The Pomp Podcast - #849 Legitimizing The Crypto Industry w/ Bradley Tusk
Episode Date: March 6, 2022Bradley Tusk is the Founder & CEO of Tusk Venture Partners In this conversation, we discuss regulation in the crypto space and efforts to legitimize the Industry. We also discuss Crypto companies goi...ng public, Tusk Venture's investments, and the future effects from the Russia/Ukraine invasion. ======================= Mode, UK Fintech app, allows you to buy, earn and grow Bitcoin, all in one app. Not only is it a secure app to buy & hold Bitcoin, Mode allows you to pay & receive up to 10% Bitcoin Cashback from its growing list of online partner brands. Available on the App Store and Google Play. Download Mode at modeapp.com and set up your account to be in with the chance of winning ONE WHOLE Bitcoin. Offer ends Jan 31, 2022. Only available in the UK. ======================= Bullish is a powerful new digital asset exchange built for institutions that delivers the innovations of DeFi in a regulated environment. The Bullish Hybrid Order Book pairs the high-performance of a traditional Central Limit Order Book with automated market making. Powered by deep Bullish Liquidity Pools, backed by the multi-billion dollar Bullish Treasury. So, you can trade with certainty and at scale across variable market conditions. Learn more at Bullish.com or follow @Bullish on Twitter. Because the future belongs to the bullish. *Not investment advice. Digital assets and cryptocurrencies are high risk products. Consult your professional advisor before dealing in them. Bullish’s services are available in select locations only and not to U.S persons. Visit https://bullish.com/legal for important information and risk warnings- ======================= Fundrise is largest direct-to-investor real estate investment platform out there, giving you the opportunity to achieve upside of an asset class previously reserved for institutions and high net worth individuals. That’s right, Fundrise is making high-end private market real estate investing accessible to everyone via an easy-to-use, automated platform. See for yourself how over 190,000 investors have built a better portfolio with private real estate. It takes just a few minutes to get started with as little as $10. Go to Fundrise.com/Pomp today and, for a limited time, get $10 when you place your first investment. That’s Fundrise.com/Pomp =======================
Transcript
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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 bradley tusk
is the founder and ceo of tusk ventures in this conversation we talk about everything from russia
and ukraine to regulation in the metaverse and also self-custody and mobile voting really enjoyed
this conversation with bradley and i hope you enjoy it as well before we get in this episode
though, I want to quickly talk about our sponsors. This episode is brought to you by Mode. Mode is a
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download the Mode app today. This episode is brought to you by Bullish. Bullish is a powerful
new digital asset exchange built for institutions that delivers the innovations of DeFi in a
regulated environment. The Bullish hybrid order book pairs the high performance of a traditional
central limit order book with the automated market making. Powered by deep Bullish liquidity pools
backed by the multi-billion dollar Bullish treasury. So you can trade with certainty and
at scale across variable market conditions. You can learn more at Bullish.com or follow
bullish on Twitter because the future belongs to the bullish. Now, this is not investment advice.
Digital assets and cryptocurrencies are high risk products. Consult your professional advisor before
dealing in them. Bullish services are available in select locations only and not to U.S. persons.
Visit bullish.com slash legal for important information and risk warnings. Go check them
out at bullish.com or follow at bullish on Twitter. Today's episode is brought to you by
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are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat
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We'll be right back.
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all right i'm super excited uh we have a special treat for everybody obviously darius every
thursday but the second guest today bradley tusk mr tusk are you there hey how are you yeah i'm
here how you doing man i'm doing fantastic how are you oh good good i had covet i'm finally done
with it so i'm pretty happy about that nice you're on the other side of it i had it too
my brothers all had it we're all you know you got to experience it to uh to appreciate it so
we're all on the other side i'm glad everyone is healthy and hopefully i was feeling left out after
two years so yeah i'm in the club with six other billion people yeah same all right uh let's talk
we got a couple of things i want to talk about first let's talk about coinbase earnings that's
happening today i know that um you've got some thoughts there what's your general take on uh
what we can look at is just like the large infrastructure companies in crypto especially
uh their reception by the public markets how are you thinking about this yeah i mean look
ultimately i'm bullish on coinbase and i should say we were an investor on the venture side we're
not currently in it but so i'm not completely objective here but yeah look long term to me
If you fundamentally believe that crypto will continue to be something that people will want to invest in and take advantage of, which I strongly do, an exchange that's making money on both sides of the trade that has real credibility and real market presence is going to do well.
Is it going to necessarily hit earnings and every expectation every quarter?
No, it's like any company.
But if you like Coinbase and you're already in it, I don't think you need to sell just because the earnings today may not be what they want.
Got it.
And so when you start to think about politicians and regulators, and they spend a lot of time on regulation, what's your general sense there?
Do companies like Coinbase going public make it much clearer for them and they start to pay more attention?
Or have you seen a change at all over the last few months?
Yeah, I have.
So look, to me, Coinbase IPO was kind of a watershed moment in our industry because what I think it said to the market, to Washington, D.C., to the media is this thing is real.
This thing is here to stay.
This is not just some fad, you know, of a bunch of people in their 20s who are having fun.
So I think the Coinbase IPO, when you look back in 50 years, the history of crypto will be one of the seminal moments in the entire thing.
But just IPO and without them doing all the work necessary to influence the regulations in the right way is really insufficient.
So I think we're at sort of a very dangerous point right now where Washington is hyper aware of crypto.
They know they need to do something about it. But crypto as a kind of political entity is nowhere.
Right. No politician thinks that like, oh, if I mess with Coinbase, I could lose my next primary or lose the next general.
No one fears crypto politically the way they fear pharma or oil or faculties or whatever it is.
And until you can play the political game and make politicians feel like you can influence their next election, they're not going to care about you.
For as long as they don't care about you, trust me, you're not going to like the regulations that come from them.
When you start to think about New York specifically, there's a new mayor, Eric Adams, who I always look at these situations.
Miami is similar. There's a couple other politicians around the United States where in the beginning they all say the right things, right?
They get coached. They kind of learn about stuff. They say, OK, hey, we want to be kind of crypto forward, Bitcoin forward, whatever.
And then ultimately, over time, you get more data points and you start to understand.
And it seems like one of the big things in New York, specifically around regulation, is the BIT license.
And the longer that that's there in place, there's a lot of friction.
I think that many people in the community want to see it removed or kind of changed in some way.
What's your general take, given that you understand so much about the regulatory environment and politics of like.
We have a lot of experience with the BIT license specifically.
So I would say this. If you look back at when the BitLicense was created by a guy named Ben Lossky in the Department of Financial Services in New York, I think Ben had the right intentions in mind, which is he saw crypto as a legitimate industry that really made a lot of sense for New York, but that would need some level of structure and regulation.
So he put something in place.
Ultimately, what he put in place isn't really smart or right for the industry itself.
It's too bureaucratic.
It's too slow.
It doesn't really kind of understand what the needs of the companies are.
And so the existence of a bit license isn't inherently a problem in my view.
And keep in mind, in other states, there's something called a money transmission license.
So you need a license everywhere.
New York just has a different name.
The problem is the way the BitLicense is constructed and done is really bureaucratic.
It's got to be overhauled.
I would say, just to tell you, based on our discussions with the Department of Financial
Services, I think that they realize that we have a new governor, we have a new superintendent.
I think if they get that the process needs to be overhauled, my guess is we will see
that in the coming months.
When you start to think about some of the other kind of longer tail components or subsectors
of the crypto industry you've uh you started to think about the intersection of regulation rules
politics etc uh with things like nfts or the metaverse and you wrote this kind of metaverse
memo uh which i gotta say i was very impressed uh with uh one your imagination of like here's
all the complexity that's going to go into this and like here's all the problems that we're going
to face uh because it got my me thinking a lot about like wow i hadn't thought about you know
many of those kind of uh um you know situations uh what's your general take maybe just like
metaverse in general and then like what are the things that people should be paying attention to
here so number one it's coming right companies like apple and facebook and microsoft don't spend
tens of billions of dollars on something they don't think that they're going to be able to
execute so it's going to happen now look it could be as amazing as a completely immersive world that
in many ways is better than our current physical reality and a huge number of our functions and
socializing and education and work is done in the metaverse, or it could just be like the internet
with sort of better VR, right? It's unclear still where it's all going to land, but it's coming for
sure. Because it's coming, you can start to predict what about it may be problematic and what may not.
So I don't fault the government for not anticipating, say, 2007 or 8 or 9, what Facebook
would become and getting ahead of it because it was a brand new thing, right? I fault them that
2022, they still haven't dealt with it. But we know the metaverse effectively is going to be
the internet on steroids. So every problem that we currently have with internet 2.0
is going to exist in web 3.0, but like much bigger, right? So data ownership. Right now,
we already have a position in the US where individuals really have no control over their
data. They're easily monetized by their platforms. And I think that that's really good for the
companies who are making money on it but really bad for the consumers or data portability you
know right now it just you know bad data portability means like every streaming service
remember our password to sign in it's a pain in the neck but it's not a huge problem but once you
have an avatar where your entire existence and life is on is in the metaverse if you have to
recreate that for every single metaverse you go into that would be impossible right so you need
laws that say the data has to be full. Or think about things like consumer protection. So right
now, the government, typically state and local government, says, here's how products have to
be made and services have to be sold to basically keep consumers safe. But still, much of that is
around a physical object. Like the chair that I'm sitting in, there are rules around how it had to
be made so that I don't fall or crash to the ground in the middle of this interview. When
transactions are completely digital in the metaverse um and they're so widespread um how
do you protect consumers right and i don't know the answer to it but i know you got to think about
it or taxation um if you are state local government and much of your revenue depends on sales taxes
you know someone with a decent vpn basically buying and selling everything we need in the
metaverse could probably get around paying all sales taxes that would devastate you know local
state government. So there's so many different issues, and the problems are foreseeable,
the challenges are foreseeable, the opportunities are foreseeable. So the reason I wrote the memo
was, you know, hopefully to spark a conversation, you know, like this, so the regulators will start
thinking about it. And for once in our life, actually got ahead of us.
How much of these rules and regulations do you think will be what I'll call historical
in application in terms of like, they're written on a piece of paper or in a digital format,
but they still are courts and laws and all that versus like the code is the law and this kind of
maybe libertarian type view of we don't need the people or the governments we just have code like
what where's the truth in this oh look i loved it personally i loved that i was like i'm fascinated
by this effort to buy the broncos like so and and you know i'm building this mobile voting
technology that could fit well with that so i'm really personally excited about that but overall
and we see this in sort of every single sector you do need some level of actual regulation with
laws on paper and legal cases and precedent and regulations and all of that because like take
crypto again um as an investor in coinbase or we were you know maybe it will be again sometime
i want the industry to be considered legitimate because i'm in the company that is legit right so
you know i want the fraudulent icos to be cracked down upon because something has to separate the
apples and the bad apples right so it can't totally be purely self-enforcing now some of
it should be like i'll give you an example um esports right how do you regulate esports betting
i've got a company i'm incubating down in miami right now called gorilla that's an esports betting
platform and how do you make sure that if you and i are playing fortnight we're not conspiring to
throw the match in one way or another so that we can take advantage of the bet um that won't work
from government regulation, that's going to require some sort of self-regulatory organization
that everyone says, these are the standards we're going to live by, and we will ostracize everyone
who doesn't live by these standards. So I think there are some forms of tech that can exist with
sort of self-policing and rules and kind of its own subculture, but a lot of it does need actual
government. John, what questions you got? Yeah. So when you think about the different industries
that are being regulated, it sounds like Tusk goes after these specific, like highly regulated
markets. What markets do you see moving forward will become a little more free open? So obviously
crypto is one that is extremely skeptical will be regulated. How will it be regulated? What are
some other markets that you are interested in at the moment? Yeah. So one, so we're big digital
health investors and while healthcare is unbelievably regulated, almost by definition,
digital health will have to be a little more free because it just changes the entire concept.
And I think what we saw, not that there's probably no upside of COVID, but one maybe silver lining is the value proposition for digital care became very clear to a lot of people very quickly.
And now you realize that you can get the care you need from your phone in three minutes, supposed to drive into a doctor's office, waiting around for a while with other sick people, and then seeing someone in person.
You're always going to want the digital option.
And so as that continues to grow and manifest, it opens up simply because the nature of digital health care is a lot freer and easier.
And I have this vision that's probably crazy, but I can see a world one day where we don't have hospitals and we don't really have physical facilities.
We have very specific physical facilities like surgery centers to, you know, kids to be born in or brain surgery to perform.
I think everything else is either done digitally or we're investors in a company called GetLabs, and it's an at-home phlebotomy company.
So they go to your house to draw blood. And it's simply because they believe the unit economics are better to go to people than to have to run labs.
So I think that if that's correct, you will see so much of health care move from physical locations into digital and people's homes.
A lot of that opens up. We do a lot in the gambling space that I just mentioned.
We just saw over the last couple of years and we're seeing right now states legalizing sports betting.
New York went online January 1st. It's been a massive explosion ever since.
That's going to follow on iGaming and eSports betting. And so there will be a lot more opportunity in that space as well.
And then, you know, maybe energy in the sense that if Congress ever does get around to passing a meaningful climate bill where there's hundreds of billions of dollars in new incentives out there, that should sort of spark some innovation and create some new ideas.
But that requires specifically Congress to get their act together, which obviously barely happens.
Bradley, one of the things that's, I think, becoming more of a topic right now, we saw in Canada, obviously, they've gone after, maybe not gone after, maybe that's too aggressive of a word, but they've at least become more abrasive to the CEOs of Coinbase and Kraken for talking about self-custody.
And when you start talking about metaverse, we start talking about Bitcoin and cryptocurrencies, it feels like self-custody is going to become a bigger and bigger kind of conversation. What's your take on the regulation there? How will that evolve over time? Any thoughts?
Yeah, yeah, right.
So we're investors in a company called Dibs.
Dibs is a kind of fractionalized sports card trading NFT company.
And I remember about eight months ago now, one of the most interesting calls I've ever
been on.
It was my team and the leadership team at Dibs.
And the question was, who do we want to regulate this?
Because our view is eventually all custody is going to be regulated.
So we could wait around and see who takes the lead on it and then decide whether or
not how we handle it.
Or our view was, right now, because no one's regulating it, what if we picked our regulator?
What if we said, hey, you know, Entity X, we think you're best equipped to regulate us.
Please go ahead and do so.
And then we can shape all of the initial regulations and really, you know, design a system that kind of works for us.
And so that's what DIBS did.
In fact, we kind of were debating between the state of Wyoming, the state of New York, and the SEC, picked the state of New York for a bunch of different reasons.
And they were a little surprised to hear from us saying, hey, we'd like to be regulated.
it. But they understood. And that's now in play. And so I do think custody is going to end up being
regulated one way or another. And I think companies in this space, rather than keeping
your head in the sand and just trying to resist it completely or pretend that it's not going to
happen, be more thoughtful and proactive about it. Think about, for what I do, who is the best
regulator? What are the best regulations? And how can I go about proactively making that happen?
In my experience, and this is true whether it's in crypto or transportation or education tech or any sector, if you are proactive and smart about regulation and politics, you will win most of the time.
If you try to just avoid it completely or just pretend it doesn't exist, you will lose most of the time.
When you think also about individuals, how many of the crypto employees or folks in the industry now do you think are equipped to kind of navigate so much of this?
Like you're talking a lot about what seems like the intersection of this brand new innovative technologies with what are pretty kind of established industries, law, regulation, et cetera.
Like, how do you think about the people and do we need to upgrade the skills or what?
You do. So, look, the the crypto exchanges and the big companies will be impacted by regulation, have to hire some people outside their ecosystem for certain functions.
Right. And when it comes to legal, government relations, public relations, that kind of stuff, you know, you need people with that kind of expertise, which are people who worked in Congress, state government, city government, whatever it is.
But you need people with those specific skill sets. You know, you can't just say, oh, so-and-so on my team is really brilliant, so therefore they can figure anything out.
To me, the worst founders to invest in the people who review is just because they have really high IQ, they can do anything.
because that's clearly not true.
So two things have to happen.
One is the industry has to get more professional
around who it brings in.
And then two, the ecosystem,
like we're right now the only venture fund that exists
that could then go out and run regulatory campaigns
for our portfolio companies.
You know, while I like having a monopoly,
ultimately there needs to be more of us, right?
It can't just be my fault
because 90% of companies are regulated
either directly or indirectly by government,
at least here in the US.
And if that's the case,
you've got to be able to be proactive about the regulation just like you are about marketing or
engineering or anything else got it and i guess part of this also is for you all uh do you think
that or my understanding and what we talked about previously is that there was this really unique
uh kind of uh lane for you guys to play in which was the combination of the regulatory uh advice
and kind of work and experience with capital do you think that that's actually exasperated
in this market where you've got crypto and these new technologies and kind of more complex? It
almost feels like the intersection that you guys play at has become even more magnified now.
Absolutely. Look, and, you know, we're in a race. I can't talk about our returns to the SEC rules,
but I would say things have gone really well. The thesis that Jordan, my partner, and I had back in
2016 has certainly proved out based on returns, based on the kind of deals we're getting into,
based on what we're leading.
So, yeah, and it's simply because
there's a saying by Pericles,
which is just because you don't take an interest in politics
doesn't mean politics won't take an interest in you.
And that was back in the Greek vampire
thousands of years ago.
But it's still true today.
If you succeed and become relevant enough
that all of a sudden there's a meaningful amount of money
going through your industry,
government's going to get involved.
And either you can wait until they force something on you
or you can be proactive about it
and figure out what works best for you.
And so we try to invest in companies
that want to be proactive about it.
And as that awareness and realization
of the need to take regulation
and government and politics seriously
increases within tech,
it just gives us more and more deal flow
and more and more opportunities to leave rounds.
Got it.
My last question for you is around Russia,
Ukraine, China, Taiwan,
kind of all the geopolitical chess that's going on.
Obviously there's this overlay of like financial sanctions
and financial censorship.
Just open-ended question,
I'm like, what's your general take on all this?
What should people be paying attention to?
Yeah.
So, and this may be an unpopular view, but I'm not quite sure why we're doing anything
in the sense that Putin's a terrible person.
He's probably the greatest thief in the history of the world.
You know, human rights violations, all that other stuff.
But virtually none of our economy is dependent on Russia or the Ukraine, right?
And yes, you know, they didn't stop Hitler in 1938 and that led to a lot of problems,
but the world is radically different today. The way we fight wars is radically different today.
And so this notion that, you know, we still have to apply kind of 20th century military thinking
to 21st century situations, to me, doesn't really make sense. And I get the idea that if we let
Russia take Ukraine, that maybe China goes ahead and takes Taiwan. But again, you know, Taiwan is
useful to the U.S. because there's semiconductor factories that we care about that are there,
but we're now building a lot of those factories inside the U.S. itself. Once we have the capacity,
You know, I like that Taiwan's a democracy, but should American troops or lives or taxpayer dollars be put at risk to defend another country?
You know, I kind of think not. Like, I'm not really sure why we feel like we can have unlimited influence, unlimited power, and then we have to contain that of Russia or China or anyone else.
So I just think we're fighting, as they always do, they fight the existing war with a strategy from the last.
yeah it's um it's i mean just absolutely surreal fascinating i don't know what the right word is
to watch all of this play out um but what i do think uh people are waking up to is uh it's much
more serious and i also think that there's been this shift of the united states's appetite
obviously for violent conflict uh but also the way that it's perceived around the world and
sometimes in a positive manner sometimes in a negative manner uh but it does call into question
And I think you bring up a great point of like where is the places where the United States should intervene and when is that appropriate, to what degree, what severity, what investment is necessary, should we put American lives at risk or not, and then when should we not, right?
And when should we kind of sit by and say, hey, we don't agree with that, but that's not our fight to fight.
And I don't think there's a right answer, and that's the part to me that always gets people.
You know, what's interesting is the thing that you guys do for a living, crypto, I would argue is the best argument for not having too much involved.
Because crypto is, in the way I see it, a sovereignless currency and concept where people say, I don't trust the central institutions in my life.
I don't trust the central government, the central banks, media, Wall Street, whatever it is.
I'd rather throw my lot with other like-minded people, even if I don't know who they are, even if there are countries all over the world.
People are getting less and less nationalistic, especially younger people.
And I think as a result, the notion of, oh, we've got to go to war because these borders are violated by these borders.
I just don't think that's how kind of Gen Z thinks about things.
And so to me, the very the fact that we're here having this conversation because crypto is so important,
that there's a market to hear us talk about this is the same reason why ultimately a lot of the traditional foreign policy ideas don't really hold up.
All right. I lied. I actually have one more question, a little follow up on that, which is one of the maybe not theories.
One of the things that I've been talking about a lot and thinking about a lot is sanctions are very valuable when the person that you're targeting, the company, the nation state uses the currency of which you control the production distribution of.
And so if they're all using dollars and we are the creators of dollars and we're able to put these financial sanctions and actually make them stick, that's great for us.
right and then we have this amazing kind of intended impact now the downside is if they
don't use the dollars and so one of the things that i keep coming back to is like the single
greatest position for a country to be in is to be the producer and distributor of the global
reserve currency the next best option is to be the largest holder of participant in and most
sophisticated user of a currency that no one controls right it's basically like if i can't
control it then i actually want no one to control it and so from like a a kind of geopolitical game
theory like should the united states start embracing bitcoin and saying look on the 0.001
chance that the dollar is in the global reserve currency in 50 or 100 years like let's put
ourselves in position to be successful and uh benefit from that situation as well yeah for
several reasons so one just like i think any reasonable financial advisor these days would
tell you part of a diversified portfolio should be in Bitcoin or crypto in some way. It's almost
irresponsible now to not hold any of it. I think the same thing is true on a national level. But
beyond that, there's such an amazing opportunity here that this country is missing, which is,
even though crypto, as I just said, is a sovereign list concept, a lot of the underlying values of
innovation, risk taking, aversion to the status quo of central institutions are really the American
ethos, American values. And we could try to make this country the home of crypto jobs, right? And
we could basically create an entire new industry, crypto, blockchain, NFTs, DAOs, DeFi, so much
stuff, and create a lot of jobs for Americans, a lot of wealth here. And rather than looking at
crypto by government as this sort of evil that has to be contained, they should be looking at it as
this opportunity that could really help transform the economy. Yeah, it's fascinating. There's
another thought process also of just like uh energy ends up being uh one of if not the most
important assets to make sure that you've got uh independence on and and uh control of and
ultimately bitcoin is uh the most secure computing network in the world it runs on energy it's the
most profitable uh use of energy uh at the current moment and so uh it just i don't know i'm with you
it's very confusing to me that uh we're taking such an adversarial stance uh in some politicians
size but i think it comes from a lack of education and uh and also just like innovators dilemma right
like hey the system works for me why do we change it if you guys have one more minute we've talked
about before which is mobile voting so i've been funding and running the campaign nationally to
make it possible for people to vote on their phones over the blockchain so so far either
deployed military people with disabilities in seven different states have been able to vote
in real elections on their phone we are now building our own mobile voting technology and
to end encrypted that will make open source to anyone who needs it. But the real reason why it's
necessary is not just because we believe in the blockchain and we want things to be easier,
but every policy output is the result of a political input. Every politician wants to
stay in office and they prioritize that ahead of everything else. And just to the listeners here
and watchers now, I spent the first 15 years of my career in government, city government,
state government, federal government, run campaigns. I've kind of seen this from every
possible angle. And if you want politicians to behave differently, you've got to give them
different incentives. So when every district is gerrymandered, that means the only election that
really ever matters is the primary. When turnout in primaries are 10 or 15 percent, the only people
who matter to those politicians are that 10 or 15 percent, which tend to be the furthest right or
the furthest left. So they're being prodded by the most ideological of voters, whereas if we can get
turnout to 40, 50, 60 percent because all it does is press a button on our phones, then all of a
sudden everything moves to the middle we have a lot less extremism a lot less polarization
and then a lot more rational thinking and and results yeah i i couldn't agree with you more
where can we send people to find out more about both the regulatory stuff that you guys do and
also the investing yeah so mobilevoting.org uh is is all the stuff for mobile voting uh
tusk.vc is is the venture website and actually if you just go to bradleytush.com that metaverse
memo you mentioned is on there and it links to everything else we do amazing thank you so much
Bradley. You've been a pioneer. You, you continue to push the pace when it comes to regulation and
the legal conversation. So keep it up. And if any founders or entrepreneurs are out there
and want to raise some money, Bradley's a pretty good, damn good person to go talk to.
All right, buddy. Sounds good. We'll talk soon. Thanks, brother. All right. Bye.
Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make
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