The Pomp Podcast - Ali Hamed, founder of CoVenture: A VC's Take on Crypto

Episode Date: December 10, 2018

Ali Hamed is the founder of CoVenture. In this conversation, Hamed and Anthony Pompliano discuss crypto currency, blockchain, Bitcoin, direct lending, alternative asset management, and why Bitcoin is like Kim Kardashian. ----- BlockFi BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. Draper University Draper University's Blockchain Hero Training is a 5 week fully residential, and immersive learning experience focused on solving the world's biggest problems using blockchain technology. The most ambitious entrepreneurs from around the world will build on their skill set, expand their network, and pitch their business to legendary venture capitalist, Tim Draper. For the executives out there, you'll be interested in Draper's blockchain intensive bootcamp, which has been designed to teach executives about the fundamentals of blockchain technology in order to understand its potential to create efficiencies in new business models. Visit DraperUniversity.com for more information. ----- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe.  BlockWorks Group hosts events for Family Offices, HNWI's, VC's, Hedge Funds, lawyers, and accountants that are already operating in or looking to learn more about blockchain. BlockWorks Group also hosts intimate, private dinners for projects in the blockchain space looking to raise capital. To learn more visit http://blockworksgroup.io/

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Ali Hamid is the founder of CoVenture. In this conversation, we talk about cryptocurrency, Currency, blockchain, Bitcoin, direct lending, alternative asset management, and why Bitcoin is like Kim Kardashian. This is one of the most fun episodes we've ever recorded. I hope you enjoy it nearly as much as I did. Before we get started, I want to talk about one of our sponsors, BlockFi.

These guys are doing really interesting work in crypto lending. What they allow you to do is keep your crypto, put it up as collateral, and receive a US dollar loan funded directly to your bank account. They do loans ranging from $2,000 to $10 million, and they're perfect for helping you reach your financial goals of all sizes. You should visit BlockFi.com slash Pomp. Again, that's BlockFi.com slash Pomp. Again, one more time, type it in, BlockFi.com slash Pomp, if you'd like to learn more about putting your crypto to work without having to sell it. Definitely do it.

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Again, that's DraperUniversity.com, and let me know what you think. If it's good enough for Tim, it will probably be good enough for you. And as Nike says, just do it. This podcast is presented by BlockWorks Group, the only blockchain event and media production company I trust. If you're an investor, lawyer, accountant, or entrepreneur and want to attend exclusive events and dinners, visit them at BlockWorksGroup.io. I promise you won't be disappointed. All right. guys. I'm here with Ali. Thank you very much for coming, sir. Let's try to get through this

without laughing too much or having too much fun, all right? It's pretty impressive that we're able to laugh this much here in the crypto market today. All right. For those that don't know, Ali is one of the smartest investors, I think, that has been coming up over the last couple years. So, let's maybe start at the beginning, where you kind of got into investing and how started building CoVenture? Sure. So if you were to go back, so my freshman year, I had done a startup, my freshman year of undergrad. And then after that, I was starting to do consulting. The consulting was like really, really basic. Basically, someone would come up to me and say, hey, can you do something? I was like, actually, I happen to be an expert at that, whether or not

I was an expert. And then if I wasn't, I would just hire some contractors. I would get them to do the work. I would manage the project. And then over time, I had made just enough money where I could start making tiny little angel investments. And so about my senior year, I would go around like all these sort of tech meetups or events and stuff like that and i go to an entrepreneur who i thought might have an interesting idea and say hey can you take 20 000 i'd love to invest in your company and they would say you know if they'd say yes they probably weren't that great of a company if you said uh no it's because a bigger firm or a more established investor like first round capital or a founder collective or someone was invested instead and i had no competitive

advantage and so about that time um me and another guy got this idea where we instead of just investing cash we were going to start building software for equity and the thesis was really really simple basically if we build software for equity we could invest in non-technical founders so we can invest in type of entrepreneur that most BC's couldn't either approach or understand so that allowed us to invest in very very low valuation so pre-product valuations but without pre-product risk so we're basically investing in post-product companies at pre-product valuations and we're also able to focus on backing founders with domain

expertise so instead of going out and finding a bunch of 22 23 24 year olds who had just graduated from Stanford computer science and we're trying to figure out health care we can invest in somebody who had come from health care and was selling to all their friends and people in space. So that was the initial bit of CoVenture, and it was just our money in the beginning. A few of the companies that we invested in actually started to do well, and so we went out to our friends who were either past clients

or people that we knew or somebody that I heard might have some cash, and we basically begged anyone we could talk to for any amount of money. There was no minimum, and so we raised $396,000. We're trying to raise $400,000. We raised $396,000. Someone committed $5,000 and only sent, like, 500 of it and, like, defaulted them for $1,500. We didn't count it. We didn't have that. Um, my little, my fraternity invested a thousand dollars. Like it was just whatever we could

possibly do. You're, you're, you're an absolute savage for taking a thousand dollars from your little in your fraternity. You know, it's actually, uh, now that, now that you say it, it is really embarrassing and annoying of me to do that to him. But, um, but if, but if it worked out, then you were very generous. Yeah. Look, he's doing actually really, really well on a thousand dollars. So I don't feel guilty. And I think actually that goes back to like, I never thought I was asking for a favor. Um, I would just go to somebody and say, Hey, here's what I'm doing. If you don't invest, I assume one or two things. Either you're a liquid or you're an idiot or maybe you weren't listening.

So maybe, like, optimistically the third. Because otherwise, like what I'm saying, obviously makes sense and you should just definitely invest. Like that has always been my mentality about fundraising, for better or worse. Probably more for worse. So anyway, so a number of those companies that we invested in actually did really well. Of the first 12, I think five will end up being good outcomes. and one of the first companies that ended up doing well was an alternative lending business. And so if you'll remember, sort of Lending 1.0 was LendingClub, OnDeck, SoFi, Prosper, Cabbage,

all these companies that were basically taking loans that banks used to make offline and putting them online. The thesis kind of went something as follows, which is after the financial crisis, banks could take less risk. It was also really expensive to make a small loan. And so what they were going to do is they were going to put these loan products online, originate them at a lower cost, use a bunch of interesting data to create a new type of loan product, and then take those loan products and then offer them to retail investors so they could earn a high yield by investing in an asset class that they had traditionally not had access to. And it kind of worked, it kind of didn't, right? So if you look at Lending Club or other businesses

like that, basically Lending Club was a clearly good idea. It was good to put loans online. But then when everyone else figured that out, a lot of people started competing with them for originations, and so the cost of origination went up, just like it used to go up when you had a brick and mortar. The second is all these lending companies would come to us and say, hey, I use 150 data points to underwrite loans. I use all these machine learning algorithms. Life's really good. And we look at the 150 data points that they were using to underwrite a loan. We say, OK, so of the 150 data points, how many of them actually provide signal? And they'd be like, three. One of them's FICO. And we're like, OK, so that's basically the same as it's always been.

And if you look at the big backers of all these online platforms, at the end of the day, they're not really retail investors. It's a small minority of the capitals from retail investors. So it was really back to just institutional investors. So they didn't really make do on that promise. Instead, the companies that we were invested in were businesses that were using the technology to invent a new type of credit. So as an example of that, there's a company called ProducePay that was providing cash flow to farmers during the harvest. If you were a farmer in Latin America and you didn't have access to capital markets, what you would do is you would ship your produce to the United States. The distributor you were working with would advance, they would take title to it and advance monies to you.

But even that took a little bit too long. They wouldn't advance much money. and so we helped the company build inventory technology to track the produce in real time take title to it at the time of it being on consignment and it became this really really awesome product they were able to help farmers who desperately needed cash they were able to help distributors who didn't want to be in a product in the business of providing cash flow to their clients and we were able to earn a really really great yield and this year they'll finance a not insignificant amount of all produce that like is in the united states which is pretty crazy

and so we kept finding companies like that and we were equity investors in them but they would come to us and say no what i really need is i'd love for you to make me a loan or offer me debt capital so i don't have to use my equity balance sheet or my equity capital excuse me to fund these loans because that'd be really inefficient and expensive and dilutive so we went out to the people who backed us initially and we said hey we'd love to set up a really tiny spv of like half a million to a million dollars to start funding the initial loan or the initial um, sort of cash flows. Uh, and the returns were really, really good. And so we started getting introduced to all the friends of our initial investors who said, Hey, if you want

income, you should really meet the co-venture guys. They're incredibly smart. And when you say the returns are really good, we're talking like mid teens returns. The, uh, I'm not sure I'm allowed to say, okay. They're really, really good. Okay. Um, and people thought we were smart because we were lucky, right? Like we just found this company and it was an amazing, uh, investment opportunity. And so people just assumed we were really, really creative and finding all these real weird niches that that didn't come till later so we had a small amount of capital we had started making a couple of these sort of are often these facilities to a couple companies and I approached two people one's a guy named Thatcher Bell another guy is guy named

Mike Beller I'd met Mike because he was the father of my best friend in college Morgan and he always used to help me out and was one of our early investors and I said hey Mike I'd love if you worked with us a day a week as a venture partner and you've already been given this guidance I'd we'd love to get you some economics in exchange for that. And then I went to Thatcher and he said, hey Thatcher, this guy named Mike Beller who had helped co-found a company that went public and did all these really fancy things

is working with us day and week, you ought to as well and we'll figure out the economics too. And so the two of them wanted to work at CoVenture because the other was working at CoVenture and I just sort of recruited the other and I was sort of the lucky guy with no resume in the middle and then when they joined, we were able to use their credibility to keep raising assets.

And so that was the very, very beginning. We had a small venture portfolio, a small credit portfolio or special assets portfolio where we're providing unique types of financing to online lending companies or companies that were using some sort of technology to originate a new type of credit and we kept raising assets and one of our LPs who is probably still our biggest LP today approached us and said hey I'll let you know it'd be really great is if we just invest in your holding company that way you guys could have or we could have a piece of whatever GP you set up in the future.

I said, I'd love for you to do that. And so I called a lawyer. I said, hey, I think we need a holding company. And so we set up a holding company for him to invest in. And we ended up building what CoVenture is today, which is a multi-asset manager. And so the way we set up is we have a holding company on top. We have a venture business.

We have a credit business. And along that path, people would say, hey, what are you guys? You know, venture and credit are very different. And we always kept hearing ourselves repeat the following, which is we're really interested in investing in the next wave of technology companies, which are going to look very, very different. than yesterday's companies. So if you think about it, you know,

today's biggest hospitality startup is Airbnb and owns no hotels. If you think about WeWork, it's the biggest real estate startup and it doesn't own a lot of buildings. If you think about Uber, it's the biggest transportation startup, doesn't own any cars.

So you're having this whole new wave of types of companies that were asset-light, they were being built differently than any new types of financing, but nobody was willing to build a new type of firm yet. And so our whole ethos, our whole, everything we wanna do is building asset classes

built at the intersection of technology and finance, and crypto is sort of an obvious place for us to go next. One of my partners, Sofneet, had been really early in the space in a number of different ways, and so we felt like we had some credibility. At the time, we'd been operating for a few years. We'd been producing good returns for people,

and so a lot of our investors knew that we knew enough about the space, and maybe even a lot about the space, knew that they wanted an allocation, and because they already trusted us, they purchased and said, hey, we'd love for you guys to just build a business there so it helped to help us invest.

And so we ended up setting up as a JV with a large financial services firm based in Japan. You know, we, our goal was to provide, you know, a stable professional asset management business within crypto, especially the time when we set up where there were a lot of cowboys who were basically putting up their flag. They were, you know, former venture capitalists

who were having trouble raising VC funds and said, no, no, no, no, no, I'm a crypto investor and I'm gonna be really good because I know all the people in the space. I'm gonna get access to all these cheap ICOs and all that stuff. And I was like, whoa, that's really, really scary. We'll try to be the professionals in the room.

It was actually funny. So one of our investors, when we first did it, he called me and he goes, Ali, I love the barbell approach of doing, you know, like asset-backed lending where, you know, to your point where we need at least a 12% net yield and we produce income monthly to, you know, crypto. Okay, so it's a little different. And we actually had a couple of our investors who looked at us really funny and a couple of our credit investors were deemed because they were like, okay, you know, I thought you were a credit fund. It turns out you're this sort of technology fund.

um why do you why do you think that so many of the incumbents haven't done what you guys are doing right because you guys really are at the forefront of this intersection you know technology and finance and um you know i've got the benefit i understand a lot about the business in terms of some of the lending strategies you guys have and stuff and and some people may say they're weird some may say they're niche some may say that they're just cutting edge is it that the large firms they don't there's not enough capital to deploy in those spaces yet is it because it's just the innovators dilemma like why do you think that you guys are able to get a competitive advantage there and kind of enter these spaces before others so i think it's a few different

reasons the first is we are multi-disciplinary and so you know we always tell people it's really hard to know a lot more about crypto than all the other crypto investors it's really hard to know a lot more about credit and all the other credit investors it's a lot easier to know a lot more about crypto than all the credit investors and it's not easy to know a lot more about credit than all the crypto investors so having this sort of um multiple funds and multiple expertise allows us to bring cross-disciplinary expertise to investment opportunities where we're one of the the only people in the room that might be able to make the investment the second is we've built our whole brand around finding these unique opportunities we're in a really really hard time in the world

to invest it's our view that the number one opportunity or investable opportunity today is creativity or to play within the seams or to play in complex you know to sort of relish in complexity because those are the places where it's less crowded um and so we've already conditioned our lps to know that that's the type of thing we're going to do um and so there's you know for most credit funds if they were gonna say hey we're gonna go lend against Bitcoin their LPs would freak out at them they would say okay so you know one I just want my nine ten eleven net like go make small business loans or middle market correct lending loans I don't want to have to tell my investment

committee that we lost money lending against Bitcoin but when we go out to people and tell them that they say oh you know that's obvious if from from an aspect lending perspective Bitcoin's an amazing asset to lend against it's liquid I can custody it you know if I lend against your car and you don't pay back i gotta go find your car and if you're being a dick about it like i gotta go like hire somebody to go find your car and get a motorcycle then it's really hard to find it well find it and then you gotta liquidate it and i gotta liquidate i gotta bring it to manheim and i'm probably gonna get dinged because you know it's just a really really hard process lending against bitcoin is

a pretty awesome asset because if i lend against it i can custody it i can liquidate it really quickly um and i can let it really really low ltvs and get a high premium just because not a lot of people are able to look at the space uh what traditional asset management firm just can't go to their investment committee and say, we're lending against Bitcoin because somebody's going to look at them funny. They have an LP base that doesn't want to have to go to their investment committee and say, hey, like, this is what went wrong. So I think that we brought, bought ourself a lot of flexibility because, you know, of

the brand that we built with our LPs. We also bought ourselves a lot of flexibility because of the fact that we know different things than everyone else. We have engineers on our team that can audit a smart contract. Most asset-backed lending firms don't have that. We also see deal flow from a unique set of people. So, you know, our credit team sees most of its deal flow through our venture network. You know, a lot of VCs know us as the people in their network who know more about credit than most other people.

And so instead of having to compete with, you know, the Fortresses, the DLIs, the Magnetars, the FlexPoints, the, you know, Soroses, the Blackstones, the Blackrocks, the Apollos, the Areses, this hugely crowded space of people who do the type of lending we do or the type of credit we do, when the businesses get bigger, we're competing sort of in the smaller less um less crowded and less competed in space where the deal flow we get is from our friends in the venture network so it's a combination of being in multiple asset classes and having multiple expertise uh disciplines in which we have an expertise and it's also having built a brand where our lps expect that from us and it's in part why they're invested in us because we'll do that creative thing got it um while we're on the topic of starting co-venture one thing that uh i've tried to tell a lot of founders that i

think kind of gets a sideways look. Do you think that it's harder to raise capital as an entrepreneur or as an asset manager? It's different. Why? Why is it different? My favorite part, when you're raising money as an entrepreneur for a startup and somebody doesn't invest, they're like, well, I don't like the idea for X, Y, and Z reason. When you're raising money as an asset manager, well, I'm going to invest in the asset class. I just don't like you that much. So it's a pretty personal experience. The second is when you're investing in an early-stage startup, in a lot of ways you're investing in hope,

and you're able to understand the asset, understand the plan, and there's a lot less unknowns. When you're raising money for a blind pool vehicle, you're like, I don't know what we're going to invest in. Here's a thesis on the space, but you really have to bet that, A, I'm probably one of the smarter people in the room. Two, the thesis is something that you haven't seen before, even though other people probably know my thesis and have tried the thesis before um and it's just

a bigger leap of faith and it's going to be a lot like pretty illiquid um so is it harder maybe i mean in the beginning i think it's a lot harder in the very beginning of raising a fund or raising money as an asset manager and then it gets uh then compared to being a startup because startup has like early stage vcs and angel investors and seed investors and a much larger network of people that can raise capital from but then as an asset manager once you have some sort of traction it gets just like dramatically dramatic well i would also argue that the appetite for failure is much higher when raising capital you know when lps are putting capital into companies versus funds in terms of they know let's say a venture investor knows that

you know i don't know 50 60 90 are going to go to zero out of their portfolio and they're going to concentrate and try to, you know, own a large percentage, a large percentage of the company and the ones that win versus your LPs who invest in an asset management firm. They're probably not as comfortable with, you know, funds going to zero or, or strategies going to zero, right? Yeah. I mean, there's no room for failure. Um, when you're, when you're managing people's assets and that's your job and also you have a different relationship when you're raising assets as an asset manager, your investors are your customers. When you're raising assets as a startup, your investors are your investors, right? So, you know, we get paid fees to make good decisions on behalf

of our LPs and they're our client. And so it is a little bit of a different dynamic. The other thing that we've also started to see is a lot of these new investment managers, they help build their track record. And by the way, we were very similar in the beginning where they just do a bunch of SPVs because that was an easier way to raise capital than raising money into a fund. And so an SPV is basically a single entity that you set up with the purpose of only making one investment. And the reason it's a good idea is because if I go to somebody and have no track record yet, I can say, hey, here's this entity that I set up. I'm going to make one investment with it.

And I'm not pitching whether or not I'm a good investor. I'm pitching whether or not this is a good investment. And so the investors can look through to the actual asset and underwrite the asset instead of underwriting me. And it's become an incredibly popular way to raise money because, one, it helps new managers build a track record for themselves before they end up rolling that into a fund. And, two, investors have started to like it a lot more because it gives them more optionality. And in many cases, there's people who work at these family offices or work at endowments, et cetera. who want to validate the fact that they're getting a paycheck and the fact that they can say here's the deal that i invested in not the manager i invested in helps them do that but there's also

a lot of negatives with that you know one of the things that people often say about investing is the best way to be a good investor is to be contrarian and right right you have a view that other people don't have you're able you know a lot of crypto investors feel that they're contrarian maybe that's true maybe it's not i think they overestimate their contrarianness but anyway so um you know you're supposed to have a contrarian view and be right when you're raising money for an spv it's very very hard to be conferring because almost by definition you're looking for investment opportunities that you can raise capital for which means you're you're raising money for consensus-based ideas the other hard part about spvs is they're not structurally

set up to support the company you're investing in so especially in a private equity ecosystem or in venture capital you know let's imagine you set up an spv and you lead the series b of a company or series c of a company that company may not get the profitability with the capital you gave them or may choose not to get profitability because they have an opportunity to step on the gas and keep growing faster. You have to rely on the people who came into your SPV to be holding their own reserves and raise the capital again. You're also putting yourself in a position where it's kind of awkward because you want to get enough information to the investor of the SPV, but you want to respect the fact that this is still a private company that doesn't want its information

displayed everywhere. So, you know, again, there's trade-offs in all these different ways of raising capital. So, you know, raising money as an asset manager versus raising money as the operator of new company i wouldn't say one's harder or easier they're probably harder or easier different parts of the life cycle it also as an asset manager depends on how you raise that money um but then how you raise that money it the ways that are easiest to raise money are the ways that make you a worse investor you know and there's a whole flavor of it there's the discretionary fund there's the closed-end fund there's a liquid fund which makes it harder to take a long-term view there's the smas where you also have like pockets of capital for certain type of strategies um there's

the spvs which are kind of consensus driven investing so um i don't know it just sort of of depends. I will say it is incredibly, incredibly difficult, though, to raise a vehicle of capital that is probably most ideal to invest out of. Because there's like this misalignment where, you know, at the end of the day, if you were, the best possible thing you could have done in 2006, 2007 is raise a 10-year closed-end vehicle to invest in distressed credit with a four-year investment period. And that's exactly what LPs wouldn't want to invest in, because it would give them, you know, a lack of liquidity and all sorts of things. But people who have those vehicles are the ones who do best.

well it's also and this goes a little bit into crypto right is the best investors are normally going to either know something or think something that everyone else doesn't and therefore they either one have to raise capital if you're an asset manager on pure reputation right so just i'm not going to sell you on my idea or my thought process i'm just selling you on me and you're gonna give me the money and i'm gonna go do what i want to do with it two is they're gonna have to sell you on some sort of trend or some sort of market cycle timing, et cetera, right? And where you may not believe what I believe, but you know that, hey, everyone else doesn't believe in this asset class now. And so if you believe that the best time to invest is when there's blood in the

streets, now's a good time to actually go into the asset class. You've got to trust me on the strategy. Or three is you end up only raising capital around strategies that you can convince those LPs, that consensus investing that you talked about, right? What I've seen, I think, is and this goes to spvs and now even into crypto is like it's really easy to convince people to put an spv into lyft at you know 10 15 billion dollar valuation right everyone's like oh this is a company it's not going anywhere they make money right all that kind of stuff it's much much harder to do that same spv into lyft in the series a yeah no i agree with that one of the things that as you were talking i was thinking about so i i'm not convinced that to be a great crypto investor

you have to be contrarian right so i think in venture capital you have to be contrarian because there's going to be a scarce allocation of resources into a certain round so in the series a of lyft there's however much money they raise let's call 10 million dollars of capital a lot of firms can take that entire 10 million dollars and so the way to win that deal is one to have seen it two to either have a good enough brand where the where lyft wants to work with you or three to have a unique opinion about how good that company is such that you're willing to purchase equity in that business at a much higher valuation than other people pay for it In crypto investing, there's actually a lot less scarcity in those types of financings.

And in an odd way, it's actually in the short, like it depends on what your hold period is and how you're trying to measure yourself. You actually don't, you want consensus because then you want a bunch of people to buy the token. And to some period where you can eventually sell out. In some investments. So I would argue, and we're recording this in November 2018, I would argue that the best investments from a structure standpoint to date, from a sustainability standpoint, have been equity investments. So Bitmain, Binance, Coinbase, kind of all of those equity type investments. Now, there's plenty of ICOs that exploded, but there's plenty of them that are down 95%, right? And so I think that, and we're just starting to see some of the regulatory issues that are coming along with the ICO structure, et cetera. Part of what you're talking about is in the ICO or where you're investing in networks, you need the network effect to take hold in order for the value to accrue to those tokens.

But I'm not yet convinced, and this is just my personal opinion, that that's actually the right way to finance things moving forward. We'll see, right? Um, but I, I actually think that if you look at companies, um, I'm trying to think of, you know, these companies are doing like equity sales, right? Or early on, what now they're doing is actually opening the pipe. They're saying, I don't really just need angel investors. I don't need just venture capitalists. I'm actually going to take money through a whole host of people.

So AngelList has done a great job of this, right? They basically said, look, anyone who's an accredited investor, who's got an account on AngelList, if there's a company that's actually on there, you can invest. Now the defensibility for venture capitalists, and I think you're getting to this is the brand, right? What are you going to do outside of the capital to actually go ahead and help the founder? I don't know if we've seen that many investment firms start that promise something different. I do think that there is, though, a similar dynamic, which you can kind of crown the winner

and stop things doing that in a really, really big level now. But if Andreessen Horowitz backs a company, you're crowning the winner in a space. If Naval or Barry Silver or somebody like that, they can crown a winner. They can say, hey, there's a bunch of companies that are in the crypto space. They're doing an X, Y, and Z thing. and we can all get together and decide we're going to invest in that company together and, you know, take something that used to be a contrarian investment and turn it to consensus. And the other sort of just thought there is I do think that people think about contrarianism

in maybe the incorrect way or sort of too long-term of a way. And I would actually even back up and say most early-stage investing isn't as contrarian as we all like to believe it is. And so if you look at a lot of early-stage investors, especially seed investors, they claim that they're long-term holders. And, you know, a lot of the people who invest in crypto say, hey, I'm long. I'm like, I'm going to hold this for five to ten years, whatever. In venture capital, it's actually this really, really weird, unhealthy dynamic because if I'm a seed investor, I'm being told by my LPs to stick to only seed investing. I'm supposed to only make early stage investments.

I'm not supposed to style drift or creep. But if I do that, I'm basically funding a company with about, you know, 12 to 24 to 36 months of capital. if it's a really big round, I have to convince everyone else in the world in the investment community that I was right shortly thereafter I made an investment. And so a lot of people aren't actually given the opportunity to be contrarian or to have a unique view because it's so quickly that they need to get validation from other people. And that's why a lot of early stage investors have instead just become almost scouts for the Sequoias and the Andreassons and the Kleiners of the world. Because basically what they do is they say, oh, wow, it turns out that

these big Series A investors or Series B investors are investing in X, Y, and Z space. I should go find the company that's likely to be interested in that space and i think that you're seeing a lot of these early investors in crypto have the same struggle in their dynamic um how long can they actually wait until you know either the project runs out of money until they need the tokens to appreciate value or they need to see a step up in the equity of the round that they just backed right so you know if you're an investor and you're taking a sleep of your capital and putting into crypto companies and even if you're buying the equity or a blockchain company you're buying the equity of those businesses you know those companies all start to run out of money really quickly

at the same time the crypto markets are going down you're going to have a significant amount of your lps being like i told you right so everyone's sort of looking for this validation and so as much as we all want to sit there and say we're contrarian we're maybe contrarian for 12 to 24 months at a time before dynamics end up making it very very difficult and you have to be able to have really strong conversations with your investors saying hey i i um i made this uh you know memo and sent it to you 12 months ago if you're going to change your mind because of a dynamic in the market that's changed like you're probably not the right investor for this if i love you know x y and z token or x y and z equity at x price and now it's a lower price we love it

even more um so i don't know it's just it's a really really interesting and weird dynamic we'll get to in a second i actually think most of the crypto investors are going to be very very wrong because they're doing what you just described and i think that it's going to be hard to invest in this space uh continuing that i think most crypto investors are either people who are momentum traders are just fine and like um it might actually be an okay strategy for people who are actually good at it um and then there's like this whole other half and probably the most of the first wave of people who actually raise capital into funds um who are crypto investors who are basically former venture capitalists who said oh wow i was in venture capital and i got

lucky and i was an investor in a crypto company early on and so that's now on my resume so that shows that i'm probably good going forward and so i'm and and so what i'm going to do is i'm to raise another pool of capital that's bigger and instead of calling a venture capital fund I'm going to call it a crypto fund and I'm going to tell people well I'm going to get into the best deals because I know all the people in the space you know I know how the technology works which makes me an expert and I'm basically going to take the same approach that I took when I was investing in a completely different asset class and I think a lot of those people are going to really struggle because there's so many differences between investing in crypto and investing in

traditional equity of companies and you know you can even see in the documents they write so a lot of their fund docs don't contemplate forks and side pockets and they're written in ways where like the waterfalls are totally broken for the fact that they're a liquid asset and there's not appropriate gates or the gates are like something that their lps don't fully understand so you basically had a bunch of people take private equity docs turn them into crypto hedge fund docs and then take venture capital approach investing to a type of investing that's like very very very different um and so you know it's it's going to be really like interesting and semi-terrifying let's go down this thread because you've said this a couple of times now where you know you

guys are somewhat the sober investors in uh in a lot of these spaces and so some of this comes down to the diligence you do kind of the discipline you have around what valuations you'll invest in given the stage of the company um talk a little bit about how you guys think about being that sober person in the room and then how you actually um you know turn that into action or stay disciplined so yeah i think the first thing is we move slower than a lot of other people uh so i think and the reason we have a real business right we manage a significant amount of assets our investors expect us to be in business to stay in business to not take a lot of risks and to not get close to the line and so for us that's first and foremost just to make sure

people feel like we have a significant amount of stability um and aren't taking it where our job not be that like 25 basis point flyer in your portfolio as a firm um this the second is you know we're pretty honest with ourselves of hey can you actually invest in some of these things on a fundamental basis or are you investing things on a technical basis um and how do we hire people and bring people into the firm who have invested in other asset classes that have behaved very similarly and we're able to look at these things you know we have this guy on our team named t and if you ever listen to him speak he just says hey these are just numbers on a screen right and And he's taking, you know, and his view is, I've seen this movie many times before in different asset classes.

And, you know, the fact that it's called crypto doesn't mean anything to me other than the fact that, you know, this behaves similar to any other market. And so we're going to trade it like it's just another market. We're also trying to take very traditional products and just apply them to a new asset class. But we're not, like, we're not the types of people who say, oh, man, like, you know, Western Union is so clunky and charges way too much. And, like, screw those guys. We're going to invest in every company that's disrupting them. And we don't care the valuation and the token's worth. God knows what the token's worth.

It's gonna be a binary outcome and it's either gonna be worth a ton or it's not gonna be worth anything, so screw it. Like, we are not gonna be that type of investor. You know, we're also not the type of investor who sits there, like, you always hear all these people who talk about a token and why that token's gonna work, and they're always like, oh, well, the technology's better.

Networks don't win because of technology, right? Like, if Facebook, if some competitor of Facebook came around and said, hey, I wanna compete with Facebook because the pictures are gonna load faster and move when you touch them, like, you still wouldn't switch off Facebook. You're on Facebook because of the network. Cryptos, in many cases, are similar.

And so we basically just try to say, hey, look, how do we approach this? If it was any other asset class, in the event that it's crazy overvalued, there's arbitrages we can take in that. We can take out rents in that inefficiency, in that fall. But we're not going to say, oh, man, this is either going to work or it's not going to work, so we'll pay any price for it. It's just never been our ethos. Absolutely. And where do you think people aren't looking when it comes to crypto that either they should be or, two, you think in the future there's going to be large opportunities? So I think that many people look at the opportunities in terms of being quant investors in the space and write it off and say, oh, well, the traditional hedge funds are probably going to do that better than us anyway.

It's expensive to set up, et cetera. We're sort of of the view that the firms are going to be best at that or can look at the asset class and say, hey, it's too small right now. So we'll do it later. And I don't really know any, I don't have any information that most of the people don't have about a lot of these quant funds. But my thought is they're probably looking at it, they're saying, well, it's really hard to deploy over $150 million from the space because all of a sudden you start seeing slippage and everything else that makes it really hard to trade because there's just not that much

liquidity. And so we'll watch it, but we won't get there yet. And so I think that a lot of people are overestimating the sophistication in terms of the trading. And I think if you, again, if you talk about, talk to most of the traders in the space, It isn't like they're sort of like touch and feel traders and momentum traders. And even the ones who call themselves quantitative or technical traders, there's not a lot of hard money going to the ground in building quantitative models that you've traditionally seen. The second is I do really believe that lending against crypto is going to be a really important thing. I don't know how long the spreads are going to stay high.

So you probably will see yields compress. I don't know who the players who ultimately win that space will end up being. Is it an exchange? She says, hey, you know, I already have the clients. I already have cheap cost of capital. If I'm Coinbase, I just have so much cash that I might as well do it. Or are they going to say, hey, we're already under enough regulatory scrutiny, it doesn't really make sense. And the other part is breaking out the different cryptos and saying, hey, what are the purposes of each of those?

And not running from security tokens, but running towards them. And one of the things that we've always just assumed is security tokens will end up just sitting on the capital stack. And they'll be subordinate to common stock with better transfer rights, but less governance, less information rights, and less everything else. So you think that they're separate? Yeah. I mean, yeah, I do. You know, I think it's really frustrating when someone compares a security token to Bitcoin. Like, it's crazy. No, no, no. Let's talk about the security token stuff for a second, right? So let's say that the security token is equity or a form of equity. You think that there's a whole host of different outcomes, but one of them that has a high probability is that people will have security tokens in their capital stack, but it will be one piece of the capital stack. It won't be, you know, common, preferred, et cetera, all in a security token capital stack. Yeah, no, I think what's going to happen is you're going to have some, you know, first of all, going public isn't cool anymore. And companies stay private for a very, very long time.

And so you're going to have early stage investors who come to the CEO of a company. They're going to be on the board and they're going to say, look, you know, I'm at the 10th year of my fund life. I need some sort of liquidity and I'd like you to either do a secondary offer, you know, to SoftBank or whoever the hell does it now. Or I need you to apply my equity back. And the CEO is going to look at this preferred equity holder and say, look, here's what I'm going to offer you. Either you can stay in the deal and shut up, or I'm going to tokenize your equity. I'm going to strip it of all its rights. I'm going to make it more liquid or at least let you transfer it.

And it's going to be prices if it doesn't have all those rights. It doesn't have the liquid prep and doesn't have everything else. And so it's basically going to be priced, supported to common, but maybe it's the liquidity premium. So it trades at a small premium to common. I actually don't really know where it's going to be. Of course. In the future, people are going to have models far better than mine. and I think that once there is that

soberness in terms of how people start thinking about these different tokens and these different expressions of equity, I think that's when it's going to start to be investable and a lot more interesting it's interesting that and probably not that surprising that DCG came out of second market, like second market was probably just ahead of its time and you know

my personal prediction, I actually know nobody at the company I think Carta would be like an amazing, amazing candidate for that so Carta basically just has the cap tables of every private company and And they could just say, okay, we're going to offer a market for secondary and private transactions. And it's backed by USP, so that sort of makes sense. Again, this is me just not having talked to anyone on the team, but sort of thinking, wow, that company could probably take over the NASDAQ one day.

I'm convinced Card is going to basically be a SaaS company that has network effects and makes everyone else go on the platform. And it says, okay, now we have the information of every private company's cap table. And now we're going to say, all right, now we're going to allow you guys to all trade this and tokenize it and train the structure of it. um and oh by the way we're gonna like also set up an ria and we're gonna make loans to the people like based on their equity like do all kinds of crazy things and if there's anyone at carter there who wants to meet with me i think you're awesome i'm in love with you i wish i could meet you well and i think part of this that's so interesting is because they have the capital stack information they have optionality right there's a whole bunch of stuff that you just

described that they can do but ultimately what it does is they get a service their customer which is the company and those companies are going to run into a lot of issues because the market dynamics are changing right so people don't want to go public all this kind of stuff the question that i that i think is interesting here is by the way i think going public is going to be a spectrum right like of course you know and i think it's insane that we have a binary private company or public company right and i think that it's really really important that we actually do put some sort of regulation around the steps in between being private and public um you know and i think that doing so is actually going to help us avoid a lot of theranos or whatever the next theranos is

how do you how do you think it helps us avoid that yeah i think it's crazy you can raise 200 million dollars of equity now and then not have any regulatory requirements other than just being another private company that's supposed to not commit fraud and maybe have an audit at that point and you have boards with very very little governance you have management teams with insane voting rights insane leverage over their boards a lot of that stuff's just going to break and i think that if we get really really smart about these security tokens or sort of the in between stages of being private and public and stop saying it's one or the other i think that we're going to actually have it is a really cool opportunity to have the right regulation for the

the right types of liquidity you have amongst your stock or your securities or your equity. And, you know, I think I bet you if you ask somebody, hey, if you were going to rebuild the SEC or the regulatory framework today and you didn't have any of the baggage of all the laws that were made in the past, would it look different? They'd probably say yes. Of course. Because it's just easier when you have a time site. And I think that this is going to be a really cool opportunity for us to do that in sort of the in-between stages between private and public. All right.

So you've got a unique view on security tokens because I don't think I've ever heard anyone argue that But the way security tokens become popular is not companies start out fundraising with security tokens, but actually it's used as a later stage kind of secondary market or liquidity release valve almost. Yeah, I mean, I think that one of the things that people always talk about, like why security tokens or why cryptocurrencies are so interesting is their liquidity. I think they'd be far, far less interesting to people. And you've seen that they're far less interesting to people and that liquidity doesn't exist. And so just like the stock market is interesting because it creates liquidity. and you wouldn't be able to go public as a small, small company

because you just wouldn't have the liquidity and it wouldn't be worth it for people and they couldn't do the research and you couldn't pay for them to have the authenticity that you can validate the information that you're publishing if you don't have enough budget

or you aren't a big enough company to do that. The companies that are going to be in a position to actually allow people to buy their tokens and feel like the information that they're getting representing the token is accurate are the ones that are going to be able to afford to actually report correctly out of those reports.

That third party validate the reports and that ecosystem just can't happen for a very small company yet. And so I think it's almost ridiculous that we're basically saying, hey let's just take this thing that we've already decided is only good for later stage companies because of the fixed cost of having a liquid token out there or a liquid thing out there it's just high and then do it for startup companies like i think that's just a novelty all right before we

continue with this conversation i want to mention our sponsor again blockfi remember they do crypto lending so you posted your crypto as collateral they give you a u.s dollar loan and you can use the u.s dollars to do whatever you want you should visit blockfi.com slash pop and then tweet at me that you win. If you tweet at me after you went to BlockFi.com slash Pomp, maybe I'll throw you a like, a smiley face, or the fire emoji. The fire emoji is the best. Remember, go to BlockFi.com slash Pomp, and I'll see you on Twitter. What's your view on Bitcoin? How does it fit into the macro environment? My view on Bitcoin is that I think it's a reasonably good store of value. And I've said this before, but if you think about what makes something a good

store value you talk a little bit about you know the volatility comes up and bitcoin's better volatility now than it used to be but it's still not great but gold used to suck at volatility too um portability i think is the best thing about bitcoin so you know and i make the joke a lot but i've never tried crossing the border with ten thousand dollars of gold in my pocket but i can't like i can't imagine it's a fun experience as a guy named ali hamid like usually when i like buy like things at duty free i get randomly searched so gold would probably be a bigger pain in the ass um and so it's really nice that i can basically move from one border to the next with bitcoin um and then also like why why is bitcoin better than the u.s dollar basically

bitcoin is allowing you to defer what currency like if i'm in a country and i'm not sure which countries are going to align with me if i ever have to be a refugee i'm going to want to defer what what currency i take my my wealth or my assets and put them into so if i commit to the dollar and then all of a sudden it turns out there's capital controls and it's harder for me to get that dollar into something else or get it back i'm kind of stuck there's a little bit less capital control or ability to control capital in bitcoin so it's almost a deferring of which country i'm willing to ultimately align myself with and the other part is like i do think having a store value or i do think having an inflation hedge is important and if you know if you start

to think where we are in the economy like you know things are really scary we don't have a lot of triggers um it's not like we're a country that can go bankrupt right like if someone calls our debt that would just print a lot more money and so there's ways to hedge against that you can buy real estate you can buy gold you can do all these certain things i don't think though bitcoin should the outside of that portfolio of things too like basically bitcoin is long us not solving our problems and i'm not long as solving our problems say that again bitcoin is long that we as a country and as a government are not going to solve our own problems and i'm not long that we're going to be able to solve our own problems i think we're really good at deferring them kicking them

down the road but there's going to be some like really weird breaking point and i don't know how going to work during our lifetime and it's going to you know there's going to be assets that are less correlated to everything else that it's probably important to have and i joke like we we didn't even solve our problems during the financial crisis so like i was just at cornell last week and the way i explained the financial crisis to these undergrads is i basically compared to the cornell greek system right so with cornell you have like all these fraternities that were doing drugs and alcohol which is really bad and cornell used to like visit the fraternities and say hey that's really stupid you ought to stop and eventually some of the fraternities wouldn't

stop and so they get kicked off campus and we had this you know and then in Ithaca there's a thing called college town and so people move everything to college town because they can't have they can't be in a fraternity anymore and you know this isn't unique to some of my uh alma mater but you know kids just don't stop doing drugs and alcohol so then they go to college town and it's less regulated and it's probably more dangerous than if it had been the great system the whole time you know in the banking system we had you know all these people doing drugs and alcohol called subprime mortgages and really risky assets. And then, you know, Cornell went to them and said,

hey, you have to stop doing drugs and alcohol. The government went to them and said, you have to stop doing drugs and alcohol. And it's not like people stopped making subprime mortgages. It's not like people started doing risky things with their assets. And instead those assets moved to non-FDIC insured institutions.

And if you look at the assets of all those institutions, like Blackstone was $80 billion of AUM before the crisis, now they're like 400 billion. I don't know the BlackRock's AUM before the crisis, but like I imagine it's much, much bigger now. And so, are those institutions too big to fail? On a regulatory basis, they're not guaranteed to be saved, but the government will probably have to do something

to save them. So it's not like we've solved our problems, we've just kicked them down the road, and then eventually there's gonna be a moment where we can't fix them. Something's gonna break really, really fast. And having an asset where you defer what country you want to align yourself with,

or defer where you wanna go, or if you need to leave, real estate's a little illiquid, so owning a house despite inflation, you might live in a really, really shitty country now, so that might not be the perfect hedge. So I do think that it fits somewhere. I, I, this idea of, um, you know, one currency, one global currency, um, I think that people under the age of 35, for whatever reason, I don't, I actually don't know the reason,

but it may be social media. It may just be, there's more travel and kind of awareness, more communication across borders for whatever reason. It feels like that is a much more obvious thing. I don't think so. You don't think so? I think this one is stupid. Why?

Because, like, currencies are really good for allowing governments to control their people, right? Yes. If you're the view that we're going to have one government for the whole world, and that's going to be a global currency, then, like, maybe, right? And you're going to have, like, one overlord, and I really, really hope we don't live in that world, and I really hope Elon Musk goes faster, right? So if you're long the view that there's going to be multiple countries or multiple nation states within our world, and you're going to want people, you're going to want governments who have a mode of taxation that allows them to control their people. So think about this. Back in the day, dollars were really good or currencies were really good for getting people off the barter system, right?

I had a wagon, you had food, and so I was hungry. Common unit of account. Yeah. But really, the thing that was so powerful about them is that monarchs like kings and queens could tax their people and settle a social obligation. As an example, basically a king or a queen would go to the people and say, look, I built you a castle, I built you walls, I gave you food, I hired knights, I convinced the knights to go fight for you. And at the end of the year, I want you to pay me back for it. And the way you're going to pay me back is I'm going to invent this thing called a dollar. I'm going to take the dollar and I'm going to give these dollars to my knights.

And at the end of the year, you have to find a way to convince those knights to give you some of those dollars and then pay me a little bit of them at the end. it's called tax and if you don't i'm gonna kill your children super super motivating um and that would that made everyone think oh wow i can either give stuff to the knights so that made it pretty good to be a government worker or it could be a knight which made it easier for the government and the monarch to recruit an army and that just illustrates how important each um you know government currency is but those but those currencies were backed by a physical resource Yeah. Do you care about gold, Anthony?

I've never seen you wearing gold. No, no, no. It's not valuable. No, no, no. It's not good looking. It's not that we care about gold. It's that when you don't have the currency tied to a commodity, governments can print at will. Of course.

I mean, that's what the U.S. government can do. That's why inflation is kind of scary. Why every fiat currency can, right? Yeah, well, no, I mean, people in Europe can't, right? Like, Germany can't just print euros, right? Like they have this whole, and that's why a lot of those countries are arguably are in trouble and it's complicated. And maybe it's better to give me what's not. But sure.

But I think that ultimately, let's imagine we get to that place where if we're on our way to a global currency, it means we're on our way to a more consolidated governance system where there's less nation safe than there are today. You're still going to have people who it's hard to imagine they're going to tie themselves to a certain commodity. I think it's, you know, I think it's clear that we're all getting off commodity based currencies. And so, you know, sure. I think ultimately what ends up backing them is the ultimate demand of taxation. So you're governmentally really freaked out by allowing anything to compete with their own currency, because allowing a global currency to exist will decrease the value of their currency. And all they'll have left is that demand and taxation. But then the lower that their currency goes in value, the less they're able to spend and the less powerful they become.

So I agree with some of what you're saying. I completely disagree with some of it. And the reason being that we're good enough friends where we can have this debate and then go get a drink afterwards. So I agree that governments want to control their people through currencies. Right. I agree that taxation is a huge component of that. Governments want to control their people. They decided currency is a great way. Fair. OK, that's a better way to put it. But I don't agree that Bitcoin has anything to do with that.

and here's why because if you're trying to solve the problem for governments if you look at it solving the problem for the people right meaning the everyday citizen bitcoin is a much better solution than fiat in a whole host of ways and some maybe fiat's better but and i think most people would agree bitcoin is more divisible more portable right all this stuff to it if people begin to opt out of a currency bitcoin has like this crappy governance system where like it can't you know make decisions very quickly and you know but is that currency but but is that not actually not a positive thing it's a feature and a bug right it's both that's fair yeah and by the way i'm saying bitcoin it can be interchanged anywhere yeah yeah of course whatever the

whatever the dominant winner ends up being okay that's fair i do think bitcoin's not going like i compare bitcoin to kim kardashian i think they're exactly the same that like enough people talk shit about them and they haven't gone away they're probably not gonna go away in the future the other thing i think is really interesting are you are you long kim kardashian begrudgingly um you know i don't it's like one of those yeah okay yeah yeah the um but the other thing that's really interesting about crypto like and you're saying well it's not backed by anything and they think that there's a generational gap where people feel like it has to be backed by something and you know i i care that uh a current a fiat currency is backed by gold as much as i

care that's backed by nothing because i just don't attribute anything gold like i don't think oh i don't think people care that fiat's backed by gold or not i think that what people care about is a little taxation or demand well oh i was just gonna say i think that they care about the impact of governments not having to have it backed right so governments can end up continue to print now here's the thing that i'll that i they wouldn't continue to print because then they had to face their fiat and then they would be screwed because they wouldn't be able to control people anymore which is back to like the whole point they want well look in every week economy right and especially economies with dictators yeah but they're not thrilled that they're printing right like they

the dictated they'd rather avoid it the the elites are enriching themselves i mean come on that's way less real real asset prices rise and who owns all real assets yeah but then you're also selling them to a country that's completely been defaced right it's like we're gonna sell to people from outside when you're you know yeah well that's where the sanctions come into stuff right the um so either i don't i'm not totally sold on that Anthony, consider me unsold. Okay, that's fair. We're coming back in 12 months on that one.

All right, so what does, Anthony, what does the world of global currency look like? Here's really where I look at it. So if you look at a single unit of account, the same value that we got out of you and I were bartering, now all of a sudden we have a single unit of account that we can go ahead and I can take my house, I want to buy your wagon, I sell my house for a dollar, I then can transact you with that dollar we get off barter and we go into that single unit of account if you look at but don't you think that'll just end up being solved by like things like stellar where it's like all right we're going to be the clearinghouse of all these different crypto

exchange like exchanges of currency from one to the next and basically governments instead of having tariffs and sanctions everything that with that will basically use those um intermediary um tokens or currencies um and then just tax them in different ways and say i'm going to charge you x them out of this all right so i took i had to take u.s dollars converted to euros right and then when i come back i'm gonna uh convert it back now having one single unit of account solves the problem there doesn't sound like that big of a problem if you don't travel a lot etc but all of a sudden if you look at corporations corporations have if you're a multinational corporation they have tens of if not hundreds of bank accounts around the world where they have to keep certain

amount of capital in each bank account to keep it open and if they want to take money from let's say vietnam you know or wherever and bring it back into the u.s they don't just go from that local currency at that local bank and come to the u.s and convert back into dollars they actually go through multiple transactions sometimes four or five six transactions where they've got to bring those dollars back into the u.s and back into that currency but that's the government's doing that on purpose right like they want that system so they can continue to tax is it is it the right system it's probably not the perfect i mean it depends i agree with you that the power here The power issue.

than other countries are um so i i just don't imagine i think i think giving that much freedom like i i think we're already seeing it though right with china trying to uh denominate oil in their currency and you're starting to see some of the things where people are saying look the u.s dollar is the global dominant currency there's not anyone i don't think anyone can argue that that's not true today right but i do think that you see other currencies not even the digital currencies just other currencies around the world who are envious of that position and they're doing things to try to take the leadership role now whether they can do it who knows etc like countries align with themselves right trying to go into you know a few other countries and saying hey you know

what make us actually stronger more powerful is if we you know just just like the euro right yeah just as we all came together and work together i can imagine there being um a handful of currencies rather than as many as we have now into some sort of consolidation and they happen to be digitally based that seems way way more likely to me than a global currency and by the way if people start advocating for global currency i'll be the first first person on the streets of the science and this is a horrible idea because i think it would just debunk control and like at the end of the day there probably should be some level of governance between our government and our people like i think left on our own to our own devices we'd probably break shit i think that

those aren't mutually exclusive which global currency and having a control in government all right let's let's move on though here we have to find a substitute to currency to control people for sure okay all right fair enough uh let's the other thing real quick just to add on to that the bitcoin thing i think it's also really important that to remember that like our kids will never remember a time before uh bitcoin like they'll just think okay it's as old as gold is right and by the way just like we think the stock exchange is as old as like forever um and we just trust it by the way imagine how crazy of a system that must have used to be everyone must have been like that's insane that you would buy these stock certificates that theoretically the money goes

to the company to use that company like the cash to operate something and then you get a dividend who the hell knows where the dividends being held like it is crazy that that mechanism existed and we just take it for granted we're just like sure charles schwab probably works you know and so i think that we also discount it's also a generational gap of this skepticism just won't be there they will assume bitcoin is older than jesus right like that i agree with that um what are the other errors of crypto that CoVenture and the team there is excited about looking at, you know, thinks is worth entrepreneurs looking at. We're short one global currency. So where are we long? You know, a lot of the ideas that we've seen in crypto that we're a lot less excited about are

for these faster and less expensive modes of what we currently do. So, you know, remittances was like one of the ones that everyone's going to come out and say, OK, like, you know, again, And Western Union and MoneyGram and all these other companies are really poorly run. And it costs a lot of money for me to send money from here to Libya, where my family is. And so we're going to come up with something that's a lot cheaper. And at the end of the day, a lot of those companies are user acquisition businesses. And the magic is not in how they send the money. The magic is in how they quickly get people to use their service.

I mean, it's similar to the payday loan problem, right? So like in a payday loan, just to illustrate the power of fixed costs in hard real estate and customer acquisition, a payday loan is a loan that goes out for two weeks. It might be $500 to $1,000 in size, and let's imagine this payday lender were to charge less than state user. Let's call it 24%. Still a very, very high rate of return, but something that's not criminal, and it's a two-week loan. So if I make somebody a $500 loan that's two weeks, and I'm charging 24% APR, I'm actually getting back $2.50 on my income, and it costs me like $20 to overchange the loan. Remittances are the same problem, which is like it's just a really

hard and expensive upfront cost and like if you actually go and listen to the earnings calls western union and like you think oh man they're like being really like dumb and then focus a lot on technology and by the way you ought to listen to quarterly earnings calls western union because if you have the time to listen to me talk about nonsense you definitely have the time to listen to that um then like you'll notice that they are all about technology and they're all about mobile payments they're all about trying to solve these issues and by the way the people who capture those rents are not going to be the consumer it's not like if western union finally figures out a cheaper way to transmit money um they're suddenly going to pass that savings on to the consumer um and

there's also it's like a government problem it's a you know there's there's so many different problems that people will go to and say what if you know we could just use cryptocurrency to solve x because it'll make the technology more efficient and it'll obviously make this better for the consumer a lot of times it's not actually true um the other thing that we've really struggled by is like so many people and i know you know you've talked about this is to say hey what is an asset that's never been liquid that people have never had access to invest in before let's tokenize it And if it's tokenized, it will be more liquid, and then if it's more liquid, it will give retail investors and people from other countries to come in, and it will change the dynamic of investing outside your border or into asset classes that you traditionally have not had access to before. But what people are missing is you still have to make it liquid, and that is really, really hard.

The magic of the stock market is not that the NASDAQ is so good at getting people their shit. It's the fact that they created this liquid market, which is insane. and again and they and they do that by artificially concentrating liquidity right it's only open certain hours or all this stuff of course yeah just think so many people focus on the technology how the technology is going to solve the problems they're not focusing on the network itself and the dynamics of the network and how they're going to get people onto the network and how i'm going to say hey here's a building and i'm going to tokenize the building and that's fine that's just sort of legal stuff but the magic of that is how they get people interested in the building

and how they get people to buy a cell and trade it and how they market make and how they do all those other things so so often when we get pitched these these ideas they're so focused on the technology and hey if everything else in the world works because we built this technology it's going to be awesome and like okay great so let's talk about everything else in the world such as who's going to buy it who's going to market make who's going to actually regulate it who's going to do all those different things those are some of those are the places that most of the pitches that we see fall down on um you know the ones that we are more excited about are the ones that are offering something that could have never existed before without the blockchain or without tokenization

And so, you know, whether that's, hey, I'm going to take my identity and I'm going to now own my identity and it's portable, that might be really interesting. The other interesting spaces that we've seen are when you're a company that has a very, very hard time aggregating disparate data and you need to motivate your user base to aggregate that disparate data for you. That might be the type of thing. So, like, I can imagine autonomous vehicles are going to, like, run around with, like, cameras on them and try to get a bunch of data so that, like, it can train the other autonomous vehicles to drive better. you would probably want to motivate the people who own those cars or own those vehicles or own those cameras to contribute the data such that you're taking you know something that needs to be crowdsourced and compensating for people for it so those are some of the areas that are more interesting but most of the time things have fallen down is because people are so focused on

the technology that they forget they're actually building the company with a lot of other dynamics around it well and i think you can summarize this just they're building technology that doesn't actually solve a problem they're building technology that solves maybe the smaller part of the whole problem right like the fact that commercial buildings are not mostly liquid is because it's just hard to get people to understand the information about like the building not because we don't have like a token for them to buy um you know you know securizations like it's not like the most novel thing on earth so i've always felt like people overestimate that so i think that you guys are overlooking a hundred percent of assets in the world will be digital

doesn't mean it'll be on the blockchain but a hundred percent will be digital right at some point in the future. I don't know what the timeframe is. But the other piece of that is, and I don't know the numbers here, I wish that we could look it up, but commercial real estate today, how much of the commercial real estate is directly owned by investors versus there's some form of aggregation, securitization, et cetera, that goes into the ownership of commercial real estate? If you take all the commercial real estate in Manhattan, how much of the commercial real estate's owned by a single SPV, non-traded REIT, whatever, by the direct ownership versus there was some financial instrument in between the asset and the investor base.

My guess is that it's a very high percentage there's a financial instrument in between the investor and the asset. Yeah, you're probably right. I mean, what we might be saying is, okay, so we're in such a massively shitty time to find investments that we're like going to go um is it off the chain we go off the chain to like a bunch of um sorry i had to we're going to go like get more and more creative by saying hey the world of investable assets today just isn't solving our need because interest rates are so low people are taking way too much risk the market's overflowing with cash so we need to go invest in assets that

have never been investable before and so we're just going to say hey we're going to digitize everything in the world and it turns out there's this thing called security tokens and that is the best way to do it and we didn't have the language and the method and the interest yet and because there's so much money invested in security tokens because of the hype and because people are speculating everything else there was this confluence of two things happening one we got desperate and two we had a bunch of people who went bananas for this thing called cryptocurrencies and so we're going to use this cryptocurrency thing that capture the minds of the demand and the liquidity of so many people and take that and for the first time invest in assets that

have never been investable again before maybe that's how it'll turn out and i think that plays and a little bit to the thesis but i i actually don't think it's going to be security tokens this is like my one contrarian thought is i think it's just digital assets yeah i don't even know if it ends up being blockchain i don't i thought digital assets were security tokens well so so so to me here's here's the example i was using with people right u.s dollars of digital currency over 90 of it's not in physical paper or coins and it's got a certain monetary policy to it security token is because i'm guessing that these are assets that are you know you know It's equity debt or claimant cash flow.

Yeah, you're buying out in speculation that the thing will appreciate it, it'll do well, and then because of that, you'll end up making more money. That's why I'm calling it a security token. Is it a digital asset? I don't know. Maybe a digital asset comes on top of the little tree, and then the security token is a digital asset, and it's only a security token that appreciates the betterment of the asset that you purchased. I agree with that.

All right, anything else you guys are excited about or looking into right now? I mean honestly the thing that I'm most interested in is this I guess this um spectrum of private to public and so I'd go really really heavy into that figuring out like what are the things that would go public if they were bigger or are things that used to go public in the 1990s and now aren't big enough to go public and what is the alternative means of doing that so that'd be one thing I'd look at the other is I'd look at like what are the things that you can make more granular so you know is there a way that I could start compensating salespeople in a more granular way where you know I can use smart contracts to say, hey, like if this salesperson is getting something closer,

like down the funnel in a more interesting way, I can compensate them more and I can issue them tokens. I can claw back the tokens and they can see their compensation in real time. And then by the way, as a salesperson, I would want to capture that data that I earned at my first job. And then when I'm applying to my second job, instead of sending them my LinkedIn resume or my indeed.com resume or whatever it is, I can basically say, hey, here's my digital profile. I'm going to port over my digital profile to you. And then you can hire me based on that. And then, you know, tweak my smart contract in terms of how I'm competent. I think that might be interesting. So just general compensation would be interesting. I've always thought quantifying the quality of

work at your, at your previous work, uh, jobs was so interesting. And it up until now, I mean, probably even now has been nearly impossible. Yeah. I do think, um, people get hired by what they, what their titles have been, but not what they've done, um, at their past jobs. And so I think that smart contracts and some sort of quantifiable accreditation system of hey you are an x y and z and you know there's a token plugged into your sales force and you're being issued tokens based on that and like you can then take that and like port it over to you know some more other reputation that that would be interesting um the other thing is i think the next wave of fantasy sports will probably be like a lot more granular because like especially in

e-gaming like but are you are you big gamer i'm not i used to be when i was younger and actually um i want to be but i'm not um and it's funny i was talking to somebody like i'm really contrarian i'm thinking about fantasy sports not for e-gaming going for normal sports it's like man can i tell an embarrassing story about you right now yeah sure all right so so i recently met ollie's dad and ollie's dad told us a uh a story that just had me dying laughing he said that uh they're living in california there was a uh wildfire like warning that's right so i don't think that you guys were actually uh under duress but there was like a evacuation and it was at like 4 a.m in the morning he uh he wakes the family up and uh your mom grabbed the cat you grabbed

your baseball cards and you guys ran out of the house i had an amazing car that's a bullish argument for crypto kitties the what are they like the baseball cards of the internet the um by the way when you're like 12 12 years old that's probably the most valuable thing you own Like, you were just, you know, surveying your assets and making sure you protected the most valuable ones. So the story I thought I was going to tell. So when I grew up, I played baseball a lot. And our high school team was probably better than my college team. But it was not, like, the most academically inclined baseball team.

And so I remember, so in Call of Duty, I used to play that quite a bit. The main metric you had, or your KPI, was kill-to-death ratio, right? So if you had above a 2-to-1 kill-to-death ratio, you were like an animal. Like, you were probably a professional. and I remember our cumulative GPA at our high school baseball team was below our killer death ratio and I wasn't totally helping the cause

so am I a gamer now but do I think that there's an opportunity for people to gamble and to bet and to predict outcomes in a more granular way and unlock a way to either compensate people or produce winning because of that I do think smart contract will also do that in a real time way

the other thing and I keep bringing analog to credit because it's one of the best you know one of the things that online lending has allowed people to do is to originate receivables that are three days in duration a day in duration really short term because there isn't that upfront cost and smart contracts allow people to invest in assets that might be more short duration or might be smaller and you know we used to be obsessed with micro payments when currencies first came out but i do think that there's going to be ways that you know like i think that people one day will say it's crazy that my compensation was like on five thousand dollar increments and not like to the penny based on my output i think a

salesperson will end up being paid annually the numbers instead of looking like eighty five thousand dollars a year will be like eighty six thousand seven hundred thirty four dollars and twenty eight bitcoin whatever yeah yeah well so one thing that i think you and i do agree a lot on is smart contracts automation right all of this stuff is it's just the use of data not only on a more granular and more frequent basis but it's also in a more transparent way right like like those salespeople what you described in terms of they take all of the metrics of success or production and then they port that to their next job and other interviews etc is part of it's been we haven't been able to quantify it another part has they've never been able to own it before but

when you can quantify and then the salesperson themselves can own it now they actually have the option to be transparent about it right like a good salesperson should want other people to know that they're good now the bad people may not want people to know that they're actually a poor salesperson but i think that the technology is going to unlock a lot of stuff there and so if you then look at health data right you know all the stuff that we actually track ourselves and if i asked you right now you know how many steps you take a day i don't know half of america probably could tell you how many steps they take because they're actually looking at that every day how many of them would transparently share that with somebody if they got compensated for they

got some value back you know something like that the other thing so completely agree so i do think it'll allow any time that you want to port data from one place to another it'll be interesting anytime the data is really granular and you want to be confident that granular data will be interesting the other thing that it kind of got me thinking is so i've been following some of these digital avatars on instagram have you seen these yes like little michaela and like the others what's your favorite one um i do think like michaela's dramatic man her friend group is nice and she has those songs on spotify okay so if anyone's listening hasn't seen any of these digital avatars the first thing you should do is go on instagram and search for little michaela

and it's this and the whole thesis of these digital avatars is if you're following a celebrity why do you follow that celebrity you don't know them it's not like you have a relationship with them and they might have been photoshopped so the photoshopped celebrity who had a touch-up still a real person probably but then how how much can they get photoshopped before they go from being a real person who's touched up to not a real person anymore and so like the thesis these avatars is really like okay so screw the story with the real person let's just create an ideal yep um and then give them a life and give them who has a personality events she really has songs on spotify that like have like this digital voice and it's totally like i've played the office all

the time to creep people out it's got millions of views and one of the things that i thought was really fascinating was what happens if you end up building these like you know ai messenger bots or whatever you want to call them um because i guess the word bot is like out of vogue now where um if for the first time a fan of little michaela who has millions of followers instagram can actually speak to little kayla dude you want to know what i saw recently in china they've taken ai and machine learning and they've created a digital uh kind of like a hologram slash avatar and they trained it on a news anchor and now they have a guy who does a show it's a it's a digital avatar that speaks looks everything real but he does the entire newscast and he's a fake avatar

It's crazy. But then here's one of the great features of cryptocurrency. So I'll bring it back. Cryptocurrency can create scarcity. So if you had this AI bot, every single person in the world could talk to Michaela. She probably would actually lose some of her value. She wouldn't be a celebrity anymore. She'd be too accessible.

And one of the great things, like when a baseball player signs an autograph on a card, part of what makes that valuable is there's a scarcity about how many autographs there are. And so what you could eventually do is say, hey, the only way for you to build a relationship with Michaela is for you to chat with her and for you to be part of the story. And by the way, the more you're actually actively in dialogue with her and the more you're contributing to her information and you're actually giving training data to the bot, the more you get compensated and, like, you can keep the conversation going. And by the way, if you're somebody who talks to Loma Kayla all the time, you're probably going to talk about Loma Kayla to your friends and create popularity for her and you're a valuable contributor to the person. Now, if you want to buy access, you have to convince somebody who's got a very valuable relationship because they're obviously talking to Lil Miquela all the time and convince them to take away that access, which is probably going to be incredibly, incredibly valuable. And now you have this token and this network within Lil Miquela where, one, you're giving people access to celebrities that they never had before because you have this concept of infinity.

They can have infinity conversations at once, but you use the token to create scarcity, which actually then creates the most enterprise value. It's like a digital avatar loyalty program. Yeah. Yeah. Well, yeah, just access to that digital avatar where you want to be able to control how much access there is and get to that highest NPV. And this goes back to what you're talking about earlier. If teams are just focused on building technology, what they miss in all of this is that you can actually use tokens and all of the blockchain benefits to bootstrap networks and drive those network effects and actually build something that's super, super defendable. right because the second that little michaela builds this massive community that's highly engaged it's really hard to unseat that yeah completely um by the way i'd love to buy life insurance somehow and little michaela um there's a lot of like weird things that in derivatives

that you can i think pull off there um but yeah and then any network of talent you know one of the other theses that we talk about all the time um is our thesis around the tattoo world um all right let's go into the tattoo thing because i know you've talked about it previously but this is like this is probably one of my favorite thesis that you guys have yeah no okay so anthony how many people between 18 and 65 do you think have a tattoo i might have told you that's already 14 38 um what else in the world can you think of where 40 of americans have something you can't name a big company space we think it's awesome you know we're i'm convinced that um there's a great opportunity to build a tattoo school where you can go to all the fine art majors at the top

university and say hey it's really hard to get a job in art but one of the the next great art form they actually can get competitive for tattooing and so we're going to send you to tattoo school we're going to finance your tattoo school so we're going to make you a ten thousand dollar loan and we're going to then get a percentage of your income on your future tattoos that you're giving and then we're going to create some sort of incredibly valuable um brand so it'll be the harvard business school of tattoo uh tattooing and then we're going to help place you in these really really amazing shops and then now you have this network where like you want to be able to buy and trade and sell into that network so um i'm convinced that there's going to be some sort of

way for these tattoo artists to either produce a lot of tattoos, which then helps contribute to the network, and then get paid in cash, but also gives them the validation where they have to have a certain amount of those tokens to then be able to go tattoo at some of the more famous tattoo shops and tattoo with the other famous artists. So again, that's, I think, another example of a network where there's going to be some scarcity and some sort of, you want to attribute disparate information, and that disparate information is the high-quality tattoos that are getting done. and and so it's encouraging people to do that and then you get compensated for having contributed

that information to the community and giving you more access to be in that community and continue to get paid and everything else um so anytime that there's a a network some sort of scarcity that you want to create some sort of granularity you want to create and some sort of disparate information that's hard to gather and you're trying to convince your community to gather it for you those are some of the opportunities that we think um those are the places that might matter I think that's completely fair. Um, you've been reading a lot. I have to thank you. You gave me the, um, who is Michael Ovitz book recommendation. It was fantastic. What, uh, what's your favorite book? Um, maybe for this audience and a lot of them have probably already read it, but Lords

of Finance. And if you haven't read it, it's basically about sort of the formation of central banks between world war one and world war two. Um, and how the lack of flexibility in terms of repayment terms and credits between Germany and France, France and UK and UK and the U S, um, led to an unforgiving of debt which led to the printing of money which led to inflation which in large part led it was one of the large contributing factors world war ii um i thought that was incredibly entertaining um what's the most important book you've ever read like if you could only recommend one book to people what would it be all right so the best book that i ever read was um counsel to the situation and it's the autobiography of phil coleman and he's basically

um this conservative uh attorney who lived through the you know ford administration the Nixon administration and was an incredibly instrumental part of the civil rights movement and worked, uh, pair pursue with Thurgood Marshall, the unfamous version of Thurgood Marshall. And so he's able to say all the stuff that the famous people aren't allowed to say in his book. Um, I thought that was really incredible. The Hamilton biography is annoyingly interesting. Um, it's like, you know, if anyone's taken American history growing up. All right. So real quick, before we wrap up three questions for you, then you could ask me one question before we end uh the first is what's the one thing you believe across investing will do

uh that you think a high majority of other people would disagree with you on so so the thing that initially people won't disagree in principle but they don't they don't agree by their actions is continue to buy ownership over and over again and leave multiple rounds of of financing in private equity so so within private equity most people again continue to say i'm going to invest at this stage i'm going i'm going to take my pro rata and follow one round so for people who are listening to this this is mostly about venture capital um and i think that it is incredibly important to actually have a long-term view when you're investing out of a long-term cycle um and trying to create more concentration within your portfolio

I'm sorry I don't have to restart this one no no you're right I'm gonna go with the same one but I want to say differently so so the the number one thing that I believe more I guess in other people is building concentration and portfolio and building concentration within particular companies because I think that allows you to take a longer term view what I see happen way too often is again sort of what we talked about earlier in the conversation where you have an investor take of you in a company and lead around or take an allocation in your business. And as soon as that starts happening, try networking that allocation to future people to convince other investors to bid up the equity in the following round of financing. The most proprietary deal flow in

the world is the deal flow already in your portfolio. And so we are incredibly maniacal about saying, hey, we like this company. We're going to spend the rest of our investment period trying to buy as much as we can every time they hit a de-risk and inflection point. And so that's something that I think that we do that a lot of other people don't, which is a lot of people say, Hey, I want you know 30 positions in my portfolio when invest and buy my target ownership at a certain stage And I'm gonna try to maintain that ownership over time We try to make a completely new investment decision every single time we have an opportunity to make an allocation Or we try to preempt and our goal is to buy as much of a good thing as possible

You know with some sort of reasonable limits. This is why I like you if you asked Mark Yusko my partner What what makes a good investor or what makes the great investors says the great investors cut their losers earlier than everybody else and and they press into their winners, which basically you're describing. And by the way, the cutting to the losers thing, I don't think people are really disciplined in it. I think people don't underwrite companies with the same discipline once they're already

invested in the business. For us, we take this incredibly maniacal view that when we are invested, every single time we have an opportunity to follow on, we are taking the savings of our investors and making a brand new decision with it. And the idea that we would just take our pro rata because hey, everyone else is investing,

It's just not sort of in our DNA. Well, and on this topic, we don't have to go too deep into it, but there's also time, right? Basically, if you've got a company that is absolutely, you know, high probability of going to zero, a lot of investors end up spending a high percentage of their time with the losers because they're trying to save them. And instead, they probably have a better return on invested time by spending it with the winners and trying to help those companies be exponentially bigger winners. I think you have to take a delicate view. I think it's so important to set expectation with the founder of what they need to do for you to

continue to contribute the time. The worst thing in the world is when you invest in a company, they think they're making progress and you don't think they're making progress. They get pissed off that you're not helping them or following on or doing anything else. And so before we write a check, our job is to say, we are about to invest. Here's what success means to us. Do you agree that this is what success means to you? And if you don't agree, we're going to have this really awkward quick conversation 12 to 18 to 24 months about why we're not helping you more and so i think that's just about alignment of what success is and being clear about in the beginning well it's setting expectations having a hard conversation being honest yeah right um okay if you could

change or improve any one regulation across all of investing what would it be yeah i think there's a lot of regulation it makes it really hard for people to get access to financial markets especially subprime borrowers or people who don't have a lot of cash and you know the whole financial system is working against them ranging from fixed cost to atm so if you take 40 out of an atm you're paying almost you know you're paying seven and a half percent um to do so which is insane you know there's another um law that there's a lot of little structures so for example often when you want to transfer the title of one asset to another there will be a government party that can charge up to a hundred dollars to do so so let's imagine i'm making a

$3,000 loan secured against an asset, and that, you know, if I'm paying $75 to transfer the asset that adds four or five points to the cost of origination and the cost of borrowing, that's actually being taxed by our government. So I think that's really crazy. So I think there's a long list of financial regulations that I do think some good people are actually trying to take a crack at to take a lot of regulation that inadvertently hurts poor people and hurts them even further over time. You know, the fact that the government has from time to time made it harder for a lender to lend money to poor people has actually made it that less people lend to those people, which makes it that there's less competition, which actually creates greater monopolies,

which means the cost of those loans goes up. So there's a lot of things, I think, in that subprime borrower market that have good intention but end up in practice hurting people. Makes sense. Let's admit that there's aliens. I'm in. Okay. Are there just human-like aliens or are there alien pets?

Do you think that there's a difference or a variation in species of aliens, or is there just a single species? So if we're thinking about why humans like pets, and we're thinking about sort of what similarities other aliens might have to humans, I do think that one of the things that helps a sustainable organism continue to exist is creating a community that contributes to each other. and then um and so that means that there's probably a part of the dna of said community um part of the dna of said community uh is to want to be loved right and part of the reason we contribute to our communities is in exchange for that love or that appreciation and i think that um because that's part of human dna the like you know if i help you then i feel excited because there's appreciation and i value that appreciation so the fact that we as humans

value appreciation and the fact that that has helped us probably evolve as a society and there's likely some sort of analog to that in another universe would mean that either they're on the pursuit of pets or probably have pets or some other form or they just have really good drugs

to give them that appreciation feeling but I think it's not unheard of when you and I go to Mars we'll go figure it out together what one question do you have for me? So what's the question that you get from investors that you're most unsatisfied by your answer? I think that I look at the asset management business probably more through building a technology company lens

than many other people that we talk to that are peers and a lot of the answers to what seem to be simple questions like what's your competitive advantage how do you you know do certain things etc uh we answer from that lens and we probably don't do a great job of articulating why that's important and so i'll give you an example um i fundamentally think that and i think you know i've actually talked about this before So take pure venture outside of crypto. Right. We used to get asked all the time. What's something that we could what is something that we could do to be able to find better companies earlier than everybody else? Right. And I fundamentally believe that somebody at some point is going to figure out how to underwrite founders in a quantified way. So there's going to be, I don't know if it's like an SAT-like test. I don't know if it's a personality test.

I don't know what it ends up being. But they will be able to quantify founders, not companies, and they'll be able to just underwrite this person has a higher probability of being successful as an entrepreneur. And therefore, we'll get them comfortable with making an investment in that person versus the idea, the market, the competitors, product, et cetera. I think that's maybe controversial in some circles, not controversial in other circles. I think that makes a lot of sense. And actually, I think it would be interesting if you started, like, I'd love to see you kind of post something on this where the person who starts a network is so important. And that's true in crypto as well. And so as an example, you know, Reid Hoffman, it was so important that Reid Hoffman, and Charlie O'Donnell actually had like sort of this tweet thread about it that I thought was really good.

It was really important that Reid Hoffman was the one who started LinkedIn because he was part of the PayPal mafia. So the first 500 people on LinkedIn were his friends, and they were incredibly important people within Silicon Valley. And that's why everyone else wanted to be on LinkedIn. The average individual could not have started LinkedIn. It was really important that Mark Zuckerberg was at Harvard because everyone wanted to be a part of the Harvard network. If you go down the list of almost all these different networks that ended up becoming really successful and building some sort of initial network effect, I do think it is really the person that matters. And I do think there might be some – it would be really interesting if people started using their LinkedIn data or Facebook data or Twitter data to say, oh, wow, this is the connectivity this person has, which means they're more likely to start a successful network. Fun fact, I didn't know this.

I just recently found this out. Reid Hoffman actually tried to start a social network-like business before LinkedIn, and it didn't work. And then basically his second at-bat with this similar idea had learned a bunch of lessons and ended up being wildly successful with it. Have you tried using LinkedIn Messenger? Have you tried to get the notification to go away on LinkedIn? The notifications? Yeah, like that little thing. I've clicked the you have a notification to see if it'll go away, and it never goes away.

if anyone from LinkedIn is listening, that's my future request. Um, please help. You know what I, you know, I don't even know if I want to say this, but, uh, uh, I'm a huge believer in Facebook and the team that's still there, but I've just naturally started using a little bit less. And I started to get emails of like this notification of that notification. And I've like, Oh man, they're like, they noticed that I started using it less. Do you email Anthony? it no so i've never done it before i get uh i have seen like curious are you i haven't seen what's going on so i've seen these ads i've seen these ads where they'll give you like 50 bucks right uh but when i get them i never respond and so i feel like if i'm not willing to engage as

the receiver of in mail then i'm probably not bullish on being the sender fair fair but like If I in-mailed you tomorrow, would you respond? I don't know. I haven't checked in mail in a long time. Maybe I'd see your name. Maybe they'd know that we're front. I don't know. Maybe.

You probably wouldn't respond because it's me. I don't know what I don't know. Who knows what's going to happen to me tomorrow? But I do think it is crazy that the people who are building these crypto networks don't spend all their time focused on these other social networks that ended up being built that just didn't happen to have the blockchain at the bottom. Yeah, yeah, yeah. And so, you know, it's another thing.

are sort of in terms of your idea of quantifying um that i do think matters one last question for you just i'm curious uh if you have only one form of communication on your phone that you had to use what would you use so i do this crazy thing where there's an app at the bottom left of my phone and then if i can find your name on my phone or this sort of version of an ip address but for phones called telephone numbers i'll just hit that and i'll call you i'm a big caller that's the one you'd use yeah because taxi doesn't have the mark is on red button so i don't i never i just never text back you're an inbox zero guy though so here i'm uh i'm jealous yeah don't they'll say archive a lot okay so i i realized that if you don't respond to something it's okay

and so i just and they and they can't reply to your reply if you never sent the reply there's nothing to reply to it's done it's done i'm a big fan of um i hope no one uses this i'm a big fan of not responding to see if the prompt like and then it's really important the personal follow-up or sometimes just test people i'd be like oh how good of an entrepreneur is this like is this somebody who's actually going to follow up um and so like that's sort of like a good like midway through a diligence process i will probably not respond to an email just to see the personal follow-up do they do they most most 80 do which means 20 like it's actually if you said hey there's one thing in your diligence process that'll weed out

20% of people you probably do it. Yeah, that's fair. All right, we're gonna have to do this again We may have to do this more frequent than not Especially if there's a global currency because I'm gonna bring you back on and do a victory lap But if uh professionally wrong 80% of the time listen if there's not one you can come on and do a victory lap So here's the thing that's so awesome though about this is if you're right if i'm right I don't lose 1x, but if you're right, I lose infinity x right because think about how massively important that global currency will be Yeah, you're hedged though. Don't lie. Yeah but it is one of the important things with all these conversations it's so much easier to explain

why something won't work than to explain why it might that's fair that's completely fair do you think that that's one of the things people struggle with when investing in cryptocurrency they're so focused on trying to get to some sort of certainty that it'll work and there's so many people when you're in a group that want to sound smart by trying to poke holes in the argument and that's the person who at best will save 1x but it's the person who understands why something might work and has a collection of those things that might work and then hits one of them that to see the thousand X. And I do think that that's one of the great analogs

between venture and crypto right now. So I hope you're right. Completely fair. I'll say this because you can't. If you're a early stage founder or you've got some sort of weird financing opportunity, you should go talk to CoVenture. What's the website?

It's CoVenture.vc, Victor Charlie. You guys should email info at CoVenture. We actually look at it. I think someone looks at it. There's a person on our team who looks at it. So feel free to be in touch. Or find Ali on Twitter. All right. Thanks, guys.

Thank you. All right. You reached the end of the podcast. Congratulations. I appreciate you listening all the way to the end. You deserve a trophy. But before I hand out the virtual trophies, remember to go visit BlockFi.com slash Pomp. They're the crypto lending leader in the U.S. They do it in 45 states, interest rates as low as 8%, and you can use the U.S. dollars funded directly to your bank account to do whatever you want.

You should definitely go visit BlockFi.com slash Pomp. You know you want to do it, so just do it. BlockFi.com slash Pomp. Before I let you go, though, I wanted to mention Draper University one more time. Remember, Tim Draper is one of the most legendary venture capitalists in the world. He's funded many of the biggest companies that you've heard of. Today, they have two separate programs around blockchain at Draper University. The first is for entrepreneurs looking to get their idea off the ground who can attend their pre-accelerator program.

and the second is a week-long intensive program for corporate executives looking to learn about blockchain and crypto. You can check out draperuniversity.com and apply there. The deadline is approaching fast because the programs are in January and February. So definitely check out draperuniversity.com. Again, that's draperuniversity.com

and one more time, draperuniversity.com to make sure that you can apply. Thanks so much and I'll see you next time. Hey everyone, Pop here. If you liked this episode of Off The Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts, please do us a favor and rate, review, and subscribe. To review, simply go to the Off The Chain homepage,

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