The Pomp Podcast - Rob Petrozzo, Co-Founder of Rally Rd: Where Classic Cars and Blockchain Intersect

Episode Date: October 25, 2019

Rob Petrozzo is the Co-Founder of Rally Rd, one of the hottest startups in technology. In this conversation, Rob and Anthony Pompliano discuss the original idea, how the company navigated the regulatory landscape to empower fractional ownership of unique assets, what the process for selecting assets looks like, and where potential intersections with Bitcoin and blockchain may exist in the future. BLOCKFI-----BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. 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. COINMINE-----The Coinmine One is like an Xbox that turns your electricity into Bitcoin. You just plug it in, connect to wifi, and tap on the crypto you want. It’s so easy anyone can do it. Everything is controlled from the Coinmine mobile app and the Coinmine keeps getting better with over the air updates that add new coins, features and services to your Coinmine. Visit coinmine.com/pomp to get a Coinmine and earn crypto for powering a new world.

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. Rob Petrozzo is the co-founder of Rally Road, one of the hottest startups in technology at the moment. In this conversation, we discuss where the original idea came from, how the company navigated the regulatory landscape to empower fractional ownership of unique assets, what the process for selecting assets looks like, and where potential intersections with Bitcoin and blockchain may exist in the future. I really enjoyed this conversation, and I hope you do as well.

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high rate. It's the best rate in the industry. I highly suggest you go check out BlockFi.com slash Pomp. Again, that's BlockFi.com slash Pomp to sign up and start earning crypto today. 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. Bang, bang. I got Robin here. Super excited to have this conversation.

He is not in the crypto industry, but they're doing a lot of things that are very tangentially related. So thanks so much for coming to do this. Thank you for having me, man. Much appreciated. All right. Before we get to Rally Road, let's talk about what you did previously, because you have kind of a unique background. Where do you want to start? Yes, I'll start in the beginning. So 20, call it early 2000, 2003, 2004, I got out of school.

I went to school for design. I've always been a designer. When I got out of school, it was this new, it was like Web 2.0, and a lot was happening in the digital space where everybody, similar to the way crypto is now, everybody's trying to jump on this bandwagon of what will be digital. They don't know what it is yet. It's post-2000 collapse.

Everything is brand new. So I'm doing as much work as possible. I wound up in the music industry, so I was working for a bunch of new artists developing brands and developing their web presence and some little bots around what they were doing for promoting video and radio and all these little elements that everything's self-taught, everybody trying something new. It led to a bunch of awesome opportunities in the startup space. So 2007, 2008 comes around, and the iPhone comes out and kind of changed everything dramatically. and then the app store came out and changes everything again where everybody that was even thinking design first had to become this user experience designer and had to create product around the iphone so um wound up at a company called scroll motion which was a digital publishing

suite um that was creating content and bringing things to life like big banks and pharmaceutical companies and traveling all over the world trying to understand content and bring it to life led to a bunch of other great opportunities so wound up at a company called kimi which is a Computer Vision Play, Digital Locksmith here in New York, and then at a workplace company called Convene for a little while, built out some internal software, had a bunch of hedge funds in between, worked a little bit with Citigroup, worked with Ares Management. So people that were really kind of marrying the idea of finance and design into this product that was for this very unique end user, whether it was employees or users who had regular banking, no matter what, it was always

this mix of design and finance. And it kind of eventually led to a conversation with my current co-founders, Max and Chris, who I've known for a long time about what the future of finance would look like in like 2013, 2014, and then led to Rally Road. Got it. And so what was, in those early conversations, what did you guys kind of identify as, hey, this is the future that may not be here yet, but we think it's going in this direction? What was kind of the more macro or structural things? Yeah. So, I mean, it was unavoidable. So 2015, 2016, we really started putting pen to paper on this. And the idea was invest in alternative assets, but do it at retail. So this is post,

you know, 08, 09, when myself and everyone around me lost every dollar. And it was something where it was new. And the only interface was, you know, I had a TD Ameritrade account and Coinbase didn't exist yet. And Robinhood didn't exist yet. And you realize that there's a very small group of people who are making all the money at the exact same time. And they're waiting for back holders like me to give up. In 2009, I gave up. And we started talking about what the future looked like for the stuff that really sustained during that downturn. And that was, you know, gold had its run. but they're also tangible assets that, you know, the super wealthy had access to and they were holding onto. So the last thing that someone with a ton of money sells when things go bad

is the stuff they really care about. So for us, we looked at things like classic cars and watches and wine collections and these things that were really about collectibles and turning those into something that you can invest in was pretty obvious. And then once, you know, you start seeing all these other players pop up, you see the Robin Hoods of the world that are activating this huge uninvested population of people who really start to get it. They're younger, But they understand option strategies. They understand crypto. They understand these things that are really sort of left field when it comes to the regular investor. And they're doing it at a meaningful way. They're doing it with, you know, bigger account balances. And they're doing it where, you know, they understand what earnings reports look like. They understand what EBITDA is. And they're 18, 19, 20 years old. Stuff I never understood. it became obvious that if we created an interface that worked the same way as some of these other products where you shrink it down to a binary yes no option with some really unique education

and do it where it's these alternative assets that everyone knows have value then we can do something really really unique and that's kind of what led to the conversation about let's put let's make this a very real thing yeah and and so when you guys first get started what was kind of the initial product like what are you guys trying to build and and um kind of how did you go from okay we got this idea let's you know make the jump to that that initial product that you gave out to users? Yeah. So, Chris, our CEO, my co-founder, someone I went to high school with, he's always kind of understood the classic car space, which was the first asset class that we started with. And he made a decision a long time ago. He was going to buy a, he had money to either buy like

a house or to buy this car, this Porsche that he really, really wanted. And he talked to his parents about it. And like, they knew the right decision was to buy the house. Real estate's a great investment. It's something that everyone knows. You don't have to educate anybody on. So he bought the house. So now, you know, 15 years later, the house is around flat and the car he was looking at has 10X since then. So we started thinking about like, all right, there's a lot of asset classes like this, but the classic car space is one that we kind of understand from a design standpoint. I always loved it. I understood that it was something that found its way into a lot of other design sort of practices, whether it was fashion or like sneakers and architecture. The lines of classic cars, the things that go with it have always been really important in the design aspect. But from a financial perspective, it was something that has gone up into the right for a long time and outpaced a bunch of other indexes.

So we looked at it and said, if we can take this and turn it into a stock and do it in a way that doesn't intimidate an end user, this might actually work. So that led to sort of trying to figure out the mechanics of it, talking to our legal team, creating a demo so that it actually looked and felt like what we would actually have, and trying to explain it not just to ourselves, but to the people around us who are going to seed this project and the lawyers who are going to be a part of it, to package up something that the sec could review and completely understand and that was like the first year and a half of the business basically yeah not not fun in terms of uh it's not exactly building the product and making it look beautiful etc it's a lot of kind of behind the scenes stuff that's just really tedious and complex yeah for sure and like and you probably know this like the the way the sec and the way that lawyers who charge you know you know 900 an hour look at

things is they want to see like printed on paper photocopies of stuff they want to mark it up they want to understand every aspect of what you're doing from that macro perspective, from that business perspective, before it even becomes a product that any, what they consider unsophisticated investor would potentially see. We have to make sure that we cross all the T's and dot all the I's. So, you know, the first 18 months of building when it was the end of 2015 into 2016 was about getting everybody, ourselves included, comfortable with the concept of investing in a thing that's not a stock in an app. And that was like the biggest process start to finish for sure. And so where are you guys today, right? Like, let's talk about how does the actual product

itself work. And then we can get into kind of how it's going. But just mechanically, how does the actual experience work if I'm a person who downloads the app and want to get started? So if you download the app, the first thing that you see is a quick tour that explains what these individual assets are. So right now, you download the Rally Road app, you open it, You see a bunch of cars, you see some baseball cards, you see some wines, you see a bunch of these really unique assets, some more esoteric than others, but all of them have value. And then inside of each of these individual portals, what you see is a bunch of charts that show comp prices of similar vehicles or similar bottles of wine over the course of 10, 20, and 30 years. You read a quick story about it. So we shrink down, you know, the entire history of something that's 40 or 50 years old.

Let's say like a Mickey Mantle 1952 Topps baseball card, which has all this air of importance around it. But it's also got a really interesting story about, you know, a bunch were thrown in the Atlantic Ocean and Topps wasn't sure it was going to be a hit. And now it's one of the most important baseball cards of all time. So we tell that story in a quick little educational portal. We have all the charts in there. So it looks and feels like equity charts, too. You can see what the price appreciation has done over time. We relate it back to pop culture.

So we always have kind of quotes or those sort of magazine-type pulls that explain why it's important to a 25-year-old today and not just in 1952. And then we give the option to invest in what we call an initial offering. So it's the first-time shares being sort of presented to the end user. And it's in a way where we price it based on very similar dynamics to the way a regular IPO would be priced, with comps in the space, with a bunch of expert opinion, with our advisory board sort of looking at all the details. And then we let you invest. We have all the details there, the certificates of authenticity, all the sort of the track record of each individual asset. So you can kind of go into the details.

We have the whole SEC qualification document, which these are all done under Reg A+. So each one of these individual assets is almost like its own company with its own balance sheet, its own cap table. And by you investing in that initial offering, you jump onto the cap table for that individual asset. Just like regular IPOs, you kind of have a cooling off period. So once the entire asset is funded, so in this case, that Mickey Mantle card, it actually went live last week. is a $132,000 company. Wow. And the only asset inside of that company

is the Mickey Mantle card. So it's kind of like an SPV almost. Similar, yeah. It's like Mickey Mantle LLC. And then inside of that is a cap table now with 264 individual investors. And each one of those investors is part of that company. So now for 90 days, that's locked up.

There's no trading that happens. And then after that lockup period is done, every around 30 to 60 days, you open up what we call a trading window, which is all done through registered broker-dealers where it's really peer-to-peer in a way that you come in, we price it kind of like a Dutch auction where there's one clearing price end of day. But for that one day a month, you can sort of bid or ask if you own shares to

buy or sell those individual shares. So you don't have to wait for an exit of the actual asset to be able to exit your investment. It's almost like a periodic liquidity. And before we go back to the structure, let's talk about this for a second. Because one of the things that I noticed immediately is there's no exchange, right? I think part of like compared to the crypto world where it's 24-7, 365 liquidity all the time. And that's a huge benefit. There's also some drawbacks to it. What you guys are doing here is you're providing once a month, let's call it, right? And there's kind of a 24-hour window or so. One, what happens if I miss the window? Can I set reminders? All that kind of stuff. And then two, why go with that structure rather than some kind of more

continuous liquidity type structure? Yeah. I mean, it's the right question to ask. I think that we looked at it in a way that we want to sort of build our community with a lot of educated investors. So when we think about why we built this platform, we think about the platforms that we came from that we really were birthed from, which are the Coinbases of the world and the Robinhoods of the world. We look at ourselves as one of those for alternative assets. The big difference for us is that I think, you know, in December of 2017, when, you know, everybody is having the conversation about Bitcoin right before this precipitous drop, the continuous nature of that marketplace, I think, and you might have a different opinion of this, accelerated the way

that that bottom fell out really quickly. And there was a lot of sort of bag holders who were brand new to it in 2017, who got left holding those $17,000 coins and $16,000 coins. And we didn't want to be in a situation that we did things irresponsibly. So for us, it's always been like a buildup and making sure that everybody on our platform is completely educated about the process before we get to a point that we're a continuous market. So what we did is we do this sort of the once monthly, once every 60 days, more so than not to really make everyone understand exactly what's happening in that trading component of the platform before we get to a point that's continuous. Because a lot of them are first-time investors. A lot of them too, or almost all of

them are first-time alternative asset investors. And someone might have a piece of real estate or might have an old baseball card or something. That's not the same as trading it. So we want to make sure that everybody understands exactly how this thing works before we get to a point that it's that never-ending bid-esque. And we'll get there at some point. I think what we're putting into the app right now is the ability to sort of add your bid or add your ask and build the book before the execution date. But we'll slowly start to add more of those execution dates to make sure that everybody can get filled. To this point, it's been a really responsible marketplace. We don't have a lot of asks that don't get filled. At times, we'll have bids that don't get filled,

but it's something that people are always like, I really want to get on this, but they also want to understand how it all works. So it's been very responsible to this point. I think we want to sort of maintain that responsibility until we get to the point that it's truly continuous. Yeah. And how do you go about selecting the assets themselves? Right. Because to me, that's like a huge piece of this is obviously you guys have built what I'll call kind of a wrapper around the assets. So you've done a great job with the charts, the description, the story, the ability to kind of see all of the legal and regulatory stuff, you know, and really present all the information that I need to make a decision on whether I want to gain access to something or not. but a huge component of that is like what am i actually buying into right and so whether it's a classic car it's a baseball card etc like there's some pretty cool shit right i can say that i don't know if you can but there's like cool shit i can say cool shit i can't say anything

about future returns okay all right there's definitely cool shit on there and so um like how do you guys go about sourcing this stuff vetting it you know who makes the ultimate decision as to what gets listed what doesn't get listed um and are there things that maybe you were like we're super excited about that ended up not getting listed for you know x y or z reason yeah absolutely i mean when i look at sort of what we're doing right now it's always been like the cool shit factor is a huge part of it and it's the idea that there's the a very so like the auction market we think about cars if you wanted to sort of sell a vehicle and you had a great car no matter what it is if it's a 60s era ferrari let's say you want to sell and you go to

a one of these big auction houses no matter what they're going to make you sign this agreement that says that they only they have access to this vehicle for six months to a year let's say you're probably going to pay for some of the marketing expenses and the travel um you're going to be giving 20% either on one side or the other, the buyer or the sell side, for the privilege to sell that vehicle. If they're at an auction and it's a little bit of a flat auction, there's only a hundred people in the room and nobody wants your car, they're going to push you to take the reserve off and sell it as quickly as possible. So all these dynamics created this world that is very, very closed off right now. And then for the buyer, you have to be in the room at the

right time. You have to be on their books, they're ready to buy it. You got to buy the whole thing. You got to take it with you when you leave. There's all these sort of barriers on both sides. So we looked at it as we can get the best possible assets and curate a great collection because so many of these people don't want to go that route anymore that are selling the assets. And so many of the buyers don't even know it exists. So we can kind of create this checklist, which right now we have like this 18-point checklist. It has a little bit of sort of algorithmic value to it, too, where in the background we're always figuring out the cultural relevance of an individual asset. And we're trying to figure out what the next three to four years look like for that asset based on upcoming auctions, some of the insurance values, some of the data that we keep in-house. But there's also that manual curation part.

We keep the best people around us in the space. So when it comes to cars, you know, we have a great internal team that vets a lot of this stuff for us right now and has those inroads and has that network. We also have a great team of advisors around us who we put on the books of our company to make sure that we're always sourcing best possible asset, regardless of whether I like it or not. As a person, I might look at something and say, that's that's amazing. That's so cool. But if it's at a downtrend right now, like we're not going to buy that vehicle. If it's something that isn't going to be going to market and isn't going to get attention the next three to four years, we're not going to buy that vehicle. but it's also a situation that we'll take a flyer on something if we buy opportunistically and we have some intuition that we feel like this is the right vehicle to buy because we are

investors in each of these assets as well so up to 10 of the asset we buy at the exact same price as investors off of our books like we buy that with cash and we can't sell so until the vehicle exits we can't sell yeah so we always we do believe in these assets we want to make sure we're getting best available we want to curate the best possible collection so that when you know when it's time to sort of exit some of these things if you want to find the best version you have to come to us for it. And I think it's a really big piece is you guys are putting money where your mouth is, right? Like the things that you show to your user base or your investors are things that you're putting your cash alongside. So it kind of speaks to where your

conviction level is. Let's talk about the cars for a second. Where are these cars? Are they sitting in like a parking lot in the middle of Manhattan or somewhere in Queens? Yeah, we have them in the lot down the block on 42nd and 6th. It's okay over there. We have a great concierge there for us. Where are you guys keeping these things? Yeah, so we have a purpose-built facility that we keep all those vehicles. And so the vehicles right now are all in one place. We're trying to find a place that makes it more accessible to everybody. So investors always have a chance to see them, which we always make it available now. But right now, you know, we have one space in Pennsylvania, we have one in Connecticut. It's really about sort of keeping the collection all in one place. So

we also have a retail location that we just opened in about seven months ago in Soho, that is our first sort of iteration of what will be the living museum. So right now there's a 1980s Aston Martin, in the middle of the store on Lafayette Street between Prince and Spring, surrounded by it are a bunch of cases that have the Mickey Mantle cards there. There's an amazing Birkin bag there. There's all these elements that are really unique that we want to put on display that you can see and then sort of leave with a piece of it. Anytime we can do that, we'll always do that.

As of right now, the vehicle, which is a fleet of around 60 cars, is in this purposeful facility, 24-hour concierge, full security. We have a camera feed that we're putting into the app now too, but we want to make sure it's always accessible. So we'll be doing things to really drive not just interest, but we want to drive dividends for our users as well so that anytime we can put a car in a hotel lobby or have an event inside of our space and there's a car there that you've invested in, anytime we can sell merch around these individual vehicles or assets, which we're starting to do really effectively now, that goes into the bank account for that car or for that asset, and then you get paid out a special dividend as an investor for owning it. Got it. And so, in terms of the retail location, right, down in Manhattan, it's pretty cool. When you walk in, you definitely feel like, hey, this brand stands for something different, right? And I think that there's kind of this element, again, of the kind of cool shit going on.

Yeah. How do you decide what goes in there? How often do you switch that stuff out? Yeah. Because I think that that's a different car than was there a couple weeks ago. Yeah, we do. We try and do it like once. We're trying to do it now in a cadence of like once a month where everything switches out. But what we really want to do is put the marquee asset there. So like we have this asset more in there now because we made sort of the bet on that vehicle about a year ago and we made the acquisition. It's going to be in the new Bond movie. It's a very it's sort of a unique story that goes along with it.

But it also speaks to what we're doing as a company where it's like that 80s and 90s sort of feel like we realize that a lot of people that are coming into that space. They're around our age, like they're, you know, 30 year olds that have an understanding of how the markets work. but they see something like this and it has this brand resonance and we can tell a great story around it. So anytime we have a marquee vehicle or a marquee asset, one that's going to be in the app available for investment soon, or that's going to be trading soon, we make sure there's a place for that in a really unique space that you can come in, have a conversation. Like that for us is our, it's our investor relations center more than anything else. People walking off the street from all walks of life and they see this, you know, million dollar car sitting in the middle

and all these things. And they just say, inevitably, they just wind up saying like, what is this? And it becomes a really great conversation. Those people stay in the store for 20, 30 minutes with their whole family having the conversation. And then they leave understanding exactly what we do. So anytime we can kind of tell a great story, anytime it's an asset that's coming into the app soon, anytime it's a marquee vehicle or a marquee asset that gets edges close to that million dollars, we're going to put a million bucks in the middle of Soho and have the conversation. That's what goes in that store. That's our permanent location. Our office is there too. But now we're starting to spin up a few pop-ups all over the country

to make sure that new investors have access to these really unique things as well, to the cool shit. We want to make sure everyone has access to it, you know? For sure. And I guess what's the kind of tangential relationship to crypto, right? So a lot of the things you guys are doing have elements, right? And what I mean by that is there's a crowdsourcing component, right? So you can kind of look at it as an investor base that all comes together for one asset. There's fractional ownership of that asset. The way that the information is being presented through the Reg A pluses. There's kind of a non-accredited investor element to this, right? Just a lot of either things that from an ethos standpoint are close or actually mechanically, they look very

similar. There's no tokens, right? There's no kind of real crypto or blockchain component today. Maybe talk through a little bit of the pros and cons and kind of how you guys have thought about this previously. Will you go in that direction? Yeah. Yeah. I mean, and you hit it right on the head. It's one of those things that tangentially lives in a place where people can relate it to a Coinbase or to sort of what the fractional ownership and the idea of not owning that whole piece, not having to buy one individual unit. And that's always what we looked at as sort of like the path of least resistance for us in terms of getting the end user to understand what we're doing. So when we think about like what we're going to do as a company, we, you know, 2015,

2016 is when we're really having the conversation about what the structure of the business will look like. And that was like peak conversation, peak ICO. And it was peak, you know, it was peak crypto for a lot of retail investors. So we based so much of what we did and so much time was spent with our lawyers thinking about what a tokenized offering will look like. And this was 2016 was a situation where the difference between utility and security was still very blurry, I think, at the time. And we were thinking, like, if we can do this in a way where, you know, your investment is your ticket to the store, and we're trying to connect the dots. And we realized that after talking to our lawyers and having the initial conversation with the SEC, we didn't want to go

down a pathway that put us in the crosshairs if anything went wrong as sort of, you know, collateral damage. Like, that was what we always looked at as sort of what we want to stay away from. So as much as I wanted to, you know, all of us thinking about seeing all these ICOs just print non-dilutive capital. And it was just like, could we do something like this? It's crazy. We couldn't not have the conversation basically, you know, but we always knew that like there's a blockchain element to this that I think a lot of other companies that are sneaking into the space right now are thinking about in terms of putting the assets on the blockchain

and having that, you know, that no third party living in between you and the information. It's the promise of tokenization of an asset. Yeah. And it's going to happen. I think we're going to be there at some point. If and when, we don't know yet. We do know that this is definitely a security, like we're talking about the Howey test and things that make this a real thing. We have to go the route that we're going right now. It's also a trust stamp for us too. There is a lot of retail investing that happens where, you know, they're just saying yes to something on Coinbase and they're not necessarily understanding what the dynamics of that investment look like and what the fees that

go along with it and what they're, the fact that it's not, like they don't have the keys, their own private keys, their individual investment. We want to make sure that everybody on our platform understands what we're doing that the trust stamp from the reggae plus sec qualified offering as part of it as soon as we can get to a point that tokenization is a little bit more understood where now it's still a situation i feel like and you're you're you're in it you're neck deep in this i'm like knee deep in you know what i mean so i think about what this is in the future and a lot of i don't know the people that we talk to don't know to make a decision to go a route that gets still gets confused by a retail investor when you think

about crypto, blockchain, token, all of these individually get confused as one thing with a lot of retail investors. And we have so many first-time investors that have to do with the SEC as reggae plus. And think about tokenization later. It was always what we thought of the way to do this best, but we'll get there very, very soon. Want to know who has the best URL? Crypto.com. That's right. Crypto.com. They're a crypto platform with one goal, motherf***ing mass adoption. That's why we're all here. We're trying to get crypto in every wallet. Crypto.com is helping people do that through buying, earning, lending, and card payment. Everything you could want at Crypto.com.

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and get paid an interest rate of 6% in return. Go check out BlockFi.com slash Pomp. Again, BlockFi.com slash Pomp to sign up and start earning interest on your crypto today. And I guess really the thought process here for you is you can kind of take two different approaches, right? So there's one is go the unregulated route, kind of go very quick,

and then worry about the repercussions later. We've seen a lot of people who did that, not so much in the tokenization of assets side, but really in building protocols, et cetera. And some of them got really bad penalties and some got kind of slaps on the wrist, right? So kind of a whole different degree of penalties there. But then the other end of that spectrum

is to go the heavily regulated route, right? And so what you guys have essentially done is you've taken that ladder out. But the part that I like about this is if you were to go to the tokenization in terms of the blockchain component, not a lot would change, I don't think, for the end user.

Absolutely not. They wouldn't see it. Yeah, at this point, nothing would change. The only thing that was a difference is that the SEC didn't really have an opinion on it when we were first coming out.

So it was still like, do we go this route and hope for the best? And then it was like talking to lawyers about incorporating the Cayman Islands and stuff. It was like,

we're going a route we don't even want to think about right now, you know what I mean? So we stayed away from it, but now it's front of mind where people have the conversation and at least they're starting to understand exactly

what you're saying and what that means. And I think for us, going the heavily regulated route I think is a must for the near term for sure. And we want to stay in that route. We feel like we have a good relationship

with the SEC right now. And the process works and people understand it. The sooner we can go that blockchain route without changing any dynamics for the end user is when we'll pull that trigger basically for sure. I think you hit it right on the head. Got it. And today it's open to U.S. investors,

international investors? Yeah, U.S. investors only. And we're working quick to go international. And that's more of a regulatory thing? Yeah, it's one of those things where like the way the SEC works now is that to go state by state is different than going region by region. Once you go overseas, they all have their own rules, their own regulation that goes with it. And you go

into one country doesn't necessarily mean you go into another country in the EU even. So the quicker we can get there, we will. I think right now we've got a really unique and super interested user base who loves what we're doing. They're hyper engaged. You know, we have better metrics than I think a lot of the other sort of fintech platforms for sure, based on what we know. And we want to continue to sort of support those investors as best we possibly can before we make the leap to go international. Talk to me about the type of investor that's participating here. My guess would be that they're younger.

They're kind of more digitally native. They are attracted to these types of assets, et cetera. They probably don't have the capital base to go buy the Aston Martin or buy the Ferrari. Accurate, not accurate? Super accurate. To the point that I think you might have access to our metrics. I have to talk to our dev team. I have heard them pitch this one time before.

That's true. So I have a little bit of an advantage. So it's a we're at a point that we have, you know, the users that we have, these end users and these investors, they're, you know, early, early 30s, late 20s. They have financial education that I did not have when I was, you know, 25 years old, where they understand some really complex strategies. But they also know that this can live next to their crypto investments and next to their equities investments in a way that, you know, Mickey Mantle has a brand that's, you know, 80 years old that everybody really understands at this point. So to say this has value, we didn't have to educate that much on that part of it. We do have to educate on what happens with your money. So what we see is that people come in, they'll buy one or two shares, they'll wait until

they see some trading, and then they'll really put some more money into the initial offering. So it's young, they're digitally native, they're definitely mobile first, they're willing to take a risk, I think, on a brand that's not necessarily the household name, but someone that's doing something interesting and is transparent about it. That's what we've always tried to do from Jump. And we've seen that we've been rewarded in that the people that come on our platform, they stick around, they ask questions, they're in a way that, you know, just our Slack channel with our VIP users who are always giving us feedback on what we do as a business and what

the feature set should look like, have really driven what the future of this platform looks like. So it's been, out of all the consumer platforms I've worked on, this is number, this is my third startup where I'm working in consumer. This is the most engaged and the most educated user base that I've ever worked with. And they're also the most vocal. When they see something they like, they let us know. When they see something they don't like, they let us know. But now we're starting to develop it where it's almost like this big syndicate that tells us exactly what they want to invest in. And we're able to go source those amazing assets for them. And is there functionality today where, let's say, I'm like, hey, I'd love to own a piece of that Corvette or that Ferrari or whatever, and I can service that idea, and then if enough people get behind it, you guys will actually go source it?

Or is that more kind of informal today? Yeah, I think that we're doing this right now, like, you know, no commissions, no management fees. It's completely free. And you just touched on what will potentially be one of, like, the subscription models where it's if you have, you know, six people that all want to put this money in and have this syndicate and you want to auto-deploy capital to something specific you can't find, we'll go get that for you. So we have a lot of feedback that from from sellers of assets right now, where they'll come in and say, like, I have these three or four things I think are really interesting. I don't want to go the auction route. Would you guys be interested in doing this? And we always have those conversations, people in house to have those conversations nonstop. But we're seeing the other side develop now, too, where it's a group of, you know, five or six people where one friend is like the apex of their friend group.

And they invested on Raleigh Road super early. And then they put it in their group chat the same way happened with crypto, where it's like there's always that one person in the retail group that says, like, guys, you should put your money here. And we're seeing those sort of pockets start to develop for 10 or 12 friends that want something really specific and they'll come tell us and we're able to kind of put that into sort of the into the asset acquisition funnel and make sure we can get them something awesome. Absolutely. And I guess really the the key here for you guys is if you keep that customer happy or that investor happy with the assets that you provide, the user experience you provide, all of the kind of transparent information before they make a decision. All of that stuff goes to kind of having a defendable moat, really. It's if you keep them pleased and you keep them excited about what you guys are doing, just keep serving them value, and that's where you kind of take the business. Yeah, and the value for us is in more unique, interesting, cool shit, to be honest, and more of these things that activate this user base where they care about what we're doing. What's the craziest thing you guys looked at? We're going to get Steve Jobs SL55.

So Steve Jobs had this thing where he would do, he hated, he didn't want to have anyone know his plates. So every six months he would get a new Mercedes and he would have the paper tags on it and tear them down and like park sideways in the handicap spots. And he was just reckless with these cars. But the first one that he ever leased, he always did these six month leases, was about to go to auction and the owner pinged us. It was like, do you guys want it?

And we were like, damn, should we do this? But it was really early in the business. We weren't sure that it was going to be something that resonated with users. So we held off on it. but we see really weird stuff. Some of the books too. That's pretty cool. We have so much cool stuff that we get access to,

but some of it is like, how do we wrap a story around this? If we can't wrap the perfect story around it for our investors or if they haven't asked for it, it's something that we usually put to the side for the time being. Got it. What is the thing that was the weirdest?

So like that was crazy because it was cool. What's the weirdest thing where you're just like, I can't believe somebody just asked us if we would put this on our platform. We get a lot of weird people who send, they'll send, and they're awesome because they're part of our platform. I can't even talk crazy,

but they'll send us these really cryptic messages like we should meet in a parking lot type stuff and not really tell us much about what they have and it'll wind up being like a sword or it'll be like

some random piece but it's something that they do have it's cool to someone and I don't know we don't know if it's cool for everyone our whole thing is like

rallying people together to do something that they really care about it's always some weird stuff I gotta look through the archives for this but there's been like there's been like

the skulls and stuff like that where it's like I'm not so sure there's been some stuff from like shipwrecks and a lot of weird things where it's really

hard to authenticate it and it's hard to sort of wrap our heads around how that story is going to be told. So we put it to the side. We never say no. We always put it into the bucket of like, we should get back to these people. You know, we'll have the first conversation with something too creepy or if it's something that is going to be a little bit too polarizing or if it's something we have to meet in the dark parking lot, we usually say no the first time.

For sure. I love it. What are you most excited about in terms of like where you guys can go? Right. So you've built this product already. It's obviously working. um like when you look out 10 years from now what what gets you excited yeah we're excited about and me personally about the intangible so like i came from music and uh to me that's an industry

that the music business as a whole is is doing you know is the music industry is doing great the business of music is still in this weird inflection period so getting to intangible assets um similar to what like spencer dimwitty is doing and some of these people who are really thinking about themselves as as a piece of a bigger thing and being able to sort of set the price on their own worth on their own equity and do it in a way that it's not circumventing the powers that be, but it's taking out a service layer that lives in between fans and the things they care about. So the way that we think about the future is, you know, these cash producing assets that aren't something that we have to create dividends around. It's something that really has the

chance to skyrocket in value and have you be a part of it early. It's the idea that right now I could say, you know, I saw this band super early. It was, you know, I saw, I saw the Rolling Stones when they were, when it was a small, like, you know, these stories, like 70, 80-year-olds. It's like, I saw the Rolling Stones. They were in a random bar in London. You know what I mean? My dad grew up in New Jersey

and he said that the big thing to do, which speaks to his age, was go to Asbury Park and race around, right? And they were all into cars and all that stuff. And he says that one of the biggest memories as a kid

was when Bruce Springsteen got into the jukebox. He was like, yo, the dude from New Jersey is in the jukebox? People tell that story and it turns from three people that were there to like 100.

It's the Woodstock story. Everyone says they were at Woodstock. Like, if everybody that said they were at Woodstock was actually there, there would have been 100 million people there, you know what I mean? But it's also, like, there are people who get it early, and they want to get behind somebody's career or get behind somebody's idea. And they want to do it in a way where it's putting their money where their mouth is for real. Instead of just texting people, like, 10 years later, yeah, I saw that band when there was nobody in the room. It's like, no, I actually did, and I invested in that person's career, and now I'm up, you know, 12,000% on it because I was there early. So that's where I think about the future of what investing looks like.

it's really the ability for somebody to not have to go the route of the big machine to go completely independent but in a way where your super fans have agreed with the price that you set on what you're doing on what your idea is what your career looks like and they're participating along the way at every step that's always something that we've looked at as the end goal for us yeah and to me what's really interesting about this is um you are almost uh overly aligning incentives right if i'm a fan of some music i buy in let's say that uh the llc owns 10 percent of the revenue of this band for the next five years or something i'm gonna go to every single person in the world listen to this song 100 and at every party i go to i'm gonna go turn it on streaming

because it's just money that's it that's it and you really get the buy-in your your quote-unquote investor now has a financial incentive to see you be successful yeah and it really changes the engagement and the relationship between that athlete that musician whoever and their fans yeah and it's it's like a situation now where you don't you don't need that machine behind you of the record label or the league or whatever it is to push that narrative if people believe in you we've seen it now like the the way information travels is the small group can push this really really enormous thing and that's what we've always looked at as the end goal for us it's not a situation that we feel like you know people need to make a binary decision we want people to be

able to get out along the way but if you believe in somebody or believe in something you know the small seed can plant something really big for us our goal every time we add a new feature or do something new with an asset or launch a new store we want to make it into the group chat like that's such an important thing for us right now is to get into the conversation with you and your friends where you're the trusted resource for information and we're a part of that conversation so the same thing can happen with all these intangible assets for sure what um when you look out there what's like the one asset you're like man if we could get this we'd put it on the platform immediately there's a lot of stuff we look at like um we'll send the twitter army to go find it yeah i mean

That would be one of those situations where, like, we get a piece of Mars type of stuff. Like, I started thinking about how something that's really crazy that hasn't really become a thing yet. That's when I started to look at, like, this would really make a lot of sense. All right, so I'm going to pitch you because you said Mars. There is a – there's Tom DeLonge or whatever, right, from Blink-182. He's got this whole alien thing. He really believes it too, man. He really believes it.

But then a lot of people who listen to the podcast have also heard Bob Lazar, right, who comes on and talks about all this stuff. And one of the things that I think would be super cool, whether it's for your platform or just in general to own, is there's these pieces of material that have different scientific characteristics that, you know, quantum physics, et cetera. They just can't explain it. And to me, it's like the fact that that's sitting somewhere in like a lab is pretty crazy because no one really knows what's going on. And my guess is that they eventually end up in a museum somewhere. Dude, you're speaking our language. I think about that all the time. Like when I was younger, there was like the little mini museum thing.

There's all these pieces. it was like every element of the periodic table and every weird rock and it was all these little pieces of it it was like this thousand dollar thing at like um spencer gifts or brooklyn those weird mall stores and i always looked at that as like the grail like i wanted to i wanted to save all of my like paper route money to go buy that thing but that's the stuff that gets me super excited where you don't know what you don't even know what the value actually is or what it's going to be or what it even is if we can do more stuff like that and really do true ipos where you let the crowd set the price on it that is super interesting to us for sure yeah yeah and to me

the the part that makes that stuff interesting is one the story right which you keep kind of hammering on but also uh it it pulls in people through like a curiosity element right of you know the mickey mantel story okay i got it but like when you say hey it's worth 130 000 or whatever like wait what yeah that that sticker price that shock value a little bit as has driven some of the best conversations I might need to go in the shoebox to see what other cars

I got I mean we want to sort of have people run to their parents attic and look for stuff you know that's what I did that's the thing

that when I started looking around I started thinking like I'm having all these conversations and I'm getting these weird nostalgic moments and I started thinking

like oh man I think I had that baseball card or I had that thing I can go check but it works the other way too where you know

we had this really unique one of two Lamborghini inside the store this Lamborghini Countach maybe three months ago and it was one that even Lamborghini thought was lost

forever on the wikipedia page for lamborghini now it says owned by rally road and the investors but it used to say they're not sure if it ever existed this lamborghini countach turbo because there was no record of it wow we found the original sort of manufacturer we found that the the guy who sourced it for us saw in a picture in the back of a room somewhere so it was just this thing that tells us great story we put in the middle of the store it was valued at 635 000 but everybody walked in they go that's a million dollar car so it's like that weird disconnect between value price and the optics you know and that's something that well you're speaking into existence with a car like that yeah and then you start telling that story no matter they go this has to be worth

millions of dollars and we're like no actually it's only worth 635 right now the chance for it to get there is there but if you hear this story about this vehicle you can understand why it might actually make it to that point yeah yeah yeah it's um it really is uh pretty cool i i have a uh growing up i had a rookie card for uh frank thomas me too that was frank thomas rookies man that's like that's where this started that's crazy you'll love this story is uh so i i had a shoebox and my parents used to buy us you know baseball cards basically it's like a hey don't go do stupid stuff go play with these right and uh i remember i had this rookie card for frank thomas and uh i went to uh one of these um kind of like a flea market type thing and somebody there was into

baseball cards and so i remember walking up to him being like oh i got this card at home like what do you think it's worth and he was like i don't know the price but that thing's really valuable it's awesome so i get my hopes and dreams up right i i went to the store and i had my parents buy me like remember the little paper magazine or whatever yeah i looked at guy and all that stuff that was worth like ten dollars yeah right because there were so many of them printed like all stuff but i remember like that whole experience you guys are essentially providing that today for people in the digitally native world i mean you must have heard one of these interviews i did a long time ago because i said like one of the reasons that we started this

company was that frank thomas rookie card no for real dead serious i was in so i'm born in brooklyn but the place that we would always go like there was a in a staten island mall was a card stand and i remember when that card came out it was such a big deal for some reason i have no idea why because cell phones did not exist yet but everybody was talking about it and we went to the staten island mall and i spent it was like four i think it was 40 bucks when i bought it and it was like every dollar i had i was like 14 or 13 years old oh so you went you bought the specific car yeah i bought that i got it in a pack i was trying to i was buying like boxes of and i couldn't get one so i was like i've already spent 30 bucks on these packs i gotta go just i

gotta commit i gotta go buy it so we went and bought it and i'm looking at it though i kept that forever i still have it in my parents house somewhere and uh it was such a big deal it was such a big deal for some reason which is insane because why would anyone from the white socks matter to somebody in new york i don't remember why it was just such a big deal i actually don't even want to admit this but i'm going to tell you uh which means i'm going to end up telling all these people my parents knew that it was such a big deal for me that they bought like instead of a picture frame there was like these card frames yeah put the card in to protect it It has the back part to actually help it stand up.

I had that in my room until I was, like, 16 years old. And I remember one day my brother walked in, and my brother was like, yeah, dude, you're weird. No, honestly, you're a Jersey guy, but the same thing was happening in New York, dude. I probably had the exact same stand. It was probably the exact same time. We were probably staring at it at the exact same moment. That's awesome. All right.

Before I wrap up, I always ask some rapid-fire questions. What's the one regulation that you would change or improve if you could? I think the, man, this is like a, this is a loaded question. I think a lot of the way that Reg D is structured and what an accredited investor means, I think it will be rethought at some point soon. I think to say the benchmark is so high, but it prevents a lot of really unique offerings and unique investors from being a part of really cool stuff. Got it.

What's the most important book you've ever read? Man, that's good. I think like- I only ask good questions, man. Yeah. I use this one. I say this a lot. I talk about it in the office a lot, but The Nudge Unit, which is a really unique marketing book.

It's about this team in the U.K., this team of researchers, who their whole goal was to sort of make big splashes with small groups. And it started with a story. I'm going to butcher this story. Yeah, that's fine. About taxes in the U.K. And they found that there was only a small percentage of people who hadn't paid their taxes, but it was a big chunk of money. so they were sending out letters to almost at a micro level to people on individual streets and everybody would get the letter and it said uh and it said um 85 percent of your street has paid

their taxes this year or something to that effect and they got the conversion of people who didn't pay their taxes just knowing they're on the outside of that group it spiked dramatically and that turned into this whole unit of this whole group of scientists and sort of economists who thought about ways to sort of make big changes with small pieces and that's something that i reread a lot yeah that's actually really cool yeah i i've never read that so i have to read it but then there's other like the in school type stuff like that shaped me like the great gatsby type stuff that you're required to read in like fifth grade that definitely shaped a lot of my thoughts about the future i've talked about on the podcast before but uh i actually have never

i can't think of a single book in high school that we were supposed to read that i actually read like cover to cover yeah i just read the cliff notes stuff right and they would go in and be like i think i got it we're on the same page the cliff notes were out that was a thing like you couldn't have them be seen in your backpack type stuff you know super not allowed right but that also led to like a lot of like i only like i read malcolm gladwell books in college and i mean like there's a lot of really stuff that is looked at as sort of more pop culture stuff and real real literary sort of uh figures look maybe look at a little bit differently it's for the masses but that stuff that always that was like the first it was more interesting more

interesting yeah the book i remember that they were uh there's two books a fair night 451 and dante's inferno and they were like bashing it over our heads and i was like yo i do not want to read 400 pages of this right now 15 years old you're like look man this is a video all right we talked a little bit about it uh aliens believer non-believer i think i think it's it's it would be ignorant to think that we're the only people in this and that we're a small speck in a small galaxy to think that this exact dynamic doesn't exist of suns moons life and somewhere else is insane i'm banning this answer this is the most popular answer i'm gonna say no Because everyone says that it's like selfish of us to think that.

No question. Right? But the part that I keep going back to here is – so I'm bringing a guy on the podcast. This will go out before he comes on. He claims that 780,000 years ago, there was a – I'm going to butcher it. But a post-biological extraterrestrial artificial intelligence alien craft that blew up near Earth. and all of this like uh materials and stuff that now people are showing up with come from this explosion anything's possible that being said if you have to add that many words to one noun it

never usually is true he's dming me on twitter and i said hey bro hold on pause and i had to go google post biological yeah i forgot half what you said alien craft i don't know that being said who am i to say it's wrong i have no idea anyone knows rats 780 thousand years ago so i have no idea. I mean, crazy stuff. All right. What one question do you have for me to finish up? Man, when you get when something like today, like a precipitous drop in what people look at as the bottom, what's happening? It's happening again. When you get those phone calls, what's the first thing that you think when you have to answer a question of why? All right. So the context here is that we're recording on a day that Bitcoin just dropped about eight percent or so. Zuck is

going to, um, uh, testify in front of Congress and, uh, the futures are expiring in a couple of days. And so, uh, short answer, nobody knows why. Right. I mean, there's like, there's a bunch of things that kind of add up to why, but when people call, uh, two things go through my head. One is, uh, 95% of those people don't care except for there's a 10% movement in either direction. Right. So a big drop, big, big rise. Uh, so it's always funny to me to see like who the people are. And the second thing that jumps in my mind is they're looking at this such short term, right? I look at it as it's very similar to venture investment, right? In the sense of it either works or it doesn't.

And that's a very binary outcome. And so the price movements, like all this stuff is tied to that binary outcome. And so it's like, yeah, you could look and I could call you every day and be like, oh, what happened today? It went up 5%, went down 2%, it went this. is that you and I all get really, really annoyed and have a headache by the end of the week, right? Let alone doing this for like two years. And you start your day like that too.

But it's always good to hear somebody say like, listen, nobody knows. Anyone that tries, in my mind, you try and tie a specific event to any up or down movement of anything, you're just reaching. It's such a reach unless there's really a very, very binary reason.

So to hear what I consider an expert in the space say there are times where it's like you don't, when people will not know is almost comforting. It's comforting for my portfolio, for my crypto portfolio. Okay, so one, definitely not an expert. But two, let's look at the public equity markets, right? So here's the corollary. If I said to you, X company is going to report earnings, and they're going to beat expectations, and they're going to increase their future outlook, you would say, wow, stock's going to rally, right?

Not necessarily. But there's a lot of times where it doesn't. Yeah, because, I mean, you're talking about a lot of – And it's because of something else. And you're talking about, like, every indicator for the future, they're basing on the past. So when I think about, like, a CNBC, I get comfort in, like, in pomp going on CNBC. Put on your blue suit, your TV outfit, and going on TV. I'm more comfortable seeing you, someone I know has a true opinion on something, isn't trying to connect dots, telling me something about potentially about the future.

I feel way better about it than having to try and connect dots on CNBC. I'm going to have to start selling the tie, man. I wear one tie, but I got to start selling it. You got the collection. You got the pomp collection, man. It's the only way. You got to merch. I'm going to IPO it on Rally Road.

I'm down. Listen, I think we have a lot of interested investors who would get behind that. All right, man. Listen, we'll have to do this again. I appreciate you coming on. Likewise, man. Hey, everyone. Pop here.

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