The Pomp Podcast - #785 Is Borrowing Against Your Bitcoin A Smart Investment? w/ Jason Williams

Episode Date: January 17, 2022

Jason Williams is an investor and entrepreneur.. He has built and sold numerous companies, including an approximately $500 million exit in the healthcare space. Jason and Pomp have also worked together to invest more than $100 million in the bitcoin and crypto industry.  In this conversation, we discuss leveraging your Bitcoin and Real Estate for liquidity, the risks involved when borrowing against your Bitcoin, and the 5 things that Jason is excited for in Crypto this next year. ======================= 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 ======================= Circle is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.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. Jason Williams is an accomplished entrepreneur and investor. He's built companies that have exited for nine figures. He's invested nine figures of capital, and he also happens to be a great friend of mine. In this conversation, we talk about everything from Bitcoin to real estate and all kinds of personal finance topics that lots of people who listen to this podcast were probably interested in. I really enjoyed this conversation with Jason, as I always do. But before we get into this episode, I want to quickly talk about our sponsors.

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Big fan of Circle, and I think you will be as well. All right, let's get in this episode. I hope you guys enjoy 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. Jason, you there? Yeah, what's going on, guys? All right, I got a whole bunch of questions for you.

First, let's start with this idea of real estate and Bitcoin. I think there's a lot of people who see high inflation happening and they're asking themselves, what should I do from an investment standpoint? Obviously, this isn't financial advice, but some of the assets that have done very well, real estate's up, stocks are up, Bitcoin's up, etc. How do you think about your personal portfolio

and Bitcoin, cryptocurrencies, real estate is like the opportunities that you have to deploy capital into. I had a really great discussion with Grant Cardone. You know who that is? I do know who that is. Yeah, so I was on Clubhouse and he jumped on stage and I was like, Grant, look, you're like a leverage master.

You understand how to buy high quality real estate, whether it's commercial, residential, mixed commercial, residential, whatever. And apparently he's got like about 2 billion and he levers about 50%. So he's got 4 billion of assets in real estate with 50% leverage on it. And he's crushing it. And I was thinking like, man, I haven't done much with Bitcoin. I've been a buyer and holder of Bitcoin. I've rehypothecated some of it and gotten paid in stable coins or Bitcoin. But I feel like right now with Bitcoin kind of being boring, I don't look at the price,

by the way. That was one of my New Year's resolutions. So this year, it's like the 14th. I haven't looked at the price, even though Bitcoin's at $43,000 and change. I don't look at the price. And it feels really kind of boring right now. And I'm playing these scenarios like, is this the right time to borrow against Bitcoin? Can I put a 25% LTV loan against my stack and do something different with it? Maybe buy high quality income producing real estate or buy some more Bitcoin with that money and re-hypothecate it to try to drive some more yield. Now, have you guys thought about that strategy at all? And I'm going both ways here. I'm saying borrow against my Bitcoin stack, leverage it and potentially rehypothecate it and drive some yield or borrow against property I own right now.

You know, you can get pretty favorable terms and either buy more real estate or buy Bitcoin with that. Have you guys talked about that at all? One of the things that I find really interesting, so we haven't talked explicitly about certain strategies, but one of the things that a number of people I know kind of privately are doing is let's say they bought a piece of real estate before the pandemic and they were kind of paying off the mortgage on it, whether they were paying it or they had people, you know, renting it and the value went up. and so what they did was they refied it right and when they refied it they basically had some delta that they cashed out and when they did the cash out refi all of a sudden that's the money they went and used to actually go buy bitcoin or you know participate in other types of investments that's like a kind of a straight down the fairway i think of like how people were getting it i think what you're talking about is a little bit more of a sophisticated thing where you're saying hey look

if you own a piece of real estate you just borrow right against it and if you're borrowing i don't know what are the rates that you're seeing in terms of either residential or commercial right know that people could borrow at? Somewhere between 2% and 3% for like a 10-year balloon, which is, it's not bad. And then on Bitcoin, it's crazy. I'm seeing like a 24-month loan at 1% APY at 25% LTV. I mean, that is incredible, guys. If you do the math on it, that means you can borrow So $5 million, 25% LTV, you got to put up 450 Bitcoin or so. It's going to cost you $4,100 and change a month or $100,000 for 24 months. That's your cost.

That's your debt service on that. That sounds pretty good to me. Now, you have to factor in, can you get margin called? Like, is Bitcoin going to drop? And can you cover if that happens? I mean, that doesn't feel great to me. But with Bitcoin, again, I don't look at the price at $43,039, something like that. I don't look at the price anymore. It feels like you may be able to borrow against it. Yeah. How do you think about the difference between borrowing? So like real estate, it's a good example, right? Most people are borrowing money to buy real estate. When they

do that, they basically are getting a couple of advantages. So you obviously get the hard asset itself that should appreciate against the dollar over long periods of time. They get the tax benefits between depreciation, segregation studies, et cetera. They get cashflow from somebody renting it if it's an investment property. And then on top of that, they also are getting uh usually uh some sort of uh of additional revenue that they can drive from it right whether it's short term long term whatever when you think about those things uh bitcoin if you borrow money to buy bitcoin you in most cases are just buying it and holding it yes you can put in an interest-bearing account and drive a little bit of interest but one thing is like where do you

borrow against so you can borrow against your real so you can borrow against your bitcoin how do you think about after you've borrowed money, where to put it, whether you put it into real estate or you put it into Bitcoin, like kind of on the allocation side. Yeah, I mean, this is why I'm trying to get all the galaxy brains together, all the guys in the dark shirts with the hoodies, you know, that have that energy that you guys have and ask the same question. It seems pretty straightforward to me that borrowing against property, you know, high quality property, whether it's not producing revenue or it is revenue producing property, seems like a pretty simple play. Whether you lever that to buy more property or Bitcoin, Bitcoin being property,

again, that seems like pretty clear to me. I think there's a very, well, it happened in 08, right, where banks restructured your holdings. But I think there's a low probability of you getting margin called on a piece of property that you hold the paper on. So I really like that strategy. The other side doesn't seem very mature at this point yet. You know, if you borrow against Bitcoin, you're kind of using its untested waters right now. There's a bunch of different options, whether it's BlockFi, Unchained, Celsius, like, you know, I don't know. I don't have a dog in the fight there. But the rates look good. It's not as clear to me on the other side of that pump. If I do borrow against my Bitcoin, I want to own more Bitcoin. I think that's where I am.

If I borrow against the real estate, I want to buy more Bitcoin as well. So like that $5 million scenario I just talked to you about at 25% LTV, you're going to have to put up north of 450 Bitcoin, but you can buy about 116 Bitcoin. Again, I don't look at the price, but at Bitcoin 43,167, you're picking up about 116 Bitcoin. All right. If you had to say, what are the five things you're most excited about around Bitcoin and cryptocurrencies in 2022? What are the five things that you're like, bam, I'm super excited to see this stuff happen? Well, Bitcoin, crypto funks, bored apes, buying planets in the metaverse, and regulatory clarity. I think I'm excited about that kind of stuff. All right, let's go in reverse. Look, look, look, look, look. I'm a

Bitcoin money maximalist. What does that mean? It just means I think Bitcoin is good money. It's an insurance wealth policy, and I'm totally in, 100% in. But I don't think Bitcoin solves everything. So I am looking around at different projects. I've always been interested in tinkering. So, you know, my Bitcoin maximalist friends, those toxic guys, you know, they just think I've gone brain dead, full galaxy brain when I talk about this other stuff, but I'm interested in it. So, you know, I'm a holder of crypto punks and crypto funks and bored apes. And, you know, I think that there's something there. I think there's a cultural shift. There's a group of people that don't care about the programmatic monetary policy of Bitcoin. They don't care

about good money. You know, they're in it for a lifestyle and they identify with these cultural movements and they like video games and stuff. So look, I'm older now, but I'm still interested in this space. And, you know, when I say I'm older now, I think I'm an older Bitcoiner. You know, I'm a guy who has assets and a house with chairs. A lot of Bitcoiners talk about, like, sell your chairs for Bitcoin, excuse me. Like, I don't want to do that. I want to have a car and a house, and I want to go on vacations, and I also want to have Bitcoin. So when you think about Bitcoin as one of the five things, that's kind of a self-explanatory.

Regulatory clarity, I think, is another one that's self-explanatory. But you mentioned three things there in the middle. You said crypto punks, crypto funks, and what did you say, bored apes, I think, right? Explain more about those three things. Why are those three of the five things that you're excited about in 2022? Yeah, so CryptoPunks are kind of like OG Ethereum-based JPEGs or PNGs.

And they kind of rug pulled the holders of those. So I'm an owner of CryptoPunks. They're worth a lot. I think the floor is like 70 Ethereum or something like that. So what is that, $230,000 or something along that way? They sold the IP to a third party, and I found it to be really weird. So they almost took the value away from the people who owned this asset, and it caused

a lot of people to think. One of the groups that I think did something interesting was a group that invented or produced something called CryptoPunks. They took CryptoPunks and they flipped them the other way. So they're just facing the other way. They're exactly identical to CryptoPunks, but not identical in any form or fashion because they're flipped the other way. And they're kind of challenging a lot of DMCA and claims around copyright and what are your rights to these images. And I've enjoyed the exploration of that pomp. And then finally, Bored Apes, they lay claim to giving you the IP and the right to actually go out and commercialize your ape. So you could launch a clothing line with that image and sell it as long as you hold it. You apparently have some rights and privileges associated with that. I think that's really interesting. Again, this is anyone can right click these images and then anybody can sue anything, anybody for anything, obviously. So that remains to be seen how defensible these positions are in court. But it's really interesting to me to dive down this copyright licensing trademark kind of situation as a holder of some of these JPEGs.

We do got questions about. Jason, I saw someone was buying land next to Snoop Dogg in the metaverse. Are you buying land in the metaverse? I hate buying planets. No, I'm buying planets. Pomp's right. Like I was talking to this guy.

He was talking to me about land and this and that in a very expansive metaverse game. And I was like, man, look, I'm going to put some money in your project, but I want a planet or the sun. Because I was thinking if I can own the sun in this galaxy, if I'm the life-giving force to everything else out there, I can monetize that somehow maybe put a little meter in the middle of the sun and and you buy

the protons uh and and the life force that comes out of the Jason Williams parabolic sun I like the way this sounds I'm working on it and uh yeah if you live in my universe you're gonna pay me for that light baby Jason what are you doing with your NFTs you have them sitting there are you using them for anything well this is the thing so um this year i'm opening up a surf shop coffee shop with my daughters and we bought a board ape and we want to use it as like you know as our mascot almost like we want to put him on surfboards or have him drinking coffee you know just doing stuff and it's just one little moment of um of this kind of cultural connection we're going for My kids love JPEGs and they love Bored Apes and stuff like that.

So I thought it'd be neat to to actually try to commercialize it and push it as far as we can. I engaged the lawyers, though, and they started to puke on it a little bit. So I think we have work that work to do to fully be protected by using this IP trademark and image. But, yeah, man, like that's one of the things I'm trying to do with with Bored Apes. I've seen some really, really cool displays, guys, of digital art and also people making physical representations of their digital art projects. And, no, it's a lot of fun. Look, Pop and I have been in this game a long time when it comes to digital art. And, you know, it's fun to see it mature.

What's the craziest NFT that you bought? Crypto dick butts. What? what is that i think i think it's dick chicken dick butts or crypto dick butts yeah i think it's uh yeah it's it's really it's like a chicken uh with a butt and a dick i think how much something like that go for big money baby let's talk about that offline that's cool yeah i'm down for that all right what's the second craziest one that you've bought um well i think gary v's project to me was was really wild i mean we dropped millions of dollars on v friends and it's really

just gary v scribbling on a piece of paper you know he's not an artist at all he's a moderately older looking gentleman who uh you know who got some ink pens and drew some really you know i don't like patient penguin and stuff right yeah like really basic stuff guys like if you had an image of one of these v friends to put up it's pretty basic stuff i dropped millions of dollars on it so gary v if you're out there bro you're gonna make me hold on to this bag forever or these things gonna pump i'm ready let's go no but the whole point but here's the last thing we'll talk about and then we gotta go because we got other things we gotta do uh is uh his whole thing isn't so much you're buying just a piece of art right it's an access thing so so there's an

element of you get to go to a conference you get depending on which one you own you get a facetime with and whatever and it's fascinating to me and just like uh if this becomes the way that people actually uh kind of engage with their community it's a very interesting way to do it right and so uh from everything i can tell like it's been very successful for them uh and if they continue to do this in a in a material way uh i don't see why uh they won't set kind of the the standard the default right like people always give uh gary a hard time uh online sometimes but the thing i always say is like the dude's been ahead of a lot of trends man you know what i mean like it's just there's something about when you live on the internet when you're molded by the internet if

you will you just understand and have intuition for oh this is going to be a big thing this isn't like the guy was talking about audio being big in like 2012 right and people are like what do you mean audio that sounds crazy and then like podcasts become a massive thing and now people are getting bought for hundreds of millions of dollars right and so i think the same thing here is like we may look back in five or 10 years, be like, damn, remember when he did that? And like, we'll see, right? Maybe he's wrong too. Like, I don't think that he's right every time. Maybe I think he'd be say that, but it is interesting that he's, uh, he's doing things to test it out and try to figure it out. Yeah. Look, Gary, I'm a fan of Gary V. He's a, he's certainly an opportunist and he's

made, you know, tens, if not hundreds of millions of dollars off of V friends. So, you know, the proof is in the pudding. Like I'm, I'm, I'm in, you know, when he, when he called his friends to participate you know we got the call you know i'm supporting him but let's see how it goes one other thing real quick about gary is i don't know if you guys saw the latest full send uh podcast but they got uh they got bob uh is there bob mennery and uh yeah and bob is uh asking them and they got uh john shahidi on too usually doesn't host the podcast but he was there and uh and the clip that i saw bob's like all right man it's like how rich are you and they cut away and john shahidi's like oh my god and to gary's credit he's like very

which uh which is great because you get bob mennery just asking wild questions yeah bob mennery by the way jason i don't know if you know who bob mennery is he's the only person in the world who could go from literally interviewing antonio brown to gary vaynerchuk and everyone in between like the guy his range is unparalleled and uh you know it just sits there and he just Ask the questions that he needs the answers to. Like, yeah, how much cash you got? They got Chad Ochocinco. They got him to pull up his bank account

and like literally hand them his phone and show him how much cash was in his bank. It's crazy, man. Which pomp brother takes his clothes off during the middle of one of your broadcasts and walks off the show? What? That hasn't happened yet.

Yeah, but I'm saying like, which one of you would be the one? John, John, for sure, John. John would do it. He'd just say, I've had enough. If you clip it and make it an NFT, I'll do it right now. he just strips off the shirt and just says peace out i'm out pom leona that's it exactly all right

where can we send people find you on the internet well i'll be teaching at wharton business school on uh 26 so you can check that out uh you can follow me at going parabolic on twitter and then i'm doing uh mining convention in texas on i think the 8th i'll be on stage talking about esg mining uh whatever else random comes in my head and uh yeah it's uh in austin scott's crypto mining i think sailor will be there as well it'll be fun all right i love that all right everyone go follow jason on twitter if you don't i don't know where you've been at going parabolic the number one twitter username in the world facts all right man appreciate it see you warden see you guys