The Pomp Podcast - #494: Ian Sigalow on Venture Capital as a Platform

Episode Date: February 17, 2021

Ian Sigalow is a Co-Founder of Greycroft and a Partner in the firm’s New York office. In this conversation, we discuss the venture capital industry, digital assets, and Ian’s investments in Braintree, Venmo, Public.com, Plated, Buddy Media, and many others.  ======================= The Stacks 2.0 mainnet launched on January 14, 2021. Stacks, which you may recognize as Blockstack, is a layer-1 blockchain that uses the Bitcoin blockchain as a secure base-layer and enables developers to harness its power in new ways. Stacks makes Bitcoin more than digital gold, enabling apps and smart contracts on Bitcoin--unlocking innovation, new value, and a new way to earn BTC. Visit http://www.stacks.co for more information. ======================= Coinbase Wallets are adding support for .crypto and .zil domains through their partnership with Unstoppable Domains. Unstoppable Domains provides an all-in-one solution for blockchain domains. You can send money using these new domains instead of long Bitcoin wallet addresses, while also storing your domain in Coinbase's collectibles section. Go to unstoppabledomains.com in the dapp browser to register and manage your domains.  ======================= As one of the largest and oldest Bitcoin exchanges in the world, Kraken is consistently named one of the best places to buy and sell crypto online, thanks to our excellent service, low fees, versatile funding options and rigorous security standards -- but this is only part of the story. We’ve been on the forefront of the blockchain revolution since 2011: http://www.kraken.com =======================

What's up, everyone? 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. Ian Sigalow is the co-founder of Greycoft and a partner in the firm's New York office. In this conversation, we discussed the venture capital industry, digital assets, and Ian's investments in Braintree, Venmo, Public.com, Plated, Buddy Media, and many others. I really enjoyed this conversation with Ian, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Stacks.

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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 Ian here with me. Thank you so much for doing this, sir. Thank you for having me. For sure. Let's just jump right into your background. Walk us through how you started your career and then eventually how you get to uh graycroft so um i i have a funny story about this i when i was in college i went to mit and i had this internship doing spot pricing for electricity across the united states it's a quant project and i found out a lot of things about spot

price and electricity too which would be a fun digression for another time and the following summer, uh, DLJ, which investment bank that was bought by Credit Suisse showed up on campus and they were the last bank to show up to interview. And I was turned, I turned down by Goldman and Morgan Stanley and everybody else, but the energy group showed up and they said, oh my God, we found somebody who knows how to do energy spot price calculations. And so I got a job in the energy group at DLJ as a summer intern. And then when I showed up for my first day of work as a summer intern at 277 Park Avenue, they put me in tech banking. And I said, why am I in tech banking? I thought I was on the energy team. They said, well, you went

to MIT, didn't you? I said, I would still go to MIT. They said, well, we're trying to compete against this guy named Frank Quattrone. And the more MIT people we have on our team, the better our pitch decks look. So you're on the tech team now. And honest to God. And so I was a tech banker And I spent my whole summer flying on the Delta shuttle from New York up to Boston. And we were pitching VCs all summer. And this was 2000. So this is like heyday internet bubble. And I quickly realized that while tech banking was good, the better job were the people that

we were pitching. It was summer in Boston. and they were sitting in their offices, no socks and Nantucket shirts on and listening to the VCs talk to them about ideas. So I tried to get into the venture business and there were two VC firms that interviewed on campus at MIT, Battery Ventures and Boston Millennia Partners. And I happened to get a job at Boston Millennia Partners when I was 21 years old through on-campus recruiting. So I got into the venture business and that was 20 years ago. So I'm 41, but I've been in the venture capital industry my entire career with the exception of two years in business school. And so when you show up on day one, what was your thought process? Were you like, man, this is wild? Are you like, I'm a genius and I'm ready to hit the ground running?

Oh, well, I'd say, you know, I've had every job in the venture capital business. I've had analyst, associate, senior associate, principal, partner, effectively managing partner. And, you know, I was never short on confidence when I was 21, but I didn't know anything, admittedly. And the firm I was at did a little bit of everything. They were doing biotech and life sciences companies and optical switches and enterprise software. And I think what I found that I was good at, because it was funny, even a couple of years

later when I was first meeting Alan Patrickoff and we were setting up Greycroft and he asked for references, I had CEO references from when I was 21 and 22. They liked me and I liked them. And I found that even when I was right out of college, I was able to talk to these entrepreneurs and come up with interesting ideas about ways to grow their businesses faster. Maybe I understood their business as well. We just connected. And I think that's a very important skill. And the second thing is I've always been really curious about why the world works the way it works.

and call me like an info junkie, but I'm up every night till two o'clock in the morning. I have a research report of what I was reading last night. How rigged are stock markets? Evidence from microsecond timestamps, which is a National Bureau

of Economic Research article. This was from 2017. How rigged are they? They're not. But, well, at least not in the way that this group thought they were rigged. But, you know, I read this last night and I was so interested in the timestamp delta

between the SIP and the exchanges. I mean, like nobody cares about this except for like five weird people, but I happen to be one of those five weird people. So, you know, when I meet an entrepreneur that's in the trading space and we can have a conversation about that, they think it's really fascinating

and I'm always probing them for more information so I can go a little bit deeper. I love it. Talk a little bit about Greycroft and kind of the strategy, the structure of the firm, and kind of what the focus is for you are. Yeah. So Greycroft today is 50 people. And there are two businesses inside of Greycroft. We have an early stage venture capital business that is on fund six. And in total across all of those funds, we're about 1.2 billion of LP commitments. And then the second business is we have a growth business, venture growth business,

and that's on fund three. And I believe we're about $900 million, $850 million of LP commitments in the venture growth business. As a firm, there are six areas that we're currently focused on. They are on the enterprise side of the house, fintech and insurtech. So B2B fintech and insurtech. That's one area. Enterprise application software and enterprise infrastructure software. That's our large, our entire enterprise side of the house. And we've got 15 investment professionals roughly focused on those specific sectors. And then on the consumer side, digital health, consumer fintech and insurtech, and then consumer internet.

And there's roughly another 15 investment professionals focused on the consumer side. And this is universal across both early stage and growth. just the difference is the stage of the company. And it hasn't always been those sectors, by the way. We've done all sorts of things over time. We were back in 2006 and 2007 doing advertising technology companies, and we were doing a lot more media investing. We've subsequently moved to be more, I guess, traditional consumer internet and enterprise software. So when you think about kind of switching focuses or switching sectors, what's the evaluation or framework process that you guys kind of think through to say, hey, you know, maybe we're not going to focus as much on sector A as we have been and sector B now is somewhere we're going to go put our focus on. First is success begets success.

and we see things outside of those six sectors and we're going to do and we still do it five or ten percent of our capital is deployed in opportunistic areas like autonomous transportation and energy businesses and stuff that we think are really interesting that partner has passion for oftentimes also it's an entrepreneur that we've known for a really long time that, you know, they'll start their second or third business that we could have even funded their first or second business. And they go, you know, why don't you come into my new company? We say, well, we don't, you know, we don't have expertise in vertical takeoff and landing autonomous vehicles. Hey, well, doesn't matter. We know you, you know, as we didn't either,

we figured it out over the course of the last two or three years. And then through that investment, we can learn a lot. And I think the venture business, like all technology, you have to keep innovating. Otherwise, you die. So when we come into one of these spaces, it's the same questions. What's the capital intensity of the model? How long does it take to get product market fit? How good is the team? If you're successful, how big can it be? How do we underwrite it? And I don't know. I think when we started in the media space, I think the markets we started were actually

a lot smaller than the markets we're in now. And part of the benefit of being in financial services and insurance, the upside is a lot bigger, a lot more public companies in those spaces. You've got this idea of kind of VCs firms as platforms. So we've seen this with private equity firms, obviously, in terms of their ability to build out large businesses that really can do many different things. So for the companies that they go ahead and they buy equity and whether it's a majority or minority stake, it seems like more and more venture capital firms are starting to do that as well. Just kind of walk me through how you see that part of the business evolving and then how you at Graycroft have decided to kind of perform services outside of just pure investing.

The next phase of the venture business is going to look a lot like private equity or hedge funds. And we're in a talent game, and it's the same talent game that every business is in. And in order to win at that talent game, and it's external talent, so building the best companies we can with the best entrepreneurs and the best executives, that's an expensive endeavor in 2021 because talent is getting more expensive every passing year. And then it's an internal talent game where the associates that we're trying to hire are being cross-rushed by D.E. Shaw and Apollo. And so you can get people who are more entrepreneurial when you're smaller to leave jobs where they're making a lot more money to come in and have more responsibility in a bigger role. But I think to really win in the venture business and to have a world-class team, you've got to be able to pay people fair salaries and at least what they could earn elsewhere. And so you need to be a bigger platform to do that.

It's very hard. We started a $75 million fund at Greycroft. I was probably the poorest person in my business school class for a long time because I'd made the decision to work with my partners, Alan and Dana. And there's not a lot to go around when you're managing 75 million bucks with office in New York and office in LA, travel expense, overhead, marketing. It was really hard. And so that's one piece.

And the second piece is that, you know, just the criteria, the back office and investment in data and technology to be competitive now is so much higher than it was even 15 years ago. So we spend a million dollars a year in data. And when you say data, explain like what exactly that entails, because I think this is a part of venture capital firms that maybe some people don't know exist or don't understand. um well i'm not talking like market data right we're not buying data feeds from the nasdaq or anything um we're buying exhaust data um app performance data from app any consumer panel

data from earnest we happen to also invest in these companies so we find them like well if it's good enough for us to buy from it should also be good enough for us to invest in um uh you know there's deep and dark web data. There's all sorts of really interesting information out there. And then on top of that, there's kind of status quo stuff like PitchBook or Capital IQ and, you know, figuring out comps. And I think that part of this data access in the private markets in particular, because, you know, the public market, the companies themselves publish their results. And you can append to that some information from consumer panels to see is McDonald's going to hit or miss their earnings projection. And that's a game that's being played

by hedge funds. In the private market, no one really knows how everybody's doing. So you've got to figure out ways to triangulate that. And we spent a lot of time figuring that out too, because there's part of our business that you've got to know if you're going to be playing global fintech, who are the 10 best companies in the world? And how do we make sure we don't get scooped on them? Yep. That makes a ton of sense. I want to talk a little bit about two of the investments that you guys have made that are in the portfolio, but use them as kind of starting points for conversation around the larger trends. And so maybe we will start with kind of the payment or fintech type company, Venmo. And so obviously there's a ton of innovation happening

in digital payments. There's a ton of kind of experimentation happening, especially in Bitcoin and the crypto markets. But also there's lots of that same innovation and progress being made not in kind of blockchain or crypto enabled products as well. And so just how do you look at that market? What are you excited about? What are you not excited about? And kind of what have you guys done there? So we invested in the seed round of Venmo in, I think, 2011. It might have been 2010. It was a long time ago. And it was really interesting. They came into our office, Ikram and Cortina, and they were totally unregulated and operating in a gray area. uh and i believe all of the users were friends of ikram and cortina at the time they had

thousands of friends who lived in uh hell's kitchen um so uh so we looked at this and and i called people and everybody said you'd be crazy to invest in this company venmo i would call paypal and we're friendly with dan shulman and dan wasn't there yet dan was still at American Express. We called him too. And they're like, oh, yeah, we do this already. But you'd go and you'd look at the experience of PayPal 10 years ago, where you got to go to a PC and log in or Apple log in and then send money over. And their mobile apps were total garbage. And there's kind of mobile web interface. And our view was that mobile was this great unlock because I could pay people, like, I don't need a wallet anymore.

I just move money around on my phone. And it's so much easier. And so they developed that. We seeded them along with Excel. And, you know, the company grew very fast, but they were losing money on every transaction because they were paying the interchange fees for credit and debit loading into the app.

and they were losing so much money, we had to sell the company. So we sold them to Braintree and then we later invested in Braintree and then Venmo consumed all of the free cashflow of Braintree and was dragging them down. And then we had to sell that business to eBay, which owned PayPal at the time. And I think in hindsight, we did okay. I think in total, we made three times on our money. We could have made 300 times. The opportunity was there. We later started a company called Verse, which was the Venmo of Europe based in Barcelona. And they were acquired a year ago by Square. So it's now Square Cash's product. And interestingly, Interestingly, we had the same Michael Vaughn, who was the COO at Venmo and had spent 10 years

working inside of PayPal, was on the board of Verse. And we got an acquisition offer from Square and we called PayPal. Like, well, we have an acquisition offer. I can't tell you who it's from. But we may be interesting to you because you don't have a mobile app in Europe. and the paypal europe guy said mobile apps won't work for peer-to-peer it was the same story 10 years later like you must be kidding me but you know there's really deep entrenched not invented here bias that happens in a lot of companies so like that's either be no if if venmo had executed on the right strategy, there'd be no Chime. There'd be no Square Cash. Because they had such a huge head start for a decade with all of those users hitting what is fundamentally a banking app.

But they didn't execute on it. And now, thankfully, there's a million fintechs that are all exciting consumer businesses. So that's kind of a long story of the peer-to-peer space. the challenge is you don't make any money. These peer-to-peer hooks are really good for customer acquisition. They're really hard to make money on. So it takes hundreds of millions of dollars to scale one of them to the point that you can start capturing interchange or pay people for instant deposit. And I think Venmo finally turned a profit last year for the first time after over a decade of losses. When you look at kind of the way that that business evolved over time and eventually got bought, what do you think would have been the things that they could have done

differently to actually go and capture the opportunity? Was it a lack of appetite? Was it like a strategic omission or mistake? Was it just a different time and people, you know, hindsight bias is kind of 2020? What do you think could have gone differently? In order for Venmo to say, be an independent company instead of acquired by PayPal. That was 10 years of tension that just got released right there. Yeah, it was. I've thought about that. I don't know that anybody, given the circumstances and the time period, and keep in mind, Facebook was building Facebook cash and they were threatening us and Square was around and they were eventually going to launch something here because Jack Dorsey is an amazing entrepreneur and he was going to come into the

consumer space this way. So our founders at Venmo were first-time founders and they were very young and I don't think that people believed. And the bigger question, because when combined with Braintree, we were a very formidable business. At the time we sold for $800 million, we were many multiples the size of Stripe, plus we had the payment business that was growing really fast. And that goes down as one of the biggest regrets of my career is we sold that business for $800 million. We had an offer to raise a hundred from, uh, leaf Excel at tiger and the board decided to sell. And, um, and we should have held, I mean, for, for many reasons we should have held with that, that company would have been worth $50 billion. I mean, even today and brain tree,

people don't talk about Braintree. It's still bigger than Stripe. Really? Yeah. Based on what measurement? Payment volume and revenue. And when you think of the payment volume, where exactly is that coming from? Because I definitely don't think people think of that, right? Whether it's just they think Stripe is so big and this Goliath or they just aren't aware of Braintree. Where's that volume coming from? Well, the U.S. economy is really big. And, you know, if you if you handle the payment gateway for for big enterprises and this is what this is, the motion in many of our companies, you know, they start off on Stripe because Stripe has won the minds and hearts of the developer community. And at some point, Stripe becomes inadequate.

because they don't service enterprise accounts particularly well. And it's also expensive. So you're paying for an obfuscation layer on top of, I believe Stripe is written on top of Chase's core. I'm not sure, but they don't have their own core. There's somebody else underneath. And you're paying for ease of use and APIs and compliance and a bunch of other stuff. um so you migrate off to save a ton of money and to get a more robust feature set and um and braintree was so early in the app store that i don't know if they still have these accounts but they were the payment gateway for uber and the payment gateway for airbnb and the payment gateway for everybody uh they kind of owned mobile apps and that was really really valuable oceanfront

real estate that um just exploded in value and it's once you're integrated with them and they were more of an enterprise player and they positioned as such so they the accounts were very sticky. Got it. And even more so now that they've got PayPal behind them, because PayPal's payment services are expansive. Yeah. Before we move on to the next kind of vertical, is there any opportunities in payments or kind of these consumer facing fintechs that you're like, man, somebody should go build in the X, you know, vertical or specific types of companies you're looking for in case anyone's building those companies they can reach out i'd say the first thing we followed was kind of the global proliferation so i mentioned we did verse

which is venmo in europe we did eco which is the square of china and we did flutterwave which is kind of the brain tree stripe or alibaba for africa um we should have done um toss in south korea i spent a bunch of time looking at it and and we probably should have done um paytm in india But these trends were kind of obvious. They had all started in the US and then they went everywhere. I'd say second, in terms of US innovation in consumer fintech, there's a lot happening right now in the insurance space. and there's still interesting opportunities there with embedded insurance that haven't been played out all the way um spending a lot of time on that personally uh you know i don't know that the um the new mobile banking apps have seen the end yet there may be somebody that comes in over the top with something really interesting um i think that the annuities market like if we

really want to go into interesting niches of financial services. I've spent the past year looking for an annuities play. I've yet to find it. And I've met with dozens. I think annuities is so fascinating. And there aren't really pensions anymore. So you get these defined contribution plans. And what people just want is assurance in their old age that they're going to have money. And there's a lack of trust that the federal government is going to be there for you because social security one minute is underfunded by like a gazillion dollars and the next minute it's not. No one really knows. So if you could buy an insurance contract that pays you for the rest of your life enough that you don't have to worry anymore, I think a lot of people would buy

that. The problem is annuities today are a ripoff because the fees are so high. So you've got to figure out how to get distribution right and the underwriting right so they're not paying you double to get your own money back. So when you think through the annuities and you say you've talked to a bunch of teams, is that teams that are working on the annuity space and you just are not convinced that's the right team or the right strategy? Or you've talked to a bunch of people working in kind of fintech, but no one working on the exact kind of point of the market of annuity. So we've looked at specifically a few people who have started companies in the annuities market. And some of them are B2B2C.

So they're building platforms for RIAs or wealth management people to distribute annuities. And then there's others that have taken an approach that's more like Acorns with one of our portfolio companies. But it's like instead of a passive savings app, it's savings and distribution. And it's geared towards an older audience. And I think the question for us is we're going to probably wait and see until somebody has some interesting traction or a really compelling team with a repeat entrepreneur that we can back. Those would be kind of the two criteria.

And once we find it, we'll jump on it. Got it. Another area is what I'll call kind of consumer facing brokerage combined with kind of social networking, if you will. Right. And so obviously there's been a bunch of talk about consumer facing brokerage businesses. You guys are an investor in public.com, which is a variation or a nuance of that. Talk a little bit about that business and then kind of that market so um you know public was such a good story because they the the company um was kind of started in our office at graycroft we were pitched an idea on you know what if venmo and e-trade and this was before robin hood was robin but what if Venmo and E-Trade had a baby? The secret sauce of Venmo, aside from the fact that

they built a good mobile app, was the feed. People would log in to see what their friends were doing and not even making payments, just like fear of missing out. That was what tipped Venmo over the K factor of one. It wasn't like I'd send you money and you have to go download the app to get it. It's like that extra login every month where you're just sitting at home wondering what your ex-girlfriend is up to and you're like, I wonder if she paid anybody. Similarly, we're thinking about the stock exchange and said, well, this is an empty room problem because if you don't know what to buy. And you don't have any real stock ideas. And there's no way to follow. How do you get information around where to trade and what to do? And it's kind of a single player experience

today going into E-Trade. So what if we could build a multiplayer experience? And Yannick, who's the CEO and co-founder of the company, was introduced to me by a friend. And I was talking to Yannick about like, what do you want to do next? And I realized that he was a really talented designer. And I had friends with this kind of brokerage concept, like what if Venmo and E-Trade had a baby? I said, well, Yannick, why don't we put you together? And we can kind of build this And I'll put some seed capital in if you'll agree to join the company. So we made the intro and the two sides hit it off. And the brokerage people liked Yannick and he liked the brokerage guys.

And we funded the seed round. And the product was out of the gate, really kind of elegant because Yannick had a whole, he's amazing on UI and user interface. And then he recruited his friend, Life Abraham, in New York, and they met at Precursor. So the two of them became co-CEOs, teamed up, and then we've been off to the races. And sure enough, the investment thesis behind Public was you couldn't beat Robinhood playing the same game Robinhood was going to play, which is spend hundreds of dollars acquiring users on Facebook, that wasn't going to be a sustainable long-term differentiated strategy.

So you had to build something that was social, that had an advantage cost of customer acquisition. And it's hard to build social applications. I mean, there are very few successes in the world, but when you get it right, they really, really scale because they go viral and your acquisition costs are lower. And what we've seen in the past year and a half is that play out. I would hazard to guess that our customer acquisition cost is one-tenth what Robinhood's customer acquisition cost is. So when you think through that, the actual acquisition costs being lower is one advantage. Are there other advantages to having the kind of social component or conversation that you think about in terms of retention or something I've become more interested in, which is maybe

the type of buying behavior, right? So incentivizing, whether it's more day trading, more long-term investing, somewhere in between, and any kind of insights into like the other benefits to those features? I think that people, there's more trust. and i don't know how to quantify that but and it's still early days right i mean we're talking million users ish platform we're not talking billion you know 100 million yet so we'll see how it how it is when it really scales but um you know the uh the trust is a big deal because when you come into a platform and you see people you know and i'm i get texts from my friends on public. Now it's become the fourth network, Instagram and Facebook and that

universe and Twitter and that universe, more recently Clubhouse and what's going on in Clubhouse. Now I've got my finance feed, which is really where I think for most people, most of their net worth that in their house, it's going to be in stocks and bonds. For a retail investor, having a feed around that information is going to be really important for one, trust, two, idea generation, and three, engagement. And what we do see, we have a lot more engaged users because they're using it to communicate in addition to trade. We've got an advantage customer acquisition cost. We're getting people who come in and fund relatively instantly. And then they build an interesting and expansive portfolio because they're following people and

getting ideas from other people in the platform. I think that specifics about what you trade and what you buy is going to be finding your own tribe inside of this platform. And people are going to follow the people they want to follow. And I think ultimately, there will be GameStop users in one corner, and there'll be people who buy Berkshire Hathaway in the other corner and never look at it. And that's fine. When you think about kind of this type of product, is it a winner take all in the sense of maybe not on a market sense, but you as the user, you're only going to use one or is this going to be something where you'll be across multiple products? And so having the differentiation can actually be pretty important in terms of you're not so much competing just on

a binary basis do i get the user do i not maybe actually what you're doing is you're kind of competing for uh you know mental share or time share uh of that actual user um it's it's going to be the latter not winner take all it's going to be you know you're going to have different accounts for different things um there's a couple interesting well one interesting non-public data point. With Plaid, and I forget the name of the company they bought, but they bought a brokerage login service at Plaid. You can authenticate your Plaid account to services like Atom Finance or Toggle. You can get portfolio analytics and alerts of my portfolio up, down, their news, insights around technical measures that are happening in my portfolio.

We happen to have invested in both of those companies, by the way. And the feedback we get is, well, we've got 100,000 authenticated users from Robinhood, but they've also authenticated their other accounts. I said, oh, that's interesting. How big are the Robinhood accounts? And where are they? What's the cross section? Where else do Robinhood users have accounts? Most Robinhood users happen to have two and a half other accounts. And those other accounts are a lot bigger. So from a market share perspective, there's two things that have happened. Robinhood has become kind of a play account for a handful of people. And they'll have Fidelity or T. Rowe or whatever for another account. And the second piece is we also look at

kind of new entrants into the trading market. And what is your market share of new brokerage accounts created annually in the US for first time customers? And for a while, Robinhood was over 50% of those new accounts. And it looked like they were going to become more of a winner take-all player. Because if you're growing faster than the market and you're acquiring half of all new brokerage accounts in the US, you're doing a great job. And in just the past couple of weeks, that's been changing. And I think we'll see. Because the market structure isn't final yet. And every day, there's new people who are either aging in or coming into the market. And, you know, I think you've seen with other platforms that if you can build something that's really social, it can be quite durable in these competitive markets.

So when you look at this, what's very fascinating to me is you very quickly pointed out the annuity business and payments. it seems like from the surface, everyone has tried everything in brokerage. Do you evaluate it the same way or are there things that you say, nope, we're looking for, you know, kind of X variation or X kind of application when it comes to brokerage? Everybody's not tried everything yet in brokerage. I figured that was going to be your answer. Yeah. There are a lot of good ideas that haven't been tested yet. I don't want to leak the public 2021 roadmap on a podcast, but there's a lot of good stuff coming.

Okay. Are there things that maybe are other parts of the brokerage market that are outside of what public would go after that you're looking for? And really just if there's a founder working on something that could be a potential fit, they can reach out? I think ultimately, you think about this as a retail investor wealth management platform. And there will be at some point crypto and alts. And we're also in Yieldstreet, which is the other side of the alt universe. And it's so interesting, like you should have today, probably three or four different. I mean, if you're an accredited investor, if you're not a credit investor, if you're various levels, you should probably have a couple of different accounts. And I'm

curious to see if public or Yieldstreet kind of get closer together over time, or if they go into even more esoteric, unique verticals to just kind of one's going to own alt and one's going to own public equities and crypto kind of sits in between in a bit because you'll have crypto lending as as a high yield asset class perhaps in the future on a yield street but you'll have the actual crypto assets on on a public brokerage got it that makes a lot of sense uh before we wrap up i always ask everyone the same three questions uh and you'll get to ask me one to finish up the first is uh just what is the most important book that you've ever read uh and i'll expand it a little bit for you because it sounds like you read all kinds of different data points all sorts

of reports so maybe it doesn't have to be just a book but just the most important piece of content that you've consumed no i i love science fiction and this is probably the not a great answer but um I don't know like the Isaac Asimov Foundation series I loved that um it also depends like I read that at an age where it I it had quite an impression on me too and one of the interesting takeaways from from that series is that the technology you build to sustain yourself and in And in his world, there was a universe of people who built things that were really big and expansive, and another universe of people who built things that were very small. And they think about the United States and the way our country has evolved.

And there were these really big projects like the Hoover Dam and the highway system. And there was a time in our country's past when people had those types of big projects. And then for a really long time, it was, you know, microchips and nanotech and biology and things that were very small. I kind of like, well, this really interesting around how in 1951, a science fiction author could kind of dream ahead about the way that society would evolve that way. And I was I thought it was really fascinating. I don't know that it's necessarily the most important book, but I thought it was really an interesting book. Um, I say it's not the best answer, but that, that it that's, uh, it's okay. It's the one that is impactful, right? Which I think is, uh, is one element of importance for sure. Uh, the second question is, uh, from our friends over at eight sleep. Uh, I've been sleeping on their thermo

regulated bed for a while now, uh, make it ice cold and sleeping a little baby. And so I've become a convert of the sleep religion when then the past I was not, uh, what's your sleep routine? Do you sleep, uh, five or six hours? Are you more like eight, nine hours? And how has that evolved over time? Um, so I am, uh, in probably a seven to eight hour a night post COVID sleeper. And I say it's very specific because really, since we went work from home in March, my sleep has been amazing before then.

because i i live just outside of the city in um in larchmont it was it was like oh god another hour to get home and then you're trying to find time so i probably was sleeping like six or seven hours and it's a life-changing difference to get an extra two hours a night of sleep um yeah two hours of sleep if you had told me a year and a half ago i would have been like ah that's like what's two hours now uh 30 minutes can be uh can be pretty impactful let alone two hours yeah and i've got two little kids too so sleep is precious around here i hear you uh the last question is a little bit more fun uh aliens are you a believer or a non-believer and and this is like aliens like however you want to define it lever things coming out of your chest or this is like somewhere

in this whole universe there are going to be other intelligent life forms because i ever wanted to define it i'd say i believe that somewhere in the universe there are other intelligent life forms yeah i i don't know that i will live to see any of them and i i highly doubt that i will but i just believe they're out there so i'm uh i'm in the same boat uh i guess that leads to the question of, do you want to live long enough to meet them? I want to live forever, but I know that's going to happen. Maybe my, maybe my conscious will be uploaded into the cloud and virtual Ian will meet them in the year 2,500. That's a good way to look at it. Uh, you could ask me one question to, uh, to finish up. What, uh, one question do you have for me? Um, who's the, who's the favorite

interviewer you've had on your show i don't have one i mean come on it's oh come on now okay which one of your two kids is your favorite right like depends on what day it is okay i'll ask you i'll ask you a separate question uh i realize you but what's the most interesting question anyone's asked you when you gave them the chance to ask you a question um there's been a lot of uh people actually really bad asking questions, as I'm sure you have figured out as you talk to so many people. There's two types of people who ask bad questions. There's the just lazy, what's the thing that would be the most obvious thing to ask? And then there's the second group, which is they ask questions

that don't really have a purpose or like a conversation thread. And so sometimes people will ask me, you know, what's going to happen to Bitcoin or like, you know, something like that. It's like, I have no clue, but by far the best ones are always the more philosophical questions. I think that make me critically think about like why something, right? So it's, it's less about like what's going to happen to Bitcoin, it may be like, why do you think it was created? Or why do you do what you do on a daily basis? Or, you know, you've said X, why do you believe that? And I think that it goes back towards it, like the Toyota, you know, ask why five times, I think is a really kind of timeless principle. And so just people who kind of pull at that is-

Let me, let me ask you a question. I've got a better one. Okay. Um, you know, when we looked at like sports betting sites and eToro back in the day, when they were doing only Forex and, and even the very first round of Robinhood, it, it, when I, when you look at their revenue, all of those companies have revenue that is directly correlated to their customers' losses. The more their customers lose, the more money they make. And I looked at that and I said, I have a moral problem with that. And I was on an island inside of Graycroft, advocating like, guys, do we really want to be investing in things that entice people to do financial actions or bets or whatever it is that the owners

of the properties themselves know are not in their customers' best interest? And I know you've interviewed a lot of people who are in this world, who run sports betting sites, who've been involved in, you know, Forex trading platforms and new retail brokerage stuff. Like, do you have, what's your take on the moral authority of the media? And is it buyer beware in your world? Or do you feel like you've got a responsibility to people to let them know at the end of the day that, you know, day trading is going to result in losses? And what's your view? Yeah. So I think there's kind of different elements to this based on which market participant we're talking about, right? So like the requirement or the expectation of the media is different than

the platform owner that's different than just a commentator versus a trader, if you will, right? And I think that let's just focus just on the companies themselves. I do think that there is much more sustainability, like it's actually better for business to align yourself with your customer, right? So sure, you can make money with, if it's something where your customers are losing money, but ultimately, like, they don't want to lose money. And so they're likely to go somewhere else. Especially if somebody can build a better model. The second thing that I think is, you know, kind of left out of the conversation is, there's almost variations to if you do have a business model where it is predicated on your customers losing money, just explicitly stating that,

right? Like, like, I think the part where it gets really bad is when you start to compound issues. So it's like, okay, one, you've got a business model that is antithetical to what your customer is trying to achieve. Then on top of that, you don't tell them. And then on top of that, like, then you, you know, make it even easier for them to lose money or what it is like, you start to stack stuff on top and it just increases the, the odds that you win, they lose. And so I think forgetting finance, just in general, I think the most sustainable business models are where you help your customer achieve their goal, uh, and figure out how to make money around that. Um, you know, finance is this weird thing where the entire industry almost feels like, uh, people

are very, uh, kind of zero sum, right. You know, in markets, et cetera. But I think that that's changing, right. I think that companies are starting to wake up to the fact like, Hey, if I want a sustainable business, probably should figure out how to do this in a way that, uh, that doesn't screw over the customer. Yeah. We we've been working at Greycroft really hard on that. It's not easy. And it's a story that doesn't get a lot of press, but we have avoiding platforms that trade against your users, for instance. And in crypto, there's even exchanges that will take the other side of trades. So, right. All right, Ian, listen, thank you so much for your time. This is fantastic. You're incredibly thoughtful. And the track record speaks for

itself. Where can we send people to find you on the internet or find out more about what uh, Graycroft is working on? So, uh, our website, graycroft.com. You can follow me on Twitter. It's my last name, Sigalo. And, um, uh, if you need to reach me, my email is Ian at Graycroft. Awesome, man. Listen, thank you so much for, uh, for your time and we'll have to do this again in the future. Thanks. Take care.