were one of the lucky ones that we were able to go through this i think a lot of people are in a much worse boat yeah it feels a lot like, um, the government said, we know we're not, uh, set up to do this. Right. And so rather than us try to hand the money out, like what's the next best thing? Well, let's go through these traditional channels. Banks are used to giving loans. They have customers, they have underwritten some of these people, uh, and they can kind of help us facilitate that. But people forget that

the banks were basically told, okay, you guys are going to do this like 48 hours before it turned on and then i remember a number of banks even like jp morgan chase and some of these uh the night before we're like we we don't even know what the rules are like we can't take loan applications tomorrow morning and so it's you know i think it uh was very um kind of hard on the applicants but also i try to be understanding and say you know for the uh the banks and those processing the loans like they were put in a pretty bad position as well and given those st those situations for for the most part, they've done a pretty good job, you know, maybe prioritizing the bigger customers or giving loans to public companies and that type of stuff is a little bit more

hard to give them a pass on. But it feels like your experience is somewhat similar in that it wasn't easy, but you know, they're doing their best. Yeah, I think that's largely right. There's definitely a large variance in what the best is from one bank to the next. But I think that's right. I think it was a tough position. And I do applaud the government for trying to push these through quickly. Like I think they could have spent months trying to like iron out all the rules and make sure all the I's and T's, you know, were perfect. But I think people are trying their best. And that's a good thing. I think there's also another round of funding that should, I think it passed the Senate yesterday, probably going to

the House later today for additional funding since the first 350 billion ran out so quickly. But there's also like adverse effects of doing all of this. Like I've heard stories anecdotally from people where because of these PPP loans, you know, it's hard to get people to actually hire or get hired for other jobs, because people want to maintain them on payroll, even if they're not doing anything productive for society. I mean, again, which makes sense, like, of course, people can't eat, people can't buy stuff. So I mean, there's nothing wrong with that. But the adverse impact of that is it might end up making it harder for the economy to restart, in some cases in some segments when people are trying to hire hire people for for new types of

jobs there's just a lot of weird things and one other sort of last thought about this is it's it just occurred to me it's kind of funny that the government has such a great infrastructure set up for collecting taxes from all of us but there isn't a great sort of system sent for remitting these sort of stimulus payments or the you know the yang gang bucks or whatever back to people universally and i think we're seeing like there's clearly a need like this this is happening kind of at this scale for the first time at least in modern history but doesn't mean it's gonna be the last time like we probably need better financial infrastructure it probably doesn't make sense for banks to be earning 10 billion in fees for these loans that they're giving out with

zero to low risk so um there is something to be said for improving the financial system generally which obviously appeals to me as someone working in the crypto space yeah somebody said to me the government's really good at collecting the money they're not so good at handing it back Yeah, exactly. And, you know, the part to me that also is really interesting is the first 350 billion, it's like only like three or 4% of the applications actually got processed and the money ended up being successfully doled out. And so like another 310 billion, I think is what is in this latest bill. It's like, are they even going to get to 10% of the applications? Like, it just seems like such a small number compared to, I think I saw over a trillion dollars in loan applications, right? And maybe not all of them are eligible or whatever, but just such big numbers coming out of these programs that it makes you think, do the politicians, Federal Reserve, et cetera, really understand how much economic carnage there is kind of on the ground or in reality? Yeah, I totally agree with that. I think it's being underestimated by a lot of folks. An additional $310 billion is great. It's a good start, but that's definitely not going to be enough for everyone. And it's money printer go bird. What are the other solutions here? I don't

know. I'm not a government expert here, but I don't think it's going to be enough. And I think the economic carnage is going to last longer and be at a larger scale than I think a lot of people think. Yeah. That meme is amazing. The whole idea of money printer go burr. I just, when I first saw that, I was like, that might be one of the best memes that comes out of all of this. And you can just see it sticking around for years and years to come. Yeah. I think I just saw someone tweet out the, the, the feds or the government's balance sheet. And I mean, it's, it's hockey stick growth, let's say? Oh, it's vertical. The Fed's balance sheet is legitimately vertical. When I first saw it, there's a quote from Top Gun where Tom Cruise says something like, he's going vertical

and so am I. But it does bring into the question, right? It's like, it kind of shows the value of obviously Bitcoin when it comes to money printing and Bitcoin not being able to be manipulated or the money supply changing. But also, I think it changes kind of people's view of right now, everyone here in the United States, we're in a dollar denominated economy, right? And you start to look around the world. And yes, there's central banks everywhere injecting liquidity. But there's also other currency denominated economies, right? And so you may get different performance. But it's all the same economic reality, because everyone's kind of being ground to a halt. And so it answers the question like should we have one global currency should everything be priced in the same

uh reserve currency like these are like big existential questions that previously uh kind of got you know brushed aside because it was just like well what would that currency be i think now when you see something like a bitcoin with a separation of state money now it's a little bit more realistic to have that conversation and you know it's not going to get solved tomorrow but It is interesting to see kind of the economic situation we're in drive more people to at least learn about Bitcoin, cryptocurrencies and some of the stuff that, you know, UI and others have been working on for a while. I totally agree with that. I think there's a lot of these things that people have taken for granted because it's just the way things have been business as usual. And now people are sort of second, second guessing and questioning everything. You know, yesterday we had a dinner discussion about how negative would the price of oil have to go for us to just rent an 18 wheeler and drive to Cushing and like pick up our barrels of oil. And, you know, it's kind of like, wait, why are we like, let's just question all of our assumptions. Why is money the way it is? Why don't we have a global currency? Like, we don't have a currency for every state. Why do we have a currency for every country? Does it make sense? Are there better ways of doing things? So I think kind of getting everyone to realize these questions and ask these questions is a hugely positive thing. Because, you know, even if nothing changes, at least people are going to be understanding how the system works and what the pros and cons of it are, which I think is very positive. So I got to ask, what was the consensus on what would the price of negative oil be?

So, okay, I live with a consultant who is quite good at X-Bane guy. But I think what we calculated was we would need to get 218 wheelers of trucks in order for this to be economically feasible at a price of about negative $3,000. So we probably aren't going to be doing this anytime soon. I'm guessing there'll be some arbitrage before that happens. But if it does get to that, you will see me in Oklahoma. Look, it's pretty crazy because in that regard, so we saw what? I think negative 50 was the low or somewhere around negative 50.

And that was for the May futures physically settled contract. The one in June right now is still trading positively. But I was starting to do some calculations on how much storage is available in the U.S., how much oil is already on its way to the United States. And there's some estimations that it could be like, you know, 50 million barrels that are already on boats on the way here. And then you start to look at it and you're like, okay, so we've got, you know,

maybe a month or so before people are going to panic again, or is demand going to increase that materially to get oil out of storage? Probably not. And so like, are we going to see what just happened this month, next month, but on a bigger scale and like my whole thing was like could we see negative triple digits like could we see negative 100 or or worse and i like yeah like it's possible right i mean it's not going to stay there probably but like we could see that and i think that it's one of these things throughout this entire economic shock where uh every time you think it's as bad as it's going

to get it gets worse right unemployment numbers like all these things and so it's kind of scary totally yeah i think the negative hundred dollar barrel of oil um would have like people would have laughed in your face a couple weeks ago if you were to suggest that and now it's like wow that i mean anything is possible where are we going to put all this oil um and the unemployment numbers are staggering i think that it's over 20 million now um so yeah it's totally crazy i think unemployment in sf has san francisco has gone from two percent to probably over 20 in the last month again, unfathomable a couple months ago. So people are really questioning everything. It's super scary. I think it's going to last longer than people think. So I'm hoping people are

staying home, staying safe, but we also need to figure out a plan for the economic side of things. Like this isn't feasible for a lot of people for a long time. Yeah. And then I guess last question for you here, before we get into the rapid fire, it's just like, how has COVID changed your guys plan? So obviously there's the impact on revenue, right? You had to deal with all the PPP stuff, but in terms of either product development cycles or hiring plans all that like what's changed due to this virus other than you gotta sit and sit at home and wear masks when you go outside i personally love working from home so i think i'm way more open to remote only work um so that's one change but i think the biggest change for the company as a whole

has been a lot more focus on rapid product development and especially trying out ideas that were a little bit more out there um and just being like you know what the hell what's the worst that could happen like it's go go big or go home type of thing right now so um launching more stuff bigger stuff faster and more quickly and being more willing to experiment which i actually think ultimately is a good thing for us so that's been the biggest change for us from covid yeah makes sense um rapid fire before we finish up and you could ask me one question uh what is your most controversial thought in all of crypto oh most controversial thought in all of crypto? Hmm. I used to be into lots of different tokens and coins, but I've become more of a

Bitcoin maximalist recently. So I, I think most coins, most tokens are totally worthless. Maybe an exception for stable coins. And if you defy things other than Bitcoin, um, I don't know, there's probably some people who agree with me there, but I think that's my, that's one of my thoughts. Welcome to the light. What, what, uh, what's the one rule or regulation you would change if you could um around crypto or just in general uh it will do in general in general oh um i definitely have a little bit of libertarian bent to me so i don't like generally the government telling what to do maybe there's some exceptions there let me think about that one i think there's an obvious example for crypto specifically and since

we work on taxes i think one thing that's kind of holding the industry back a bit is basically having capital gains on every little transaction i think if there were a de minimis exception basically not taxing small transactions and stable coin transactions and things like that that would be better for the industry as a whole that's very niche for this i'd have to think a little bit more on if i could change any law what would be that's you know so much free reign there what would uh you make the de minimis exemption be like what would that dollar amount be well i uh ultimately they tried $600 and that failed because people thought it was too high. So I think getting it to any level where people would be willing to pass it practically would be good.

$200 would be a good start. I think there was some folks in Congress we spoke to who were trying to do that. So I think $200 would be a good start at least. Got it. Makes sense. Most important book you've ever read? Lots of good ones. I'm currently reading The Black Swan by Nassim Taleb, which is relevant at scale. Although I think according to him, this is not actually a black swan. Maybe the price of oil negative is a black swan but that is interesting i really like guns germs and steel um i read that um back in the day i think that's a sort of an interesting explanation of just the state of the world that's one of my favorite books it was a jared diamond right who wrote that one um all right and last question before you get asked me one uh aliens believer

non-believer i think unquestionably they must exist it's just like there's there's just so much of that vast universe out there i think it's very it's like it reminds me of when humans used to think the earth was the center of the universe it's like why do we think we're the only planet that has life it seems so self-centered it just it's unfathomable to me that there isn't life on other planets there's so many planets do you think we understand space or the ocean more oh um the oceans i think are not well understood but space i think is so much more vast there's so much we don't know it's so much bigger that i would i would go with space all right that's fine what uh what one question you have with uh for me to finish up okay so i i i did a quick little

bit of snooping on your background um what is the most interesting thing you learned as a sergeant in the army and what is the least useful thing you learned at facebook that you had to unlearn um by far the most useful thing as a sergeant in the army is uh to never ask someone to do something you're unwilling to do yourself um and i think that is uh the army does a really good job so uh for those that don't know um you have to go to a number of schools or one school i forget uh to basically um become a sergeant there's a specific leadership school you go to and all stuff and uh there's ways that this manifests itself uh in um some big ways in some small ways so a big way would be if a bunch of things need to be physically moved somewhere uh and i am your

sergeant like i shouldn't ask you to do it unless i'm willing to go do it right and so that's like a pretty cut and dry example and you just want your soldiers to know hey um like he has my back right he's a good leader he's willing to come out here and do it with us it's not you work for me go do it because i said so type stuff um so so i think a lot of people in the military their view of the military is it's very um hierarchical uh and obviously there is ranks and there is that to some degree but at the same time like these people are going to listen to you if you inspire them if you kind of show them why they should follow you um and so i think that's one piece of it and then the other thing is like stupid shit. Like, uh, when you go to, um, eat, uh, one of the big things

is, uh, in the military, you'll find a lot of times that sergeants will literally fight with each other. Uh, not like fist fight necessarily, but just like argue with each other as to who gets to be in the back of the line. And it's because they want all of the soldiers to eat first. Right. And then the sergeants will eat or the officers will eat. And so you kind of build into the culture, this idea of the people who are in charge at the various levels, they take care of the men and women who they are in charge of, right? And that goes to them eating first and all that kind of stuff. And so when you compare that to other parts of society, that's a little bit different. Like a lot of people say, oh, I'm in charge, I go first. And so getting that, I think

was, it was cool to kind of get both the leadership lessons and the academic portion of it. But then also you kind of put it in practice and see how beneficial it is. And then in terms of Facebook, so I was there at the time context, I think really matters. I was there in 2014, 2015. And I would say that the two things, or actually there's one thing. So there's a blessing and a curse. Facebook is the best in the world, in my opinion, obviously highly biased at using data to solve problems. And I was on and ran a number of different growth teams and product teams and saw that in action over and over and over again, where most people would walk into a room and say, well, I think that X is true or Y is true. Facebook was very good because they had so much traffic

at designing these tests, running multivariate tests and getting the data to tell you the answer and then kind of pushing through whether it was growth plateaus or design problems and things like that. And so obviously you train yourself and your colleagues every time that we have a problem, let's just run a test and the data will tell us the answer. That works really, really well, like 80, 90% of the time. There are cases though, where like, that's not the right approach. And so we became so good at it that in hindsight, you know, there's certain times both at Facebook and afterwards where you look at a problem you say the data can inform my decision making but i shouldn't just like whatever the data tells me go do it and so i think that it's a thing where

because it was so effective it also led then to um at least you know my team being a little blind of just like let's go follow the data um and so luckily we weren't working on anything where that could have really adverse effects to uh to users uh but you could easily see you know when you get into the conversation around fake news on all the different platforms and things like that well if you're just optimizing for clicks then actually some of the more salacious less credible content may drive more clicks and you know how do you balance that stuff um and so i think that you know that's not a problem just at facebook it's kind of around the uh the social media or technology companies but that's probably the answer there that's super cool i i really like both of those

yeah well where can people go uh go find more about a coin tracker and uh you as well yeah for sure coin tracker is coin tracker c-o-i-n-t-r-a-c-k-e-r.io you can check us out on our website we're also at coin tracker on twitter and you can follow me on twitter as well at c-u-g-l-o-d-h-a how did you get that at coin tracker nobody had that on twitter that's actually another fun story we actually had another username and we'd closely been monitoring this for a long time the account was quite inactive and we followed some steps contacted twitter said the account was not being used could we have the handle and they gave it to us ah see you guys went the uh the the path of twitter i know a lot of people who uh slide in

the dms and it becomes a negotiation from uh you know hundred dollars to five hundred i've heard people selling some of these accounts for uh for thousands of dollars so going the twitter account is much cheaper yeah it was it was a nice price of zero awesome man well listen i really appreciate taking the time to do this i hope people go check out coin tracker both for the portfolio management and also for a lot of the tax services that you guys offer and we'll have to do this again as hopefully the uh the crypto market comes raging back from uh from this nice little winter we've had thanks so much pomp and someday we might find ourselves driving to oklahoma together to get some I love it.