The Pomp Podcast - #563: Kevin O’Leary on Investing in Bitcoin and Crypto

Episode Date: May 24, 2021

Kevin O’Leary is a Canadian businessman, author, politician, and television personality. He is a Shark on ABC’s hit show Shark Tank and has had numerous previous business successes, including when he sold The Learning Company to Mattel for $4.2 billion in 1999. In this conversation, we discuss bitcoin, gold, risk management, institutional investors, DeFi, yield farming, regulatory environment, ESG mining, energy consumption, and Kevin’s portfolio. ======================= Choice is a new self-directed IRA product that I'm really excited about. If you are listening to this, you are likely part of the 7.1 million bitcoin owners who have retirement accounts with dollars in them, but not bitcoin. I was in that situation too. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it too. Absolute game changer. https://www.retirewithchoice.com/pomp ======================= Gemini is a regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy bitcoin, ether, and other cryptocurrencies: https://www.gemini.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. Now, let's kick this thing off. Kevin O'Leary is a Canadian businessman, author, politician, and television personality. He's a shark on ABC's hit show, Shark Tank, and has had numerous previous business successes, including when he sold the learning company to Mattel for $4.2 billion in 1999. In this conversation, we discuss Bitcoin, gold, risk management, institutional investors, DeFi, yield farming, regulatory environment, ESG mining, energy consumption, and Kevin's personal portfolio. I really enjoyed this conversation, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors.

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after you trade $100 or more within 30 days. Again, open a free account in under three minutes at Gemini.com slash Pomp and get $20 of Bitcoin after you trade your first $100 or more within 30 days. Go to Gemini.com slash Pomp. All right, let's get this episode with Kevin. I hope you enjoyed this one. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by pomp or his guests as a specific inducement to make a particular investment or follow a particular

strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. All right, guys, bang, bang. Kevin is here in person.

How long has it been since you've done one of these in person? It's been a while. I mean, we're, you know, Miami's kind of fully open here. So here we are. all right where do you live are you living in miami now i am i live right on the beach

right on collins avenue i love it i love the bohemian lifestyle i walked everywhere i eat dinner every night i just love the place uh i've seen you multiple times riding your bicycle we've gone to dinner you've ridden the mr wonderful bike there yeah did you recover it somebody stole it so it got stolen all right a big uh big operation they stole over 100 bikes that night and Vespas. Oh, so this was not a targeted crime. No. Well, I found out later, and I offered a $25,000 reward, not for the bike. I wanted to catch the guy that did it. So they're an organized crime organization, and they put it in a truck, and they put the truck on a barge in the river, and they took maybe 250 bikes that night off the streets of Miami. And what do they do with them?

They apparently sell them, they take them offshore. They put it on a ship and just... So my Mr. Wonderful is in some South American country right now. And Vivo, the bike company that made it for me, saw it on social media and said, let's do another one even crazier. So I was there last week designing the craziest Miami bike you've ever seen. It's pink. It's red. It's black. You don't have it, though.

When you see it, I'm going to be Mr. Wonderful a la Miami. All right. I feel like you've done a great job. Shark Tank, all the social media, CNBC, et cetera. you build this massive audience. How do you think about that stuff versus like the investing activity? Do you still spend a lot of time investing or is it more so now you've got the investments you've got, you've made those investments and now it's more of the media focus and kind of the content? I think a new model is emerging and you're actually part of

this new model. And let me explain the way I see it over the last 24 months. So let's take a company that is trading, MindMed. When I got approached with that company here in Miami at the Soho Club second floor it was a bunch of crypto guys three years ago one guy there named jr ran said look i'm a kryptonian however i also have a great interest in psychedelics as medicine i said you're crazy those are illegal drugs lsd is illegal schedule one narcotics same as cannabis psilocybin all of this stuff he said no no i'm going to go to the fda form a company and do clinical trials there's no recreational use of this and you know i want three million bucks And I said, you know, it's too crazy, but I'm going to, my guy, Alex, who does, runs O'Leary

Ventures, he's got a team. We'll do due diligence on it. It's intriguing enough. That was three years ago. Alex worked on it for about two months and he really went to town on it and did a lot of research with his guys. And the way my deal with Alex works, to give you an idea of how this works, so I probably told you this. I already know, but go ahead. Okay. So when we do an investment, you know I'm the bank I lend him 15% so his you know what's are on the line he borrows the money for me and invest beside me he gets his own stock but he owes me the dough 15% so that I know our interests are aligned this is the first time in history on mind mid where he came back to me and said I'm taking your 15% and I'm tripling it with my own dough and I went what why and he laid out

his case we ended up investing that went from a 20 million 20 million valuation that we bought in at to now 1.7 billion. So it's my biggest winner in years. But those are the kind of investments. And how did that story happen? This is where social media intersected with the story of Mind Man. It got into the Rolling Stone. It was in all the news magazines. It was in the popular press. It was all over social media because I was talking about it along with all the other advocates. And the story built into a giant company that has over 300,000 shareholders. So my new model, pomp is this. You want me to get involved in your business, all right? I want a proprietary position. I don't care what your last round was at. I want to be a founder. So you're going to

give up the stock, but then I'm going to turn on my machine. And if you have a story of merit, I will explain it to other shareholders, and hopefully we'll build this business together using all the tools the new world has. Shows like this, social media, Yahoo Finance, Benzinga, CNBC, CNN, ABC. That's how companies get to be known, not just for shareholders to tell their product story. Why should you care about microdosing LSD? Because it works, or at least it potentially can, and it's going through clinical trials. And it can solve for addiction, opiate addiction, anxiety, alcoholism, all these things. Is there a specific type of company that this works for more so than other types of companies? Does it have to have some inherent story behind it and

some interest? And that's really what you're trying to underwrite just as much as the actual investment itself? It's a great question, but the truth is every company has to be able to tell their story in the best light. I don't care if it's a really sophisticated technology. I mean, it's much better when it's consumer good or service. But right now, the reason crypto is of such interest globally is the story was told by guys like you for years. And it slowly emerged as a story of, you know, store of wealth, if you want to call it that, or a currency, if you want to call it that, whatever it was. It's the fact that investing has become democratized by the Robin Hoods, by the Reddit crowd, by all the news channels, by the cable channels. Business is part

of everyday news every day. And so if you can get a following that is interested in your investment philosophy, I invest sustainably, ethically. That's what I do. That's where I came from. That's all I do. And people that are interested in that follow, they don't have to invest with me. They can bet against me, but at least they hear these companies' stories. So my argument is that the value I have to a company now is the ability to take its story and blow it up. And then investors will make their own individual decisions. But that's very hard to get to that place. And it's taken me a long time as it has taken you. And I want to use that power wisely. When you think about public markets versus private markets, how much of this is better

suited for public markets where there's liquid stock price, there's shareholders, people can make decisions every day to buy, sell, hold, whatever, versus the private market where there's not so much access for some investors, right? There's not that liquid kind of daily stock price. And maybe the impact is more around like helping the business built in terms of getting customers or driving, you know, consumers to check it out or whatever. Is it either or, or can this work across both public and private markets? It's both. And the most powerful platform to tie these together is equity, you know, crowdfunding now, where you can tell a consumer of a product or service that you can become a

shareholder at the same time. I'm very intrigued by that. I have a relationship with StartEngine now, one of the largest crowdfunding platforms in the world. So when a company has 100,000 customers that have tried its product, it's still private, we can go to the customers and say, look, you love our product, you love our service. Now we're going public. You can buy our shares. You can buy them online. You can put $200 or $2,000 or $20,000 into the company that you've supporting now for five years and that's this is again another digital you know crossroads of equity and funding and debt to the consumer which doesn't have the same issue around timing like a private equity firm does or a venture capital firm where after seven years they turn into a pumpkin

and they want a pref share and they want this and they want all these special rights i'm not into that anymore i'd rather do you want to raise 50 million let's do it in equity crowdfunding where everybody owns the same share, all the interests are aligned, there's no time bomb. People can buy and sell their stock anytime they want. And so for me, it again goes to the platform. What I try and do with my companies that are private is get them customer acquisition costs, get theirs down.

And I use my platforms to talk about their products and services. I try to get people to try the products. But at the end of the day, I feel a responsibility. I don't endorse products I don't use personally. I think that's bullshit. and I think people can smell bullshit a mile away. So I never do that. You know, I do things that I use, I like,

or I invest in and I tell my story and you can either agree or disagree. But at least I get that mega bullhorn to get out there and talk about it. Yeah, when you think about your career building up the media side, there's a lot of people who listen who they're very interested in this

and more so founders are interested in this as well. So one of the big secrets in venture capital right now is almost on a daily basis, I have a founder that comes to me and says, how do I build my Twitter following? How do I build Facebook? How do I build Instagram? You know, should I create an email newsletter? Like what should I do so that I have the same power?

Maybe it's at a smaller scale, but I can talk directly to an audience that's in my vertical or in my industry. And I think that there's a lot of kind of value that can accrue there. What are the things that you did that you're like, these were the big inflection points, right? Obviously Shark Tank probably was a big one, but are there other things that you're like, this is how I built this massive platform and kind of made a name for yourself where people were willing to at least listen, hear you out? What I found worked as these, you know,

it's a, it's a complex question because I get the same question all the time. How can I get a million followers? Well, it's not that easy. I mean, there's people that try and sell you services to do it. There's all kinds of consultants to try and do it for you. They want you to pay them 15 grand a month. All that stuff happens. But the truth is that social media is, is the great democratizer of people that are good storytellers. Because if you have interesting information that may assist somebody, or they may find interesting, they will tell another about it. They will send that link to somebody else. And that actually, that organic growth occurred pretty quickly for me. It started, you know, 50,000, 100,000, 200,000, then a million, and then another million.

And I never changed. I mean, I like to have fun on social media. You know, I'll play guitar with my pajamas on on Saturday. I'm happy to do that. People who play guitar like to do that, you know, just share it. I talk about stocks. I talk about bonds. I get very, very serious about issues around politics.

I just lay it out there. And it's all true. And I don't bullshit. And I think that's what worked for me. But I'm very happy to be in different verticals. You know, I can talk about watches with anybody in the world now. I have a massive watch collection. I used to be a shareholder in Fender.

I can play guitar. I have Chef Wonderful. It's a multi-million dollar business now. My wine business is now the largest direct consumer in the country. Really? Yeah, yeah. We just did 5.1 million in 20 hours on QVC last week. That's an all-time record.

So these are different verticals that interest me. And there's different constituents that come into your universe around those interests. I got a huge following of people that like wine. Tell me more about the wine business. I don't know anything about this. Yeah. so you know here's something interesting that I learned I I grew up with a Swiss stepfather who's really taught me in my teenage years how to you know the difference between Bordeaux and Burgundy

and DRC and the Italian wines and all the varietals and I became interested and over in Europe you know wine is just part of family it's not about getting drunk over there they just drink it you know maybe one glass or two glasses not a big deal so kids drink it watered down whatever and so I became pretty proficient at the different varietals. I always was interested in why, you know, I'm a collector of wine and an investor. I buy wine futures with a group in Boston. We invest millions of dollars in wine. And we try and guess which varietals, like this year's going to be terrible because it snowed just last week in France. It actually snowed. It's unprecedented. And the point is, when you get knowledgeable about it, you get kind of sucked into that lifestyle. So I started

a wine business in california where i blended it and i sold it and um i was losing money like everybody else like a lot of money everybody goes into it romantically and i'll joke if you want to be a millionaire start as a billionaire in the wine business because you lose a ton of money and then i met this woman um through shark tank named annette alvarez she was the wine buyer for costco the largest buyer of wine in the world is costco people don't understand that all the global wines. They are the largest seller of wines as well. And she said, Kevin, um, I was trying to sell her a Shark Tank deal of single serve wines. Nobody could ever reach her. She was impossible to get to. And I asked one of the guys in my office to go to the dark web and hack her cell

number, which I had in 10 minutes. And I called it and I left a message. And, um, I said, listen, I'm the guy on Shark Tank. If you were a Shark Tank fan, I don't know. You saw that deal last night a single serve wine deal human and i went into and i'd love you to costco to to uh this is the cupola wine or whatever it was it was the yeah and there was another one called zips as well and so i left the um the message and i thought well maybe she'll call me back 10 minutes later i was up at our lake house the phone rang it said this is annette alvarez i got your message you were rude to barbara last night on shark day i went what what she said no you were really rude to her and I said, I got to tell you something, Annette, the only reason Barbara gets to Shark

Tank on time is I buy her a new broom every year. And she didn't think that was a funny joke. But we're over to with it. Yeah, I know. I thought she'd like that, but she didn't. And anyways, we got into a conversation. She said, I'm on my way to Hawaii for our annual holiday with my husband. I'll be at John Wayne Airport at one o'clock on Saturday. It was Thursday night. And if you want to fly here to meet me, you can bring your wife because I want to meet your wife to. I said, why? She said, I just do. And I want to see a real person. And I said, Linda, we're going to John Wayne. And we flew there. I got an hour of her time and she told me this. She said, look, you want to sell wine with me? I'm the largest buyer on earth. The only reason you get this

hour with me is I'm a huge Shark Tank fan. I have some questions about the show. I'd like to meet you. It's great. But here's what you need to know about the wine business. 97% of wine sold in America is sold for under $14 a bottle, 97%. People don't understand that. That's all of the wine, Pom. That's basically, the stuff you buy for 60 bucks, you're in the 3%. In order for you to make money, you're going to have to be able to ship me 150,000 cases a day. If I order a cab from you, I need 150,000 cases. That's just my stocking order. The next day, I need another 100,000. You can't do that. You don't have the capabilities. You don't have the logistics. You can't even understand how much juice that is. If you want to pull that off, I'm going to give you

the name of a guy named Pat Roney. He owns 19 vineyards and he makes our Kirkland wine. He is our logistics guy. He can ship me 2 million cases. You form a wine company with him, you go 50-50 partnership, then I know you have the logistics skills then, then I'll give you an order and it'll blow your socks off how much wine we can buy from you. I go to see Pat and Pat says, I know you're coming. Annette called me. We're interested. Let's form a relationship. We fought for six months on the terms of it. It ended up being 50-50. It has been wildly successful because she was right. The minute we dropped our price point between 11 and 14, we started selling hundreds of thousands of cases. And last week I broke a record, never been done before on QVC. We sold $5.125 million

worth of wine in 21 hours. That means we have to ship a quarter of a million cases in two days. we can do it. But that's a business that's very profitable now. In fact, a SPAC took over that company. I'm now a shareholder in Vintage Wine Estates, and it's going to trade on the NASDAQ June 6th. Wow. And so you also do direct-to-consumer as well, or it's just- Absolutely. Launching a new site. It'll be announced next week, so I'm a little early on it here, called Shop Mr. Wonderful. And it's going to have not only all my wines, but all my Shark Tank products. So a massive play direct-to-consumer as a result of the pandemic, organized by a great digital team a lot of work going into this it's it's like extending the voice

pop as we talked about the beginning of the show i you know what do i do with this voice these are products i invested in i use wines i make my wife blends the whites i do the reds this is our family stuff try it it's a very it's it's an honest pitch if you don't like the wine ship it back i mean you know you can send it back if you want but when it comes to wine i've got your back nobody makes one like i do yeah uh crypto i think when we first met uh three years ago maybe now yeah uh cnbc set i didn't know very much about you other than how this guy on shark tank yeah uh i don't think you knew anything about me and i told you that at 50 of my net worth in bitcoin i thought you were fucking crazy and uh well that that's a nice way of putting it because i think on the segment what

you said was i forbid you i forbid i remember we were on the set of squawk box and i thought who is this idiot yes why would he put so much into one thing and uh and you didn't realize that uh i think i was playing a game with you and you were playing a game with me because uh right before the segment started uh they were at commercial and we were all talking or whatever and uh i was kind of jabbing you a little bit trying to get you to to be excited and then you you said to me right before so you said how much you know do you have in this i said 50 the lights cameras turn on and that was the first thing you fired across well i mean those that was then and but in 2017 i had nibbled in i'd start buying some bitcoin and some um you know ethereum at that time and a couple of other i

think u.s uh i can't remember when i bought my stable coins but you know what happened to me because i'm in a highly regulated industry with with you know all my indexing and all these financial services companies that i'm invested in so i'm really regulated by the regulators and i started talking about crypto and whoa what a negative response back then you remember it was it was especially 2018 when it had dropped from 20 000 bitcoin price to yeah 3 200 so i got my wings clipped pretty pretty hard by lawyers in washington saying you got to stop i mean you're you're you're a heavily regulated guy and you're out there on tv talking about bitcoin forget it what and you talk about as much as you want or not but like i think

a lot of people think uh elon tweets something or there's somebody who is really bullish who all of a sudden is a little bit more bearish and uh they call the tap on the shoulder right the like hey knock it off type thing yeah is that like uh you know goes through the back door conversations somebody just says hey you know you should chill with that or is that like something that is uh kind of more uh stated right in terms of the way it works is i i i have to be compliant as per the compliance officers that work in these companies every single word i say including this this podcast is going to be reviewed by compliance and these are organizations i have to be compliant with because they have to be they're telling the regulators that we are compliant

and they have to make sure that's their job yep and so i i started getting calls from lots of them and different companies saying you're way off side and you've got to stop and i did and i you know um what happened though if only it was only eight months ago uh when the swiss regulator the french regulated, the German, New Zealand, Britain, Switzerland, and Canada, they started putting ETFs out. The regulators had gone 360 or 180, whatever you want to call it, right? And I said, well, wait a second. I'm an investor in those jurisdictions. I have investments in all those jurisdictions. I'm a global investor. I have investments in all those currencies. I am going to buy some Bitcoin as I can in those jurisdictions. We don't have it here yet the same way,

but it's coming, I would assume. And obviously the regulators have lifted their curtain or made it easier to do that. And so I started growing my position to 3%. I'm in the operating company. So we have 5% in gold, for example. I said, let's go crypto to 3%. And we started buying coins and we started buying ether and we started investing in a few other things. And then I started getting calls. And I think I've talked to you about this. I service institutional clients and sovereign funds. And they saw me on CNBC talking about my 3% weighting and the phone lit up. It went nuts. And what was it about? It was about ESG. It was about this issue around sustainability and saying, where'd your coin come from? But they were mine in China. I said, well,

who cares? It's all fungible coin. Bitcoin's a Bitcoin. It's awarded. It's a coin. They said, well, you're supporting coal-burning miners. You know, this issue, I predicted, would explode, and I think I've been right on that thing, but it hasn't changed my interest in going long Bitcoin for a bunch of reasons, because I've gotten a lot more sophisticated now. What interests me the most right now is DeFi.

I think it's where the puck is going, and I'll tell you why. So now I've got a large amount of capital tied up, 3% waiting in the operating companies, a lot of capital, and it's not yielding anything, right? So why don't, so I said to my guys, let's get into some DeFi and take a portion of the assets and wrap it into the Ethereum chain and let's start making some interest.

Let's start looking at different ways that we can loan our assets out and start making four, five, six, seven, eight. You and I have talked about this. I have gotten way down that rabbit hole and I'm way deep into that now. What's up guys? Bang, bang.

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or airline miles. I'm an investor in the business and a very happy user. I think you will be too when you go to BlockFi.com slash Pomp. Again, BlockFi.com slash Pomp. Go check it out and let me know what you think. All right, let's get back into this conversation. I hope you enjoy it. So let's stop for a second just so people understand where we are.

So you got 3% of operating company assets, right, in crypto. You've got 5% in gold. First question is why still 5% gold, 3% crypto? I think a lot of people who've kind of gone down the rabbit hole of crypto either invert that, right? So it's 5% crypto, 3% gold, or like literally have gotten rid of the gold. So why still have more gold than crypto right now?

You know, it's a great question. And we've had that discussion internally. We do our meetings every Monday at 10 o'clock. We review the portfolio changes, et cetera. I know there's going to be a change there soon because it comes up every Monday now. Because we can't make any interest off gold and we now are starting to get yield

and starting to make money. and the weird thing as you well know we've had tremendous volatility on bitcoin this last 10 days that actually enhances defy it makes it better i'm making way more on my contracts now and so you know i said to the guys look um and this is you know brand this is i haven't even told anybody this story it's just unique it's on your podcast because it's so new um you only bring me the good stories well you know we talk about a lot of stuff so i said to the guys on the on my crypto team look um this d5 stuff is really complicated it is not easy you know we've got the metamask format we've got all of these other platforms all the stuff we have to do these

contracts this is crazy complicated but there must be millions of people that have a little bit of coin that want to make some four or five six percent on it why don't you go find me a company, a team that I can invest in that will do a commercialized DeFi. And I mean, not, not corporate so that somebody that has a wallet that's got maybe, you know, 20 grand or 10 or $5,000 in it could easily do what I'm doing. That takes a staff of four people. You're basically talking about more user-friendly, better user experience, an easy way. Hey, I elect, I want to do this. And rather than me actually have to go in and do it myself, I can use this service to accomplish this yeah and so they came up with this team again it's in a

different jurisdiction because it's canada which is very open these days a vancouver team that one of my crypto guys uh introduced me to ben is the uh you know and he's got a great almost 20 people they're doing this that they're all ex-bankers they understand the whole format they're they're deep deep deep into the algorithms and all the code they're writing and they said look we're we're looking to raise some money here. Um, uh, do you want to be an investor? And I said, yeah, I'll take this on. I'll, I'll, uh, but I want to buy a third of the company. I want to be a significant shareholder. And we negotiated for a while because you're going to be, you're going to do two things for me. I'm going to help your company, but I'm going to give you a ton of

capital and you're going to manage it according to the way I want to manage it. And you're going to produce things that I want because I know if I want them, others are going to want them like tax returns. I want to press a button and get a tax return. I want to be compliant. Nobody does that yet. I don't want to have to sit there with an accountant and figure out all my trades. I want it automatically produced. He's working on that. His team is working on that. We put a significant round together for them, a $20 million round. I'm the lead on that thing. And I think it's going to be a great company. We haven't even announced it yet. It's called D5 Ventures. I'm going to rename it to WonderFi because it's going to be my vehicle. And I think

it's just the beginning, some great things to come. So when you go into DeFi, what exactly are you guys doing? You're taking Bitcoin that you own and Ether and earning interest? Here's what I want, Paul. I'm an investor. So there must be many other investors like me. I've made my decision to 3% to 5% allocation. Probably as you snuck out of me, I'm going to be moving it up because you're right gold's not doing anything for me and well three plus five is eight not five so you could get rid of all the gold could get to ten okay all right but you know we're bound by certain covenants just how we manage the operating company 10 i feel like is on the upper bound of most conservative investors right so it still fits within the kind of bands if you

will if you're a conservative investor most of your focus is outside of crypto yeah one to ten percent is kind of the band's up there paul five percent institutional investor ten is up there Right now, that number for the big guys is 3%. They're happy, and they want Bitcoin. They haven't gotten past that yet. Bitcoin is the property, the digital asset they want. It's a store of value. Store of value.

And you've been right on that. Can't deny that, okay? It's a volatile. Whoa, we might have to roll the tape back there. You may have to erase that. But my whole point is it has inherent volatility. But imagine, so here's my thoughts about DeFi. okay, I've got the vol. I know I'm going to be up and down 38% a year. That's what it's been

historically, right? So we're seeing that. We've had a crazy vol right here. We're literally recording this on a day that it's been down 40% in a month. Okay. So let's say in my case, my DeFi company, of which I'm a large shareholder now, I say to the guys, look, let's put a bunch of crypto on our balance sheet, all right? I'm going to own a third of that balance sheet or whatever I own in the balance sheet. I want you to loan that out and get me between a 4.5% and an 8% yield. Now, of course, I have to mark to market the change in value because it's going up and down. But I'm kind of agnostic because I'm owning it as property.

I don't really care because it's an allocation. Let's say it's 5%. It's going to stay at 5%. I'll change it every quarter, adding or taking away from it. But I want you to loan it out there. So the whole operation, the DeFi operation, is to start doing these contracts for me on an AI basis so it can go look to the market, see what the spreads are on all these different opportunities.

I don't want to get too complicated with it. It's basically yield farming. What you guys are going to do is yield farming. And then others that are interested like I am on taking their asset, and imagine if I could have over these years had a 5% yield on my gold. That would have been incredible. Well, I can on my crypto. So that's really what I'm doing in DeFi.

And I think I've got the best team in North America. Everybody says that. But I'm backing this team because I've done a lot of due diligence on them. And I think, you know, in the next few months, that will become part of our portfolio with a yield metric to it. So because what you're basically saying is you're going to keep the assets denominated in the asset, right? So let's say just for easy things, you have 100 ETH, you put that in, you want 8%, so

now you're going to end the year with 108 ETH. Staying in ETH. regardless of did the price go up or down i might go back to fiat to just pay some expenses but i'm going to stay in eth on that balance sheet and you as a shareholder go with me in the share price as my assets grow do you think that because this is a really important piece that i think the traditional world hasn't woken up to yet sounds like you're now getting there is um once you leave fiat into crypto yeah you don't go back i don't want to go back okay why would i well i don't know you tell me how do you think about it right so you've got 100 of your assets you've

said i'm going to take three i'm going to put it into crypto yeah uh maybe that goes up maybe it doesn't whatever but let's just say it's three to five percent whatever the allocation is once you put that into crypto why are you not going back well the reason i would come back out let's say let's say our covenant is a max on 10 which at most institutions that is max arena okay all right so 10 is the max allocation because because if you're going you know you basically if you have lps or you have other shareholders or you have other constituents you've told them you have a covenant of diversification and it might be 10%, whatever it is. But it's not much higher than that. So when you get to 12% at the end of a quarter in your crypto, you're going to trim back

to fiat. You're going to go back to 10%. Or maybe, and then you just sit in the weeds waiting for correction and you buy back up to 10%. I've been buying. You bought the dip. Well, it's not really a dip. It's maintaining the 3% weighting, right? Yeah. No, I'm saying the dip in the price. Yeah, I know, I know. But to me, it's, okay, we're at 2.4 and we said we're at three, buy up to three because we've had a correction.

You can't call that, that's a correction. We just did that. Well, I mean, look, in 2017, there was what? Six over 30%, I think, right? There was two 40% drawdowns. So it doesn't feel good, right? No, nobody likes it. When the asset draws down,

but it's not atypical for the kind of historical bull runs. Right. Right, which again, if you tell in the traditional world, hey, there's gonna be two 40% drawdowns, but you're gonna go up 20X in a year. They're like, I'm out. Well, they're like, I'm out of this. But in this case, you end up with more coin after that correction.

And then you're out loaning it out and you're getting your... And with that volatility, you just got 200 basis points more yield. People don't understand vol is good for yield. It's not good for your stomach, but it actually helps you mine yield from your crypto. And so when you understand those smart contracts and how it's being loaned out, and I'm getting way more sophisticated. So I look at it now with my team saying, okay, you know, you could even put leverage on this if you want, which we don't, but I think that's a crazy chicken move, but you could really

goose your heels. Why are you only targeting four and a half to 8%? Some of these can pay 20% or 30%. What's your duration? What duration? Well, that's what I'm asking you, right? Is it just, you're saying, Hey, I want to be able to earn the four and a half to 8% forever.

And the 20 to 30% is only there for a couple of weeks or a couple of months. Like how do you think about yield versus duration? So what we don't have is a long history of what that curve on duration looks like. You just don't have it. We're all pioneers in this. And because I'm a bond guy, I've been a bond guy for decades. And so what I look at is duration and quality. You can't work with that yet.

We don't know. So I said, look, let's keep our contracts short. Let's understand the change in the deltas. Let's understand how inefficient the market is when there's a lot of volatility. Let's just gather our own data. Keep our powder dry. Let's only loan out 50% of our positions until we understand how it works. And I should also disclose I'm working with some of the larger corporate DeFi guys.

I've opened accounts to manage some of my company's balance sheets. I'm putting up to 5% of our fiat currency into a strategy like this on our balance sheets. I don't talk about that too much, but I'm letting you know. I'm saying, guys, let's have an operating company that's sitting with $30 million in cash. Let's put $1.5 million into this strategy. You will open an account. You'll understand how it works. You're the treasury.

Let me show you how it works, how I'm doing it. Let's disclose to, if they're private, we just have to disclose to our LPs what we're doing. I haven't had anybody said to me, no, I don't want that. Everybody wants to learn. So instead of making nothing on our cash, which we're basically under inflation, we're losing money on our cash,

we're picking up, we're doing better than four and a half. That was a few weeks ago when coin was very stable. Now, today, you can get seven, eight, nine, as you know. So it's not impossible. And so I think it's true. Why only put 5% of the company's assets? Why not do more if it's just yield? You're not taking the price risk necessarily in terms of that's the goal.

Because the compliance departments are all in that, let's tiptoe in. You know the concern. It really is a 3% number right now. There are some at 5%. But here's the thing that everybody should understand, because I live in this world. The potential is huge. you've got less than one percent of global corporations even thinking about crypto right now so as time passes and they see examples of what i'm doing and others are doing and they start to

tiptoe in you're talking about billions of dollars that are sitting on balance sheets making nothing and so it's going to become that's good and bad news because the more money goes into that the less yield you're going to be making there's going to be a lot of competition and so but right now i'm tiptoeing through the tulips, you know, almost double digit yields. I think it comes down commensurate with the volatility. So here's the thing you got to understand. I don't want to get too complicated, but let's say when you put a lot of Bitcoin on your balance sheet, you're going to have vol, you're going to have volatility. The criticism of Tesla when watching, they showed on CNBC today, all the balance sheets that have, you know, crypto on it, they're all down because

people think, oh, woe is me. They've got crypto. It's going to affect their balance sheet. It does. But at the same time, they're loaning it out if they're smart and they're bringing in yield that they never used to make on their cash. So over time, when people understand this, it'll offset it. I think people, when they hear this, are going to be very surprised to hear that you're buying the dip, you're getting into DeFi, you're earning yield, right? Those are various, fairly sophisticated strategies compared to just buy Bitcoin, right? Or, hey, I want to buy a mining stock, for example. Because you're getting more and more in the weeds, right? And I feel over the last like two years maybe went from uh hey i probably shouldn't talk that much about this

to okay maybe there's something interesting to three percent now like hey let's start going further and further into the weeds where does this go like 10 years from now like if you just fast forward and you say okay hold on a second like there's a bunch of stuff that has to get built and get there eventually is it just 100 of corporate balance sheets or you know in digital assets and so there's digital dollars but also bitcoin ether whatever there's yield there's like all like a true decentralized financial system that gets built here kind of right out underneath to Wall Street? Or is there coexistence? Just like, where are we going, I guess? I guess what's happening is the money is looking for the most frictionless way

to actually be productive. And so the reason DeFi is so interesting, instead of paying those crazy 200 basis to 2% fees that these wallets are charging, I don't need those guys for anything. Maybe I need a ramp to put my fiat into Ether or whatever. But after that, I don't need them. And And I can go and do this for a fraction of those costs on a decentralized basis. What got me into this was we're always trying to find a place for our cash. Like when we haven't found an investment, we want some kind of yield on our cash. And right now we have a lot of cash because we sold a lot of commercial real estate just before the pandemic and during it because I'm worried about what happens to all that

office tower space. I'm not sure everybody's coming back the way they think. So one of the guys that works with Alex that runs O'Leary Ventures was one of our interns, Heavy Crypto. Eric's his name. I'm not going to tell you his second name so nobody bugs him.

But he came to me and said, listen, you got a ton of cash here. Why don't we start a fund, a structured product that does exactly what we've been talking about? And I said, why is it going to be structured product? He said, because in the jurisdiction we're going to put the fund

where you're going to invest the cash, they allow this. We don't allow it here in the US yet, but there's other jurisdictions like Switzerland and everywhere else. and you and you just report your gains to the irs as you said any other asset and he worked on it uh he went way down the rabbit hole on it and um he's still working on it it may still come to pass but in the meantime i said to him eric why don't you and alice go find me a

company that's doing this already i don't need to have a fund i got the cash let's just buy the company and put our cash on the balance sheet if we're a large enough shareholder we won't care and uh which is what we did and he so he found the company he introduced me uh to these guys in vancouver you know uh d5 ventures and i met the ceo and the whole team and i went wow and i showed other investors the team and said hey guys do you want to come in with me put this deal together and that's that's actually how it happened and along the way uh you know i ran into guys you know josh richards his partner animal ventures all those guys we all looked at it together and said this is cool so we're partners on it i think it's great i mean and he you know he josh is like

some phenom you know gen z guy that wants to be part of this and so i said okay who's better at paying stocks you or josh we did it we did it with wine the other day and he shouldn't even be drinking he's only 19 but i met his parents online he's a great cool kid and and uh you know griff his partner and mike michael gruen and all those guys we have fun together and uh i actually introduced him to the crew at CNBC. And I said, you got to get this guy on as the Gen Z guy. Like you're the crypto guy. I'm the institutional guy. He should be the Gen Z guy. He's very smart. I like him. And I said, you know, you want to come into a couple of deals with me? Let's work together and find some stuff. And he's been backed by some heavy hitters, you know? Yeah.

Oh yeah. I know the whole story. I think part of what's so fascinating is you have a lot of different worlds that collide, right? So you've got wine, you've got watches, you've got shark tank you've got uh commercial real estate you've got your traditional kind of businesses and investing uh venture capital and then you've also got crypto yeah and when all that comes together is it fair just to say like you're just looking for the best opportunities you would be right but you know i'm like you i want to enjoy what i'm doing i want to get up in the day and say everything that nancy's plotted for this day including being here with you i want to do it i don't want to do stuff i don't have to do anything but i want to do stuff and i love

working with entrepreneurs i just i like finding people and saying look don't do that because i've been there before it's a mistake do this or i can help you here i can help you here and let me come along for the ride and let me bring in shareholders that invest beside me and let's do stuff together i have a community of entrepreneurs that enjoy like you know i work all day and all night and i love what i do and i get up and play the guitar in the middle of the night i was wailing on the balcony the other day like two in the morning i know they're pissed at me on the beach but it was was just fun for a couple of minutes. You just enjoyed it. I enjoyed it. And so that, that kind of, you know, it's, it's like, uh, live your life as if there won't be another tomorrow and try and

make some money. Cause it's expensive. Can I ask you a somewhat personal question? Sure. I've never asked you this before. Do you have like a number in mind that you would eventually say, you know what? I've had my fun, but like, I am now rich enough where like, I want to walk away. Is there a milestone or is it literally you're going to die working and you'll just never retire. You'll never going to stop. I'm not, I'm not working for money anymore. I don't need anymore. I don't want to lose what I've got. Um, and there's always another watch to buy. And so, you know, every, the reason I do deals is in my world, you have to do a deal to buy a watch. So you remember what deal that watch was from and that's the collection. So I'm always doing deals to buy watches. That's

basically the way I look at it. So I got a, you know, a massive watch collection now. And that community is a very interesting global community. I've met some of the biggest collectors in the world some of the princes in the middle east i'm friends with them now because you know we were on whatsapp talking about different watches it's a great community to be associated with and when we find a rare piece uh you know everybody gets excited about it and it's just i don't know it's just interesting i enjoy it so what is it why are you doing it is it literally just to get a watch yeah you know it's a good question you enjoy it i i know you well enough at this point now i know you enjoy this stuff. I do. But I'll tell you why I do it. I tried the other way. On my first big

score, the sale of a learning company is a $4.2 billion transaction, including the debt. There were 10 of us as founders. We had all started in middle class or no money. And we'd worked together for, I don't know, 12 years or something. And then that was a massive liquidity. And I remember when we closed, we were in Cambridge. And we're sitting around a table just like this, 10 of us, having lunch. Uh, we, we ordered in some lunch to talk and we'd close the deal. So now we were funded and, and I said to her, what, what's everybody going to do? I mean, like, you know, we're, we're, they bought our company. They don't need us. What are we going to do? And, um, how old are you at this point? I think I was, uh, 30, maybe early thirties, maybe 29. Okay. All

right. So around 30, yeah, around 30. All right. And, um, I said, you know, I'm going to take, i'm gonna take uh some time off i'm gonna go to every beach on earth i just want to go to every beach on earth including those ones in cambodia vietnam thailand you know these incredible beaches the northern part of cyprus these all these legendary beaches and i did it took me three years and at the end of it i was bored out of my fucking mind i mean i just said this sucks it was depressing this is it this is all i do is go to beaches and sit there and get drunk it's just boring and i got back in the game i mean i just got and i started doing deals like crazy and i put my capital work i became an investor not an operator i i made some great scores i made

some cat you know catastrophic failures i lost millions i made millions and then i got in the groove and i figured out what is it i'm good at and you know um and then the shark tank thing came along and that became a huge platform um then the cnbc thing came along and it kind of just morphed into this uh you know like you know people know exactly i'm pretty transparent not everybody likes me they think i tell the truth too much but you know business i think it's good but anyways it is what it is at this point so i'm kind of riding the wave looking for opportunities shark tank i renewed yes 13 just got announced 13 seasons i mean you know uh nobody can believe what happened there like nobody nobody um i have another show i taped at telemundo here in miami

which will be announced this week i'm excited about it but you know the network wants to keep it a secret till maybe next week i don't know when but telemundo is a i'll tell you i'd never been to that studio before it is the most modern studio in the world it's completely digital the whole thing is wired digitally even the signs are all digital they can change anything temperature in one part of the room it's it's and it's massive when j-lo rehearsed for her super bowl act she did it in a soundstage there the size of a football field wow and i was taping right beside that when i and i walked and looked at it and went this place has its own weather zone it's so big the ceilings were so high yeah it's just north of the airport it's a massive facility yeah um shark tank

13th season versus the first time you went on does it still just as exciting is it still just as fun or is it different now? Well, a few things have changed. First of all, venture capitalists have now figured out that they get to 100 million eyeballs for free. So you've got all of these VC-backed deals with 50 million valuations, 100 million valuations. And my attitude about that is I don't give a shit

what your valuation is. If you want me as an investor, I'm carving my own deal. And you don't have to take it, but it's going to be that makes me get a special position because I add way more value than your VC does. Nobody knows who your venture capitalist is. They don't know the brand, but who cares? They're all the same.

And they all want preference shares and all this stuff. And I'm not saying they're bad people. I love venture capitalists, but I don't need them. I can raise my own money for my firms in my own way. And I don't like preference shares. I don't like shares that are sitting above me and have rights I don't have. That just pisses me off. So I don't use that stuff.

So we get a lot of those companies now, Paul. We get all these companies that say, if only we could get on Shark Tank, right? so we get they have to weed a lot of those out because they're just gold diggers then we get some really interesting stuff on direct to consumer like there's a trend emerging in america let's just take the food group for example low sodium low sugar low cal totally healthy like really eclectic verticals where people you know that really care about health will make a different kind of coffee or a different kind of peanut butter and what i find what i what i see happen on those deals is when they hit the airwaves you sell five million dollars worth of it in one hour

yeah a lot of people are into that health thing so that's a big change because in the old days we just have pizza sauce and you know just hot sauce and more sauce and you know now it's sauce with no sodium totally fresh no preservatives all that kind of stuff and things like that and and really they come in knowing what shark they want they've known us so well now i want to deal with you know damon and clothing or you know i want to do a financial thing with kevin or whatever it is and anything in the wedding industry that's me i love love uh i want to leave with the best story from shark tank that you've ever told me which is your best investment which is the potatoes yes tell us the story and what happened uh since you did this deal yeah so it's called potato parcel

and it's a company i'm imagining damon being here right now and just laughing his head off and he did he did this guy comes on and he says i take a potato a real potato and i you send me your image digitally and i imprint your face on the potato and then i ship it to somebody for you in the u.s mail and then they put the potato with little toothpicks in a little thing of water and the potato grows right through your face and it and it takes months to do it and crazy stuff happens right i said that's really really stupid i mean that is incredibly stupid and what a stupid business this is and he said well what is it you care about in business sales right and i said of course but nobody would buy that crap and they said oh yeah look at this he had like 30 percent

growth a month and he was really good at seo he was really good on on digital really good on social he was telling the story and i was sitting there thinking i'm never gonna invest in this thing so stupid and i said to well how about i get a chunk of equity but i want a royalty i want to but hold on you'd already seen one example of something stupid yes money right that's an important part of this well it's true i saw i want to draw a cat for you yes which was the stupidest most stupid thing I'd ever seen. Which one's dumber? Potato Head or I Want to Draw a Cat? I Want to Draw a Cat for you. Incredibly stupid. You pay a guy

to draw a cat and then he mails it to you. And Cuban invested in that and made a fortune. I thought that was the stupidest stupid... Because he had the song, right? He had some stupid little song. Yeah, and he had a dance. He danced like a cat. It was like so... I thought it was such a piece of trash. What a stupid idea. And it did a ton.

And really, really high margins. Because this guy would just sit down and draw a cat. And he had other cat drawers. It's so dumb. So when I saw the potato parcel, I said, there's room in my portfolio for a potato parcel company. Now, remember on Shark Tank, you calculate, you're putting out capital. So you really want the internal rate of return on that capital. In really NASA venture investing, it's return of capital, not return on capital you care about. That thing aired and I got my money back in like 45 minutes.

And so it has the highest return ever for me in a shark. everything because i had a dollar royalty on every potato and i own i can't remember what percentage i forget what i own of the company but that thing has has just spun cash and i got calls from ceos of major corporations saying listen i want to buy 1500 potatoes for my sales force globally and ship them and i want a discount i say no way there's no discount i'm the only kid in town for monopoly on feast nobody else puts a face on a potato the way we can plus our new gift box pump we get a premium gift box with a beautiful little label on it and a gift package with your face in the potato and it comes to your door and you're just thrilled to death we are pumping those out

by the hundreds of thousands and there's no discount i mean this is the el supremo potato so there it just shows you with the right social media platform what you can do and and and these are real entrepreneurs a real business it's not a bullshit business so it's made money it bought a watch i'll tell you that i'm proud of you because three years ago when i went on the cnbc set and you hit me with you were forbidden you're not at 50 yet yeah but uh you're at three maybe five maybe you can get you to 10. You're headed in the right direction. We are. And I think we could eventually get, we may abandon our gold position, which is significant. The way we own gold is we own the GLD for rebalancing,

even though it's more expensive, it's very liquid. But we also store gold and pay for the storage. So it costs us money to hold an asset that has no yield. And that's the argument that the committee makes about the gold position we've got, saying, think about this. It's reversed interest. If gold stays flat it costs us to own it why don't we just allocate 200 basis points of the gold portfolio just sell down our glds go to fiat and then just buy in you know bitcoin yeah or you know whatever you can you don't have to just buy bitcoin but buy a portfolio of different at crypto you know crypto assets and then do the contracts and i'm i'm opening up to it um because proof is in the pudding and so it's just and you and the weird thing is that and you said it earlier you don't

want to go back to fiat and so you're saying to yourself i'm going to live with more and more vol because you are as you build up that asset but you feel a lot better about getting yield off it all of a sudden it's working for you while you're sleeping as opposed to most people think they just own bitcoin in their wallet pay the ridiculous fees to their wallet which they don't have to I mean, people are going to figure this stuff out. They're going to start to see DeFi can be a lot cheaper, less friction. You can still be compliant. I don't want to break any laws.

I want to be compliant because I got a lot of other assets. And that's why I want this version of what we're doing in Vancouver with the DeFi Ventures guys. I want that to be compliant to the point where I just press a button and get my tax return. That's how it works. Yeah, I mean, it can. So I'm very excited. I mean, obviously, you've been riding the wave a lot longer than I have, but I'm caught up pretty damn fast. You're coming along.

We just got to get you to stop. The other thing you said one time was crypto garbage, not garbage, garbage, which is a little bit above garbage. No, but I liked it. And it's now legendary out there. And everybody nails me to the wall on that thing. They say it. They say, you're the guy that called it garbage. All right, ladies and gentlemen, my friend, Kevin O'Leary.

Thank you so much. I really enjoyed it. The time flies when I'm talking with you, Bob. That's terrific. Take care, everybody.