The Pomp Podcast - John Wu, CEO of Digital Assets at SharesPost: What Assets Should Be Tokenized Next

Episode Date: March 13, 2019

John Wu is the CEO of Digital Assets at SharesPost. In this conversation, John and Pompliano discuss tokenizing assets, the current infrastructure landscape, how institutional investors are looking at security tokens, and what John believes are the best assets to tokenize moving forward. ----- Join the Off the Chain newsletter. Pomp's daily email analyzes the crypto market for institutional investors. Simply, it’s the best crypto newsletter delivered to your inbox every morning. No frills. No bullsh*t. Just everything you need to know in a 3-minute read. https://offthechain.substack.com/ ----- ZenLedger simplifies crypto taxes for investors and CPAs. We provide the best software for importing crypto transactions, calculating gains and income, and auto-completing tax forms like 8949, Schedule D and FinCEN. If you had losses in your crypto investments, ZenLedger can help you save up to $3,000 on your income taxes, with our tax loss harvesting tool. ZenLedger is also a TurboTax partner and has the best support for EOS owners. Finally, a simple tax tool that saves you a ton of time and headache! Visit Zenledger.io/OffTheChain to get your taxes done with ease, and as an Off the Chain listener, save 20% of your 2018 tax forms! ----- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. John Wu is the CEO of Digital Assets at Chair's Post. In this conversation, we discuss tokenizing assets, the current infrastructure landscape, how institutional investors are looking at security tokens, and what John believes are the best assets to tokenize moving forward. I really enjoyed this conversation, and I hope you do as well. All right, guys, before we continue with this episode, a quick word from our sponsor, Zenledger. For all you accountants and crypto investors out there trying to get through this bear market,

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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 Morgan Creek 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, super excited. We've got John here with me from Sheriff's Post. Thank you very much for coming on the show. Hey, thank you very much, Pomp. It's a pleasure. Absolutely. Maybe let's start with your background because you've got kind of an interesting investing and technology background.

Yep. So I came into this space as a technology investor. I spent most of my career as a tech investor via the hedge fund mechanism at places you and Mark Yusko would know, Tiger Management first, and then Kingdom Capital. And then I ultimately ran my own hedge fund that was sponsored by Blackstone. Very cool. And how do you see the parallels maybe between some of that work and what you're doing today? So it was because of my last experience running my own fund that I, as a user of crypto or buyer or investor of Bitcoin, that I realized how difficult it is for institutional investors to get into the space. So around 2013 and 14, by definition as a tech investor, you're looking at new emerging technologies. So while I was looking at

Bitcoin, trying to figure out if it's a good investment thesis, I instantly realized that even before I figure out the investment thesis, can this be operational for my fund? Was I going to fulfill my fiduciary responsibilities to my investors by investing in this class where there's custody at the time was just completely unknown. Settling and transferring these securities were also questionable in terms of regulation. Internally, there was no accounting, OMS systems, anything to record these trades in an efficient manner. So, ultimately, I said, no, there's no way I can do this because you can tell your investors that you lost some money, but you can never tell your investors you lost their money and it's unrecoverable. So luckily for me, at least,

I started investing in it personally, but it was that firsthand experience as a user that I realized what needed to be built. And that ultimately led me to SharesPost, where I am the CEO of the digital assets group inside of SharesPost. And we are creating some of that infrastructure, trying to create the liquidity and create a secondary trading marketplace for digital securities or security tokens. Got it. And maybe give us a little bit of understanding of, you know, what is SharePost kind of legacy business? How does the digital assets fit in there? Maybe some of the, how it's structurally set up. Yep. So SharePost has been around for almost 10 years. It's the largest marketplace for private securities in the secondary market. Those

today are Lyft, you know, Uber, Airbnb, Palantir. We make markets and we provide a marketplace for the transaction of those types of securities, which are unregistered securities. So the infrastructure from a compliance perspective, you need to allow the transaction of those securities, a settling clearing broker dealer that we have, and an ATS is very similar to that of a digital security or security token. Security tokens are also unregistered securities. And it's pretty much pretty clear now that the regulators have deemed you need an ATS in order to affect transactions in an electronic manner. So what we're doing at the Digital Assets Group is using the existing broker-dealer and ATS registrations that we have at SharesPost

and working with the SEC and FINRA and creating a technology stack that allows you to match orders and trade in a compliant way, both secondary trading of this as well as providing private placements of security tokens. Got it. And let's maybe talk a little bit about the difference between um security tokens and what i'll call cryptocurrencies and utility tokens right so like i think it's finson um came out with this guidance of look there's three separate buckets of digital assets they can be broken down into cryptocurrencies which are money right the ability is store value medium exchange uh utility tokens which are giving access to a network um and then just give us the description of how you guys see a tokenized

security or security token and what that means in kind of the more macro financial market? Sure. So, first, obviously, I guess most people on this podcast will know what a currency is, you know, Bitcoin, Ethereum. You know, ironically, that's, you know, where most of the market cap is right now in the space. Then utility tokens was the craze and the rave and back in 2017. And I think, you know, $6, $7 billion was raised in 17. In the first half of 18, also about $7, $8, $9 billion was raised in that format. But that was raised in a way that was not compliant in terms of the SEC or in the eyes of the SEC. You were going out and raising from unaccredited investors. You were marketing and soliciting in ways that probably would not be

approved of in the United States. So, security tokens or digital securities, the way we think about it is, it's really an extension of private placements and how the private markets work, the unregistered securities. The rules there are pretty clear. The rules for public securities are pretty clear. The security token functionality, in my opinion, sits somewhere in between private placements and public. It gives you more liquidity than private placements,

but it doesn't obviously have as much liquidity as public companies. At the same time, you have to obey by the private placement rules. MARK BLYTH, JR.: Yeah. And I think that's kind of the promise of this whole space. this kind of hybrid where you're able to maybe not completely mesh public and private, but smooth over what used to be a pretty black and white line and create a little bit more of a gray

area, not from a regulation standpoint, but more of just how they interact with the financial markets, right? In terms of what regulation you use, different jurisdictions, et cetera. Is that kind of how you guys feel as well? That's exactly right, Pom. It's a bridge. In other words, I mean, If you've seen what's happened in the private securities world, obviously, there's a lot of money for entrepreneurs out there from seed all the way to the later stage. Today, it's like D, E, F, G, et cetera, et cetera. Used to be just D and E, and then you go public. Anyway, but the funds that invest in these companies have gotten so big. Now that you're seeing the valuations get more distorted at the later stage companies than at the earlier stage companies.

So it's almost like riding up a yield curve or riding like, you know, bond math, people ride down the yield curve, but this is the opposite. Like if you get in and find the good seed or a company, you know, the valuations will get further extended further out because there's more buyers, more demand because the funds are so big for those large companies. So that's created what I think is somewhat of a gap in the B, C type stage companies. Those companies, $500 million market cap companies, also would like access to more capital. To be clear, they have access to more capital, but they're having a harder time than the later stage companies.

I see the security token or the digital security format as great for those companies. So, here's another channel of capital formation. And that's where I am seeing from, you know, our vantage point, a lot of companies go and at least investigate whether the digital security capital formation manner is good for them. Got it. And so maybe let's go through a kind of a market update, if you will. Right. What is the state of tokenized securities today? We can start with infrastructure. How do you see the landscape in terms of how much of what we're being told is kind of pipe dreams versus it's being built and it should be online soon to actually operational? Like, what's your guys' view of that?

Yep. That's like a three part question there. So first, I'm really into the complex questions today. So I will give a market update what we see today. And but first, the vision of what we see ultimately happening here. I think Sheriff's Post is a unique position because it sits at the intersection of two major macro trends. One of the macro trends we just talked about is that growth companies in the technology sector, and particularly in the private area, is staying private a lot longer. And the valuations are getting ridiculously large for some of these. The average unicorn now is,

I think, $2 billion in market cap. There's about over 300 of them now. And by definition, Unicorn, it's hard to find 300 of them. And they're staying private for 12 years. Just 15, 20 years ago, that same type of company would be a four or 500 million market cap, and they would be private about four years. So, public-private market structure has completely changed. That sets the tone for what we're seeing in the markets today. We are, again, because we have a great is that effort at SharesPost for the security token. And we are very in touch with issuers on the private shares. What we're seeing that's very interesting, I think people don't get a view of is that these unicorn or unicorn-like companies are now starting to at

least investigate, how do I use a coin, whether it's for a utility like a Starbucks or some sort loyalty program? Or do I create actually a cap structure related security token offering? They're investigating it. Now, the other stuff we're seeing is more of what we talked about earlier. And frankly, those are most of the inquiries. Those are the companies that are B or C. They can get access to capital, but they're wondering if it's better to try to do in this digital security manner because you get different type of capital and you probably give up less control to a venture capitalist. Those are really what, you know, the two types, buckets of people from a issuer perspective that are coming to us. Do you think we'll see, I don't know, maybe next

24 months, a late stage private unicorn rather than go public, use the digital asset or security token path? Is that over 50% probability? So I think, you know, again, the two macro trends we see. One is the private company staying private. And the second is the burgeoning macro trend, which is digital securities. I see in three years, you're going to have, you said one, I know, but I think it's more like three. In the next three years, you're going to see a unicorn company do a security token. And you're going to see a company that did a security token as its primary way of raising money become a unicorn. Got it. So, okay. So that's interesting. So this is a private unicorn will create a tokenized security so an actual equity based token where

shareholders will own equity by owning the token correct and then you also think that and that will be somebody who's already a unicorn and they'll convert over to this tokenized securities world correct but we'll also see somebody who earlier in the life cycle of their business started with a tokenized security and then convert or and then eventually reached a billion dollar plus in market valuation. Correct. Got it. Look, I tend to think that both of those things are going to happen. Right. I think to your point, the timing is the hard part. Right. It's how because there's multiple facets that go to this. Right. You've got to have the infrastructure available for people to use. Right. You've got to have the investor, educated investors who

have a desire to own these assets. Right. So you've got to have the kind of the demand side And then you've got to convince the issuers that this is a better way to move forward. And so you kind of have those three market forces all have to converge at the same time at some point in order to get that to happen. That's exactly right. And then the long vision in 10 years, you won't even be discussing this because it's just going to be one and the same. You know, what is tokenization? People will say, I don't know. It's just part of capital formation.

Yeah. It's funny because I went back probably two, maybe three years ago now and spent a lot of time thinking about and learning about equity. Right. And this idea that like the first time somebody invested in somebody else's company, there was no idea of like enterprise value. Right. It was I'm going to give you a hundred bucks. I own 10 percent of your business and you own a corner store. And when you get your monthly books done, you give me 10 percent of the money. Right. And that was, quote, unquote, equity was I owned the cash flow or a portion of it. And at some point there was an entrepreneur who said, hey, rather than give you that 10 percent of the cash flow, I'm actually going to keep that. I'm going to reinvest it. And over time, you're going to actually be able to get access or claim on a larger amount of money if we reinvest rather than distribute the capital. That switch today, we don't even think about. Right. Um, and then you look at like the shift between the mechanisms in which funding happened, right? So it used to just be, Hey, I'm going to buy equity.

Then there was this idea of a convertible note and that became all the rage and it became the standard and early stage investing and, and all that. Well, today, nobody thinks about a world when convertible notes didn't exist. I think what the point you're making is probably in the future, there's going to be a world where nobody thinks about tokenized securities as something new or different. It's just, of course people do that. that's what everyone does. Just the way you do business. But what's even more fascinating is if you think about the potential, you mentioned equity, then there's obviously security tokens

related to debt and up and down the cap structure. But the beauty of tokenizing and security tokens or digital securities is obviously it's programmable. It's a more eloquent way to do structure products. And there are going to be hybrid solutions out there, package solutions, taking bits and pieces of different parts of a capital structure in different companies, putting together and creating very much similar to what the structure products companies or banks did to structure products back in pre-2008. Now, we all know how that ended, but that wasn't because of the structure products. It was the leverage associated with the structure products. Leverage will bring anything down and take correlations to one. But the point is,

there are going to be a lot of hybrid solutions. And I've seen those types of security tokens already exist globally, rev share type security tokens. There are companies in Asia, Asia banking in Southeast Asia, a lot of these companies and countries don't have great banking infrastructure. You have large mega banks that help the large conglomerates. And then in the lower tier, the SMEs, you basically have pawn shops that charge users rates. So I've seen companies in Southeast Asia where they have, they need, there's a need for a fleet of mopeds or bikes in order for their employees to get around, deliver or do whatever they need. They've actually raised a security token where someone basically has cash, it has a yield associated with it. And

after three years, the salvage value, the residual value of that fleet gets sold and goes back to the investors. So all of a sudden, they've lowered their cost of capital, the issuer did, because they did this creative financing via digital security. And they actually took that package and sold it across border to Japanese investors who are yield starved. And Japanese investors ate up this because of the yield associated with this. So a lot of this is already happening in these hybrid solutions across the world. It's crazy to think about not only world where we are today kind of going digital, if you will, right? So this idea of, hey, there's a stock, and it's really an electronic stock today on the stock market. If it goes into a

digital world, there's a bunch of advantages, right? So kind of more global, the market doesn't have to shut down, right? All this kind of stuff. Those are incremental or evolutionary type improvements. There's a world though, that could be incredibly revolutionary. And I think you started to talk a little bit with like on-chain cashflow and the stuff where you almost start to rip out bureaucracy, middlemen, paperwork, but you also are increasing trust, transparency, reducing counterparty risk, right? And just automation. Like I just keep going back to this idea of all this is automation, right? This idea that I own tokens,

I can quote unquote stake those tokens on a chain and as part of participating in this, I actually am automatically paid a percentage of the revenues or the cashflow from the participation in that network or that business, et cetera. That feels a lot less like let's decentralize the world and let's burn down Wall Street type stuff

and much more about, of course we're moving to an automated world that's a no-brainer right that's right what's kind of your take on that i think you're absolutely right i mean if you think about what compliance and regulation has done and how it's done today you know basically it's done at multiple parties and they have multiple servers and they ring fence that because they they feel it's more secure to be able to to keep their own service and keep track of everything there's a lack of trust. If we get into a distributive manner and people actually have a trustless mechanism, all of a sudden you just save so much money and you don't have to have

every single organization with multiple layers of their own servers and keeping track of things on their own. That's really how ledgers are done today. Individuals, law firms, everyone's keeping track of their own thing because they feel like they have better trust in themselves than everyone else. For sure. What are you seeing from the projects today, right? Like what types of projects are interesting to you? And what does that investor demand look like? So the projects I think are interesting are actually funds as well as real estate projects and for two different reasons. So on the fund side, we've actually at SharesPost helped trade in a secondary manner and custody a security token, the blockchain capital token. And

on the primary side, we're helping a company called Citiblock do an issuance on the private placement side. So, the funds coming to the platform makes a lot of sense because you're, especially in these two cases, you're investing like you would in this type of company. So, it's not a hard concept to understand. The wrap of a digitalized token around this, as opposed to normal paper from a private placement, is also not that much of a leap of faith anymore. So this type of project is a lot easier to understand. I think a real estate project, although it makes a lot of sense because you can fractionalize ownership, is still a little bit hard to understand for the buyer of this because it's very regional and they're not sure

if that's a good real estate project or not and who are these people that are doing it. Whereas a funds is a good bridge step into the whole security token world. So we're seeing a lot of funds. We are seeing a lot of real estate-like projects. And there's a lot of potential in debt products. The complexity with debt products and structure products make the blockchain and the smart programmable contract a natural operational efficiency that gives that whole asset class something everyone's thinking about. Yeah. Look, you guys are doing the city block thing we're obviously investors in uh in city block and um i think the idea of creating a brand new type of asset management firm where everything is tokenized and transparent and

kind of liquid uh is really interesting and um will become the norm over time i think so the fun stuff makes sense that and that's a big part of that transparency because in any new asset class or undiscovered asset class, information and understanding of the product is very important before buyers can come in. At SharesPost, we had that experience way back when with private securities. So we created data and research unit in order to educate a lot of the buyers and volume and transactions started happening. That's another benefit of coming to SharesPost to do your trades is that we have a research arm to help support that and get the right message out in terms of what you're about, what your fund's about, or what your project's about,

and let people and the buyers know that this is what is out there. For sure. And I guess the other thing you mentioned is debt. And from my standpoint, it's one of the more interesting applications of this technology. Part of it is just reduction of cost and counterparty risk. So the idea that you can, again, automate a loan, you can govern that loan, and then you can recoup the principal plus profits in a semi, if not fully automated way, super interesting. It becomes even more interesting when every single person that is a party to the transaction has full transparency, full confidence in the code, the way that smart contracts can be executed, etc. It feels like a lot of attention is running towards real estate

funds, you know, all the equity based type stuff, which makes sense, right? But the debt market is probably the underestimated component here. It's huge. It's pretty easy to take debt instruments and put them on to these automated platforms or networks. And it's actually less complex for an investor to understand, right? Like with equity in a company, for example, you've got to not only understand the technology, the market, the infrastructure, You also got to understand the founders, the business, the competitive risks, all of the things that are going to happen and can prevent somebody from building the business itself. So you got to kind of underwrite tokenized securities and you got to underwrite the business itself. With debt, it's much more simple, right?

How do you guys view rolling the product out that you guys are building today in terms of funds, real estate, and that big debt market that seems to be going a little unaddressed by folks? So, I think, first of all, everything you said that is absolutely correct. It's easier for people to think, what's the yield on that product and what am I going to get for it, than it is to possibly think about, who am I underwriting? The people, the business model on the equity side, et cetera, et cetera. On the debt side, it's actually happening and big transactions are happening. It's just happening right now in the private blockchains. So, the major banks have done massive debt offerings, massive in terms of the size for a security token as we know it, but for debt offerings, actually relatively small.

So, that market is probably like 10 times that of the equity market. And the debt offerings right now being done by banks are being done on blockchain. And the efficiency that they are getting in weaning out operational inefficiencies is the main attraction, as you said. And it's always easier to sell something that you say, I'm going to save you X dollars, as opposed to saying, you're going to see so many more benefits from this. So, that is happening. We are addressing it at SharesPost by looking at potential debt security offerings. We're going to be the first to admit, though, down the fairway, our strong suit is the private security side. That's been the DNA of the firm for over 10 years.

That's where you have a competitive advantage. Absolutely. We have a huge competitive advantage. And we have a large investor base, 170,000 registered users and over 60,000 accredited investors who know how to buy equities. But we are definitely looking at that. And we recognize that largest transactions right now in security tokens are happening on the debt side. And how is this being looked at in different jurisdictions around the world? Because I think that you and I are in agreement.

It's going to happen from a technology standpoint. I mean, issuers are going to want to do this for a whole host of reasons. Investors are likely to want to do this for a different set of reasons. The one question outside of like, when is the infrastructure going to be available is the regulatory environment, right? And kind of how people are looking at it. And we see, you know, CZ and Binance kind of go and play the regulatory arbitrage game in the non-tokenized securities world. a little bit harder to do that in the securities world just because they are securities. What are you guys seeing? How are you guys thinking about, you know, kind of attacking the different

jurisdictions and kind of staying, you know, on the right side of the rules, but also trying to push innovation and build a business? Yeah, that's a great question. Obviously, the rules are different in every single jurisdiction. That is what makes equity trading in general very hard. If you're an individual at your Schwab account, you wanted to buy $0.10, which is trades on the Hong Kong Stock Exchange, you usually pay a commission of $200 versus $5 these days. That's because they have to go through many intermediaries to facilitate that trade for you in a compliant way. Now, what we're doing at Shares Post is, we see that same problem in the private security world.

We actually are very close. We're getting the RMO in Singapore, which is the equivalent of an ATS in Singapore. We're doing the JV in Hong Kong and Dubai in order to get those licenses as well. Ultimately, what we want to create is what we call the Glass Network, a global liquidity and settlement system, where different jurisdictions can help settle and clear trades for trade referrers, exchanges, brokers, in various jurisdictions in a compliant way but allow this to happen on a global scale so it's a big project i think we've got over 15 different trade referrals exchanges brokers and settlement providers all signing up and we're all going to try to figure it out together so that would be uh i think i would call it a great b2b network and um great teamwork in order to create

that to happen for sure um i saw a stat uh etoro actually released this that said i think it's like 43 percent of millennials that they surveyed trust crypto exchanges over legacy stock exchanges that is a wild statistic that is a wild statistic and um you know we went going back to earlier where you talked about adoption, I've covered so many different emerging technologies. And ultimately, the people who grow up in that technology is when that inflection point happens. And I don't know if people realize, but by 2029, just about 10 years from now, the disposal income of millennials will flip and go and get bigger than the baby boomers and Gen X.

In terms of also in about 10 years as well, their net worth will also be higher than any other group. So at any prediction we make in security tokens and crypto, I guarantee you about 2029 and further, it's going to flip very, very fast. I mean, I used to cover the advertising, online advertising names, everything from the early search engines to the ad tech companies. And everything just made so much sense to me. Okay, you have a good ROI. You can figure out exactly how you spend and calculate the conversion of that dollar to actual business. But yet, it was not adopted. And people were still coming to New York for what they call these upfronts, where CBS, ABC, NBC, and Fox would parade their shows for the season.

And these Mad Men like guys would sit there and look at these shows and then they'd go and have their cigar and have a steak and drink a glass of wine and use a rate car to decide how much to pay for a 30 second spot, 15 second spot. It just didn't make sense to me. You know, ultimately I realized, whoa, that happens because these guys ran, were in charge and controlled the system. And there was no way that they were going to give up the way they did it until another generation came and forced them to do that. And that's ultimately what's going to happen in any emerging technology, including crypto and security tokens. Come around 2029, when the buyers of this stuff are more millennials than Gen Xers or baby boomers, you're going to see rapid change. Until then, we're probably going to have evolutionary change. And I'm hoping that we have fast change even before then.

But definitely within 2029, as millennials take over in terms of wealth. Look, I affectionately joke all the time and say technologists are successful because they're lazy. Right. And what I mean by that is most technologists that are incredibly successful actually use software to make something easier, to make it less cumbersome, right? Less friction. And you can look across, you know, Stripe's a great example, right? hey it was really hard to get payment solutions integrated into your website well what the brothers do they literally just made it easier right and so now i could copy a couple lines of code and i didn't have to go through all the steps i previously had to go through right if you look at you know uber or lyft i press a button on my phone and a car drives to me and i think what

we're seeing is um it's easier to onboard onto a crypto exchange than it is a stock market exchange It is easier to offload those assets in terms of a 24-7, 365 marketplace on a global scale. I will likely not have to have a bank account and a brokerage account in the future. It will all just be one account because every stock, bond, currency, and commodity will be digitized or tokenized. We're just breaking down these barriers. And so when I saw the stat that 43% of millennials prefer or trust a crypto exchange over a stock exchange, the first thought I had was, wow, what happens when the quote unquote stock exchanges, the equity exchanges are based on the same technology that today the crypto exchanges are? You're going to see a rapid influx of this millennial interest into that market to buy these equities, I think, over those traditional stock changes. And so at least the question, what do stock exchanges do?

That's great. Ironically, I was just at the New York Stock Exchange yesterday, and I walked around all the different posts. All that is right now, frankly, is broadcast booths for CNBC and Fox and CNN, their money center broadcasting. They don't really transact there. It's all done electronically. I think the big difference in fintech from advertising and from other technology disrupting Silicon Valley-style tech people, is that the banks here, the exchanges, they all get it. They've seen this now. They're not going to be the retail that gets disintermediated by Amazon. They are all spending tons of money. I think Fidelity spends like $2.5 billion on R&D, not just for blockchain and crypto, but for everything. They are all spending tons of money

in the background. They're aggregating the troops, and they wait for the market to actually be there before they deploy the troops. That is the big difference, I think, between this generation of tech development versus previous developments. There's a reason why fintech and healthcare were one of the last places for California to come and try to disrupt, because this is very hard. The size of financial institutions and the regulation behind that make it very hard. So I anticipate a lot of partnerships or ultimately these banks buying out some of these startups in order to get their technology or get their book of business or get their DNA, venture DNA to lift off a specific project or a technology. I don't see them sitting

around doing absolutely nothing like other industries and just let their lunch be eaten from them. Yeah. Look, I tend to agree. So it'll be fun to watch. Before I finish up, I usually do rapid fire questions. Most controversial thought you have in crypto. What do you believe that most other people disagree with you on? In three years, there's going to be a unicorn that does a series D via a security token. In three years? Less than three years. I actually agree with that, but I do think that most people will disagree with that. so that's a good one um if you could change or improve one regulation what would it be

there's a lot of regulation out there already um i would notice i don't ask anybody if you could create a new regulation so i see we want to change or improve how about this let's get some reg a companies out there with tokens yes yeah because what you're talking about is as far as i understand and correct me if i'm wrong uh there's not been a reg a filing with the sec that involves a token that's been approved to move forward yet, right? I think a lot of people are waiting for that because you can tap into the unaccredited investors.

That's right. Because I want more people to have access to this. So let's get one of those out there and then you're going to start the greasing the rails and making this thing happen. Yeah, look, that would be incredible. I think that's going to be a huge opportunity. Most important company in crypto other than your own?

I'm going to say Fidelity because it's about access. And the most important people in crypto are not in crypto right now. And Fidelity will have custodial solutions for funds. Fidelity will have mutual fund products in the crypto space for retail investors. And you need someone that big in order to get more access for broad swaths of people. What is the most important book you've ever read? so i'm gonna give a shout out to um classmate of mine at harvard chris yeh who just wrote blitz scaling with reid hoffman oh it's fantastic it's awesome book it's easy to read for people out there and it gets a it's good shortcuts on how to be an entrepreneur it's a lot of fun it the so i read it and um the part that actually made the book pretty interesting is the ability to share tactical, um, kind of lessons learned, right. And then immediately follow it or relate it to

here are two or three examples, you know, um, the example where they use like Airbnb and, um, rocket internet and, you know, do you buy versus build and kind of those scaling, uh, challenges. I found it, um, educational and entertaining at the same time, which is, uh, not very common for a book. That's exactly right. And, uh, knowing Chris who helped, uh, rewrite that, um, that's how he actually speaks you know he's a very smart guy he's able to boil things down into a few points and explain and communicate it very well with actual examples like you said yeah i love it um aliens what uh what do you think uh is the probability that they exist i'm sure there is beings out there that we can't comprehend are we over under 50 percent on your

confidence that those exist under? Cause I just don't understand under 50%, but I'll tell you if they, uh, they exist, they are going to be highly intelligent beings just like we are. And I don't think things are that different in this parallel universe over wherever they are, because if, um, maybe I'm projecting my humanness, I guess, but they're going to have the same things and have the same challenges that we have because they will desire the fundamental traits of, of beings are going to be the same for those guys as well as for us. Do you think that

the simulation theory has any credibility? This idea that we're all actually just living in a simulation? That's a good one. You're the first person I'm asking on the podcast. That's a good one. Because aliens,

now people come expecting the alien question. Now we're going to add in the simulation question. Simulation, wow. I don't know, actually. I can't answer that one. i'll think about it i to be fair uh i probably give it more credibility than i did originally like the more that i thought about it uh but it's still pretty low probability uh in my opinion um but i i it's a thing where if you believe that aliens exist then like the next kind of iteration

is like well do you believe the simulation right interesting so the uh the the you'll have to come back at some point and, uh, and tell us what, uh, what your theory is in that. Um, before I finish, I always let everyone ask me one question. What, uh, what one question do you have? So you're incredibly busy. You're always on podcast, Twitter, et cetera, writing things, running a fund. What do you do in your free time? Uh, this is my free time. I, uh, I got a great piece of advice. Um, I don't, frankly, I don't even remember who told me this. So a shout out who ever told me this um they basically just said look you'll know that you're doing what you enjoy when you want to do it every waking second right um and uh the only thing that that is at odds with

is uh my girlfriend probably wishes sometimes i didn't spend all my time doing this stuff um but but uh it's this idea that i really truly believe um what crypto is in the process of building is probably the most important thing that anyone could work on today right and why i say that is there's a lot of other important things you know everything from um kind of renewable energy to all the kind of healthcare, disease eradication, go to Mars, all this other stuff could be incredibly valuable. But in terms of the effect on the total global population in the next 50 years, this is probably the thing that has the ability to affect the largest number of people with the most depth in their life right and the reason why i say that is if you

fundamentally change money for example if bitcoin becomes the i don't know a top 10 currency in the world you're going to touch billions of people let's say you know crisper for example the the gene editing type technology incredibly important right i'm super excited people way smarter than me are working on it the odds that it's going to permeate and affect billions of people in that same 50-year period? Probably a little less likely. Still possible, right? But less likely. And so I think of impact in terms of how many people can you affect and almost how many seconds of their life can you impact with that technology? And it just feels like this is probably one of, if not the most important. And so if you take that 50-year timeline, what would the things that

you would do today be you know what would you do today that sets you up to be around 50 years from now and kind of see everything participate in what you want to participate in etc stuff that we're doing right um and so uh i joke on the internet a lot and say look i'm just happy to be kind of learning alongside everybody else but the reason why i do the podcast because people like you are willing to come in and talk right and so i gotta learn a lot and the reason why i spend so much time on Twitter, I learn a lot. And it's just a new kind of way of collective learning and, and, um, community that, uh, that I find enjoyable. I think that's absolutely correct. And I think everyone that comes here and listens to you or just listens to you out there,

they really appreciate your conviction. And I think your phrase is ruthless conviction attacking this space. And, uh, you definitely have it. And without people like you, we're not going to move forward in this space. I am a big believer in this idea that you can speak things into existence, right? And so if you continue to say something is possible or something will happen, you increase the probability that it will happen or that you can make it possible or happen. There's a lot of people I think that are in and around crypto. They're interested they're intrigued they are hedging hard they've got a very small percentage of their net worth in they are working on it but they're planning hey if this thing fails

what's my escape plan what's my you know plan b for me if everyone does that then we're unlikely for it to be successful because and when it is unsuccessful what we'll actually end up questioning is, were we working on the wrong stuff? Or do we not give it 100% of our effort? Right? Were we not 100% convicted on it? If you control for 100% effort, 100% conviction, we're gonna find out real quick whether this stuff works or not, right? And so I don't expect everyone to be able to do that, right? I'm in a very fortunate position in my life where I can kind of go all in on something. And if it fails miserably, and you know, a crater the earth five years from now i'll be okay but i have no fear of failing in public in that way

and i think that's the part as i talk to people that's the part that scares them the most is it's not being wrong it's being wrong in public and thinking they can't overcome that in their you know future careers etc i don't think we're wrong obviously but i think that's probably if i could change one thing about the crypto industry it's that more people had no fear about kind of going all in and being a hundred percent convicted. We need to get more people with no inhibitions in here. Yeah, I think, I think it's true. So I appreciate all the work you guys are doing.

You guys are obviously pushing the envelope and you know, working with with city block and, and kind of doing all that stuff. So I appreciate coming and I'll have to do this again. Thank you very much. I appreciate it. I appreciate you guys listening to that great episode. Before we go, remember to go visit zenledger.io slash off the chain. Zen Ledger is the best crypto accounting software available. If you had investment losses in 2018, you may be able to save up to $3,000 on your income taxes using Zen Ledger.

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