The Prof G Pod with Scott Galloway - Crypto, Web3, and DeFi — with Mike Novogratz

Episode Date: November 18, 2021

Mike Novogratz, the founder and CEO of Galaxy Digital, an investment firm focused on cryptocurrencies, blockchain technology, and digital assets, joins Scott to give us a macro view of the crypto space. He tells us about the various use cases of Bitcoin, Ethereum, and NFTs as well as how to think about investing in them. Follow Mike on Twitter, @novogratz.  Scott opens with his thoughts on conglomerates and offers a prediction for 2022. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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NMLS 1617539. Episode 117. The atomic number of Tennessee. What is the number one dating site in the south 23 and me too much go go go welcome to the 117th episode of the prop gpodPod. In today's episode, we speak with Mike Novogratz, the founder and CEO of Galaxy Digital, an investment firm focused on cryptocurrencies, blockchain technology, and digital assets. We actually had Michael's sister on the program. So I think it's the first brother and sister.

It's very exciting. That's one of those homes, like one of those crazy overachieving homes. They've done really well. I remember we had Jacqueline Novogratz on the pod and literally at the end of the pod, I don't know if we got this on tape, she said, could you use a hug? I've never been offered a hug over a podcast. And one, it struck me that this is a very, I don't know. I think she generally meant it. She's a very decent woman. And also the fact that she could sense what like a chocolate fucking mess I am over a podcast kind of frightened me or rattled me. But anyways, her brother's off making billions

in crypto and we'll speak to him. We'll also discuss the who, what, and why of the metaverse with Michael. All right, let's bust into what's happening. What's in the news? A few notable breakups in the business world have reporters saying breaking up is hard to do. They're so funny, aren't they? The turn of phrase, those crazy media reporters. We're going to explain why breaking up companies can actually be a good thing. As you probably know by now, GE, General Electric, once the most valuable company in the world, and Johnson & Johnson, also one of the most valuable companies in the world, are splitting up their lines of business or they're breaking into lines of business to become individual firms. Japanese conglomerate

Toshiba also announced it will split into three different businesses in 2024. I thought Toshiba is kind of an unusual brand. It's not as aspirational as Sony, but it has some of that Toshiba or Japanese manufacturing excellence. I'm super excited. I wanted to go to Tokyo for the holidays. I did an interview with a Nikkei. Let's talk about Scott. Let's talk about Scott. Well, okay. Okay, if you twist my arm. So I did an interview with a Nikkei today talking about the metaverse. I think Tokyo, I don't want to say it's the most underrated city in the world, but people talk about London and New York, New York and London, and occasionally they throw in Paris or Beijing and Shanghai. I think Tokyo and Japan are just fantastic places. I'm sure they're great places to live. I don't know. I've never lived there, but they're fantastic places to visit. I always thought that the tagline for Alexis, the relentless pursuit of perfection is evident the moment you get off the airplane in Narita. It's just this culture is so fascinated with perfection and art and the gardens and just love Japanese culture. I love the food. I just find everything. It's just such an impressive people and nation. Anyways,

can't go to Tokyo. I'm going to be in Thailand at some camp with elephants, and I'm sure there'll be a documentary similar to Blackfish showing what an awful, ugly American I am taking my kids to ride elephants somewhere in Thailand. Does that sound a bit touristy? Does that sound like I'm really leaning into my privilege? Well, I am. Why? Because I can. Anyways, I don't know how I got there about Tokyo. Back to Toshiba. That's how we got here. Anyways, Toshiba is also breaking up into three different businesses in 2024. So what's happening here? Markets are obviously cyclical, and that applies to corporate strategy. In traditional industries, we are in a period where focus is seen as a virtue. Companies should do one thing and they should do it

really well. That hasn't always been the case. There's a point of view that putting different lines of businesses together under one corporate umbrella can be a good thing. Who is it a good thing for? I think is the question. At the extreme, when a single corporation unites several unrelated businesses under one roof, we get, wait for it, a conglomerate. You can generally recognize a conglomerate if you have no idea what a company does. Hello, General Electric. And that that is there's a difference between the conglomeration or the acquisition of assets that sort of makes sense and provide immediate synergy. I think if Google acquired Android, you can see how that might make sense. You can absolutely see how them acquiring Waze makes sense. When ITT has a fertilizer division called OMSCOT and they also own the company that makes peanut

butter or when Clorox owns Charcoal and then also owns Kingsford and also owns Hidden Valley Ranch Dressing and also owns, I'm trying to think what else they own that made no sense. Or when Sarah Lee owns Coach or when Campbell Soup owns Godiva, you could say, well, there's synergy around distribution. Maybe, maybe. But when a conglomerate sort of begins bringing on businesses where there isn't obvious synergy, they'll bullshit the market and say, oh, we have synergies around HQ. Essentially, the reason they conglomerate is the CEO is typically run by a guy in his 50s or 60s who, to be a CEO, you have to be a bit of a narcissist. And that is you have to love the fame. You have to love the affirmation you get from being a baller professionally, because you pretty much have to sacrifice almost everything

personally. And there's this cartoon of the guy or the gal who has everything. I've worked with and know a lot of CEOs. It comes at a huge sacrifice. Obviously, enormous compensation, but it comes at a real strain. As a CEO, your inbox is never empty. So they like to make more and more money and sit on top of bigger and bigger thrones overseeing more and more of the seven realms. And so acquiring companies makes you feel big, makes you feel like a baller, makes you feel strong like bull. And also it smooths out earnings, good diversification of different business units. The health unit doesn't do well, but your financial services unit does better. And also it creates so much complexity that what you

find is organizations are able to kind of fudge or the numbers become more malleable, as in the case of Jack Welch, who's gone from being the best CEO in history to someone who basically set up Jeffrey Immelt for extraordinary failure and was kind of cooking the books. And I realize that's a harsh statement to say about someone who's no longer around to defend himself, but it's increasingly looked like that the managed earnings at General Electric that resulted in the most valuable company in the world were more than just managed, they were cooked. And here's the thing, investors don't need CEOs to diversify for them. If I want to buy a health tech company, I can do so on my own. If I want to

buy a jet engine company, I can do so on my own. I don't need them to diversify for me. In some, the conglomerate strategy doesn't make any sense. If you're looking for a digital OS that has a bunch of different components, it might make sense. And if you're constructing a digital corpus such that you can make a super app in one interface, that makes sense. So it might make sense for Tencent to have social, to have gaming, to have e-commerce, to have transportation all under one roof, to have payments, because they can present it in one OS, one interface, and there's synergy around data. And they end up, these super app companies across the world, whether it's Joe in India or Alibaba in China, they have some of the greatest revenues per employee.

There's real synergy there. But a company buying an unrelated business just to smooth out earnings or to bulk up... When I was on the board of the New York Times, and I constantly bring that up because I think it makes me feel more relevant, and I'm desperate for your affirmation. Anyways, we owned amongst... In addition to owning a newspaper called the New York Times, we owned all these regional newspapers. There's probably synergy there. You'd like to think there's synergy there, whether it's buying print, whether it's having training around editorial, whatever it might be, you can make an argument. We also decided to buy the seventh tallest building in America,

and that is we financed and built our own headquarters. So at one point, that building was worth about a billion dollars and the whole company was worth about 1.7. So we were no longer a newspaper company or a media company. We were a REIT. We own 17% of the Boston Red Sox. My favorite was the CEO used to say it gave us exclusive access to proprietary content, sports content. I'm like, no, it doesn't. We don't cover the Red Sox better than anybody else. As a matter of fact, the New York Times did a shitty job of covering sports purposely. One of the great moments for me professionally was when I went on the board of the New York Times, they invited me to something called the page one meeting. And basically all the, I guess it's the lead editors for every section go around and kind

of pitch their story to be the lead above the fold on the cover of the New York Times, which arguably is some of the most influential real estate in the world. And everyone would go around and say, well, Hillary's in Africa. Someone else would say, well, the Fed is thinking about cutting interest rates. And then the sports guy would pitch his idea and everyone would just roll their eyes. The New York Times just had absolutely no patience for the Joey Bag of Donuts running the sports section, which was kind of cracked me up. Anyways, Boston Red Sox made absolutely no fucking sense for us to own 17% of that. We also owned about.com, which again, made no sense. That was such that the CEO and the chairman could get on an earnings call and say that 17% of our revenues were now coming from digital. They were basically using about.com

as an accessory to digitize an analog outfit. There was no synergy there. We weren't learning anything. We all of a sudden decided we were venture capitalists and ultimately ended up spinning the thing after Google did a panda and overnight our revenues were down 40 to 60%. I think we ended up selling it for less than we bought it. Who wanted to sell it when it was worth a billion dollars? First name D, last name AWG. Anyway, anyway, these conglomerates don't make any sense because what happens when you end up with this mishmash, shittiest business in your portfolio, i.e. the newspaper business that isn't growing, and we're going to assign that multiple to the entire business. So what you end up with, and this is why J&J and General Electric are splitting up, the disposition of assets or the spinning of assets, when your multiple reflects the worst business, what you end up with is you end up with an accretive move. And that is

the G's healthcare unit is a great business. G's aerospace and jet engine or jet aviation business is a great business. But what General Electric is trading at now is basically the multiple assigned to a conglomerate that no one can fucking understand, which is not a great multiple. The same with J&J. J&J's healthcare group is an amazing business and has played a seminal role in the fight against the novel coronavirus. That will trade at a greater multiple likely than their consumer business. But typically in a conglomerate, again, there's no obvious synergies. They take the multiple on the worst business and assign that to the whole business. So breaking up makes a lot of sense in these conglomerates. The other side of this coin, what we're about to see in 2022, and this is one of my big predictions for 2022,

is we're about to see the mother of all M&A, specifically around super app. And that is, they have some super apps across the world, but we really don't have a leader in the largest economy. There's no obvious super app, I would argue, in the US. You could say, well, is it iOS? Is that a super app? But there's no interface that takes us to payments, social, e-commerce, and media that kind of does it all, similar to what Tencent sort of does and a few others around the world are attempting to do. I believe you're going to see Jack Dorsey purposely find God and start cleaning up his user base and kicking off a bunch of accounts, which will suppress revenues. I think they will throw up in their next earnings. The stock will go below 40 bucks and he will reunite

the sister wives here, specifically Square and Twitter, such that he can have one office to go to all day. And that will be sort of a mini 10 cent that will emerge and get the marketplace excited. I think it's likely you're going to see one of these FinTech companies start acquiring media or maybe even e-commerce because they have such deep pockets right now. But we are going to see, or you are going to hear the term super app a lot in 2022. So in sum, there is a deconglomeration of spins with companies that make no sense where the whole has become less than the sum of its parts. So it's a creative to spin these things. For example, remember who used to own PayPal? eBay. And guess what? PayPal is now worth $250 billion and eBay is worth a lot less. So spins can be great for shareholders.

They take a lot of discipline and they take a CEO shareholder focused as opposed to being ego focused. But we're about to see things go the other way. We are going to see these financial services companies and these FinTech companies with exceptionally fully valued, i.e. overvalued stock go shopping because they can monetize. Pinterest is a great product. It's a shitty business. And anyone who's been on that platform recently looks at it and goes, okay, they polluted this thing with a bunch of ads on flooring and things that just aren't very elegant. And they don't get a lot of money for it. Whereas those half a billion monthly active users can probably be better monetized across a vertical

e-commerce offering or payments platform, whether that's PayPal or maybe Shopify. I don't know. We'll see. So the old guys, the old guys, the old conglomerates breaking up, but Leviathans, on the other hand, specifically FinTech in the race for super app, you're about to see some very, very odd weddings between the Starks and the, I don't know, the Prince of Doran. I'm getting my names wrong. You get where I'm going. You get where I'm going. But you're going to see the mother of all conglomerations across 2022's business story of the year. And that is the race for super app.

Stay with us. We'll be right back for our conversation with Mike Novogratz. The Capital Ideas Podcast now features a series hosted by Capital Group CEO, Mike Gitlin. Through the words and experiences of investment professionals, you'll discover what differentiates their investment approach, what learnings have shifted their career trajectories, and how do they find their next great idea? Invest 30 minutes in an episode today. Subscribe wherever you get your podcasts. Published by Capital Client Group, Inc.

Hey, it's Scott Galloway. And on our podcast, Pivot, we are bringing you a special series about the basics of artificial intelligence. We're answering all your questions. What should you use it for? What tools are right for you? And what privacy issues should you ultimately watch out for? And to help us out, we are joined by Kylie Robeson, the senior AI reporter for The Verge,

to give you a primer on how to integrate AI into your life. So, tune into AI Basics, How and When to Use AI, a special series from Pivot sponsored by AWS, wherever you get your podcasts. Welcome back. Here's our conversation with Mike Novogratz, the founder and CEO of Galaxy Digital. Mike, where does this podcast find you? I am in our new office, 300 Bessie, down in a Wall Street-like area, right on the water. So let's get into your domain expertise here. You were sort of in this before it was cool. You were sort of in crypto. What was your background in financial services and Goldman? You're successful and you decided

to kind of go all in on this crazy thing called crypto. Give us your general macro view or the elevator speech on why you're so excited and decided to invest your own finite human capital in the space? Yeah. So when I first invested in crypto, it was an asset trade. It was an idea. And I figured, cool speculative idea that was going to go higher. I then either smartly or foolishly talked about it in public. And the next day I was on the cover of EFT, Fortress's, Novogratz's, you know, Bitcoin's going to a thousand. And ever since then, I've been asked constantly to either talk on TV or do lectures or podcasts.

And that forced me to try to understand really what was happening, just so I wouldn't look like a fool. And the more I dug in, the more I was impressed. I was impressed with the people I met. They were purpose-driven and mission-driven. It wasn't all about the money, as the press often said. It was about rebuilding the financial infrastructure

of the world in a transparent, more egalitarian, and more fair way. It was literally an FU to the system from millennials and Gen Z who said, we don't like what you guys have done with the world. We don't trust governments, so there's a libertarian streak. We don't trust the rent takers

who keep kind of winning even when they should be losing. We think about it, it came after the financial crisis, right? None of the big banks really suffered. They got bailed out. And that pissed a lot of people off. And so crypto at its core was a little man's revolution. And I got charged by that spirit. And I had this unofficial role of spokesperson, of trying to take this idea of crypto and make it understandable to institutions and bring them into the tent. And I also had a role to play, or in my company had a role to play, of trying to give some guidance and counsel to these new, exciting businesses that at times were naive, thinking we're going to live with that outside of the structure of any government.

And so I started Galaxy with this idea that we would play those two roles. And so is Galaxy essentially a hedge fund investing in different parts across the crypto universe or are you investing in companies? No, Galaxy is an immersion bank. We use our own capital to invest. We've made over 150 investments in the ecosystem from security to exchanges, to coins, to protocols. But we also have an asset management business, sales and trading, or, you know, client sales and trading business, a mining business, an investment banking business. And so the idea is use our own capital, understand the space, and then take those lessons and bring them to the different client bases.

And who's your old model? Are you trying to be the Goldman of crypto and fintech? Like, what's the vision? It started out with this idea of Goldman or even Drexel. You think about what Mike Milken did. He really credentialized, you know, high-yield financing, junk bonds, and made it a thing. And so we kind of thought, how can we be help in the credentializing process?

I set it up at Goldman because I had worked there. I just love the culture of bringing in bright, young human capital and setting them, trying to kind of create a culture of excellence. But now we've bought BitGo, which is the second largest custodian in the world, and the biggest provider of wallet services. And so the idea is to understand that this isn't a Wall Street

or a tech thing. It's a hybrid. And we're trying to be this marriage between Wall Street and tech. Can you attempt to break down the different, loosely speaking, can you bucket the different types of asset classes or investment types in which you're most bullish or bearish on? Sure. So I'll start with kind of three big buckets and then I'll take a second bucket and break that along. So there's Bitcoin, right? Which is the best brand in the space. If you think about it, Bitcoin might be the best brand created in the last hundred years. It's owned by over 200 million people. It's 13 years old. It's worth a trillion too.

The technology isn't what gives it its value, right? Technology is pretty cool, right? Satoshi's white paper created the first digital signature that you could encounter fit. Like that's my simple macro guy's view of what the genus was. And that created scarcity, digital scarcity. And so originally Bitcoin was going to be digital money, but it quickly became a digital store of value or digital gold.

And so it's being adopted by more and more people as a place to store value. So I think that's its own lane. The more exciting lane in lots of ways is what we call Web3, the Internet of Value Exchange. And so that's Ethereum and the Ethereum lookalikes. So that could be Solana or Terraluna or Avalanche, lots of them. And that lane is trying to be the base layer of them. And that lane is trying to be the base layer of trust. Think about a global,

decentralized supercomputer that processes and authenticates data. That's it. So we're building a shared supercomputer that can share this giant Microsoft Excel spreadsheet amongst lots of people. So one guy doesn't control the spreadsheet.

On top of that is where the magic happens. And so now I can use this blockchain technology and take it to finance. There's a whole bracket called DeFi, decentralized finance. So I can create a driverless insurance company or a driverless exchange or a driverless fixed income market. When I say driverless,

this is code. It's open source code that the contract's all priced in, the activity's all coded into the, and it lives on a blockchain. And so now me and you can exchange in a peer-to-peer fashion equities or tokens

or whatever we want on these exchanges. That in the long run is going to revolutionize finance. And it's going to because it's a better product. It settles atomically, which means there's no settlement risk. It's composable, which means I can build on top of what you built. That's allowed this explosion of innovation to happen.

I think about this all the time. You had the iPhone, pretty cool, but it was the GPS on the iPhone that gave us Uber and DoorDash and all the other delivery apps. The apps, yeah. Yeah. And so think of Ethereum

and the other base level trust as the iPhones. And on top of it, you have all this being built. And then you have, you know, what the NFT space did. It really credentialized this idea that we can move out of the crypto sandbox. Because DeFi was mostly crypto to crypto. It was like this giant crypto experiment. When we started with NFTs, it was like, wait a minute,

I can change the way people celebrate basketball, memorabilia, or art, or branding. And soon enough, you'll have NFTs for your healthcare records. And so that triggered in people's mind the idea that this second bucket wasn't an asset play like Bitcoin, but it was indeed a tech play. It was this new generation internet. And investors around the world said, I can't miss the internet.

And so we've seen a ton of money pour in. But more importantly than money, we've seen a ton of human capital pour in. But more importantly than money, we've seen a ton of human capital pour in. If you looked at my analyst class or my summer analyst class that I hired at Galaxy, it's breathtaking, the talent. And we could have hired it three years ago. And so now you've got the best engineers moving into this field. And usually in my 30 odd years of investing, you follow the smart young kids, you do pretty well. Yeah, agreed. So I want to put forward a few theses and you confirm or push back on them. So I look at the notion of having smart contracts. So getting a mortgage is an inefficient process. And when you have humans involved, you have certain biases and you take out that friction, you take out that bias and you just make the process less friction, more money for

the original creator, lower cost, lower fiction for the end users. I get that. When I hear that argument, I then go to, to me, that all sounds like a bearish argument for Coinbase. Isn't Coinbase AOL? Doesn't eventually it go away if we're really talking about decentralization of these platforms? Well, yeah. I think about this a a lot when I tell my own team, hey, we're going to have to eat our own arm to grow a new one. These transitions don't happen overnight. And so the early adapters, they're going to trade on chain. They're not going to give Galaxy their money to put in a Bitcoin fund. They're just

going to own their own Bitcoin. And they'll probably own it on their own treasure or they'll custody it somewhere. But a lot of guys will do their own custody. But pulling in pension funds and institutions, it takes a lot of time. And so just like some people still use dial-up phones, I think in 10 years, you'll still have a big asset management business where other people are paying you to take their risk in this new technology. Coinbase's broadest model is retail,

and they're making 2% to 4% on retail trades. Everything about me thinks that is going to shrink, shrink, shrink over time. What Coinbase has going for them, and they did a brilliant job, they've got an amazing brand, they are the brand in the space. And because they've now gotten a valuation and raised tons of money, they're hiring a full- service staff of great people. And so, you know, they've got a big chance to like, they came out with the NFT platform much faster than anyone else. It wasn't like they were the only one who thought about it. Right. We're fighting them all

the time as they're moving into the institutional world. Right. We compete in custody, we compete in trading, we'll compete in lending, in venture. And so they're the 600-pound gorilla in our space. So a lot of this, and I know I sound like a boomer, but I look at a lot of these assets, and I just kind of shake my head in disbelief. But having said that, I also want to participate, because what you said that really resonates is when you have this amount of human capital going into any sector, there's just going to be some enduring concepts in companies. There's just too many bright people working in this sector. There's not going to be something that comes out of this. Just like the internet or junk bonds or what have you. Say you

have $100 and you have, you can go into kind of the, I don't want to call it the safer stuff, but you called Bitcoin the greatest brand or one of the greatest brands in recent history. I like the way you think about that. There's Ethereum, the kind of second level protocols, there's NFTs, there's the companies. Where do you think there's asymmetric opportunities to the upside right now? How would you manage your portfolio of investment in this space? So broadly, I would say put a third in Bitcoin, a third in Ethereum, and then a third in a collection of venture bets. And most people don't have access to venture bets. I use our stock, Galaxy Stock, as a good proxy for that other space. If you really want to dig in deep, you can do your

research on Twitter. And there's a bunch of coins that come and go that get excited and run up. But that's a full-time job where people on the inside have a huge advantage. One of the things that actually intrigues me is we've had this concept of the democratization of finance, that everybody should be an investor. And as a guy that spent 35 years learning how to be an investor, I don't think that's a good idea.

In the same way I wanted you to come to me to drill your teeth or I want to go to a real doctor when I'm sick. It takes a lot of painful learning and work and education to become a great investor. And so there are some great investors that are learning on the internet. There's great education online.

But a whole part of this new generation, the YOLO crowd, assumes this is easy to make a lot of money. I'm quitting to be a full-time crypto guy. And I'm like, be very careful. Like, you know, you better have gone to some university of risk, you know? It doesn't mean necessarily, like some training in this process of how to think about risk.

And so I do think we're going to see a gigantic washout at one point of this idea that it's easy to be an investor. It just takes a big commitment beyond those first two. Well, it takes stomach of steel, right? I mean, this stuff is, this is not for the faint hearted. Well, that's what people don't understand. The volatility of crypto is roughly 100%.

And so that's 15X trading currencies. And the volatility of these smaller coins can be 200%. And so that's 10 to 20x equities, depending on which equity you're looking at. It's crazy that people trade this with leverage. It's literally the definition of insanity. Yeah, I agree. The one thing you didn't mention, and I'll put forward another thesis and you tell me where I've got this wrong. People talk about Bitcoin and Ethereum as a stores of value or

payment mechanism, however you want to think about this, as being enduring. And there's a lot of cynicism around NFTs. And I think everything goes to instinct. And I look at NFTs and I think they're no less or more crazy than buying a reprint or a signed 145th copy of a Picasso and that people like to signal scarcity. It makes them feel like ballers and makes them more attractive to mates, and that these NFTs might be interoperable across different metaverses. I wonder if NFTs will be more enduring than some of the other assets. What are your thoughts on NFTs? Oh, I think the NFT space is just getting started. It's just getting started for a couple reasons.

Why? A, it's brand new, so people are feeling it out, right? A lot of the NFTs people buy today won't have value in the future, but some will have a lot of value. But the architecture is going to change the way we think of things. And so right now, if you bought a really cool NFT, let's say it's a piece of digital memorabilia, or it's a piece of art, it's a piece of generative art, you can show it to me on your phone,

or maybe have a cool TV screen to display it. But in a few years, I'm going to hit a button on my glasses, and they're going to switch to AR. And you might be wearing a cool NFT jersey, or a piece of jewelry that was created by an artist, a 101 or a 110. It might float right above your shoulder. And so as we move into this metaverse,

what we call the metaverse, the idea that you can have digital identity, authentic digital identity, is going to be worth a fortune. We're going to go to nightclubs where it's 70s night and everyone's going to have to wear digital 70s gear. And some might be like really expensive, done by Gucci. And some will be, you know, H&M. In the same way, I talked to one of the people that run one of the biggest dating sites,

and he was like, dude, in five years, in three years, instead of how tall is the guy, let me see his NFT collection. It's going to be a signaling. And you're seeing that already. I just want to go back to Pangaea or Lotus from the aughts. I don't want to go back to the 80s. So, I'm actually, I believe the metaverse is another giant head fake in technology. You sound more bullish on it. You think that we are all going to spend more time in a quote unquote metaverse and that NFTs are going to be the ultimate signal, like a Ferrari or what have you. Well, it's interesting. When I met these two young heads, I had them come out to Jackson Hole, and we were debating.

And I was like, yeah, we're going to visit the metaverse like we visited in the amusement park. And they're like, dude, you're such a boomer. We already live in the metaverse. And so a 20-year-old of you who grew up with a phone already thinks they're in the metaverse. If you look at about a time they spent video gaming. Twitter, Epic, Fortnite, yeah. Yeah. You know,, Fortnite, yeah.

Yeah, this is their life. And I like to kid around, I say, identify as Gen Z. It's hard to identify as Gen Z. I admire that generation. I like try and understand it. And the new Gen, they call Gen Glass. From age two, they've been tapping on glass. And so a massive investment in human and

financial capital that will, it's just hard to believe it won't result in enduring concepts, technologies, firms, equities, or investment opportunities. Who's on the wrong side of that trade? Who gets hurt the most? Is it the Goldman's that don't pivot fast enough? Is it traditional banks? Is it insurance companies? Who is ground zero for the disruption from the massive investment in fintech and crypto? I think the banks will be able to move fast enough. These banks have 100 years, 50 years, 30 years of legacy financial infrastructure that both regulatory infrastructure, technological infrastructure. That's the definition of technical debt, right?

I just don't think they'll be able to shake it when you're competing against a piece of code, right? And so it's not that they're going to go away, right? What places like Goldman Sachs or Morgan Stanley have done really well for years is given people great financial advice, given companies financial advice, giving companies financial advice, giving individuals financial advice. I think there's still a role for giving great financial advice. Like I said, I don't think everyone should be their own portfolio manager. But the monopoly on the infrastructure of trading and insuring and pricing that risk is going to get stolen from them.

And that's going to get decentralized. And so you should be scared if you're for the New York Stock Exchange, you should be scared if you're any exchange. There's just no way they'll be able to keep up with decentralized exchanges. We'll be right back. Support for this show comes from Indeed. If you need to hire, you may need Indeed. We'll be right back. quality candidates fast. Listeners of this show can get a $75 sponsored job credit to get your

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That's www.alexpartners.com slash V-O-X. In the face of disruption, businesses trust Alex Partners to get straight to the point and deliver results when it really matters. So you're involved with NYU Langone. You're involved with your alma mater, Princeton. Tell me if this idea has legs and if and how I'm thinking about this correctly or incorrectly. NFTs to a certain extent are trying to monetize a new form of scarcity and signaling. What if Princeton issued a coin and said, anyone who owns this coin, as long as they meet minimum standards, can take classes that add up to some sort of accreditation, is involved,

can have lifelong learning, can be part of the Princeton community. And they issued 100,000 coins. So what if NYU Langone said, anyone who owns a coin, we're going to do away with all insurance, we're going to do away with all admin, which are huge points of friction in the healthcare industrial complex. And anyone who owns a coin for their whole family gets cradle to grave healthcare. I imagine as someone who has kids that I might gift that coin to my family to know, okay, they're all set in terms of healthcare. I imagine as someone who has kids that I might gift that coin to my family to know, okay, they're all set in terms of healthcare. Do you think there's opportunity for a coining of

what I'll call aspirational luxury where they can pull forward sort of like a Bowie bonds on steroids where they try and monetize the scarcity? And you said Bitcoin's the best brand in recent history. I think Princeton and NYU Langone are amazing brands. Do you think there's opportunity there? So Princeton wrestled with this a lot, not within the coin side, but like, do you have this very elite brand? And should you put classes online?

And should you make it more accessible? Or does that dilute the brand? And so I think that's still a question, but I think your idea is a great one. And in a world that's growing, where these universities have a stated commitment and they are trying to be more egalitarian, it's something that they all should consider, right? If you look at public education or higher education, not public education, it's falling off, We have 4,400 colleges in America. That's

an insane amount. When you get below number 200, the quality starts slipping pretty fast. I think you're going to see more people learning online, more people learning in different ways. And so having these tokenized credentializations is an amazing idea. Won't regulation... Everyone complains, all the banks complain about regulation in 2008. Fast forward 13 years later, they're making more money than they've ever made. Isn't regulation

going to be a good thing as long as it's thoughtful for this space? Isn't it needed? A hundred percent. So the caveat, as long as it's thoughtful. There's a lot of crap

that goes on in our space. And I don't want that to sully what I started this conversation with. The core of the space are really purpose-driven and principle-driven people that are trying to rebuild the system in a way that they think is more fair. And so I would hate that the shysters around the edges

and the crap that happens around the edges, you know, sidetracks what I think is a real revolution. And so you do. Regulators need to protect the little guy. That's their job. But they've got to be very careful because they've done a shitty job of it. And so I keep telling the crypto community they need to self-regulate. If you're one of these groups that launch a token and you own a bunch of them, you should report when you're going to sell your own tokens. If I sold Galaxy shares and didn't tell anybody, I'd go to jail.

But I could be the head of Token ABC and quietly sell all my shares like Charlie Lee did when he was the founder of Litecoin. And then he went on CNBC. After he had sold them all, he said, oh, I don't own any. And of course, the thing collapsed. And he's like, you know. What do you know? That guy should go to jail or at least get beaten up.

All right. Yeah. I've always thought the SEC is there to protect management, not investors. But so we have a lot of, our listenership tends to skew younger. And I think a lot of people listen because they're looking not only for advice around how to invest their financial capital, but more than anything, how to invest their human capital. So sort of advice to your 25-year-old self or advice to a 25-year-old who says, you know what? I buy into what Mike's saying. I think this is the future. How do I prepare for it? What courses, what classes, what companies ideally do you want to start tracking or trying to throw your resume into? Help courses, what classes, what companies ideally do you want to start tracking or trying to throw your resume into? Help me, help this younger generation, give us a little

bit of a playbook or best practices and say, I buy into this. How do I get involved? How do I prepare for this world? Well, so the great part is there's a huge amount of information on YouTube and Twitter, right? And so you start following the thought leaders, the Talek, Joe Lubin, Brian Armstrong, Chris Dixon. And so there's really amazing stuff that's shared both publicly and day-to-day on Twitter,

publicly on other forums. There's 25, 30-odd companies that are real in the space. At least, you know, the big venture companies are hard to get into, but those are amazing places. That's A16Z and Paradigm and Polychain. So few jobs. That's kind of not realistic, right? Yeah, you're right.

And so Coinbase, ourselves, any of the crypto companies just being part of, we're now 510 people. We think we'll be 800 by March. And so we're hiring quickly, as a lot of our competitors are. But I think there is a self-education that's going on. And there's a lot of resource on it. What's unique about this as well, it's global, right? We've never had global markets before, right? We've got U.S. bond market, Japanese bond market. I guess gold was one of the few global commodities in oil,

but now you've got compound, which is a global interest rate market. You've got Uniswap, which is a global exchange. And so really, you know, behooves people. Well, I would tell a 25-year-old anyway to travel. Like, forget crypto for a second. Like, go to Europe, go to Asia. Try to understand how these other cultures are. Because the world is, especially in the crypto universe, a very global one. So your market cap right now, I just looked this up, is about $3 billion. For the life of me, I can't figure out why Goldman or Morgan wouldn't buy you. It's actually $11 million.

Oh, sorry. We have a two-share class thing. And so that's the public- The difference. Yeah, that's the public. The difference. Yeah, that's the public float. The rest of the- Good for you, Mike. All I have to say is good for you. Well done, 11 billion. So in reading your background,

the thing I was really drawn to or the thing that obviously, you have very impressive background, but the thing that really I found most fascinating was that you were a helicopter pilot in the U.S. Army. I was. What led you to that? You know, I grew up in an Army family. And back in 1983, 84, when I was in high school, I graduated in 83. Taking an ROTC scholarship in my neighborhood was a viable way to finance your education. I got into Princeton.

They didn't have athletic scholarships. And so I took an RTC scholarship and I decided if I was going to be in the Army, I thought I'd better be a fighter pilot. Tom Cruise had come out with Top Gun. It'd feel like a cool thing to do. And I look back on that. I loved my time.

Now, I naively thought we'll never go to war again, right? There'd be glasnost. And so I chopped out and went to the National Guard. Reagan had put too many people in the army in the 80s. They said, anyone who enjoyed the Guard? I was like, I'll join. And so I didn't serve that much time on active duty. And of course, right after I left, Saddam invaded Kuwait and all my friends from flight school went off to war. And I was flying a helicopter out of New Jersey looking for pot plants. Right. The drug war. Yeah. And who knew, who knew that 20 years later you'd be growing them in your backyard.

That's true. But what are the biggest misconceptions about serving? I mean, so many of us look back or look from the outside on service, and I don't think we really understand it. What do we not understand or get about serving, and especially being a helicopter pilot? So the first part is the Army is one of the great integrators our country ever had, or the services are. Right, so you go to basic camp and you've got black kids from Mississippi and white guys from Olene, Illinois and people from all over the country. And when you're standing there in your skivvies,

your white underwear, and living in a barracks and waking up at 6 a.m. It's a pretty great leveler. And you become buddies and you learn to appreciate other cultures. And so in some ways this idea of universal service makes sense just for that. We have such a balkanized world and that was the un unbalkanized. The second

is, there's idea that you're willing to debate, you know, like, I thought I was a Republican when I went to flight school and real quickly realized I was the most liberal guy of the 700 people in flight school. And so I literally shifted parties to Democrat because I can't, if I'm a Republican, we're all screwed. But you're willing to debate issues, but when it comes down to it,

you're wearing the American flag on your chest. You know, when you talk to schools like Princeton, the biggest donors to Princeton are the athletes because they wear the colors on their chest. And if you take that metaphorically for the Army, once you wear that flag on your chest, you raise your right hand and swear to defend the Constitution, it creates a spirit of bipartisanship that doesn't exist, right? It's America first.

I mean, Obama said it. We're not the red states or the blue states, but the United States. That's been lost. And I think, quite frankly, if we had a lot more people that served, we would probably have a much more cohesive country. project and has made criminal justice reform a focus of his family's foundation. He also serves as the chairman of Hudson River Park Friends and sits on the boards of NYU Langone Medical Center, the Princeton Varsity Club, Jazz Foundation of America. That's a rap in bars. I don't believe you're really into jazz. I think that's just a cool rap. An artist for peace and justice, he joins us from his office in Manhattan. Michael, thank you so much for your time and stay safe. Thanks a ton.

Algebra of happiness. I have a lot of friends who are struggling with their teenagers. And it's one thing to struggle with your teenager because he or she is drinking or not doing well in school. Those are what I'd call kind of DEFCON 2, or I don't know if DEFCON goes up or down. I think it goes down to DEFCON 1. Anyways, I don't know and I don't want to know, but it's sort of a blinking yellow light, those things. The red light is when your kid is struggling with some sort of mental illness. And some of this is a function of proximity bias in that because I'm at an age where I now know a lot of parents whose kids are struggling with some form of mental illness or depression, there is this kind of convergence or this epidemic of mental illness because of the perfect storm of one,

concierge bulldozer parenting. And that is we as parents with more resources, helicopter, and use so many sanitary wipes on the kid's life that he or she doesn't develop their own immunities. They show up to college, they get their first C, they get their heart broken. Mom and dad aren't there to clear out every obstacle, and they literally freak out. And at NYU, I can tell you that it's sort of disturbing how much emphasis, and they're absolutely doing the right thing, has been placed on suicide prevention. Not because that's not the right thing to do, but the fact that we need to do that, that the number one source of fatalities now in college is not accidents.

When I was at UCLA, I was president of something called the Interfraternity Council. So I was sort of king of the jarheads, and it was a 3,000-person strong special interest group. And it was just shocking how many kids hurt themselves or died in alcohol-related accidents. I had a friend go to a party in Malibu and decided while he was fucked up, no shocker, we all spent the majority of our late nights on weekends fucked up, and take a jet ski out into the Pacific at 1 a.m. And he washed up eight days later. I had another friend roll off the roof of a fraternity and lost his vision in one eye. I mean, it was just everywhere, these alcohol-related accidents. And now it's suicide that is the number one culprit of young people losing their lives in college. And then you have

social media, which there's a direct correlation between escalating teen depression and when social went on mobile. And then you have the pandemic where if you're a senior in high school or a freshman in college, you got to think that the lack of socialization just compounds these effects. And I don't have what I'll call a silver bullet or some sort of majestic sentimental learning from this, other than to say that you have your world of work, you have your world of friends, you have your world of kids. Something comes off the track with one of your kids and everything shrinks to that kid. And it strikes me that it doesn't matter how successful you are, it really doesn't matter

how influential you are. To a certain extent, it doesn't matter how many wonderful friends you have. If something goes wrong with any of your kids, kind of all of it becomes pretty meaningless pretty fast. And I'm wondering what it is we need to do. And my go-to is always, I always blame social media companies. But I think there's a lot that we need to rethink as a society around how we raise our children or what's involved. Should we be sending kids this early at the age of 17 to college? I was too young to go to college. I mean, fortunately, it's kind of a safe place to fuck up where UCLA was, but I went to college when I was 17. I think the notion of what Mike talked about of some

sort of national service where you let people marinate and develop connective tissues around the country. I do think we should educate social media. And this past weekend, we held a fundraiser for the Jed Foundation, which works with universities to educate and assist young people around teen mental health issues and suicide prevention. And just some of the figures are just striking. But what is it about our society? What is it about our businesses? What is it about parenting where we can do sort of an all hands on deck and figure out the legislation and the resources and the parenting advice to stop or to reverse this trend? Because this really is

Jonathan Haidt, my colleague at NYU, who is not prone to dramatic statements, said that the mental health crisis or the emerging mental health crisis among teenagers is in fact the worst mental health crisis he's seen in his lifetime. And this is from a social psychologist who kind of looks at every trend across every geography. And I think it's up to us as voters. I think it's up to us as people in small business. And I think it's also up to us as parents to say that we are just not going to tolerate an emergence in teen depression. If it emerges and increases, that means it can submerge and decrease. We need to hold firms accountable for hardwiring and addictive

techniques. We need to hold CEOs accountable. We need to hold ourselves accountable as parents that not programming this software to operate in the environment it's going to have to operate in. And that is, it's probably okay if the kid fails every once in a while. It's okay. I mean, this's going to sound weird. I yell at my kids and my people around me freak out. And so you're traumatizing them. I'm like, well, get fucking used to it. They're going to get yelled a lot out there. Or maybe I'm just saying that to make myself feel better. We need to absolutely support organizations that are going after this issue because I'm telling you, my brothers and sisters who have small kids,

there is nothing like your kid coming off the tracks as a teenager. It literally stops and pauses your life. And there is no reason we should accept this. There is no reason we can't turn this back. Our producers are Caroline Shagrin and Drew Burrows. Claire Miller is our assistant producer. As a reminder, we answer your questions regarding business trends, big tech, entrepreneurship, career pivots, and whatever else is on your mind

on the pod every Monday. If you'd like to submit a question, please visit officehours.profgmedia.com. Again, that's officehours.profgmedia.com to submit a question. If you like what you heard, please follow, download, and subscribe. Thank you for listening to the Prof G Pod from the Vox Media Podcast Network. We will catch you next week on Monday and Thursday. extremely high positive impact on revenue growth. In Alex Partners' 2024 Digital Disruption Report, you can learn the best path to turning that disruption into growth for your business. With a focus on clarity, direction, and effective implementation, Alex Partners provides essential support when decisive leadership is crucial. You can discover insights like these by reading Alex Partners' latest technology industry insights, available at www.alexpartners.com slash vox. That's www.alexpartners.com slash vox. In the face of

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