The Pomp Podcast - Geoff Lewis, Co-Founder of Bedrock Capital: In Search of Narrative Violations

Episode Date: February 17, 2020

Geoff Lewis is a Founder and Managing Partner of Bedrock Capital. Previously, he was a Partner at Founders Fund and was named one of the Top 100 Venture Capitalists in the world by CB Insights and The New York Times in 2019. In this conversation, Geoff and Anthony discuss his time at Founders Fund, what he learned from working with Peter Thiel, why he started Bedrock, what narrative violations are and why looks for them, what he thinks about new media models, and why growth valuations are overvalued.  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. UNSTOPPABLE DOMAINS-----Make your crypto currency payments simple and build censorship resistant websites. Visit unstoppabledomains.com and purchase your blockchain domains today! -----If you enjoyed this episode and want to stay updated on everything Bitcoin, blockchain, and crypto. Check out Off the Chain newsletter by visiting offthechain.substack.com and join 35,000+ other investors currently subscribed to my daily investor letter.

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. Jeff Lewis is a co-founder of Bedrock Capital. In this conversation, we discuss his time at Founders Fund, what he learned from working with Peter Thiel, why he started Bedrock, what is a narrative violation and why does he look for them, what he thinks about new media models, why founders are humans and humans make mistakes, and why growth valuations are overvalued. I really enjoyed this conversation with Jeff, and he's incredibly entertaining and intelligent, so I hope you enjoy it as well. Before we get started, though, I want to talk about the two sponsors that made this episode possible. The first is BlockFi. If Bitcoin and other cryptocurrencies have any chance of ever becoming the next global reserve currency, we need a lot more infrastructure and wealth management services built.

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Also, go to YouTube, search Anthony Pompliano, and go ahead and subscribe to the YouTube channel. It's booming. All right, let's get into this episode with Jeff. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek digital or more concrete capital management you should not treat any opinion expressed by pomp as a specific inducement to make a particular investment or follow a particular strategy but only as an expression of his opinion this podcast is for informational purposes only all right guys bang bang i'm super excited about this conversation we're all uh got a bunch of

coffee ready to go jeff's here um dude this is gonna be fun looking forward to it yeah thanks are coming to do it. Let's start off with your background pre-Founders Fund, because I don't think that you were on a path to become an investor. No, I was definitely, I don't think I was really on any path. It was a pathless existence prior to actually starting my company. And so the backstory is I grew up in Canada, sort of a pretty unstable childhood. And so when I graduated from college, I really wanted to optimize for stability. So I joined a large American multinational company, Procter & Gamble, and quickly realized that stability wasn't for me. Found it extremely boring, but I knew that I wanted to do something more entrepreneurial.

And so I stuck around until I got my green card. And then shortly after I did, I got out of there and got to San Francisco and decided that I wanted to actually optimize for hanging around smart people rather than stability. And I figured if I could just meet a lot of really smart, interesting people. I'd sort of figure out what I wanted to do. And sort of serendipitously met a number of the folks that were sort of in, at the time, what was called the PayPal Mafia, just through friends and friends of friends, ended up getting recruited to join Peter Thiel's hedge fund, which is called Clarion Capital. And so I joined that hedge fund in sort of a pretty undefined role, sort of a pretty unclear role, sort of unclear what I was going to be doing,

but I knew I'd be working with extremely smart people, Peter and others there. My timing was unfortunately really bad. I joined Clarion two weeks before Lehman Brothers collapsed. So I could not have picked a worse time for my foray into the world of finance. But the upshot of that experience was I shared an office with an absolutely brilliant engineer, this guy, Trevor Austin, and we ended up becoming friends and decided we wanted to start a business together. And, you know, the advice I give entrepreneurs now is you shouldn't start a business for the sake of starting a business. You should have sort of a really clear mission of what you want to do. I actually didn't follow that advice. I knew that I just wanted to do something entrepreneurial.

So did Trevor. And so I ended up cycling through a few concepts. Initially, we landed on something called Udors, which was basically, I would say it's actually an early version of Pinterest meets Instagram, executed horribly. So people sort of tag places, brands, et cetera, in their photos was in 2009. The execution was terrible. We got no users, a sort of a laughing stock. We raised half a million dollars from VCs, including Founders Fund, and the business was clearly going to go nowhere. And Trevor, to his credit, sort of realized that and ended up joining Palantir. So I was sort of on my own there as a founder. We had a few hundred K left in the bank. And I was like, I just can't fail. Because for me, failure wasn't an option. I mean,

I had nowhere else. I could have maybe gone back to Clarion or something. But I ended up sort of pivoting the business, putting together a new team of co-founders, Ash and Oz. And we ended up turning that business into something called Top Guest, which I think the pithy way to describe it would be sort of Cambridge Analytica for hotels and airlines. So we were pulling a lot of social data with people's permission. We got the permission and giving them loyalty points from programs like United Mileage Plus, Starwood Preferred Guests at the time, et cetera, in exchange for sharing their social

data. So sort of an enabling SaaS tool for these hotels and airlines. This was circa 2010. Realized that business, you know, realized we're sort of relatively good at selling into customers, but we didn't have great product market fit. So we ended up selling it. It was a reasonably good, you know, not huge, but reasonably good financial outcome for me.

Went from, you know, $40,000 in credit card debt to, you know, having, you know, some money in my bank account, which was nice. In the positives. In the positives. That was a... I always joke, that's the first step to like financial freedom, right? is go from negative to positive and then worry about what the positive number is. Oh, it was really life-changing. So sort of like, you know, I'd lived my early career had been

very much in sort of this matrix type environment. So, you know, you're at a place like Procter & Gamble. There's this existing structure. It's been around for hundreds of years. You know, there was a lot less true at Clarion that felt a lot more generative. You could sort of do new things, sort of a lot of openness to folks trying different projects. And then when we actually left and we started the business, the startup, you're just completely out of the matrix. And so it's sort of like you somehow have to just make it work. And then after I sold the company, what I realized was I wasn't very good at executing these technology businesses, but I felt like the ideas were actually quite good.

The idea for Udors I thought was a very good idea later, proven by folks like Instagram and Pinterest who executed phenomenally well. The idea for TopGuest, I would argue, what we're trying to do is make travel more personal. I'd sort of argue that Airbnb sort of ended up doing that in sort of a different way. And so I figured that I should try and optimize in a direction towards figuring out what ideas are going to work in the future, but not actually having to build the things myself, which is what led me to Founders Fund. One of the things you said that I've heard over and over again about Peter's just entire world is you came on to Clarium with an undefined

role. And I think a lot of people, uh, especially in startup world, like they're trying to like textbook, Hey, what should I do? Okay. We have a role. Let's go find somebody. And if you listen to, you know, Peter Thiel, uh, Keith Robois, a lot of these folks are like, look, find young people who, uh, are kind of undervalued given what their potential is. Uh, and even if you don't have a role, like just get them in the door and if they're good, they'll figure out how to create value. Right. And, um, it sounds like that was something that you kind of were the person being plugged in without that defined role. Was that something that you thought was a positive or a negative at the time? Well, I thought it was hugely positive. And one of the things it does

engenders tremendous loyalty. So if you give a young person a chance who really doesn't have a traditional background. I didn't go to Stanford or Ivy League school. I was working in CPG marketing. And so when someone gives you a chance and takes a chance on you, it engenders a lot of loyalty and there is an ARB. So ideally, whoever is... And we try and do this at Bedrock, my firm now. We like to hire young, curious folks who maybe aren't from the traditional backgrounds. We look for that with our entrepreneurs as well. There's obviously an ARB on the pricing that you can get if you find these people and you're right about it. And then over time, the ARB closes. But over time, you can sort of build these powerful, positive sum relationships with folks that were

sort of underestimated by the market. For sure. And so when you started to optimize for the investing side versus the execution side, you went straight to Founders Fund? Yes. Okay. And what was kind of the thought process there? You were just going to invest in early stage, kind of full stack. What was kind of the idea? Well, the thought process on my end was I really wanted to be an investor and do VC. And they were the VCs that I knew and that I was friendly with with some of them. And they were the ones that gave me a job. I don't think if I had applied to Benchmark or Sequoia, they would have reviewed my resume. But Founders Fund took me somewhat seriously. And I went in there for some interviews. And really, initially, it was sort of, I thought

I'd stick around for a year and then start another business. I mean, my whole ex-post analysis of the top guest Udor's experience was, the execution was terrible, yet we still managed to make money for ourselves and for the investors. I thought if we could actually start another business where the execution was good, that could actually be very good. So I was quite anchored on going off and starting another company. But really what happened was I just fell in love with venture capital investing. And one of the awesome things, many awesome things about Founders Fund, but one of the particularly awesome things is that I joined quite junior. I was the newest person on the investment team, but I was empowered to make investments. And really the only way you can learn

about investing is through actually independently sourcing and making investments. Obviously, you debate things as a team and people weigh in. Really, my second deal on the team, I'd been there for four months, was Lyft. I saw it out of the corner of my eye and led the first financing round in that company after they'd pivoted from Zimride and joined the board. Then from there, it kept going and just got more and more into it and excited about excited about finding these interesting opportunities and working with these great founders. Why did you like Lyft? What was the thought process? Well, let's see. At the time, so rewind back to 2012, Uber was just a black car business. They

were experimenting with taxis. They hadn't done any of the UberX stuff. So there was no concept of peer-to-peer ride sharing. There was no concept of regular people driving other regular people around. There were two companies in 2012 that started experimenting with that. It was Lyft and Sidecar were the two. And quite frankly, one of the things that a lot of the people at the time were joking about was you had these couple dozen Lyft cars in the city. They had these fuzzy pink mustaches on them. And those caught my eye. So I downloaded the app and tried it and ended up meeting with the founders, with my colleague, Scott Nolan, and just really falling for the founder's vision of what peer-to-peer ride-sharing could unlock. And they really did pioneer that

idea of regular people driving other regular people, you know, about the sidecar people as well. They seemed a lot less good than Lyft. And then there are sort of these, you know, one of the things I like to sort of keep in mind as an investor is oftentimes the very small things, the things that people don't think much about, can actually be very important. And so you take the name Lyft. It's sort of a positive, friendly name. Uber is sort of this snobby name. So there's a sense which I thought was sort of a more friendly brand. And that translated from a business standpoint into the founders, even very early on, correctly focusing on optimizing for supply. So whenever you're building a marketplace, obviously you've got to get supply, got to get

demand. They correctly identified was, we have to make this an incredible experience for the drivers, the riders will come like there is demand to get around cities cheaper without having to drive. And so they really optimize to the extreme for making it a great experience for the drivers, things like the fist bump, which is one of the things they did early on, you know, encouraging conversation. I remember being on the board, I don't really like talking very much in cars. So I kept trying to trying to convince me, can you do a silent button, please? And Logan, the CEO kept saying, no, we're not doing that. It's not friendly. We're friendly. And I was like, come on, I need a silent button. But it turned out they were right. And so they did all these

things early on to optimize for supply. And yeah, I remember having the conversation with some of my partners at Founders Fund. And the question at the time, we invested at sort of a sub $100 million valuation. The question was, can this 10x? Can we see this being a billion dollar company? And sort of, uh, you know, three of the partners, uh, thought, thought it could be. And one thought it couldn't be. And, uh, and, uh, luckily it's, it's, it's grown into a much bigger company than that. Yeah. The, um, first of all, sidecar is a blast from the past in 2014, uh, in San Francisco, that's actually the first ride sharing, uh, company that I downloaded was, uh, and then they went out of business on like two, three years later. Um, and, uh, with Lyft people

forget the pink mustaches and the fist bump like it was kind of weird right but it was if you were in the group right or kind of in that club it was almost like a point of pride right versus the other ones who just didn't have that type of stuff um and then uh you guys uh invested in a number of different rounds right not just that first time we we did the first one and we we did we did some we did some follow-on investing um you know the the challenge with that company and and it's you now that the company is, I would argue, executing far better than Uber and is a much more well-run company, it's easy to gloss over the hard times. But the challenge with that business was, we're actually competing against a ferociously aggressive competitor in Uber. At the time,

2012, 2013, 2014, 2015, that was a formidable company to be competing against. They very quickly wised up to the fact that peer-to-peer was actually going to be the future of this market, cloned Lyft by launching UberX, had more access to capital, were able to raise more capital. And we were in sort of a crazy price war and war for market share and war for raising capital because they're both very capital-intensive businesses to get to scale with Uber. And so it was a really rocky road. and those founders, John and Logan, I think are heroic and like massively underestimated

to survive those early years. Quite frankly, it was also my first board. So sort of me, the founders, we had one other board member. And emotionally, it was a pretty crazy rollercoaster as a first board seat as a 20-something VC. It's very difficult. Talk to me about the decision-making process inside of Founders Fund, right? Because um you know most venture capital funds have a pretty uh standardized and strict hey we're going to meet every monday we're going to have the founders come in and pitch and like you know we either have to get the consensus or some majority uh and like it operates like a vc fund everything i've heard is founders funds very very different and uh it'll lead to this idea that i

have of like founders fund is one of the only firms that has original thought left um but kind How do decisions get made internally that's different than some of these other firms? Sure. So I can't speak for how it works today. I haven't been there for a few years since we started Bedrock. But back then, yeah, anyone was empowered to source investments. If you're on the investment team, you can source investments. And then you've got to build a really strong case.

And there's a lot of spirited and intense debate and a willingness to really hear out different perspectives and try and get to the truth about a company. And so I remember, before I'd even joined the team, I was invited on an offsite that they were organizing. And I remember that I was sort of pulled into this late night debate about a prospective investment, even though I had sort of very limited context. And my opinion was sort of heard out and valued and taken into account. And that is kind of the firm it is. It's a lot less top-down hierarchical than I think many of the other firms are. And we've really tried to take a page from that playbook in how we build Bedrock. For sure. And the last thing on Founders Fund, just takeaways from working with Peter. And I think he's become over time like this mythical figure. But when you talk to people who are spending a lot of time with him, he's actually very rational. He's very kind of pragmatic. Like, what just do you take away from working with somebody like that? Well, lots to start. We don't have that much time. I mean, the reality, I've learned more from working with him than I've learned from any other sort of person that I've worked with in my life or any other experience. There's just a tremendous amount of learning from him.

I'd say I was very lucky to have started working for him before he was fully valued by the market. So I think he was seen as very talented, very successful, but he's obviously become much more successful since. Um, you know, I'd say the, the number one learning, um, that I took away would be you have to analyze, uh, businesses, um, things, things, things that happen in life, uh, the world on all of these different layers. And actually the most interesting and important insights are these on these subtextual layers. And so that leads one to actually, uh, you need to be quite interdisciplinary. So you need to think about the psychology around a business.

You need to think about psychology of the founders, psychosocially, why other investors might miss an opportunity, sort of why the company, why the business model would resonate in sort of a really long time horizon. And so it's sort of these multiple layers and, quite frankly, drilling down on seemingly small decisions that entrepreneurs have made. It's like, well, why did you launch this at this period of time? Or why is this the name of the company? Or why did you hire this specific person? If you actually drill down deep enough, these types of questions can yield very important insights. And then obviously the sort of ethos of questioning, questioning things that most folks would just assume are true, questioning conventional wisdom, and always trying to get to your own perspective. And the only way you can learn that is really through an osmosis of working with someone for a really long period of time.

And so you can't teach in a class. You sort of have to observe it firsthand over many years. I was lucky to have had that experience. And then you guys leave and start Bedrock. What was the idea behind doing that? Well, the idea was really I'd had an amazing run at Founders Fund, and it's been an amazing experience. Got to invest in phenomenal companies, work with great entrepreneurs across multiple different sectors, New Bank in Brazil, FinTech, RigUp, which we're now large investors in at Bedrock. And I'd also along the way built just a great business relationship and

friendship with my now partner at Bedrock, Eric Stromberg. He was actually the first entrepreneur I invested in at Founders Fund. Right after I joined, he was building a Netflix for eBooks called Oyster. We'd been friends before that. I then worked with him as a board member and he was the CEO. And we had sort of a very unique yin and yang in terms of business partnership. And I'd never lost my desire to build something of my own. And so it was sort of this question of, is there a way to do what we love doing, which is venture investing, but also sort of get back out of the matrix a little bit and try and create our own universe. And so that was kind of the thought process. And the strategy is really to not make very many investments because we don't

think there are very many good companies. And so it's sort of, we go quite slow. We only make a few investments every quarter. And then we really concentrate capital triple, quadruple down into the things that work. So far, so good. Yeah. And what does that look like when you say kind of build these concentrated bets? Because I think that was a very popular strategy in kind of the early days of venture capital. Sequoia's first fund, I think, had like nine investments in it, right? And then we went through a phase of like, we'll call it spray and pray, right? Where it was, let's put 30, 40, 50 companies in a fund. And now, you know, there's you guys, I think even like the Chamath and kind of social capital

world, there's a couple of people who are saying, hey, wait a minute, this concentrated bet idea is actually better if you're right on the bets. What does that look like in terms of when do you first start to invest? And then do you invest in every round from there? Kind of what's the strategy in terms of building that concentrated, you know, kind of allocation? Sure. So the strategy is that the companies that are really working, we never want them to actually go to market and do a financing process. And so that's sort of the basic ethos is in theory,

if you're an entrepreneur and you have a business that's really working and you like your existing investors, they don't mess with you. They give you advice, they're sounding boards, but they don't try and run the business for you, which is something that we're very religious about. We don't want to run the businesses for the founders. You shouldn't actually have to waste time going up and down Sand Hill Road, pitching a lot of firms. The capital should just be very easy to get as you hit milestones, as you grow. So in practice, we've done that with RigUp, which is a marketplace for blue-collar labor. And we invested initially in the Series B right after we started the firm.

We've invested, I think, six subsequent times since then, such that we've scaled up what was initially a $1 million position, a little over $1 million, to north of at this point, $85 million into that single company. And in order to execute this strategy, the founders have to actually like you. And so we actually try and find, I think that's sort of an underrated attribute of being a good VC is you sort of have to have the right chemistry with the founders. I mean, not every VC is for every founder. I'm not for everyone. Not every founders for me, Eric, same thing. There's certain, you know, you sort of have to have that chemistry. And, and if you have that, you can really concentrate capital into ones that are working. So the strategy is basically if they're good, we don't ever want anyone else

to see them. And part of this strategy is you'll invest seed series A, do you want to come in in the kind of the A or the B, like, like where do you start that relationship? And then from there, you guys are kind of the sugar daddy, if you will, if everything goes well? So there's sort of one, we're trying to optimize against sort of one vector. The vector is basically the current fund we're investing out of manages $350 million. And we want to at least 6x the fund. And so we have to find at least six companies over the course of a few years, each of which will return $350 million. And so if you have that as sort of your vector that you're trying to optimize for you actually can't really have any other rules because doing that in and of itself is just so

hard. And so it's this sort of crazy search problem. You've got to find these companies somehow. And you have to get to a narrative that you actually believe that's true as an investment team on why over many years we can scale up a position such that it can return the entire fund. And so that leads us to being pretty agnostic in terms of when we first get involved. I'd say that you know, seed series A, mostly series, sort of series A, series B, uh, tends to be for us the right place because it's moment in time where there's, there's something that you can sort of tell is working, but not everyone can tell it's working. So you can sort of get involved, uh, at a moment in time before sort of everyone realizes it's working. You know, we sort of did

that with, uh, with a company called Clearbit. We did it with, uh, with, um, with, uh, The Athletic and others, but, uh, no rules beyond, uh, beyond we're trying to, trying to find a number of companies that will return 350 million dollars a piece i love it um one of the things that you uh you were very loud about early on that i think uh people kind of were like what the hell is he talking about and now has uh become a popular term is a narrative violation um and uh when i first saw you say it uh on twitter i literally remember saying to myself like i don't know if he's right or not, but that is going to fucking fly if it catches on because it's just such a clear articulation of an idea. Where did that come from? And kind of like, why is that the thing

that you guys really kind of latched onto? Sure. So I will give the disclaimer that I do worry that it's become somewhat, it's really caught on very powerfully. And whenever everyone starts using a term, there's always a risk that it's being way overused right now. So I do want Yeah. I do want to note that I'm definitely using it less these days. It is still our- Is Jeff narrative violating his own term? I might be narrative violating. I think there's these orthogonal terms that we like. So there's this one that actually someone who I met over Twitter came up with, which I'm going to shamelessly ape, which is narrative void. And so we like to find these companies where there's just no

narrative around them. They're sort of these weird idiosyncratic businesses. I think one could argue that something like a Lambda school was that when we invested. Certainly, narrative violation would be rig up where you sort of have all this energy around climate, clean energy. And sort of there was early on the business initially started off in the oil and gas industry as a marketplace for labor there. That was a very unpopular sector, sort of ignored in terms of the popular narrative. So that would be a narrative violation. Something like land maybe was a narrative void. No one could really categorize what it was. And then there's this whole idea of narrative mirages, which is VCs, as everyone knows, tend to be incredibly herd-like. And these popular narratives

can really lead to very frenzied behavior. And we want to always, always avoid those. And so I think where we initially, I think I initially heard the term on maybe as a Jordan Peterson podcast. I think he may have used it. He used it in a very different context. We use it in an investing context. We're talking about markets, companies. I think he used it in sort of a different context and it sort of stuck with us. and we wanted to see, could we build out a sort of thought piece around this? We wrote our letter, which we published to our website in 2018, and really didn't do much to get it out there. And over the last few years, it sort of has really just taken off and sort of really been read by lots of folks and people reach out all the time. So it's this idea of most popular narratives are sort of, they're often true, but people often believe they're more true than they are, something like that. So you need to question it. Yeah. And part of this is like in investing,

the best investments to make are the non-consensus investment and you got to be right, right? So if you do something different than everyone else and you're right, there's a lot of money to be made. If you do something that's different than everyone else and you're wrong, then like, you're just the idiot, right? It's kind of the way I think about it. And so the narrative violation, it's not just about, hey, everyone thinks X is true. We're going to go do Y. It's you have to have a reason for it right and i think that's the part that kind of gets lost and now that it's being overused it's like almost become cool uh you know a couple years ago it was cool just to start a company right but that was kind of the the tail end of um that being cool now all of a sudden

you see people saying oh there's a narrative violation well like yes but that doesn't necessarily mean that it's right right and i think that's a really important piece of of what you guys have done is you've proven time and again that you found something that wasn't consensus uh and it's continued to work right you guys have kind of been right in doing that Yes, I don't like the non-consensus and right framing. So I think that's sort of the benchmark, what benchmark says. So I'll let them own that. We'll keep narrative violation over here. Our name sounds similar, bedrock benchmark. So we need some differentiation from them. And so I will stick with narrative violation. No, I think Howard Marks is the first one to say it. I think it was like in 1992. I'll probably get the year wrong. But I think he was one of the first people to say like, look, you got to have to do something different than everyone else and be right. He was talking about it more like fixed income type stuff. But Benchmark might have borrowed that from him. Interesting. I do think the sort of incremental piece that hopefully is somewhat generative for folks who do sort of think about these narrative violations is that definitionally in the term,

you sort of have to ask, well, where do the narratives come from? And more often than not, the most dominant narratives come from the media. And so there's a sense in which if you actually are pursuing investments that are counter-narrative, you actually want to be looking for things that either the media is not writing about, they're not talking about, or oftentimes things that they're critical of. And that's sort of an additional lens that you can apply as an investor to finding these companies. Narrative mirage is another part of this, so it's kind of the narrative violation is the thing that is different, but also these narrative mirages are the things that everyone's talking about that actually may be incorrect. I know you

guys have some thoughts here around scooters and things like that. Maybe talk a little bit about how you think about the narrative mirage? Certainly. So I'd say one that we've thought has been a narrative mirage for a while has actually been the whole frenzy around direct to consumer brands over the last number of years. And so we founded Bedrock in late 2017. We haven't made a single direct to consumer brand investment. There's not a single one in our portfolio. And the reason why was because you had the investors valuing these businesses as technology businesses when they're, in fact, they're more like a Procter & Gamble or a CPG business. And so that's something that we've argued behind the scenes with folks in our world.

We think a lot of these D2C businesses are narrative mirages. And now just recently, the narrative's very sharply turned against them. You only need one or two of them to get in the public market and get slammed. The Casper IPO, you have the brandless bankruptcy, and it's all very unfortunate stuff. And these are great founders. It sucks it's happening. We have sort of the Casper IPO, the brandless bankruptcy. You've got the FTC stopping the Harry's acquisition. I mean, that must just be brutal if you think you've sold your company and in fact you haven't. And the government says no. The government says no. You got to go back and make it work. I mean, man. So in fact,

there might actually be... So what that means is there might actually be opportunities in direct to consumer brands in the future, and the valuations are probably going to get rationalized because of these developments. That would be an example of something that was a narrative mirage. We've remained consistent that when we've started the firm, we launched it into two things, the crypto craze, which I think that is going to be long-term right. I think we're aligned on that, and the scooter craze, which we've been very consistent on that we are very skeptical of. and we think it's a narrative mirage. And it's sort of this market where it sort of works particularly well on every narrative layer. And so if you sort of unpack it, there are all these

layers to a narrative. So you've got founder, you've got company, you've got market, you've got society. And so from a founder layer, it's sort of the founders of the scooter companies generally worked at the ride-sharing companies. They were generally at Uber or Lyft, and in some cases, both. So it's like, okay, it's sort of a straight line to ride-sharing. The market, sort of, again, straight line to Lyft and Uber. This is for short distances, last mile, et cetera. Societally, they're sort of good for the world. And so in a world where we're talking a lot about climate change, sort of this nice- Electric scooters, man. Nice thought that we can all just ride around on our electric scooters. It doesn't matter if it's

it's 20 degrees outside and snowing or raining or whatever, we'll still just ride the electric scooters everywhere. Sort of inconvenient they don't work when the weather's not great. They don't really work very well on steep hills, but we'll just ignore those problems. We've got this climate change issue, so we can all ride our electric scooters. So there's a sense in which when it's hyper good for society and you can draw a straight line to this category that has worked, you get a lot of frenzy and heat around it. And then if you actually really dig in to the businesses as we have with one of them, it turns out that they're not necessarily great businesses. Now, that's not to say that one or two of them is not going to work to some degree. And I'm

certainly, I like the entrepreneurs, I'm rooting for them. But I think the category is at this point definitively was a narrative mirage. Yeah. And then crypto, where's the conviction there? Why so heavily convicted on that given you guys are fairly critical of other things that people are excited about? In 2017, there were a lot of people excited about crypto. We didn't do anything in 2020. We didn't do anything. No, correct. So when did you guys start to do things in crypto? Was that more like 18 bear market? I'm not going to say exactly what we've done, but we got involved in crypto at a moment in time when it was very unpopular to do anything in crypto. That's all I'll say now. I'm not going

to disclose any more details that's all that's all you need to say um you guys recently announced uh the athletic so i'm going to talk about a couple of the investments you guys made and uh some of this we agree on some of it we don't um what's the logic behind the athletic right and for those that don't know the athletic is uh it's a content business that essentially said look we're going to go find the best reporters at uh local sports reporters um we're going to pay them well we're going to give them kind of more autonomy and we're going to wrap this up into who is a subscription business. I think it's like 10 bucks a month, 60 bucks a year. And if you subscribe, you now get access to, quote unquote, the best sports reporting on the planet. The

business has grown very nicely. And then you guys just made a pretty big investment. So what's the thought process there? Cool. So yeah, that's another one where we've made a number of investments. So we've scaled into it over three separate financing rounds. So we always like to start with the entrepreneurs and the founders. And so we sort of rewind to shortly before we started Bedrock. My partner, Eric Stromberg, I was at a Y Combinator demo day. I think it's the last YC demo day we've attended. We don't really go to those anymore, but the last YC demo day. There are all these presentations. Then after the demo day, you have all of the investors swarm the hot companies. Eric, to his credit, was looking for the founders that weren't being

swarmed by investors. The two founders of The Athletic, Alex and Adam, were standing in the corner. No one was talking to them. No one wanted to hear about the business. And so Eric went up and started talking to them and almost made a seed investment, but didn't, unfortunately. It would have been a great investment, but kept in touch with them, built the relationship over a number of years. And because he'd been working on Oyster, which was a subscription business as well, that wasn't a huge success. It was acquired by Google, but it wasn't a huge financial success. Had really spent a lot of time thinking deeply about the mechanics of what makes a great subscription business like a Netflix, like what do you need to have? And there are a few things

that he gained very high conviction that need to be true. And by extension, we at Bedrock sort of had an ethos around with subscription. One is retention is just everything. And so you want these sort of ultra high retention businesses where you have sort of very low churn. Two is you need differentiated proprietary content that you just sort of can't get anywhere else. You need passionately loyal readers or listeners who are passionately loyal to the actual content creators. And then you need some sort of winner-take-all dynamic on a market-by-market level. And so with the athletic, what's so interesting about sports is in any given market, there

are a handful of teams or a handful of sports that people are really passionate about. There are a handful of writers that people do passionately follow. And if you can actually, by having great retention through a paid subscription, pay these writers, these content creators, more than anyone else, you can create this phenomenal flywheel where you basically lock up these local sports media monopolies with these great writers. You give them a platform to grow their reach. And the economics work over time because the retention of the businesses is astronomical. It's something like 80% one-year retention, which is sort of well north of Netflix, well north of Spotify. Unbelievable numbers. We spent like a month verifying the numbers before we invested because we sort of really didn't believe them.

And then if you retain for two years, I think it's sort of 95% of folks – From year one to year two. From year one to year two stick around. And the business to date, they've got over 600,000 paying subs. The business of the date has just been really mostly just written content. And so if you think about all of the different areas they can go, they've started doing audio now, started expanding into Europe. I'd imagine they would do video in the future. So it's sort of this very – there's a lot of ways in which the business just continues to grow and expand.

And then sports is sort of the – there's a sense in which it's – and I hope I don't get in trouble for saying this. There's a sense in which, well, I won't get trolled by you, but maybe by somebody. There's a sense in which it's kind of an anti-media media company in that there are a few of these legacy media brands, New York Times being one, that are going to do fine going forward. But by and large, local newspapers are really kind of screwed. And the driver of revenue for all of these local newspapers has been the sports section. That's what drives all of the ad revenue. And so the question is, well, what's going to replace all of these local newspapers?

And we think it is going to be The Athletic. Yeah. So this is super interesting because my father recently calls me and he goes, hey, I went to go read an article in the newspaper of a very rural area in North Carolina. Like we're talking can't be more than 20,000 people live in this area, right? And that's probably being overly generous. And they've got a newspaper and they put up a paywall. and he said that he goes he clicks on an article right and he gets hit with the paywall and he goes there is a feature where you can pay 99 cents for the day right because they literally have

realized people are not going to pay on a monthly basis what they just want to read the one article so they're gonna get their one dollar and and do it and and uh he he knows nothing about media knows you know any of this stuff he just was laughing at the fact that he's like there's no way that that thing survives right and part of it is uh the quality some of it is just like what could possibly be going on there that you can't get somewhere else right kind of that idea of you have to have content that other people don't have but when you then look at it and you say well if something like the athletic comes and takes away the need for me to check the scores right and and kind of that component there's really no reason for it right and yeah maybe they write it

about a local business or whatever but but it changes the dynamic of this and part of what i think to me is so interesting is not only the business model but you're using the same uh staff You're actually going and taking their staff and just putting it in this new model, right? So you don't change the quality of the content. You just change in which the format in which you get it. And then you add in all these other cities, you know, their best writers, etc. It becomes pretty compelling pretty quickly. Very more importantly than that, it's really fun.

It's just a really fun business. And yeah, it's a really fun business to be involved with. I know that the team's having a ton of fun building it. And we think the long-term trajectory looks more like a Netflix-type business. We'll see if we're right on a 10-year time horizon. So this brings into question kind of media in general. And before we started recording, we were talking about kind of these new media models, right? So you see the Barstool Sports.

You see The Athletic. Things like Substack have come out. There's Morning Brew is a large email newsletter, et cetera. Do you guys kind of generally think that the old media model outside of maybe The New York Times and a couple of others goes away and gets replaced by somebody new? Or is this more of there's coexistence, there's the old models that work, and then there's new models that come along and kind of carve out a different demographic? How do you think about that as like a market dynamic? Well, you know, I'd say you always want to sort of look to the past as a way to sort of help

predict the future. And so one of the ways in which we like to do that is to sort of try and these counterfactual thought experiments. And so I think when it comes to the media, one could do a counterfactual experiment of if social media had existed 60 years ago, would we have all of the media institutions we have where they've actually lost their credibility a long time ago when anyone can fact check an article, when CEOs can have their own audiences and can publish their own thinking to their own audiences, and the public can decide who's more credible, sort of the CEO or the media, the journalist, that really changes the game. There's an interesting counterfactual thought experiment you could do on the impact social

media has had. And certainly, I think it's really screwed up the business models for the media companies. And so in practice, what that means is I think we're now entering, we're already in it, But I think people are starting to key into, we're in a realm where really what matters is reach, trust, and your own differentiated sort of point of view. And so I'm pretty convinced that media is going to just be increasingly decentralized. And maybe in 100 years, the New York Times is not even going to exist. They've often been critical of companies like Facebook for having a dual-class share structure, which will enable Mark to run it forever. And Salzberger also has the dual-class share structure of the New York Times.

They get to run it forever, but their forever might not be forever because I think the ecosystem is really, really disrupted. And so, yeah, I think it's a totally new era. And I think that journalists are starting to realize it. And there are a lot of great journalists out there. And I think the really smart ones will do things like what Jessica is building with the information and the tech industry, with the athletics, doing with sports. We were talking earlier about things like Substack that enable journalists to just build their own business on a platform that gives them the tools needed to do it. And I really do think we're heading in that direction. And then one of the other great developments, I think, is that the folks that are written about actually are able to tell their side of the story. And so, you know, I feel like the FedEx CEO letter, there was an article about FedEx in the Wall Street Journal. FedEx felt it was very inaccurate.

And the FedEx CEO was able to sort of write a letter and get it distributed. I think many more people read the letter from the CEO than read the actual Wall Street Journal article. He challenged them to a debate, right? Yeah, I don't think they took him up on it. Of course not. Of course not, because they knew they would lose. And I think you got, we had Dalio do this recently. There was a New York Times piece that he felt was very unfair.

He's got millions of LinkedIn followers. He wrote a response on LinkedIn. And I think increasingly, that's the world that we're entering. And I don't think that the media industry is ready for it. So I'm quite worried about them. Well, and I think part of this is social media really has exposed the fact that these big journalistic institutions are run by humans, right? I mean ultimately what ends up happening is journalists for a very long time hid behind the fact of we are very objective. We don't have bias.

We don't have emotion. We have no kind of horse in this race. We just write the facts, and that pretty much was accepted, right? I think a lot of people, if you go back 20, 30 years, people are like, yeah, that's true. And they read whatever's in the Wall Street Journal, New York Times, et cetera. Now, all of a sudden, even before kind of the CEOs and politicians, et cetera, realize that they could do this, you just started to get kind of data points that would get presented that all of a sudden, wait a minute, that doesn't jive with what was written, right? And so that kind of started people questioning things. What you're talking about now is the ability of these platforms to just completely remove that middleman in telling the story, right?

So whether it's the FedEx, you know, I mean, look, if you take in politics, you've got Trump and you've got AOC, they both do the same thing on two different sides of the aisle. They just realize if I talk directly to people, no one can mix my words, right? This is what I want to say. And so what it does, though, is it then brings into question, at what point do we empower the people being written about too much, right? If all of a sudden people now just listen to, you know, the FedEx CEO or some other leader, like who's there to fact check, right? It's kind of the counterbalance to this because the media does serve a great purpose in a lot of people who are full of shit, right? And they do a great job of saying, no, you're full of shit. Here's the truth. And so that's my fear, right? It's like the writing's on the wall and kind of we know where we're going, but what's that counterbalance to kind of keep optimizing for truth? because I think it's possible to not just rotate back to the middle, but actually over-rotate in

favor of the people who were being written about. And now they can just bullshit and people just have to take them at face value. I 100% agree with you. This is a massive risk and something I'm very concerned about as well. My hope, and this is the optimistic version, would be that the folks that do fact check and publish truthful articles and can build their own businesses on platforms like subs that were talking about a 20-year time rise. And I'm hopeful that there will be trusted new brands and media that are trusted to be a source of truth. I think the unfortunate reality of what's happened is you've had these historically trusted media brands that have oftentimes published articles that are not wholly truthful. And so you can't both be the

arbiter of truth while also publishing things that aren't truthful. And I would also note that not every highly regarded media institution actually has fact-checkers. And so one interesting tidbit I learned about the New York Times from some friends is they don't actually have fact-checkers on staff. The journalists fact-check their own articles. And so I'm all for fact-checkers. I'd be very supportive of every media company doing extensive fact-checking. The reality is that does not happen today. I'm hopeful that in a more decentralized media environment as this continues to develop, actually we can get more fact-checking. People will be more empowered to actually fact check. So I've got another framework that this isn't fully fleshed out yet, but I've just started

to realize. So if you look on a geographic basis, the Great Firewall in China has kept a billion plus people in the dark about what's going on in the rest of the world, right? To some degree. And either they have no clue something happens or they get pieces of the information, but it's stitched together in a story that the government wants them to hear, right? The coronavirus is the first time that's been reversed, where now all of a sudden the rest of the world's like, what the hell is going on in China? And we either don't know, or we're getting pieces of information that are being strung together, and we're being told a story that they want us to hear. And it's really interesting because I don't think a lot of people have realized yet, like this is the everyday life

of people in China with the rest of the world. When you reverse that, now all of a sudden everyone's up in arms like you have to tell us, you know, it's like we're we're the police of the world. Right. But that is a really dangerous world to enter into where if this was not just a China thing, this was in multiple places in the world, whether vertical based in terms of industry or geographic based. If you now start to get fed stories where you can't fact check, you can't actually get access to information like that's a scary world to live in. Yes, I've never been to China and have no plans on going, I think would be a very scary place to be living, particularly now. And I feel absolutely horrible for the people there. But where are you going with this?

Because you have this. So where does this theory take us? Let's jive on this for a moment. So my whole thought process is you have a country that's got 1.2, 1.3 billion people, and it's becoming more and more important to the world. And the coronavirus is like something that grabs everyone's attention because there's kind of the fear mongering aspect of it. It's health related there's people dying right all that kind of stuff well might actually be really really bad so i don't want to i don't want to downplay absolutely but what i mean is it's easy to grab people's attention even if the deaths aren't happening in the united states right it's just the fact that death grabs it yes but if you pull it to less important things like uh technology

investing businesses you know all this kind of stuff there was a wave in like the 90s and into the 2000s, Carson Block and some of these guys realized, hey, we're being fed bullshit. These companies are actually frauds, and they brought them down. But now all of a sudden, there's this resurgence of China's getting its act together, et cetera. There's a belief that maybe we just are being fed the rose-colored glass perspective, right? And maybe it's not actually what we think it is. And then if that's happening in China to the rest of the world, could that actually be happening in the u.s right you know it's um one of the things that uh and i forget the exact data um i think it's the federal reserve has missed on gdp projections every single time they've ever

estimated right they're like oh for like 250 times or something yeah which is fucking crazy right that like at some point just flip a coin you know right and you can at least get close but then you start to look at now we also see things where like numbers get reported and all of this financial activity happens investments stocks go you know up down sideways whatever but then they go back and they recalibrate the numbers you know a quarter later two quarters later but no one talks about it and so when you start to like unpack some of this stuff it's almost like is that intentional or is it just really hard to count you know in a highly complex environment and so it leads to this idea that i start to just think around like you literally have to fucking question everything

correct right and like that's not a world i think that most people are one well positioned to do like we actually don't have the skills as especially the united states the the skills to question everything because we're so used to just accepting information that we're given but also too if you question everything and you start to get answers you don't like i think that that quickly jumps off a cliff that people just aren't thinking about aren't ready for etc and This is everything from the Jeffrey Epstein type stuff all the way to, you know, literally what's going on with how many people have died like that. That should be pretty easy to measure. Right. But there's numbers. I've literally seen 10 X in variation of numbers like that's big fucking, you know, spectrum all the way to like, did a dude get killed or did he commit suicide in a government facility?

Right. That had never had any never had no one had ever died in that facility before, by the way. Yeah, and it's like – I'm always – if Plano was here, she would immediately be like, hey, stop doing the conspiracy theories. It's getting dangerous. Yeah, but it's not so much conspiracy theories as it's pulling back on this thread of like if we have to question everything because the information we're being fed is questionable, where is the line? And I think what we're realizing is like there is no line, right? It's not just economic data. It's not information in stocks, whatever. It's actually like a lot of different types of information.

And so when you take away the trust in information, like, I don't think we've had that before. It's like, where does that take us? I don't know. It's yeah, I don't think there's any way to predict where it takes us. I think the the lesson is or at least the the realization is we should have been questioning everything all along. And so certainly that that should really sink in for folks that one one should have been questioning things. For all the previous, the boomers should have questioned things.

Gen X should have questioned things a lot more than they did. And so I'm optimistic that the fact that more and more people are keying into the fact that actually you need to form your own view of reality. You need to question what you're being told, come up with your own answers. Hopefully we'll be positive. Now the challenge is just, if you question every issue that's out there. There are millions of different issues at any moment in time. It's exhausting. Right. And so the future is going to favor people who are able to actually very quickly sift out and filter out anything that's not relevant to what they're trying to do in the world and their family, their loved ones, what they're trying to build, what they're trying to do, their company,

and be able to really key in on, okay, what are the very important things that I need to get to a truthful view or a view that I believe on and really dig deep and review a lot of different sources and come to your own view. And so I think with individual processing power and ability to filter out things that aren't important, key in on the things that are, question them and get to your own view. Yeah, I think that is just table stakes for existing as sort of a sovereign individual in today's world. And I don't know where it's going to lead us. Yeah. And so I want to make sure that I clarify, like, I'm not suggesting that everyone's lying about everything. Right. Of course not. There's plenty of people who actually just make mistakes. And one of the things that you guys have. I don't think counting is that hard, though, on the numbers thing. Absolutely. Right. So like that's where you get into kind of the narrative mirage, if you will. But but one of the things you guys have said, going back to kind of more investing in entrepreneurship is like the media forgets a lot of times that founders are human and humans make mistakes. And that doesn't mean that if you make a mistake, like, we shouldn't call you on it.

We shouldn't say anything bad. But, like, there is this element of, like, it's okay to make a mistake, right? And so how do you guys think about that internally? And not even so much with your portfolio companies, just more of, like, tech was really good for a number of years, and then it became, like, the bad people, right? And, like, oh, let's all go yell at these people. They're being too successful, right? So, like, let's go attack them. Where's the line or, like, what's the framework to think through?

When is it they did something bad versus they made a mistake and they should be able to kind of overcome that or at least make it right at some point? It's always case specific. And so whenever there's a thing that's hyper case specific, you always want to try and come up with some sort of shortcut type formula. And on this specific question of sort of, I guess we call it canceling founders would be sort of a terminology. The cancel culture.

The cancel culture as it relates to sort of these entrepreneurs. And, and certainly there are, you know, there are certainly people in the world who should be, you know, who really have deserved have been canceled, they probably deserved it. And then I think there are probably a lot more who, who probably haven't. And so if you sort of, so I want to start with a metaphor, and then I want to get into a sort of shortcut rule that maybe there are a few exceptions to. So the metaphor would be, if you commit a crime, let's say you assault someone, which I know you haven't done, nor have I, but theoretically, if someone assaulted someone, they were arrested, jury trial, you know, you would go to jail, you would serve your sentence. And then I think most people would agree that once you're released from jail, and you've served your time, you should be able to reintegrate back into society and live a life and sort of have an existence. And I think that's, if you're let out of jail, you sort of get to start again, and you get a second chance. there is no equivalent for cancel culture. And so if you're canceled, your life's permanently ruined and it doesn't matter why you were canceled. It's just your life's over and no one wants to talk to you anymore and you can't do anything else. And so it strikes me as really bizarre that there's a second chance for ex-convicts, but not for people that have been canceled. That seems really screwed up to me. So I think I'd love some sort of get out of jail

option once you've been canceled. Unfortunately, I don't quite know what that is. Then I'd say the shortcut on this is, I've learned so many things from Peter Thiel. One of the great things I learned from him was that when you're evaluating the business model of a company, these laundry list type business models where it's like, well, we can monetize through advertising, through subscription, through selling the data. When there's a laundry list of different business models, it actually means there's just no business model and the company doesn't know how to make money. And I actually increasingly think this laundry list analogy can apply to the cancel culture stuff as well. And so I'm very skeptical when there's sort of a list of accusations that

aren't all the same thing. And so if someone's been accused of doing the same thing over and over again, that's probably bad. But in the case of something like Away, where you had the board try and cancel or the media tried to cancel Steph Corey, the CEO, she's the CEO of the company, she's now back. It was sort of this laundry list of mean things she'd said on Slack. And so it was like, well, she said this mean thing. And then she also said this really mean thing. And then there's this other mean thing. And it was sort of a list of mean things that she said. And that made me sort of very skeptical of that as a cancellation. Now, she's now back. So that's a really positive development. If you rewind to when Travis was canceled from Uber, and to be clear,

disclosed my bias up front, I am not a natural ally of Uber or Travis. So to be clear- You were one of the biggest investors in Lyft and was literally on the board. Yeah. It was basically ... Yes. He caused me a lot of emotional trauma while I was on the Lyft. He was the formidable competitor that you talked about earlier. Correct. Yes. Not even Uber, just Travis. You never want to compete against ... It was actually Travis. And I think Emil was pretty good too, but you never want to compete against. But in any case, retrospectively, if you look

back at the series of facts that led to him being ousted from Uber, it had a very laundry list feel to it. It was sort of like, well, he was mean to this driver. Yeah, he was really stupid. He shouldn't have said that. It was offensive, but I don't think it warrants being canceled from your company. It was like, yeah, there was this culture of weird sexual harassment stuff. He wasn't directly implicated in any of that. No one tied anything back to him. There was sort of other random accusations, but it had very much a laundry list feel to it. And so whenever there's a laundry list of accusations, I'm very skeptical of it. And then in certain cases, it's justified. So certainly, someone like Elizabeth Holmes, I'm really glad that that story came out.

And I think that was very positive for the world and was a positive development. And so it's always case specific, but I am very skeptical of the laundry lists, A. And B, it strikes me as really screwed up that it's sort of worse than going to jail if you're canceled. well and going back to your metaphor about kind of there's a uh bad thing that happens then there's a trial then there's jail then there's like restart right the cancel culture has like maybe bad thing that happened and there's no trial by your peers it's usually trial by somebody with bias or a twitter mob right yeah so twitter mob or or the media or whatever

and then very quickly because people are looking for this stuff it snowballs right so that's where you get kind of the mob mentality but the two things that it doesn't have is like actual confirmation of like did that happen or did it not did it happen in the way that it was said is it actually as bad as it was like the away stuff literally i think part of the reason why the ceo came back was because there was actually a bunch of people saying like what are you talking about like that's not that bad right so like yes she said it but it's actually not that bad right and that's what you get in a traditional trial if somebody does something bad uh you know crime or whatever but then the other piece is like there's no sentence right and i think this is what you're

getting at where it's, it's one thing to, Hey, you can't restart, but I actually think it's because there's no sentence. So in the criminal action, there's you're convicted and then you are sentenced. And that sentence is a very specific thing. You are going to jail. So you're going to go sit in this cell for three years. When you get out, your time is done, right? It's kind of like when you put a kid in timeout, right? You're going to sit there for five minutes when you're done, it's over, move on in cancel culture. There's no sentence. And therefore, if there's no sentence, um, you get in a world where like everyone has their own idea of the sentence, right? It's, you know, that person should not be allowed to ever participate in

building a company ever again. And other people think, well, if you sit out for a year, then, okay, you've kind of served your time, quote unquote, you should be able to come back and everything in between. If you don't have the sentence, you can't get the restart, right? And so like, it's not a crime, so you can't use like the legal system. But I agree with you that that is a missing component, which prevents people from being able to restart unless you're somebody like a Travis who literally just says, I'm going to sell my Uber stock. I'm going to take my money. I'm going to go build another company and like, good luck, try and compete with me. Right. I think that's the only thing you can do because if you don't have that sentencing

component, you know, if you and I disagree on how long that person should be punished, then there's no right answer. That's right. But I will say that I think the tides are turning. So a few, a few, a few cautiously optimistic signs here. So I'd say one, I think the Steph Corey case with Away was a case where she fought back and she won the fight. And so I think the lesson one can take away from that is if people are trying to cancel you and you as an individual, one as an individual doesn't believe that the grounds are valid, you need to fight back and you need to get your allies to fight back with you. And so it's fighting back against the cancel culture. I think we now have a data point, at least in a tech entrepreneur concept, that it

actually can work. Moreover, I think, you know, people in powerful positions are starting to key into the fact that actually oftentimes it's quite unfair. And so perhaps patient zero for sort of the Twitter cancellation in sort of tech, tech adjacent industry would have been like, do you remember Justine Sacco? She'd been that, she was an IAC, she was a PR person at IAC. She was going on a long flight to South Africa and she tweeted this sort of very off color, you know, it's not a joke that I would ever tweet. It was obviously a really bad judgment, sort of off-color joke. And it was on this 14-hour flight or something. She lands and checks her Twitter. She was fired.

And it was literally retweeted 100,000 times or something. And mobs came after. She was fired. She was from IAC. She was just rehired by Match, which is an IAC company, to lead their PR. Now, It was sort of like nine or 10 years of basically having to live in purgatory, but she's been brought back to the company that, a subsidiary of the company that fired her. And so I do have hope that this is actually starting to change and it's just up to everyone. It's up to all of us to, sometimes it's valid and then we have to really question every case as a unique sort of situation and people who are being canceled need to fight back if they think it's unfair.

Yeah. And part of where this gets like a really slippery slope is it's one thing for you and I as adults. Like we have brains that are fully developed. Right. We can make our own decisions. Hopefully we are smart enough to not do dumb shit. Right. And all this kind of stuff. But if you take a 16, 17, 18 year old kid. Right. I mean, how many kids have the story that really blew me away was there were some kids. I think a couple of them got accepted to – it was like Harvard or something. And then I don't remember all of the details, but I think they had either racist tweets or something like that that came back and actually got their scholarships revoked or their admission revoked. Now, guess what? Racist is really bad, right? And they should not have said that, et cetera. But how many 16-year-old kids across the country of all races have said something whether they were joking or not, right? Well, it was just that social media wasn't around to document it, right?

And so, like, there's a whole generation of kids that are now growing up where they're, frankly, they're immature, right? Their brains aren't developed. Like, there is some question of if we are going to document everything everyone does, where is the line? And the sad part is, like, I actually don't know, right? If I was sitting there as that administrator at Harvard or whatever the school was and had to make that decision, I don't remember all the facts, right? But, like, I don't know how I would think about that. I don't even know if I have a framework to think through that. And so the cancel culture affecting adults who make adult decisions later in their career, like that's one whole bucket. There's a whole nother bucket for essentially kids, right? I mean, how many kids are putting dumb stuff on TikTok right now and is going to surface it, you know, five years from now and they get fired from their job, they don't get accepted to a school, whatever. Like, is that fair? I don't know, right?

But like that, that's a whole nother component of this that I think just isn't part of the mainstream conversation, but will eventually have to be entered into that conversation because it's a reality of the, of the world we're living in. Yes. And I would argue that this whole, the cancel culture stuff is sort of an outgrowth of sort of the woke movement. And there's a sense in which you can think about sort of wokeism as a, as a religion, just as Christianity is a religion.

Now I'm not Christian, but I do know that Christianity provides for people, people are sinners and they make mistakes, you can sort of repent for your sins and you can still be a good person. And that doesn't exist in wokeism. So if you screw up and are canceled, there is no second chance. So certainly in the children context, that's very dangerous. So if you sort of think about who the teachers in the schools are, I think tend to be somewhat in many of these institutions, many of these leading universities and private schools, et cetera, there's a sense in which wokeism is kind of becoming the religion. And I think there's some very valid attributes to it. But at the same time, it is sort of a very rigid religion. And we don't have any sense of

what the long-term consequences are going to be. Yeah. I think you and I agree on the idea of the world tries to make things black and white and it's just not black and white. That's right. And so it's like case specific. It's very gray. Um, and, uh, and we have to be aware of what's happening because it affects everybody in all these different ways. Uh, and if you don't talk about kind of what's happening, then, you know, it just runs wild, frankly. Um, moving on, uh, another thing you guys think of a lot about, um, and I've seen you tweeting about is, uh, growth valuations being heavily, heavily overvalued. Uh, that's not very popular opinion. in many circles. Where is that coming from? How do you think about that?

Sure. Look, here's the reality of what's happened. It's very hard to get a return on one's capital today in this environment. So it's sort of like, well, how are you going to get a return on your money? And one place where over the last number of years, folks have been able to generate a good return has been in venture capital, and in particular, growth stage and to some extent, seed stage. So what you've seen is over the last seven, eight years, tons of capital, hundreds of billions of dollars have flown into the asset class. There are hundreds of new funds that are getting formed every few months or so. And basically, in order to scale up a venture fund from having a few hundred million dollars to having billions of dollars under management,

you actually have to actually deploy the capital. You actually have to invest it in things. And so you actually have this weird adverse incentive where you have these firms that are trying to scale their assets under management such that they're investing in companies at valuations that are pretty crazy. And SoftBank was sort of the modal example. And I think that maybe had somewhat of an impact. They're obviously good growth stage companies, but yeah, I do think they're generally pretty overvalued. And sort of the broader point that I'd make is a lot of the things that we've called tech companies over the past few years aren't actually tech companies. And so certainly a lot of the fintech stuff, and I am pretty bullish on fintech. I sort of led the

Series C in NewBank at Founders Fund. We've done a lot of fintech investing at Bedrock. But a lot of the fintech companies, their product is just money. And if you're selling money, that's not really a tech company that should warrant a tech valuation. Same thing can be said for the D2C brands. WeWork was not a tech company. They tried to put sort of a technology gloss over it. And these businesses have been able to command these tech valuations at the growth stage because you have so much capital in the venture asset class that is looking to get deployed. The other perverse way in which this manifests is, one thing that people generally understand in venture capital is there are actually only a few dozen really good venture capitalists that

have generated the vast majority of the returns. I became a VC in 2012. I think at the time, there were 10 or 11 who I thought were really good. At this point, there's maybe 30 who I think are really good investors, have generated the majority of the returns for their firms. There's only so many opportunities. That's right. There's only so many opportunities. There's only some people that are actually good at this. And yet to actually scale up the assets under management at a firm, you have to scale the team. And so basically what we've seen happen is these teams just become huge. In fact, a friend of mine is a great investor. She's a partner at a very large VC firm. I think they have something

like 20, 30 partners. And I was looking at their website the other day and going through the partners. And I think only three of the 20 plus partners have really ever made any investments. And so there's all of these managing partners that haven't actually made any investments, but the firm manages billions and billions and billions of dollars. And I think that actually, yeah, you need to hire these people so that you can raise the money. But of course, you can't actually let them invest because that would ruin the strategy, sort of like art pieces hanging on the wall. And so I would sort of encourage anyone, considering becoming a VC, are you going to be an art piece on the wall to help the firm

raise more money? Are you going to actually be able to invest? Because that's the only way to learn how to do this. Yeah. And this leads into, you've said a bunch of times, the overhype component of becoming a VC early in your career, right? It used to be a thing where, hey, go be an entrepreneur, have a successful exit, get some money, then go decide you want to be an investor, kind of do that later in your career. And then at that point, you've almost earned the right to do this. Now, I mean, there's literally kids that are in early years of college saying, my goal is to be ABC, right? Like right out of school, I want to go work at a venture firm. How do you think about what's too early? What's not? Is it a case by case thing?

What's kind of the thought process if you're talking to a young kid about who wants to go do that? Yeah, look, it's always case by case. So I mean, in order to be successful as a VC, A, you need to be able to make investments. So everyone we hire on the investment team at Bedrock is empowered to make investments. So that's sort of part one. So if you're a young person looking to be a VC, you should join a firm where you will be allowed to make investments. So that's sort of the gating factor. And then I think to be successful as an investor, you need three things. You need access to great companies. You need to pick the companies correctly. And you need to win the deal. And then, yeah, of course, you also need to be right over time. If you're sort of a young person coming out of college, it's very unlikely that you're going to have great intuitions on what businesses are going to really work. It's very unlikely you're going to have sort of differentiated access to companies. It's very unlikely you're going to be able to win the deal. And so I think in practice, a lot of young folks can spend years and years in VC supporting senior partners, never making any investments. You might end up getting a title as sort of a managing director, like a lot of these folks at my friend's firm, and spend eight plus years there and never actually make an investment.

but that's not a very fulfilling career. I mean, what gives us energy at Bedrock every day is we get to spend all day meeting with brilliant founders, deciding whether we want to invest in something all over the world, all different industries, all different sectors. That's really exciting. I think running spreadsheets and writing market research reports for a sort of random managing director, not a very exciting career path. So that'd be part one. I'd say part two of why I'm sort of skeptical of it is because it's become the hot thing to do. Definitionally, it's probably quite overhyped. And then finally, there is a sense in which it's a pretty comfortable thing to do. And so you sort of start doing it. It's very comfortable. A lot of folks don't work

very hard who are VCs. That's not true of everyone. Certainly we like working and we work very hard, but not everyone does. So it gets really comfortable. But the lessons you learn as a venture investor, they actually aren't really applicable to many other things. And so you're not going to learn how to operate a company if you're a VC. You're not going to learn how to code a piece of software if you're a VC. At most firms, you're not really going to learn about things we were talking about earlier, like how to question narratives and how to actually... that's not what most VC firms will teach you. Now, there are a few exceptions. There's a place like us and founders and there are exceptions to this. But I think generally, it's a suboptimal track

for most folks, unless you join Bedrock, in which case, it's a good idea. And you talked about as an investor, and I've always felt this way of the job of smart people, or usually some of the smart people in the industry coming in and then teaching you about something is pretty fucking incredible right uh in that interaction uh i saw you tweet and say that uh there's some people who say to founders don't argue with the investor right like basically go in pitch and like don't get in an argument you took the opposite track which i actually agree with it no no that's part of the fun of the pitch right is wait a minute i'm calling bullshit on this or i don't understand this and and the back and forth kind of teases out more information

why why do you think other people say don't argue and then kind of how do you guys use that debate or lively discussion to your advantage if other people aren't going to do it huh interesting well i don't want to speak for the other people what i will say for us is uh you know through getting into a spirited debate uh you actually can get to the truth about about different things and so you can push back on elements of the pitch as an investor and hear how the founder responds then you sort of unpack the answers and you ask follow-up questions and it's a way to actually get to the truth. A, B, a two-way conversation

or a three, four, five-way conversation is much more fun than just having someone talk at you. And one of the things that I think is just true in one's career is you wanna optimize for having a lot of fun. And so if you're doing something where you're not having fun, that doesn't make any sense.

This is certainly just purely selfish reasons. We find it fun to debate. We like debating with founders. We like being proven wrong. We like hearing better arguments than our point of view. And we can oftentimes get convinced. I mean, founders have convinced me of opportunities I thought were crap through getting into these spirited debates and actually getting me to change my position. I think a key marker of someone who's sort of curious

and intelligent is like, you're able to change your mind if someone makes a compelling argument. That's a shocking idea in today's society. That's called flip-flopping. You can't do that, right? Well, I'm a notorious flip-flop. But it goes back to this idea of intellectual honesty, right? And if you are actually intellectually honest with yourself, the things that you actually have high conviction on and are willing to argue to the death, there's very, very few of them, right? And if you are presented with new information, why would you not change your mind, right? It's almost like you flip and you're like, wait a minute. You're an idiot if you don't change your mind, if you're giving new information that proves your previous thought process was probably not accurate.

Yes. Now, that is true. certainly in a pitch context, you have to be careful about changing your mind too often once you've made an investment. So this is one failure mode that I've actually been guilty of in the past where you sort of make an investment, there's a period of time where things don't go very well, and it's very easy to just skew hyper negative. And this is sort of, I think a lot of the psychology around Bitcoin as well as people, the psychology can just shift very dramatically from positive to negative. And so you need to actually just have a very, you do need to have high

conviction in the long-term trajectory of a company you invest in. And then you just have to be... As the facts change, you take them into account. But generally, I think you want moderate opinions strongly held once you're an investor, and you want strong opinions weakly held before you invest. The first time we met in person, we had a great conversation. And when I was walking out the door you said something i said i forget whatever it was and i was like i just got lucky and you immediately snapped back with there's no such thing as luck and uh it's something that i actually feel very strongly about this um and i agree with your sentiment um but it's not socially acceptable to say that well this is a tricky one to unpack so first of all uh whenever

I say there's no such thing as luck, it's always off the record. So it takes like it's off the record now. It's now on the record. That's okay. We're going to roll with this. It's now on the record. So my off the record is the, and again, you know, so this is one of the problems. I did not know it was off the record. It's off the record. So I would never say that on the record. But in any case, I did say it to you off the record and it was in a specific context. And basically, here's what I think about luck. So I think you need to look at it sort of through a sociological lens. So basically my, my current view of it is, um, uh, people who are, um, people who are not

successful, people who have not been able to achieve what they want in life, ascribe everything to luck that that's incorrect. So it's like, Oh, it's all just luck. And I'm an unlucky person. Okay. I think there's people who, um, who are successful, but don't feel, um, that they, uh, that they are, uh, that they are fully successful or fully made it sort of like a chip off one's shoulder type vibe, in which case also there's no such thing as luck. And I think both you and I are people who are very ambitious. And so I think it's a healthy mentality. I think even if there is such a thing as luck, which I do believe there is, to be clear, on the record, I think a healthy mentality as you're building something. And if you're very ambitious and you're trying to

make a real impact on the world is to have the mentality at least that you make your own luck. There's not some sort of preordained magical lottery ticket that's going to fall on your lap. But then I think that actually the best, the people who've really made it and who are sort of clear-eyed about it would acknowledge that luck does play some role. And so- So the way I think about this is pre-being born, post-being born. Okay. Right? And pre-being born, there's a lot of things, a lot of luck that goes into it, right?

Kind of the ovarian lottery type thing, right? And so where you're born, what language you speak, the color of your skin, the socioeconomic situation you're born into, that's all luck, right? In terms of, yeah, there's some math probability, but it's luck. You're given a deck of cards is kind of how I think about it. once you're given the deck of cards from there, there's very little, if no luck, right. And it being the things that are outside of your control all happened pretty much before you're born. Right. And I think that when people take this paintbrush and say, no luck, all luck, right, whatever, again, it doesn't kind of account for no, you and I, and many people listening to this

are super, super lucky because most people who are listening to any kind of audio content, Right. Totally. Naturally are in a way better position in life than majority of the humans on this planet. So there's kind of a here's your starting point, whether it's good, bad or in between. But then from there, there's very specific things that occur. Right. I'm one of these people who believes that even when it's not in your control. So like the family environment. Right. Somebody is making decisions that isn't quote unquote luck. Right. It's somebody somewhere is making a decision that then puts you in that situation and what you do with it ends up being the actions you take. And so it's almost like this taboo thing where luck gets, again, that paintbrush.

But if you look at it that way now, all of a sudden, like you said, it's kind of this mentality component, but also it changes behavior. Right. And I think that's the key piece of it, where there's a lot of people who sit around and when they have the mentality of luck, luck, luck, luck, luck. the action follow or the lack of action usually yes right whereas if you go into it with the mentality of there is no luck i had luck to be the starting place i was now there is no luck it's all on whether i accomplish something or not uh the action does follow and there's this great book um that uh i used to keep it as a secret and not tell people about this book because i was like oh this is a fucking advantage in life but now uh lately i've started to tell a lot of people about it. So in 2013, this guy, Tim Grover wrote a book called relentless. Okay. Tim Grover is a dude. He

played a college basketball, got hurt, uh, says, you know what, rather than be a basketball player in the NBA, I'm not going to make it. Uh, I want to train those guys. And so, uh, one of his first clients ever was he went to, uh, the Chicago bowls and he called every single player other than Michael Jordan. And he said, well, that guy's the best in the world. So he doesn't need me. they'll call everybody else. Long story short, he becomes Michael Jordan's trainer and he gets a chance. The Chicago Bulls staff says you can come and he'll work with you for like 30 or 90 days, some short period of time. And in the first meeting, Jordan's basically like, you know, who the fuck are you? Right. You know, I'm the best player in the world. What are you going to do for

me? And lays out an exact plan. And they end up working together for 20 years. Right. He then becomes the trainer to Kobe Bryant, Dwayne Wade, like every single top NBA player in the world goes to this guy and some of them are every week they work with them some of them are don't talk to him for three years i need you right now fly to where i am and like help me for two days type thing and in the book he lays out there's three types of people um there's uh i think a clean i think he calls it a cooler a closer and a cleaner and he goes a cooler is just somebody who is basically happy to be there right they're happy to be in the nba it's great if uh we're at towards the end of the game tell me the play coach and you know i'll go try my best and where's the party

at after the game type attitude uh closer is somebody who says hey coach uh give me the ball and if i'm open i'm gonna shoot if you're open i'll pass you the ball right but a cleaner he's like is going to fucking take the shot right no matter what they're going to create the situation they're going to take the shot they're going to win the game and there's no question nobody in that huddle is questioning it etc and what he goes on to talk about is those are also the guys at during the offseason who realize practice should be harder than the games right it's not that oh practice let's go take some shots and then go home and like i'll turn it on for the game no i'm gonna actually work harder in practice than i do in the game so the game's easy and he goes

through this idea and it's used as term cleaners but the whole thing is around everyone else thinks oh he turned it on for the game he got lucky in the game the ball bounced his way this time like all of those kind of sports metaphors that are used all the time are associated with this idea of luck right and he doesn't talk about luck in the thing but it's basically he's talking about but he goes there's very select few cleaners that when they walk in the gym everyone knows that's a cleaner and that person's here and no matter what happens in this game they're in control and i think that applying that type of attitude and mentality to the rest of life completely changes the actions that people take and that's where like this idea of like quote

unquote there's no luck when you apply it in that framework all of a sudden it's like well yeah i do fucking believe that it's a very it's a very healthy very healthy frame of mind to have and back to your just a deck of cards metaphor it's it's about how you play the hand you're dealt yeah i think it's a great way to look at it um what are you excited about kind of moving forward in uh in the tech role what what is one or two areas where you're like no one's talking about it, but we think that there's incredible opportunity there. Yeah. I always refuse to answer this. I always refuse to answer this question. Why? Wait, why do you refuse? Well, you always want to refuse to answer the question because if it's an area that we're

excited about, definitionally, we haven't found the right company to invest in yet. And so here's some thoughts. One, I do think there is a lot more on the enabling infrastructure side of things. You just had the plot acquisition by Visa. Stripe is a phenomenal company. We think there's more like that. These can be very valuable companies. Enabling infrastructure in fintech or in other areas can be very, very valuable. I'd say, too, is I do think there will be a new wave of consumer internet applications. And I think most people have just said, consumer is dead. All of the energy, all of the heat is on enterprise SaaS. To be clear, those are the businesses today that are working. They are mostly enterprise SaaS businesses, and we have a number

of investments there. But I just think a lot of the consumer internet applications are somewhat broken. There's got to be a new wave, and it might actually just take decentralization to make it happen. So it might be 10 years away, but I'm optimistic on that. And then there's always the question of what can you do on the biotech side of things to sort of make people healthier. And certainly with coronavirus, there's a sort of heightened interest on my end in that whole world. But in practice, the companies end up not actually being that valuable. And so it's sort of like you get to a milestone, you sell it to pharmaceutical companies. It's a question of is there some way that these companies can get more valuable. So there are a few things we're thinking about right

now. Is that a capital problem? Like the access to capital is just not there for them to scale past and they have to sell? Or what do you think? It's very hard to build a drug platform. Everyone pitches that. And then in practice, it's really hard to actually do. I think it is somewhat of an access to capital problem. And I think it's also in many cases, a founder mentality type problem. And so there aren't that many founders that have sort of a internet software, Silicon Valley type mentality to building a biotechnology business. So if you find a founder that actually does have that mentality, that's probably a really good investment to make. For sure. Any words on Bitcoin in terms of how you guys think about it?

I mean, I think anyone who can afford to own some should have some Bitcoin. So I think that's pretty, pretty common, pretty common wisdom. I mean, we think of it as just an ultra long-term hold thing where you sort of want to just have it and hold it and not really not check the price for sort of, you know, I haven't checked the price for years. I haven't checked the price in a long time and I sort of don't want to check the price for a number of years. Um, I really appreciate you doing this. My pleasure. Yeah. Um, where can people find you on the internet? Uh, you can find me on Twitter. Uh, although I am trying to use it less, uh, uh, uh, for all the, especially now of all the controversial things I've said on this podcast. Just J-U-S-T-G-L-E-W. And you can find us

at bedrockcap.com. All right. Before I let you go, I always ask everybody about aliens. Are you a believer? Yes. I definitely think it's more likely than not. What is the logic as to why you believe? You know, it's not an easy logical sort of train of thought to deconstruct. I'd say that it's actually pretty irrational in that my favorite book as a young person was Contact. I want to believe that there are these friendly aliens and it seems more likely than not that given the vastness of the universe, there should be intelligent life somewhere else out there. I've asked this question to over 220 people.

You're the first person to basically say, regardless of the logic or not, I want it to be true, which I actually think is a very honest view. And many other people probably, that's why they believe. Overwhelmingly, people say yes, that it's likely. But you're the first person to say it that way. We always try and be honest. Yes, always got to try and be honest. Hypocrisy is not a good look.

I love it, man. All right. Well, listen, thanks so much for coming to do this. And we'll definitely have to do it again. My pleasure. Thank you. Hey, everyone. Pop here. If you like 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, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening and see you next time on Off The Chain.