The Pomp Podcast - Peter Johnson, Principal at Jump Capital: How Crypto is Revolutionizing Financial Systems Around the World

Episode Date: January 22, 2020

Peter Johnson leads Jump Capital's investments in the fintech, insurtech, and crypto/blockchain sectors. In this conversation, Peter and Anthony discuss the stages and types of companies that Jump Capital is investing in, how they work with companies, the value that Jump Trading brings, why he is so bullish on stable coins, and Peter’s deep personal conviction in where the space is going as well as how committed Jump as an institution is to it. CRYPTO.COM-----Crypto.com is a pioneering payment and cryptocurrency platform that seeks to accelerate the world's transition to cryptocurrency. With the vision of "cryptocurrency in every wallet", the Crypto.com App offers a full range of financial products with competitive pricing, well designed UX and high security. It is the best place to buy, sell and pay with crypto. TAXBIT-----Refund-maximizing, cryptocurrency tax software you can depend on. Visit taxbit.com/invite/pomp and receive 10% off your tax plan today by signing up for a free trial. ETORO-----This episode of Off the Chain is sponsored by eToro, the smartest crypto trading platform, and one of the largest in the world. Join 11 million other traders and create an account at etoro.com and build your crypto portfolio the smart way.

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. Peter Johnson leads Jump Capital's investments in the fintech, insurtech, and crypto and blockchain sectors. In this conversation, we discuss the stages and types of companies that Jump Capital is investing in, how they work with companies, the value that Jump Trading brings, why he is so bullish on stablecoins, and Peter's deep personal conviction in where the space is going, as well as how committed Jump as an institution is to it. Before we jump into this awesome episode, no pun intended, I want to cover the three

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They built out a bunch of products like stocks, commodities, traditional currencies, and cryptocurrencies, and offered it to people all around the world outside the United States. Last year, they came to the U.S., and they got started by offering cryptocurrency trading. But they're not just a crypto exchange. They've pioneered two concepts that I think will change crypto exchanges forever. The first is social trading, and the second is copy trading. Social trading is essentially layering a social network on top of the exchange. You can navigate to an assets page, let's say Bitcoin, and you can check out the conversation

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As you guys have heard me say before, eToro is larger than Robinhood. Just don't tell anyone. So head on over to eToro.com and sign up for an account. I'm a huge fan. I'm even an investor. Let me know what you think about their social trading and copy trading features. And when you hit eToro.com, let them know that Pomp sent you. They really, really, really, really, really hate getting customer service tickets and social media mentions about me. eToro.com, let them know I sent you. And before we jump in, also remember, Off The Chain is not just a podcast. I also do a daily letter to our investors, but normally most

investors wouldn't let this be publicized. For me, I don't care. I actually want as many people to read it as possible. So you can go to offthechain.substack.com and sign up today. Again, that's offthechain.substack.com and hear my personal news analysis and opinions about the crypto industry. Now let's get into this awesome episode with Peter. 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. Bang, bang. I have Peter here with me all the way from Chicago. We've got a ton of talk about, so thanks so much for coming to do this. Great to be here. Thanks for having me. Absolutely. All right, hold on. We're starting already with, you got to talk into the microphone. Yes. I've been waiting to embarrass people on the podcast about talking into the microphone. So, I just got my first victim. Sorry. What did you do before Jump? Ah, yeah. So, I started, I was a management consultant. I did strategy and operations work for banks, brokerages, and asset managers. Did that for quite a few years. Then saw what investment bankers were doing. So, financial structuring looked pretty interesting.

So, went to Morgan Stanley and did financial structuring and M&A work, again, for banks, brokerages and asset managers and did that for a little while and then met the founders of Jump Capital just as they were starting the firm and took the jump over. What year did you jump over to Jump? In 2013. Okay. And what was the biggest takeaway from all of the structuring and working with banks, et cetera? That's going to be fascinating to kind of see under the hood of those deals. Yeah, it's really interesting work. For me, total finance wonk. Really interesting doing that type of work. I also saw just how slow financial institutions are. Innovation does not happen at big financial institutions. So I said that was the biggest takeaway and one of the

biggest reasons that I left those types of positions. Got it. When you joined Jump 2013, any idea of crypto? Were they talking about crypto, Bitcoin, anything? Or was it more in the fintech and financial services world? Yeah. So when I joined Jump Capital, which is the venture capital arm of Jump Trading. It was just as the firm was starting in 2013, beginning of 2013. I met Mike McMahon and Such Chitnis, who were the two guys who were in the process of starting the firm at that time. I joined them. It was this really unique opportunity to help build a venture capital firm, come in, lead fintech investing for them. At the time, I'd heard of Bitcoin, but it certainly wasn't a focus for the firm back

the beginning of 2013 um but i started paying close attention to it really close attention to it shortly after i started it was i forget exactly when in 2013 um it was actually the kind of what happened in cyprus where uh you know the government was gonna seize bank deposits the price of bitcoin jumped um that's what no pun intended right yeah yeah but that's what first got me like really reading about bitcoin and like okay like are people really buying this magical internet money instead of their you know keeping money in the bank because if so like either that's crazy or there's maybe something there yeah and what did you guys do to figure that out like like so i think there's a lot of people who went through that mental exercise and during that time

period and then they didn't do anything you guys went to go try to figure it out in some manner was that more of like passive research by like googling around you could talk to people like what do you guys do to figure that out yeah so it was reading everything possible uh which there was not a ton back in 2013 to read about, talking to everyone that knew anything about the space, starting to go to early crypto conferences, which were fascinating and interesting, and then bringing the right people onto the team. I think it was 2014 or so, I actually hired the general counsel from Eric Voorhees' first startup, or one of his first ones, Coinapult, if you remember that, but hired him for a summer to help me get smarter on crypto.

Really? That's amazing. And so at what point do you guys say, okay, well, we thought that this might be a thing. Let's go do some research to, this is a thing that we want to participate. Yeah. So it was started looking into it from a venture and investing perspective in 2013. And then it was not until I think late 2014, we made our first equity investment in a crypto company. So it was a significant amount of time that we spent just getting smarter about the space, looking at opportunities um and also working with the trading team who in you know around 2014 is when they you know started to get active in the market um mainly down at our research lab down at jump labs um but started to get into the market and that really helped push our thinking as well

um but yeah it was a long fairly long kind of incubation you know evaluation period before we before we jumped in so uh before we go any farther i want to make sure people understand the difference between jump trading and jump capital uh jump trading is a traditional kind of wall street and air quotes uh type firm where uh they essentially trade all different types of assets in a very kind of quantitative trading methodology but maybe just describe you know how'd the firm get started and what does that look like today and then we can uh differentiate that between uh jump trading and jump capital right so jump trading is a one of the leading quantitative trading firms in the world Can we say the leading?

I say one of the leading. All right, all right. We're being nice today. Go ahead. They are a, I would say, massively successful proprietary trading firm based in Chicago. They've been around 20 years, highly quantitative, highly research-based, trade most every asset class in pretty much everywhere around the world, and just is an amazing firm, what they've done over the last 20 years.

Jump Capital is the venture capital affiliate of Jump Trading. We operate generally independently from the trading organization. We're structured as a fairly typical venture capital fund, except the capital that we invest comes exclusively from the owners and employees of Jump Trading. So we also, because of that, work very closely with the trading firm when appropriate for making investments. So I lead our fintech and capital markets and crypto investments. So I am very often working very closely with the trading side of the firm. Fintech and crypto is just kind of one sleeve of what we do at Jump Capital. We also invest in IT and data infrastructure, B2B SaaS and media companies. And a lot of those, the vast majority of those have kind of nothing

to do with the trading operation, but just are your more typical venture investments. Got it. So just good investment opportunities and really the thread there, I think, across the media b2b sass and the it infrastructure it sounds like there's more uh infrastructure platforms etc it's not uh what in crypto would be called like an application or media publisher etc yeah absolutely it's a lot of the kind of infrastructure for those types of companies is typically what we're investing in it's a lot of data-driven companies that's definitely a theme um kind of the way that jump capital differentiates itself is one it's a thesis driven firm so we go very deep in areas and look to invest, develop a thesis of how we think that space is going to develop

and invest in the best companies in that space. And then we're also very operationally focused. So the team was started, the firm was started by folks that were operators. They've built and run companies from startups all the way up to public companies. We built an operating team. So we have folks that help our portfolio companies with recruiting, especially around data science and engineering, with M&A, with finance, with corporate development, connecting with potential partners and acquirers, um, with, with sales and customer success. Uh, so we're very, very active and involved investor. Um, and that's kind of how we differentiate ourselves as well as in crypto and FinTech. We differentiate ourselves by, we're also connected with one of the smartest trading

firms in the world. Yeah. And so when you look over at the, uh, FinTech capital markets, crypto stuff, um, from a venture perspective, how much of the investments you guys make there are companies that could be partners or help the trading firm versus these are just good financial investments that we find interesting in those specific verticals. Yeah, it's a good split between those. There's a lot of fantastic investments that we do that have nothing to do with the trading world.

We're investors in Personal Capital, which is the best online investment manager, and M1 Finance, which is great for the do-it-yourself investor and allows you to borrow against your portfolio. A lot of companies like that. We're investors in companies like TradingView, which kind of span, like they are in capital markets, but it's not necessarily strategic with the trading firm. And then we're investors in crypto exchanges and futures exchanges,

which are very clearly strategic to the trading firm. So it's a fairly wide spectrum. Got it. So TradingView is a good example, right? We were talking a little bit before we started recording. For people in the crypto world, TradingView is one of, if not the go-to chart type platform, right? So you can go in, you can chart a bunch of stuff. And as I like to say, just draw squiggly lines everywhere and tell everyone where you think the price is going but from the trading view seat crypto is like probably maybe one of the smallest markets right or a very small market because they're in equities and all of these other spaces and so it's funny to me how like the crypto world thinks trading view is so important but trading view has you know i'm

not gonna say that they don't think crypto is important right but but probably their larger markets if you just looked at it from a size perspective are uh dominating this little small crypto market you know so it depends on which side of the market you're sitting on there yeah it's funny you talk to crypto folks about trading view and they assume it's a crypto company uh crypto is definitely not the largest market on trading view uh much larger in equities and fx and in other markets um yeah it's interesting but crypto is certainly a big big part of what they do and an important part of what they do yeah and really leads to this idea of um you know you're looking at fintech, capital markets, and crypto. Depending on how you slice those three,

those could be three very, very separate things, or those could be identical, right, in terms of what company you look at. How do you think about it as you guys are sitting there saying, okay, we're going to come up with thesis. Are they vertical specific, or do you more come up with kind of thesis and future evolutions of these industries, and you don't worry, is that fintech, is that crypto, and try to kind of place it in a bucket? Yeah, right now they're still fairly bifurcated like the crypto world and the fintech world are are different generally um you're starting to see more overlap companies that are doing both crypto and fintech things think like you know like a robin hood for example um and then you're also starting to see crypto companies

which are building fintech companies except they're just building it on different rails uh like your investors in blockfi great company uh you look at what they're doing they're taking deposits and making loans that sounds like a like a fintech company and so how do you find these companies you guys come up with a thesis what's kind of okay we think uh exchanges are going to be important what's that process look like for you guys to go find investments yeah so we find investments uh you know kind of three different ways one is just very thesis driven that's i would say the primary way and that is like we think for example um you know wealth management is going to become digital or hybrid digital. Let's go find out the best

company in the space. For us, that was personal capital. Or we think fiat on-ramps and off-ramps for crypto around the world are going to be incredibly important. Somewhat obvious. But let's go find the best companies in each country that align with that thesis. We just invested in Bitso, for example, in Mexico, which aligns with that. That very thesis, this is how we think the world is going to develop. Let's go find the best companies that align with that view. Certainly, I would call that the primary way. We also find companies through relationships we have with entrepreneurs and with other investors, because we don't have a monopoly on ideas.

There's tons of things that we come across that we never would have thought to have a thesis on, but we see what somebody's doing, and wow, that's really amazing. And then we also have some systematic sourcing ways out just to make sure we're seeing everything. Got it. And what stage are you guys looking for? Yeah, so we're mainly investing in series A companies. So three to $10 million initial investments is what's typical for us. We also have a what we call a growth equity strategy, which is investing in profitable or close to profitable companies. And then we'll occasionally

make seed investments or earlier stage smaller investments. I would say in crypto, that's one of the places that will look, you know, maybe earlier, be more flexible, just because the industry is so early and there's companies that you know the trading side can be strategic too sometimes yeah and in crypto specifically it sounds like you guys are looking at financial service related infrastructure right so things like block fi exchanges bitso etc um same thing there in terms of the split between how many of them can help the trading side or the trading side can be helpful uh versus the ones that are you know kind of non-correlated uh to some degree Yeah. So in that space, a lot of them do have, the trading firm can add significant value,

sometimes very, very significant value to companies that we're investing in. But some of them just are, they're fantastic companies building things that are really interesting, but they have nothing to do with the trading operation. Or maybe they just don't have an opportunity with the trading operation at this time. So there's a pretty good split there as well. Yeah. Got it. And then let's go through kind of some of the thesis that you guys have are places that you guys have been investing so uh bitso obviously is one um they uh have a lot of uh fiat on and off ramps kind of around the world uh maybe talk through a little bit as like what that thesis looks like and why you guys are so bullish there yeah so our view kind of i would

say kind of my core beliefs are one bitcoin is digital gold that's going to be adopted in portfolios two is that stable coins are going to become money transfer transfer rails and fx rails that enable money to move around the world that three emerging markets will increasingly adopt crypto assets and that four that the infrastructure is going to be developed to enable those first three things to happen so if you believe those things like how does how do people get access to bitcoin if it's going to be digital gold and how does you know if stable coins are going to be the rails that money moves around the world like you need at the end points you need to go back into fiat currencies at some point at least right now um so if you believe those things the

gateways in each country that allow that that fiat to crypto conversion are absolutely necessary and key to those things happening um so a bit so we're extremely excited about one because you look at remittances if you think remittances are going to be a big use case we do i do um u.s to mexico remittances are a massive market like how big you think that is you probably actually know i do know i don't remember the number offhand are we talking uh just ballpark are we talking a you know a billion dollars a month are we talking tens of billions uh on a annual basis i don't want to quote yeah it's a very large number yeah yeah uh and the amount of remittances that are going through bitso has been increasing exponentially uh bitso just announced i think over the last

week or so uh two and a half percent of remittances to mexico are now going through bit so really yeah and those are all across crypto rails yes wow and i mean it's fascinating to me because there's a lot of things that go into that right that two and a half percent number is impressive just in general but that means that one people who are sending the money got to figure this out two they got to understand the value proposition three they got to sign up right and be able to use it and then four is the person on the receiving end's got to figure out how to use as well yeah a lot of steps it is a lot of steps but most of those steps actually aren't happening okay because uh it's being abstracted away from the end user how because the end user doesn't

know that they're getting crypto what's happening and i think is going to drastically uh increase is that for example remittance companies are saying hey how do i get money to mexico i you know i take dollars i go to the correspondent banking system they get converted to to pesos they come out pesos on the other side i'm paying x amount of fees for that or i could take dollars go into bitcoin or xrp or some cryptocurrency send it to bitso convert it to pesos there and then i know what my fees are total cost on that rail it's just a different rail and remittance companies are increasingly just looking at it as another rail and so so bitso is frankly it's not interfacing with the sender or the receiver they're acting more as the infrastructure

for the remittance for a lot of that remittance flows yep it's completely abstracted away from the users yeah and so then really it's not the sender and receiver have to make this decision it's the remittance companies which to some degree is easier i guess because it's only you know a couple of decision makers at a company you have to make the decision once and then all their volume can you know come over and go through bitso but two is it's a much harder decision because it's not like the one user who signs up and sends ten dollars now you're talking about an entire corporation understand the value profit and switching over so um there's kind of pros and cons between the difference of being the infrastructure provider versus the end user

provider yep absolutely yeah it's super interesting because um okay so you guys got that uh what are the companies on the crypto side uh bitgo uh it's one fairly recently that we're incredibly excited about uh and what's kind of the thought process there yeah so uh private key security and custody for crypto is and will continue to be like one of the biggest issues i know anyone want to argue that. Come on. All right. Just incredibly important. Securing private keys, it's a bearer asset. There's nothing more important than securing those. BitGo is the provider, the wallet provider, the custody provider for a vast swath of the crypto industry. And they have put themselves at one, they're just a trusted provider. They're a trusted name.

People trust BitGo. And at the end of the day, if you're a custodian, you're selling trust. And they've been doing this for a very long time, and a lot of people trust them. They've also built this incredible network of you have a lot of the industry is custodying their assets with you. You're in a great position to provide settlement solutions, to provide lending solutions, to hold everyone's asset and allow them to transact with each other without actually moving that outside of your custody. Just puts you in a really good place to provide the backend infrastructure for how the industry is going to work in the future. it is very similar to um traditional custodians like a state street where it's not it's not a uh you know kind of name that a lot of people know but they're on the back end for a lot of what's happening in the the financial services industry yeah um might as well just keep going

through your portfolio i've never done this before but we're gonna we're gonna keep going until uh to run into companies uh what what is the one company in the portfolio that you think people would be most surprised you guys have invested in oh um most and just so people at home know uh most of your investments are public but there are a couple that aren't so we can only talk about the ones that are public obviously yeah so so what would be the the one that is known to folks but would still be surprising in terms of it'd be kind of a um off the beaten path or difference in strategy yeah spring labs okay is is a little bit different what's that uh so spring labs is building a decentralized credit bureau a decentralized credit bureau yes for uh

like lending services for lenders yes okay it explains more so how are they doing that they are enabling so the founders of spring labs came from avant which is a massive online lender based in chicago and what they saw is that credit bureaus are effectively creating they're taking in data from lenders and other sources and then they're capturing rents by selling that data back to the lenders that they are taking from the lenders good business model people will buy it great business model, good business model to be disrupted. So what they're doing is they're saying, hey, how can we use basically blockchain technology to enable lenders to share information securely with each other and get compensated for that while disintermediating the credit bureaus

or working alongside the credit bureaus, kind of depending on who you ask. so what is the benefit to the individuals in a transaction right whether you're a borrower or lender using that decentralized credit bureau versus a traditional one it's going to mainly be for the for the lenders themselves got it so for the lender and it's more like accuracy of information or yep the accuracy of information cost of information uh you know things like loan stacking where people are applying for a bunch of loans at the same time with online lenders like if there is a better way for lenders to simply share information with each other about who has loans with them and who's applying for loans uh you can help solve that problem yeah

this is uh it goes into this trend um i probably haven't talked too much about but i've started thinking more about so a lot of the businesses today that are quote-unquote online they started out as businesses that were not online and then they had to catch up right so this internet thing happened and like how do i get my credit bureau which used to be more in the analog world now i got to get it online right and so they basically took what they had and they uh modernized it a little bit but really to try to fit what they had to the internet when i hear like decentralized credit bureau or other people doing um you know these these kind of digitally native businesses what they do is they start building a high level it's

a credit bureau but the way that they get there is much more digitally native much more built for the internet much more for our global world but like it changes and so decentralization is true in some instances sometimes it's not decentralized but um that to me feels like a pretty big shift in the way that people think about building businesses in certain verticals is because one is built and then brought online another is built for the internet or for this global digital world um and if you do the latter it seems like that's a much more scalable valuable type approach than hey let me build it how everyone else has always built it and then just put it online yeah absolutely and that kind of spans our investments in fintech and in crypto like a

lot of our traditional fintech investments are just like, how can we build something that is native, natively digital, which can compete, you know, better with these historical businesses that are trying to transform their business to compete in a digital world. Got it. What are some of the other themes that maybe you guys haven't invested in yet that you're either looking for companies or you're excited about? Oh, I mean, the, the, um, the lending and borrowing market, uh, we haven't explicitly invested in, although BitGo is certainly in that market. Um, uh, but that is a market that is you know absolutely you know taking off it's maturing um you know really excited about where that is so we're certainly looking at you know solutions there

and have you looked at um so right now i think most of the lending and borrowing is happening in what i'll call like true crypto assets right so it's bitcoin ethereum digital dollars whatever um but have you seen people doing stuff with uh traditional assets that are tokenized or digitized or is that still really really early and more kind of theoretical than people are actually executing on it i think it's mainly theoretical yeah that's what i've seen yeah yeah like the traditional the like digitizing or tokenizing assets i think that the most interesting part of that by far is currencies effectively stable coins like how do you bring stable coins or fiat currencies into an open network kind of that is freely tradable i think that that is the

first kind of major shift that we'll see and that will happen you know well before you know we really see like let's tokenize equities or real estate or you know gold or other things like that and what's the fascination with the stable coin so like you're very very bullish probably more bullish than most uh one there's data right that suggests that things like tether etc are being used pretty uh widely but what else kind of drives that bullishness for you yeah so one is just looking at the data looking at tether for example there there's been shown there is huge demand for u.s denominated settlement and trading accounts for uh folks that don't have access to the u.s banking system or want to trade on on in places that don't have access to the u.s

banking system and more generally if you look around the world there is strong interest in a lot of places in having usd denominated savings like venezuela you know they've they've it seems like they've embraced dollarization so how does that happen digitally stable coins is in my view the best way that that happens and so like let's take uh venezuela or even like other more kind of nefarious actors slash sanctioned countries like the irans north koreas etc part of the knock against the usdcs gusd true usds all of those types of stable coins that are originated here in the united states is that uh they're still heavily regularly regulated right now but that kind of air quotes for those listening at home because they can be stopped assets can be frozen

they can be seized etc i think tether for example is much more uh kind of unregulated kind of outside of some of those controls etc do we get a world where there's consolidation around one or two of these stable coins or do we see kind of a plethora of the variations and it's kind of buffet or like pick what you want depending on what you need my inclination is that there would be there'll be various stable coins for various degrees of regulation so like yeah like tether is like an unregulated open network and i don't think that's going away at least in the near term because i think tether's market cap will increase over the next year more people will be using it i think that there's going to be a very large market for regulated open networks which are

coins like usdc um and why do you uh sorry to interrupt but uh regulated open network the regulated part makes sense uh when you talk about open networks is it open because theoretically anyone can come use it is it open because like like how do you come exactly yeah and i think that that gets to the core of why i'm so excited about stable coins okay it's because it is it's open network is that anyone if you have a crypto wallet you can receive dollars in usdc or other stable coins the banking system the traditional banking system is a closed network you need to you need to onboard with a bank to get into that network or if you're a business and you want to have say you know real-time settlement uh you can go to silvergate and you can onboard into the

silvergain exchange network but that's a closed network you need to onboard into uh with stable coins you have a u.s dollar open network that anyone with a crypto wallet can join or for you know mexican peso it's an open network if you are a u.s company that wants to own pesos someday there will be a peso stable coin and you simply need to receive a peso stable coin in your crypto wallet to own pesos so that's where i believe the world is going and why i'm so excited about stable coin yeah it gets at the heart of um you know one of the things that i don't agree with that it's kind of a public narrative or debate is uh digital currencies versus fiat currencies like to me it's a foregone conclusion every currency will be digital right now the question comes down to

what does that look like right so kind of regulated not regulated open closed but also what is the monetary policy that supports that digital currency and that's where the competition to me exists is people now will have accessibility to all of these different currencies now there's competition at the monetary policy level like if you're in venezuela if you can access dollars the one the euro you know name your other favorite currency and they're all readily available on an exchange like crypto exchange where all you need is a internet connection what do you use is it brand awareness like hey the u.s dollars the u.s dollar and i trust the full faith and credit of the united states is it monetary policy and so now you start to actually learn more about

it like what drives those decisions around adoption i don't know right i don't think there's a clear answer but that becomes a very interesting world because right now usually what country do you live in okay what's the native currency or the reserve currency of that country that's what you use right because it's just an accessibility thing but if you take if you break down those walls and you give choice and have more of a free market competition is that good or bad i don't know what do you think i think it's a good thing okay why it gives people more choice and it allows people in places with you know currencies and banking systems that are not working another option yeah not all currencies are good not all currencies are good yeah uh so i think that that's

a good thing to give people options if you ask you know is it is it good for people in venezuela and argentina and places like that to have other options other than their local currency i think most people would agree that that's a good thing is it good for the governments i think that's an open question yeah cool because not all governments are the same right so like you could argue i guess one side of the argument would be uh digitized currencies from major superpowers would bail out the failure of the venezuelan government to the venezuelan people right so you've hyperinflated away your currency basically your people are suffering if they don't have access to something else it's quote unquote good for you as the government because now all of a sudden you don't

have to go come up with the solution like they can just get access to a different currency and to kind of stop the bleeding vice versa i don't think there's a lot of governments i want to give up that control or maybe it's like the kind of the the escape hatch or the bringing competition into a market makes actors behave better and are you going to have massive inflation in the country if people have other options yeah so maybe that will happen less like i don't know i'm just speculating at these things but i think overall like it's a good thing and that it will be like it will be because you for the first time have open networks and because it's always been close network you live in a country your money is kind of the closed network the money of that country

in 10 years that won't be the case you're going to have a lot of options and that that's that's going to be very different and very new one of the arguments i haven't heard that many people talk about that i would love for somebody to argue uh i'm not even going to say whether i agree with it or not because i would have to think about it more is uh the digitization of the dollar would actually further enhance the dollar's dominance right so this idea that if you digitize the dollar more people have access to it because it is the global reserve currency today more people would adopt it and therefore you would actually build a deeper moat around that global reserve currency because accessibility is one of the biggest barriers

to that happening i think that there's a credible argument there i don't know what the probability of that happening is yeah i feel like that is the logical argument i'm not enough i'm an expert in that space to argue for or against it but the case that you just made seems very logical well and i guess it begs the question then do you think that whether there's dollars ones whatever central banks do this or private companies like usdc is technically a digital dollar g usd is a digital dollar right tether is a digital dollar all done by private companies versus the governments themselves can is that a sustainable model or do we need the central banks to do it i think it will largely be done by private companies like what we're seeing right now okay why do you think that

because it's central bank digital currencies as they're proposed in most places um are issued on private blockchains or databases even it's basically the government uh is keeping the records so like how are records kept is kind of what we're talking about here again the current system for individuals uh you know kind of balances right now the current system is banks keep the records uh in crypto we're all keeping the records in central bank digital currencies as they're generally proposed the government is keeping the records i think in most places the government doesn't want to or really have the capability to keep the keep the records some places like china i think would be the exception to that generally i like i don't think the u.s

isn't going to start keeping the records of all kind of U.S. balances for a whole variety of reasons. So I think that will be done by kind of commercial banks and technology companies as we're seeing right now. How do you think kind of surveillance and the nefarious activities of governments play into this, right? So like one of the arguments, Alex Gladstein from the Human Rights Foundation is the chief strategy officer there. He's done a fantastic job outlining. uh i don't know if you could say it's a probable situation as much as it's a potential situation where governments realize hey this technology is great because now i can keep track of everything and if i want to know what my citizens are doing i should digitize my current currency pull cash

out of the market now they use this digital wand digital dollar whatever it is and i have full surveillance over all their financial activities scary right very scary uh but is that enough of a poll to get people to do it like to get the governments to do it how do you think about that I don't know. I mean, I hope not like that. I think that that is the, the fear when you talk about central bank digital currencies is just kind of what you outlined is, is the, is the nightmare scenario or the scenario that people worry about. I certainly hope we don't go in that direction and I don't think we would in, in most countries, but yeah, but that's, that's the concern. Yeah. Some of them for sure. And then how do you think about corporations

interacting with these stable coins? Right. So if you look at like a bit, so who's doing more like remittance type stuff um that's one component but usdc tether whatever it is uh business is going to move money you know around the world as well do you see adoption happening there have you have any insight into like how they're thinking about these stable coins or digital currencies yeah my hope is and my belief is that long term they will or at least this will be used on the back end for what they're doing it's it's like it's a better way to move money like you move 24 7 money 24 7 it's open on the weekends i mean i think that we're at the point now where it's like pretty hard to debate it that it's not better right like it's cheaper it's faster it's 24 7

365 it's available in every country you get it you're gonna have a hard time convincing me otherwise right it's pretty compelling at the same like business our business is looking at using stable coins right now for moving money around no like general corporations aren't that's not even on the radar at this point uh you know it probably will be at some point or the vendors that they use will be using this as rails on the back end which is probably more likely yeah um all right what other uh what are the themes other than kind of stablecoin stuff are you uh you interested in you said lending and borrowing yeah i mean like market infrastructure like how does this market evolve to look like more traditional markets um in ways that it should so that's

something that we you know look at a lot because we are very close to the traditional markets so things like uh you know different types of companies in the crypto market focusing on their core competencies and kind of getting separated out into like should there be should an exchange be a brokerage and a custodian and does this all really belong together or should there be companies that are really good exchanges and really good brokerages and really good custodians that's something that we think is certainly like the market is maturing and it's going in that direction so we look to certainly invest behind that trend so in traditional markets there's definitely uh folks who come from traditional world who look at crypto and they're like i can't

believe that the exchange and the custody provider are the same right or some other variation of these different components being vertically integrated um is crypto different like is this time different or do you think that whether it's regulation or just market forces force these to separate become different service providers uh for whatever reason i think that generally it makes sense that they are different companies that are providing these services uh if you look at because the core competencies that you need for each of them are different to be a really good brokerage you need to be really good at acquiring and servicing customers for being an exchange it's really about bringing parties together you know having that network network effect of liquidity

is is kind of the key to having a successful exchange uh for custody it's security it's securing you know folks assets is especially in crypto is the most important thing so why would same company have all those different core competencies which are very different so i think it's very natural that they get separated into you know best in class for each of those i think you see that even um you know brian armstrong at coinbase recently said that you know the the coinbase like they're they're separating the brokerage from from the exchange which which makes the end the custody piece like they're breaking it down just like you would expect from a traditional market so i think i think that the crypto market is learning from

traditional markets on what works in traditional markets, but they're also learning what didn't work. They're going to take over places in the traditional markets that they can improve upon. Why are markets not open 24-7? That's absurd. The crypto market is open 24-7. Why are markets not accessible to everyone? The crypto market is accessible to everyone. I think that's where where we're going is we're going into a future where you're going to take the best things from the traditional markets that crypto markets is going to learn from. And they're also going to improve on the things that aren't ideal in the traditional markets. So this is one of my favorite topics, which is every once in a while, I'll see a tweet dunk, which essentially is somebody quote

retweets some announcement and says, congratulations, you learned finance. And it's usually somebody from Wall Street or the traditional markets, realizing that the crypto world was unsophisticated in some aspect. Right. And the announcement is basically getting to, um, kind of a, uh, a comparable, uh, you know, position as the traditional market. So, um, could be something around regulation, around custody, you know, whatever it is. And the reason why I like talking about it is because, uh, I think from the finance perspective, a lot of folks are like, Hey, idiots, like we've been doing this a long time. Like we know what we're doing, right. Which, oh okay that's a position to take i think the other argument though on the crypto side is

wait a minute just because you are do something the way you do it doesn't mean that there's not a better way to do it right and those two forces collide a lot i think in crypto and i think what you're saying if i'm understanding correctly you can correct me if i'm wrong is if you start out saying well maybe there's a different way to do it sometimes you're actually going to end up saying well the way they do it is the best way and so we're going to do it that way but sometimes you end up saying wait a minute there's this other thing to do and like it's an improvement on that old world is that exactly right yeah yeah and that's a great thing about crypto is that it's kind of building a new financial system from the ground up and sometimes you land well the existing

financial system kind of got it right and sometimes you land the financial system got it way wrong and we're going to build something better yeah how do you know if you're like from the investor seat right when you're talking with a founder and working with them how do you know when oh the existing model works versus we should go innovate or create something different is that like a pretty black and white let's go left let's go right or is it more of you just kind of keep doing what's best for your business then you end up somewhere i think it's more of the latter and i really like companies that have people that come from both like the people that know the financials traditional financial space and they know how it works and then you've kind of more crypto native uh folks

that i think they can bring both those mindsets into maybe you know what works and what doesn't what we can improve upon uh because it's not always clear yeah it's um it's interesting to me how we're seeing the disruption and innovation uh and wall street hasn't seen that very much right i think the tech world's used to it at this point they kind of know how this stuff you know okay here's the market cycles here's how you go into these large industries there's very well understood business models you know hey we're going to execute the platform strategy we're execute this you know b2b strategy whatever wall street pretty much has done the same thing for a long time and you know if you think about crypto starting at the most important component

which is the base unit of account and having innovation there around like let's say a bitcoin now i'll get into stable coins etc like can we rebuild the financial system can there be a complete replacement or is this uh we coexist you know the the crypto world and the legacy financial world yeah i think it's definitely a coexist like why i'm gonna push you on this why oh i just have a very hard time seeing a future where you know the crypto world displaces the traditional financial world in you know the developed markets i just don't think that will happen i think that there is opportunities in other markets that maybe don't have a as a developed financial system okay so you're gonna buy for kate let's say you take the globe buy for kate

developed undeveloped or developing worlds i think is the appropriate way to say it um the developed nations much harder to see the financial system as it exists today completely going away in the developing world easier to see that happening right is that exactly so far yeah okay i don't disagree on the developing world side right in terms of if you don't have a lot to start with and something new comes along it's pretty easy to see people wanting to switch right now somebody's got to build that it's got to work all that kind of stuff but but that's pretty self-explanatory in the developed world let's say you're right the legacy world can't go away if you were the disruptor what are the one or two things that you would have to see happen

to change your mind like what would be hey x happened oh you know what actually i think they could get disrupted and i and i'll bail you out a little bit with this question i don't know if i have an answer but it's an interesting way to think about okay we both agree that like legacy world's pretty big they're pretty powerful it works you know i always joke us dollar works the united states pretty well right but what would have to happen to say you know what actually this crypto thing could displace or just completely disrupt the legacy world i think you need to find the the little places the edges where where crypto is is better okay so you would go more of outside and you got to start gaining traction somewhere where crypto

is better yeah yeah like find find those places where where where it's a little bit better and And is this kind of what you're thinking about with like Bitso and the remittance type stuff? Exactly. Yeah. Yeah. Yeah. Like find the place where it's just like, okay, we need to get, you know, dollars into pesos and get those in Mexico.

What's the best way for us to do that? It happens to be using crypto rails. So we're going to start using crypto rails or we're going to start experimenting with it. And then, you know, maybe it's better 10% of the time. So we're going to be using that 10% of the time. And then, you know, crypto markets are getting more liquid, spreads are getting tighter. It gets more than 10%.

next thing you know all the remittances to mexico are going through crypto rails because it's just a fundamentally better rail yeah it's almost like the trojan horse type uh you know model right where um hey do you want to get paid in uh you know you're going to send money back to a country that your family lives in right so traditional remittance uh i'm your employer and i say would you like to get paid in the currency that you send right and you say you know what i'll take 10 of my salary well at some point you say okay give me more give me more even more and do you say you know what i'm going to send the money i send back but then the money that i keep here in the u.s i'm actually going to keep in that currency as well and now i want to spend it now and it

almost like eats into your wallet share to some degree or your portfolio share uh i haven't thought enough about it to know like how realistic that is but it's an interesting way to you start on the fringe or like the more like toy you know type thing and then eventually it becomes more serious and like oh shit like you know 80 of my wealth is in this stuff yeah like how do you get that little little edge and you talk about like how do you get folks off zero i think it's the same for like a lot of these use cases it's like how do you get people folks off your off zero how do you get you know part of their innovation budget like using this in some way and trying it because it's a lot harder to get going from zero to one it's much harder than going from

you know one to 50 and 100 agree i definitely agree with that um all right you're bullish i'm bullish what's your biggest fears in the market like what do you what do you wake up and when when you wake up you're like if x y or z happened i would like go do something else so that wouldn't happen uh i'm that's a bold statement no i'm hyper hyper bullish uh on crypto okay so what are like the the big so what i worry about and i did want to ask you this as well what i worry about like what's most damaging to the crypto space uh is if regulators decide they want to really clamp down on crypto and then just kill innovation um like outlaw you know holding crypto in you know the major developed markets that matter this it obviously does not

shut down bitcoin and crypto at the network level at the protocol level like you think you can't shut that down that's why bitcoin is bitcoin uh but if you you know shut it down like you cannot hold these things you can't work on them like that that is just very very damaging to the industry um so by far that's my biggest worry okay so uh if you ask me the same question i have two that's one of them for sure uh and again i think i think you're saying the same thing of it's not because you shut down bitcoin it's because you basically kill the adoption and the innovation and it's kind of it's kind of like drugs right like look drugs still prevail in the united states in the sense of they're there people use it whatever but if it was legal there's way

more people who would use them than probably not yep people are straightly going to use bitcoin and the network you can't shut down but if it's if you if you outlaw it then it's only criminals using it and like that that's a nightmare scenario yeah so my other one is uh i call it the self inflicted wound right there's uh we rush something happens and there's a bug introduced into the code or something where like it has nothing to do with the external forces has nothing to do with how bitcoin is designed has nothing to do um with kind of a black swan event or regulation or any stuff it's just simply we all trust that code is being contributed and it's getting introduced and it goes to a very kind of serious vetting process that's pretty methodical for a reason etc but if

at some point there was a bug that was introduced that wouldn't be good so i think about those two things which uh one's external one's internal but at the end of the day they kind of end up at the same place right where uh it ends up not it either ends up being not as valuable or it's a massive massive um i wouldn't even say it's a speed bump it's probably a stop sign at that point right in terms of regulation yeah if you talk about what could you know effectively you know kill bitcoin uh like those are i think that's probably the biggest two things yeah uh what about facebook and uh libra and calibra and all that what are kind of your thoughts there uh so love it because it's getting everybody talking about crypto i think that somebody needs to onboard the world

to crypto which is like one of the you know very much aligned with our thesis and especially calibra the wallet um kind of that their goal is to onboard the world into crypto so i think that that's fantastic i love that um will uh you know libra eventually look like you know as it is proposed it might is it more compelling if you just do individual stable coin currencies my personal views that versus a basket um but overall i think it's highly positive i mean i'll admit i lobbied hard for them to just do with bitcoin just do bitcoin yeah i mean because it's look yes i understand they're saying there's too much price volatility can't be used as a means of payment but you know yada yada whatever uh but it's also the most decentralized is also the most adopted

is the most liquid and in hindsight it probably gets you from a lot of the kind of regulatory backlash that they're getting or at least from the the legislators etc uh the question is like that short-term pain is there a long-term gain right versus bitcoin or stable coins that already exist probably wouldn't have that short-term pain because the regulators would be like you know whatever um but is that long-term sustainable we don't know right we may never find out but um to me it's uh it's hard to come out and say like hey we're gonna create a new currency when your facebook right and like even though there's other corporations or whatever like if i i can almost uh this is one test i would love to do i'd love to go ask every single congressperson

who created libra they would all say facebook right yep and then if you said name five other corporations that are in the libra association my guess is that i don't think that a single congressperson could do it five of the 21 probably be tough yeah because you know i don't think i could because you know the names that most people know like if we went and asked people on crypto they know the names of the corporations that left yeah the card networks yeah right like you know i could tell you that strife was in there at one point i could tell you that you know you know abcd whatever but the people who are left actually like i would struggle to name five of them and so is that good bad you

know you can debate that all day long but i do think that that's part of this as well as like you haven't seen amazon you haven't seen you know google you haven't seen like to me tesla is a no-brainer for them to eventually come out with their own uh digital token and it's more of like a credit in their energy grid right and so all of a sudden you got a power wall you got your tesla you got charging and all stuff like why can't your tesla car pay for the energy that it is using at the um electric vehicle uh you know not pump but like the charging station yeah yeah i'm sure at some point somebody there's thought about that right um and so we started thinking about that stuff it's uh it's pretty crazy that you know 11 years ago none of this existed and

now here we are talking about we've come a long way an amazing way yeah right um all right what one area around the world are you most excited about other than the major developing markets oh i think that the the emerging markets are the most interesting place for crypto by far so why because there's less competition because there's more real use cases for it okay because if you look at the like the use cases in developed markets for crypto broadly like digital gold of bitcoin is the most compelling use case in my view if you start to go to places that don't have you know stable currencies and good banking systems then it's it's beyond digital gold it's actual you know payments and using for commerce which i think gets a lot more interesting

so you know latin america africa some parts of asia um i think that that's where the most interesting things in crypto are more likely to happen yeah and do you think that's kind of what like jack dorsey at uh at twitter and square sees uh sees you at binance you think that's kind of why they're spending so much time in these areas yeah absolutely yeah um square and twitter ever merge i love this conversation because i got to just throw wild ideas that you would see your reaction i never thought of that one so here's my here's my pitch i i don't have an opinion as to whether it's going to happen or not but if you said to me it happened and i had to come up with a thesis as to why uh twitter has connected individuals around uh communication

and now all of a sudden if you overlay it with a payment network so take paying businesses right using Square, and then also paying individuals through the Cash app, and I overlay the communication layer and the payment layer. I don't know what that looks like, but it's something new and could be super valuable. And who's the one guy who's super bullish on both of those things and owns companies that do both? Jack Dorsey. Makes a lot of sense.

Right? Because this idea of connectivity to me is new, right? So we know how it works when it comes to communication and individuals. So like, let's say you and I, uh, 30 years ago, live in the world, two different cities. Uh, the way we communicate is basically faxing, telephone. Maybe we were really, really early to like an email type service, uh, or letters. Right. And that's how we communicated.

The second that we get internet connections, we get services where we can communicate, sharing of information, feedback loops, you know, all the things that we know that's great about the internet. Well, like that happened to words and text and communication. when that happens to money like that to me feels like an even bigger deal than communication right but is that really what's happening in crypto or are we simply saying oh no the people who are already connected via communication now we're just going to put money in there as well like are we onboarding new people to money or are we just simply trying to improve the people

who already have access i think we're moving from from closed networks to open networks and i think that that is what happened with with communications with a lot of things that they used to be closed networks and then explain that though what why do you think we're moving to open networks when it comes to money uh because before the internet um like most things were closed networks most things were not accessible to everyone like that that's kind of the major kind of innovation hard to argue yeah innovation of the of the internet is that it opened information up to everyone um and that's what i think we're seeing with money is that money has been closed networks um and now with crypto money becomes open networks that anyone can access money anyone can access

different types of money um so yeah i think kind of it's that same type of disruption which is really interesting so uh i don't disagree what that then leads to is do we eventually get to a point where there's a separation of state and money and not in like the let me caveat this um i'm trying to be better about not putting people in bad positions um not in like the anarchist way right like hey we've got to take down the dollar for that to happen but in the sense of you as a user have a government currency you have a non-government backed currency then you've got these like digital hybrids right where it's a usdc so it's not technically the one that the government issued but it's digitization of a government currency let's say those are three

options when you have those options you as a user are going to choose right are the other two sustainable like will the regulators will the governments allow non-government currencies or like you said earlier kind of that that um really really bad case they come in and say absolutely not we're going to regulate this out of existence yeah my hope and my vision on how it plays out is that it is different fiat currencies and cryptocurrencies coexist it gives people options they can use different things for different use cases to transaction around the world uh you know, to hold Bitcoin as kind of the asset that I think will be as part of a portfolio and a store of wealth to transact and, you know, the different currencies for different, you know, countries that

they're in or, you know, parties that they're interacting with. That's where I think and hope it's going. So I go even further. What's the uncomfortable idea in the room? True separation of state and money. Governments no longer control money. If you said in the mid 60s, one day those paper notes in your pocket will not be backed by gold you would blasphemy right like no way is that ever going to happen 1971 or whatever it was right happens to me the world would look a lot different and so i don't necessarily think it's going to happen what i think is that it's a higher probability than people assigned to it right so it's almost like we're all we're mispricing the probability and what i don't know is if that's good or bad

right so let's say that if i went out on the street to ask 20 people uh the consensus would be there's less than a five percent probability of separation of money and state and actually if you could somehow measure this and come up with an equation uh the probability is actually 15 percent right still it's only 15 not very high but difference between 5 and 15 pretty material that's a very interesting like we're edging more towards this like wait maybe the world is not expecting something right um and i don't think a lot of people are talking about that no i mean does the world go in that direction my inclination is no but at the same time i agree we as people generally under price the probability of drastic changes happening so i think that's fair yeah um

is there anything else that you've been thinking about in crypto that you haven't heard anyone talking about like what do you think is important whether it's for 2020

or beyond that you're like man I wish more people were talking about X I got them thinking yes I think no come on

you gotta have something I mean people are talking about what i think is the other thing we haven't talked about or directly hit on that i think is kind of most interesting is when when and how does this become like a real global macro play that we see like somebody come out and makes that like they're going to be the next soros and they're going to make their name in crypto okay before i dig into that what would what is kind of the the milestone that would put somebody there is it they take a lot of fiat and convert it and then they're very public about it is it they make some directional bet like how do

you think about i think it's like a big global macro hedge fund that that publicly you know says we're we're all we're all right like we're all in in a meaningful way yeah we believe this is how the world is going and we are going to put a lot of risk on the table in terms of how When Ray Dalio writes his letter that he recently wrote about kind of how the world is broken, or the system is broken, but instead of ending it with buy gold, he ends it with buy Bitcoin. I think that somebody like Ray making that announcement could be a seminal moment for the industry. Okay. I don't disagree at all that that would be a seminal moment for the industry. my question is historically do the innovators who became the man right because every innovator

always becomes the man look back in history bill gates was disrupting and now he is the man everyone's going to try to disrupt microsoft same thing happens in finance so the ray dalios of the world steve cohen's all these guys they were no names that built into who they are today can you get the innovators who became the man to do that or do you need new innovators to disrupt kind of the old guard. I'm not sure. Like, what do you mean? So to me,

I don't think that you're going to get those big global macro folks, no matter how much time you spend with them on it. I think that it's classic innovator's dilemma, right? Your entire life, you've made money and been very, very good. You know, if you look at money as the scoreboard, you've been highly, highly successful.

You've won almost every game you've ever played. with one specific strategy, with one specific view of the world, one specific understanding of the system. To get somebody to flip that on its head around separation of money and state, decentralization, digitization, developing world, adopt technology before developed world,

all these kind of different mechanisms. I don't think you can get those guys to do it, right? I think it's actually the opposite. I think you need young people who those ideas are not as radical to them. like they almost don't know better right they're too naive to know the world works you know option one yeah that it's not going to be you know dalio and cohen that uh you know dude it's good it's going to be folks that become the next dalio and cohen yes because of what they're doing yeah so

like what that does though is that puts you in a position where that next soros that next dalio whatever probably is already here right but we just don't know who that is like like who becomes them and is recognized as them um one of the uh anecdotes that i have that blew my mind and frankly made me feel old uh was i asked my brother who's 23 years old i said hey you ever sent a bank wire and he said what's that and i said you know fair right um i said how do you send money to your friends he said two ways i said okay he said venmo and uber the for those that are only listening peter's had a pretty visceral reaction to that So Venmo makes sense

Uber what he was Hinting at Was when him and his friends Take an Uber together they split the ride And so he's not actually sending money To his friend what they're doing is they're Essentially combining Capital to pay for something

But in his head his buddy Ordered the Uber and his buddy Then same thing as requesting money on Venmo His buddy is requesting that they share The ride so he just hits accept whether he's accepting on Venmo and the actual mechanism is money's going to you or we get in the car together and you request to help pay for the ride and I just hit accept the user experience saying for me I accept that's interesting and so I started thinking about that I was like damn like

like either I'm an idiot I'm old or both because I'd never thought of it that way but it just really started to make me think like if you grew up with a phone in your hand right and all of these digital technologies fintech companies etc like that's all you've ever known you do think about money differently you do think about these mechanisms and the way that you uh you know kind of uh conduct transactions in commerce etc very very differently than even me who's you know i'm 31 years old and not somebody would have told me like i don't understand technology or fintan i've been like maybe not but here we are yeah and and and it's going to be really interesting like years from now when you have people that are coming of age that grew up in a

world where you know bitcoin wasn't a new thing like like that's like do they do they have crypto wallets before they have bank accounts and like what what does that mean like it'd be really interesting i want to know how many kids under the age of 18 have venmo but no bank account actually i don't know if they could sign up for a venmo account but i will tell you you know what they do have how many kids have the starbucks app and their parents put money onto their app so that they can buy things versus have a bank account way more have the starbucks app i bet how many kids use either their parents credentials for uber or have their own uber account and their parents deposit money into their uber account way more than a bank account like again is that good

right vertical specific accounts where your parent is still the same thing rather than me sending you money your bank account and you know when i was a kid my mom put 20 bucks in my bank account i was ecstatic go swipe my card and you know i was rich but if today they're doing it on your starbucks or on your uber right is that in the same thing yeah it's digital dollars that's not directly held with a bank like it's it's pretty crazy to think about all right uh for people who want to pitch jump where can they go uh the chicago vc on twitter uh reach out to me there all right our dms open uh dms are open or why why do you have your dms open you like it so startup founders can find me all right that's fair or info at jump cap.com okay um twitter

i think is the best tool in the world yeah i love twitter i somebody tweeted yesterday they said uh yo jack if you ever wanted to charge us all one dollar a month now's the time to do it when everyone's glued there's sports politics potential war like everything going on on twitter they're like dude right now would be a really good time to turn that that monetization on uh but it's all there right um and then uh are there specific types of companies you're looking for right now series a ish yeah series a ish uh typical for jump capital you know the three to ten million dollars, series A investments, companies with meaningful revenue. That is the core of what we do. If there are companies that are in the trading, investing space, love those types of

companies. If jump trading can be a partner, liquidity provider, customer, strategic partner in some way, that's even better. Absolutely love to hear about anything there. All right. Any last parting words before we get into the rapid fire? Anything you want people to know other than you got a pretty cool twitter handle the chicago vc the chicago vc what happens if you move do you change it or you keep it or are you never moving never moving never leaving crypto all right you guys heard it here he's never gonna leave chicago um what's the most important company in crypto other than jump jump's pretty important uh i think the easy answer is binance because just the way that

they're innovating and like blitz scaling a crypto native country uh company uh my view is actually bit uh bit go bit go okay why go uh because as we talked about earlier like they are the infrastructure provider for such a big part of the industry private key security is so incredibly important and i think that there's significant network effects of of being kind of the largest independent custodian in the space kind of the back office uh infrastructure and services and tools that you can build off the back of that i think is incredibly important now i would say if i would add one more the sleeper is uh lmax digital which is quietly built what is probably the largest uh crypto spot exchange in the world and i feel like a lot of people don't even know

their name all right explain uh because lmax digital because so it's l-m-a-x yeah yeah lmax digital uh i mean they they just put their uh their volumes up publicly so for a long time they didn't publicly disclose volumes uh they're now up you can see them and they're providing infrastructure where people can tap into it's a spot exchange yeah but it's spot where any consumer can go in and use it or uh it's mostly like trading firms and mainly trading firms yeah so they're based in the uk so a lot of u.s folks haven't heard of them and they are focused on trading firms uh so a lot of people haven't heard of them but that's where you know a huge amount of actual spot crypto trading is now happening is on omax digital did you guys invest uh we're partners

with them. Got it. Um, and then, uh, you guys invested in BitGo, right? Yes. People get all upset when I don't say who invested in what now. Um, I was accused of, uh, of talking about great companies and not saying which ones I invested in and not. And I said, that's like jeopardy. You got to figure it out. Um, all right. What, um, what is the one regulation or a law that you would change if you could? Oh, a bit licensed probably. It's just such a hassle for, for New arc yeah it's pretty crazy it still exists yeah like my favorite fact about the bit license is the gentleman who like led that whole thing then left started a firm to consult people to then navigate it like so i got one one rule in politics which is uh i wish that there was a rule that said

if you're a politician uh and you get elected into um a seed representative whatever we go back and we look at who put you there, right? So whatever industry was your biggest donor, you cannot legislate over that while you're in office. So you're a congressman, healthcare is your biggest donor, you get put into office, you can't actually vote or legislate over the healthcare industry because you're biased, right? I actually think that now when I heard this bit license thing, it's like same thing. Like, hey, you can't be a regulator, create a law that is so onerous and hard for people and then turn around and be like,

okay, now pay me and I'll help you navigate this. Yeah, I don't know if you read Matt Levine, but he talks about that. That's the best thing to do as a regulator is actually you create really tough laws because then it gives you a lot of work when you go to the other side

and you consult around it. So I haven't heard him say that, but I get his email every day. I don't read it every day, but when I read it, he's fantastic. So good. I wish that he did a stand-up comedy, right?

He didn't even have to be that funny because it's kind of dry humor type stuff. with with finance but like if he just stood there and talked about like what he writes about and just like a one hour special put on netflix i'd watch i'd watch it absolutely um all right what uh what's the most controversial thought you have in crypto that everyone when they hear it will disagree i don't know if anything is that controversial i would say that i am much more bullish about the future of stable coins than most people i talk to That's not really controversial.

Not really controversial, though. I'll let you off the hook. Most important book you've ever read? Principles by Ray Dalio. Why that one? Yeah. It mentioned a lot, but why? So Ray, I think, is one of the most,

probably the most thoughtful investor in the world. What I love about Principles is it's about looking down at your career and your life like it's a machine and really understanding how that machine works and being the designer of the machine instead of just kind of being part of the machine. And I think that's just a brilliant way to think about your life and your career and everything.

So this idea of being able to step out of your body and take a more kind of transparent, honest view of where you are, etc., is very similar to a concept that Jocko Wilnick, the Navy SEAL commander, has where he basically tells a story. you know one time they're doing an exercise and he realizes like no one's leading and all of a sudden he just took a deep breath and he took a step back like a physical step back looked around figured out what was happening and then just started ordering people what to do and he said like that's one of the things that he does in a lot of his executive coaching and corporate coaching is like hey you can't just be in the weeds every day like sometimes you got to take that step back and i think that's kind of what ray talks about uh in other words but similar concept of just like designing right being aware of what what's going on and a broader picture which is uh it's

pretty powerful absolutely do you have a second most important book i don't know about most and second most important i would say most interesting book i recently read okay uh was devil take the hindmost devil devil take the hindmost i don't know what that is uh the subtitle is a history of financial speculation oh okay devil take hind most devil take the hind most okay uh check that out yeah so it goes through history uh kind of every you've got a period of spec uh financial speculation so tulips railroads south sea bubble and kind of how each of these you know bubbles or periods of financial speculation uh played out and it is one is just an absolutely fascinating entertaining read and two you can very clearly see some of the ways that things are similar and

not to crypto which has kind of gone through many periods of financial speculation joe put it back up there joe is on top of it he's got the computer and he is pulling it up on amazon there it is my my uh my goal this year is to get people to start coming up to me and asking where's joe because joe is always sitting in the corner or record the podcast he's firing away um all right aliens what uh what do you think believer non-believer uh i think there probably are aliens uh i think it was it was that you're you're smiling when you're saying this why what's the catch so we we were talking about this before the show uh so i think it's the i think it was like the drake equation or whatever it is like no number of planets drake equation and fermi

paradox yes yes so you just you go through the probabilities like is there probably life somewhere else in the universe uh just based on pure numbers like probably uh then the next question that that you have is do aliens have pets you know when somebody comes in and brings up that question they've been listening for a long time yeah so so that one really got me thinking i think that's the harder question so i was thinking you know how many species are there on earth so i looked it up there's over eight million eight million species on earth apparently wow i think that's a lot yeah like i'm guessing that goes all the way down to you know single cell organism that type species uh and how many of these species have have pets uh did you google that too i did

not i just i just assumed it was us joe how many species on earth have pets all right so you so if you follow that there's eight million species on earth we're the only ones that have pets then that's pretty damn rare so my guess would be there's aliens but they don't have pets man i think they got pets i think they got pets yeah just because aliens is so broad right like i don't know it brings up the question we talked beforehand uh a buddy of mine who will go unnamed because he would be absolutely mortified if i said that he said this um said to me uh but your pets have pets and i was like what do you mean and he said well your dog has a what we call a toy humans right dumb us we call them toys but your dog plays with an inanimate object that maybe

your dog thinks that's its pet and i was like damn that's a really good way to look at it i don't know if you're right but like really expanding my mind right now blows your mind and well because then it gets into like uh you know toy story right like what happens if you leave the room and the toys all talk to each other i think actually in toy story one of the toys had a pet i think so yeah I think so. Yeah. All right, Joe,

you got an answer for us on the species? How many species have pets? There's no answer. All right. The unanswered questions of life. Uh, what one question do you have for me to end this thing? Yeah.

So you talk with a ton of really smart people, investors, what differentiates the top two or three investors that you've talked to from, you know, the top 10%. So I'm going to cheat because, uh, I actually asked this question to Mark Yusko.

who uh when i when mark and i first decided to work together um me him and jason were sitting there and i said something to him like you know explain what you've done in your career right essentially what was uh one of the questions out of many that we talked about and what i found fascinating about mark was he was always in the allocator seat for a long time right at notre name, UNC, and even at Morton Creek. And so he has met with thousands of managers, including the very, very top, right? So one of, you know, in Mark's words, one of his mentors and friends is Julian Robertson at Tiger, right? And then you kind of go through that whole kind of era of investors, the absolute best in the world. He knows he's allocated to all the way down to

probably some that ended up being very good right and so when i asked him the question i said what separates the five best from the one percent right which essentially the same question you're asking right like the absolute best in the world from the ones who are really really really good and without flinching i don't think he took a breath he said to me immediately like oh duh he goes they cut their losers faster than anyone and they press their winners harder than anyone else and so cutting losers, I think is a pretty well understood concept, right? Hey, I've got some kind of risk profile or stop loss or whatever. And if I down it X percent, I cut and live to fight another day. But the concept of pressing the winners was one that I really pushed.

Explain that more. And what he essentially said is Soros, Cohen, Dahlia, all these guys have this knack for what Mark calls doubling up. So in times of absolute despair, when everyone's running fear the blood's in the street etc they're sitting there they're cool calm collected and they double up and so when you think about investing you don't think about those guys being kind of grand slam hitters right you think of them more as consistent returns over 20 30 40 years but if you actually go back and look like soros broke a bank right like like uh my favorite story is i'm gonna forget the guy's name uh who's the guy who chased the um the naval ship uh from like argentina or whatever um the guy he goes in he buys distressed government debt uh was it lobe

no no no he would probably do it no not einhorn either um i'm gonna forget the name but uh there's an investor uh if you just google it he basically he goes in he buys super distressed uh government debt and, uh, tries to buy it, you know, first pennies on the dollar. And then at some point, either, uh, tries to get paid par value or, uh, basically strikes a deal, right. And says, Hey, look, you know, I bought your, uh, debt for 5 cents on the dollar. If you pay me 30 cents on the dollar, I'll go away. Right. Uh, sometimes they do it. And sometimes they say, you know, basically fuck you and no. And so one of the cases he hired, I think it was like a private army to storm a naval ship

that was off the coast of Somalia or something. They actually took a ship, right? I can't remember if they took the ship or not, but they definitely did something. Oh, Paul Singer. Yeah, yeah, yeah, Elliott Capital. Okay, Joe, man, you are on top of it. All right, so Paul Singer,

it was an Argentine naval vessel, and they had a subsidiary of Elliott Capital won an injunction in Ghana, in Ghanaian Superior Court, to hold a ship in the port city and it's like dude you're really serious man he went after a naval ship of a country and had it held in a port until they paid you the money they owe you that's wild it's serious and so it's like is that pressing the winners is that cutting the losers i don't know but like that guy's going to really really extremes that i think a lot of other

investors wouldn't do so that's my answer it's not really my answer it's more mark's answer but when he said it to me it's just stuck with me that like cut the losers press the winners and that knack for doubling up i think kind of separates people has there been anybody in crypto other than morgan creek that that has stood out to you as you know kind of inviting that i'm gonna answer no and the reason is i know people who i'm very impressed by i don't think we've had enough time to see, like to do it in 2017, literally you could have thrown a rock left-handed and, you know, hit some kind of profit. Did you do it in 18? Did you do it in 19? Are you gonna do it in 20? Like we're talking about for most of the fund managers, three to

four year, you know, history. Uh, and one of those was such an outlier compared to traditional markets. That's unfair to say like, Oh, you're, you know, you're a genius. You're great at this because of that one scenario. So I think you probably need two market cycles, right? You need two bulls, two bears, get through both of them. If you're sitting there like, you know, the what is Jim Simons, right? If you're sitting there saying, hey, we've done 66% a year, right? Okay, you've done that for 20, 30 years, like you're probably pretty good. I think that we just need more time to identify who in crypto could do that. And the big question,

going back to your thing about the macro, is that going to be people like Jump, people like Renaissance, et cetera, that are well-established players in other markets who come into crypto? Or will we see kind of the digitally native investor or firm kind of rise up and end up being that group?

I don't know. I don't know. We'll see. All right. We're ending this, frankly, because Polina's calling me and is going to yell at me if I don't hurry up and go meet her. So shout out, Polina.

Thanks for interrupting the podcast. If you listened to this far, now you're embarrassed. All right, listen, Peter, I really appreciate you coming in. This is super fun. We're going to have to do this more often. But where can people find info at jumpcap.com? Info at jumpcap.com. Twitter is probably best.

At the Chicago VC. The Chicago VC. All right, man. Thank you so much. Thank you, Pom. A ton of fun. Hey everyone, Pop here. If you liked this episode of Off The Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts, please do us a favor and rate,

review, and subscribe. To review, simply go to the Off The Chain homepage, 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.