The Startup Ideas Podcast - Disruptive Innovation And Unbundling The S&P 500 With Howard Lindzon

Episode Date: November 11, 2021

In the first episode of Where It Happens, Howard Lindzon (@howardlindzon) -- the man behind StockTwits and early Robinhood investor -- helps us rethink the financial industry, places big bets on Web3, and presents a new way to think about investing. And, hosts Sahil Bloom (@sahilbloom) and Greg Isenberg (@gregisenberg) provide the Where It Happens community with a task that kept Greg up all night.Want to watch the episodes? Subscribe to our YouTube channel here.Want more community? Learn more here.Special thanks to our sponsors Mercury and AppSumo.

So, wow, find your phone sway. I'm still trying to get it like every day. Humbleness is hard when you start receiving praise. I feel, but some words can never be taken away. Got to do what's best for you. Whoa, whoa, we made it. Here we are. The Room Where It Happens.

This is it. We're here, and you're here. Months of preparation, we're so excited to have you here with us. We want to tell you a little bit about why we're doing this. The Room Where It Happens, it's a show, a podcast. More importantly, it's a community. We had this feeling that podcast. Podcasts always stop. They left something, they left you wanting something. They left you wanting more

because the conversation was always one-sided. It was always one way. And we're looking to do more with this. We're looking to bring you all into this conversation, open the door to the room so that you're really a part of this with us. This is a two-way conversation. You're in the room. Come join our Discord. Ask us questions. This is as much about us as it is for you. So, so excited that you're here. So excited that you're here. So excited. that we'll deconstruct frameworks, grow together, come up with startup ideas. This is the beginning. Yeah, and we're going to do a pretty cool take on this whole show.

We're going to have basically every episode is going to be the two of us. We like to deconstruct stuff over a drink, so we're always going to have a different bottle of something with us. Encourage you, if you're open to it, have a drink, sit back, relax, and join us as we talk through these frameworks. We're going to have guests joining us, for about half the episodes to dive deeper on these concepts that we're getting into. And then, like we said, we're going to get into the community afterwards.

When we roll things out, we want to continue the conversation with you guys. We want to dive deeper, go further with all of these conversations. And that's going to come from engaging with you. And it's going to come from the guests being a part of that with us. So we're so excited to get into it. And here we are, first episode. Greg, question for you. If banks want companies to open accounts, why do they make it so difficult?

They like punishment? Maybe, but not Mercury. It's banking built for startups, and opening an account is so smooth, you basically fall into it. You can apply for an account from anywhere in the world in 10 minutes, and you get access to everything you need to be able to do banking well. The sign-up flow is beautiful and intuitive. All accounts are FDIC insured. They offer virtual and physical debit cards, and you never have to visit a physical bank branch.

And the whole product has such an elegant design. I'm a Mercury investor and a Mercury customer myself many times over. If you're a founder or creator, this is the banking product you need. Sounds like startups can just like start when they use Mercury. Super low friction. Exactly. Mercury is where startups can just start. Check out Mercury.com if you want to see it for yourself.

I wonder what founders will do with the time they say by starting with Mercury, you know? Build great products, grow their businesses, I guess. That's a pretty good guess. Thanks, Greg. You're welcome. Today's show is sponsored by AppSumo, the leading digital marketplace for entrepreneurs, and a great way to get your product in front of one million plus entrepreneurs, entrepreneurs, founders, and small businesses.

They have the tools you need to automate all the busy work that comes with running a business, so you can boost your productivity, scale beyond your skill set, and focus on building something you're deeply passionate about. This Black Friday, Apsumo, is bringing you 20, new deals on digital products at discounts of up to 90% off, plus a limited amount of freebies. This is their biggest sale of the year, and they sell out quickly. All you need to do to get first access is go to absumo.com slash the room before November 21st. Enter your email address, and they'll send you at the exclusive deals.

Again, that's absumo.com slash the room. Check out the link in the description as well. If you're on their email list like we are, you know they have some of the best tools to run your business. So go sign up at absumo.com slash the room. You don't miss these special Black Friday deals before they sell out. Should we get into it? Yeah. Let's dive right into it, man. I think this is really funny because we're here for the first episode.

And I was telling you about this. I was telling my parents about what we're doing. The idea of this podcast, the show, the community. And you know the whole thing. Your parents, they don't really get it. They're like not in the tech world. my parents grew up in the 50s, 60s, 70s. And so I'm talking to my dad this weekend.

And I was like, Dad, you know, it was his birthday. We're hanging out. We're having a couple drinks. Like, Dad, I'm super excited with filming the first episodes this week. It's going to be a blast. It's going to be so fun. We've got some guests coming in. It's going to be a hell of a time.

And he kind of looked at me and he was like, oh, who you got for guests? And so I was kind of laying out some of the people we have. We've got some cool people coming in. We've got Gary Vee coming in for the first season. We've got Howard Linson with us today. We've got a bunch of really cool people. And he just looked at me kind of with this blank stare on his face. And he was like, well, how about, like, Elon Musk or, like, Jeff Bezos?

Because they would be good. And I sort of just looked at him. And he was dead serious, dead serious saying this to me. And I just sort of said, you know, dad, I appreciate that you have this faith in me. I think they're a little hard to get. Like, maybe we'll loop them in when we get Obama and Jesus. But, man, that was something else. So my dad's got a lot of faith in me.

I mean, I like that he, like, he's a dream big type of guy. He is a dream big kind of guy, and I appreciate it. So, we'll dive into it, dude. All right, let's do it. I know we're going to get, we're going to get some drinks going. For every episode, we're going to have something. We are so lucky to have what is, in my opinion, the best tequila in the world, Comos, from our friends over, Hat Comos.

Yeah. Joe Marquesie. Shout out. Thank you so much. Bottles are really cool. It is the best tequila I've ever had in my life. And unfortunately or fortunately, I've had a little bit too much tequila. Well, this is my first time trying it.

Well, you're going to enjoy it. Cheers. All right. Cheers. Welcome in with us. We're so excited. And let's dive right into it, man. So good.

Damn, that's good. So good. All right. So what are we talking about today? So I don't know if I told you this, but I went to the bank because I want to buy a condo in Miami. Okay. and as one does by the way as a tech guy as one does right now we buy condos in Miami apparently well you know I moved to Miami and you got it you got to live somewhere

okay and I call up the bank and I said I found this great property I'm really excited about it and my banker was like yeah but I can't give you a loan and my heart sang because I was so excited about this property and I mean I was banking on the bank you know and I said why you know I've and he goes well you know you started a new company you work for yourself you know you don't have W2 income I'm sorry but you're you know Chase cannot give you a loan and you know I'd like to consider myself like I've done some things I sold some companies I've invested in stuff and I can't get a loan So I was just, that's what's been on my mind recently.

This is crazy. So I've been thinking about this exact thing in like a number of different contexts recently. This whole idea that the traditional financial system is set up for really what is like the old way of working, right? It's this whole idea of you go get a job when you get out of college, you work for 40 years. They give you a gold watch and you retire. That's like the way that our parents worked. That's how the world has always worked as it were.

But that's changed a lot. Now, there's a lot more people taking on entrepreneurial roles. There's a lot more people doing 1099 stuff, this whole idea of like the portfolio theory of jobs and people doing a bunch of different things. The like hustle culture, young people taking on a bunch of different side hustles and building. And so the idea that the mainstream financial ecosystem does not work for a huge and growing population of people like you, by the way, who you have a, I imagine you could buy the place outright in cash if you needed to.

So the fact that you cannot get a loan is like crazy to me. But I keep seeing this type of thing popping up. Yeah, I think it's going to happen more and more. And there's a ton of like startup opportunities there. I think also about, you know, immigrants. So when I first moved from Canada to the U.S., I had no credit. And it was right after I sold my, you know, one of my first companies. And I literally couldn't even, like, I went to AT&T.

I was like, I want a phone. And they were like, sorry. I had to, and that's why a lot of immigrants, you know, use T-Mobile, which is what I used up until recently. Like, I literally just got off of it because T-Mobile, I was loyal to T-Mobile, because T-Mobile was the only phone company in America who had my back. T-Mobile, if you're listening, like, sponsor us, do something. Like, I appreciate that. You heard it here first. For all the immigrants, and, you know, I think, like.

It's better than cricket wireless. Yeah, I mean, it's a step up for sure. I mean, I was definitely in San Francisco, you know, in like the downtown area and like my T-Mobile reception wasn't working. But anyways, the point is like so cool that, you know, they had my back, but crazy that like, you know, the financial, yeah, the financial system is kind of stuck in the past. All the rails. I mean, the rails of the entire traditional financial ecosystem are broken for where the world is heading. I just saw this with a close friend of mine, this guy, Josh Fabian, founder of this business Metify, amazing. company, raising money at a huge valuation, backed by some of the biggest VCs in the world,

and he is a founder who came from not a lot of means. He grew up very poor, he had tougher times when he was younger and has now risen to this amazing position. He's building this incredible company. He moved his company into New York, creating jobs in New York City, could not get anywhere to accept him to rent an apartment for himself. He said, I will pay for the entire year outright in cash. They wouldn't let him do it because he had bad credit. from what his past was. And that's insane that we live in an ecosystem and in a world where the rails have not adapted

enough to be able to underwrite someone differently than what their traditional system is set up as. So what's going to happen? Is it going to be like the chases of the world innovate? Or is it going to be like there's startup opportunities creating chase but for entrepreneurs or chase for immigrants? It's a good question. So first off,

the mainstream financial world is not good at innovating. I mean, you see big companies in general are just slow to innovate. You see that across the board in most industries. We both know that. They're just not good at it. It's not part of their culture. It's not part of the DNA to move quickly, to pivot, to innovate.

So I think of this, like I'm a frameworks guy. And so in every episode, you're going to hear me talking about different frameworks. I know you're going to get sick of it eventually. But for this one, I just keep coming back to what is one of my favorite frameworks, which is the Clay Christensen. Have you mine? Like the Harvard Business School professor, very famous, managerial. thinker and has this model of disruptive innovation. And this is basically a framework that talks about

how small upstarts can come into new markets and completely disrupt incumbents that are very large. And so in the financial world, I think this is a great model to think about because you have these massive incumbents, like a Chase or Bank of America or whatever they're doing. And what they have done has created this massive ecosystem. But what in reality has happened is that they are either overserving or underserving a ton of different customers. And so Christensen's model says that there's a huge opportunity that exists for people to come in and really just serve one particular customer archetype extremely well. Provide like either the minimum viable product for that one customer or the best potential product for that one customer

and use that as your launching pad and as your wedge to then go and expand outwards. And so I think when you look at the financial world, that's what you're going to see. You're going to see people coming in and using this tiny way, edge of going and providing the best service for that one archetype to go and expand out and completely take over this ecosystem. I mean, that's the whole unbundling, right? I mean, this is, this happens on the internet in general and that's just, it's coming to finance last just because finance is traditionally super slow and there's a lot of red

tape. So regulated. So regulated. But yeah, I mean, totally makes sense. Yeah. There was an interesting, I've seen a few interesting ones recently that I want to talk to with you. So one that I saw recently was.

I think it's called carrot. And they do what they're... I haven't heard of it. Tell me about it. Okay, so what they're trying to do is creating the financial rails for the creator economy. So creator economy has become this big buzzword. We'll definitely be having people on to talk about it and go into more depth. And we can talk about it in the Discord later and jam on it.

But the creator economy has a very distinct set of needs associated with their finances. It's 1099 income. Yep. typically the loan and credit market for those type of people that are earning 1099 is low. So you could have a YouTuber that's making a million dollars a year on YouTube and has a $5,000 credit limit through Bank of America. And that clearly doesn't work. Like Mr. Beast has to spend a ton of money on the videos he's making.

And there's an incredible opportunity for a company like Carrot, which is what they're doing, to go and think differently about underwriting. Rather than just looking at all the traditional metrics and underwriting that way, think a little bit differently. And it exists for YouTubers. it might exist for knowledge creator economy people like substack writers the twitterati you know like all these people that are creating in different ways but what carrot is saying is that's where they're going to go create they're going to create the best product for the greater economy and use that as a wedge to take over

more of the banking for them they've started with a credit card I believe and that's their first product but then the whole idea of like go into the market with just that very small make it the most amazing product for that customer and go and expand outwards from there yeah that's my whole thesis on how to build products for the internet, like not just finance, is start with the community and then build the software versus, you know, build software and then go find a community to attach it. So I think like if you're listening and you, you know, you want to come up with ideas that for startups that are going to work, like pick a community that you like really connect with that you have like inroads with. Right. So like if you're a creator, you know, you understand creator's needs. Right. So like what are other, just off the top of your head, what are other kind of communities that you can see there's opportunity in financial services? We talked about creators, maybe entrepreneurs. Gig economy is a huge one. I know a lot of people jumped into this, but like this is this whole idea. You and I've

talked about this. It's like, go talk to people. Just go ask questions, figure out what pain points they have, figure out what's stressing them out. And so like creators, if you went and talk to creators, and I'm assuming this is what the founders of Carrot did, they talk to creators and they realize, what the hell? Why the hell do I have a $5,000 credit limit when I'm making a million dollars this year? It feels ludicrous. And so they realize that. And now you can create a product, create a service, create a community around fixing that. Same thing for gig economy. I mean, one of the biggest issues that people perceived when they talked to Uber drivers was that they weren't getting paid quickly enough. They were getting paid every other week originally or once

a month. And that didn't work for the way they were having to pay bills, pay their gas. And so startups came in and said, oh, okay, we can actually front that. It's just an arbitrage product. and go in and do that. And so, like, I think a lot of this, just from a kind of way of living standpoint, is just opening your eyes and talking to people as you go about your daily life because you end up learning and having all of these ideas come up

on a daily basis from just going out and doing that. And I think when you're to add, so completely agreed, and to add to that, I think, you know, one mistake, especially a lot of Silicon Valley companies do, is they don't, the product needs to speak to, for example, the Uber drivers. And that means, it has to give them that warm and fuzzy feeling, that aesthetic, that artwork, that copy, that combined, they're going to use that over existing financial products or whatever because they're like, these people are speaking to me. These are my people, right? Yeah.

I think that's the goal. And we do that a lot at Leachuket. Like, we help all these companies do that. But I think your point on immersing in the community. You got to immerse yourself. I want to really harp on that because I haven't thought about it that way and it's so important. Like if you just went and immersed yourself within a creator community and just talk to people, you didn't even have to talk. Listen, be present for it.

That is how you garner all of these insights. You end up realizing that a bunch of creators don't know how to manage their invoicing. They don't know how to manage their taxes. They don't know. They're not optimizing around what's deductible expense. I mean, that's the most simple thing in the world. And if you're a creator and you are paying for different things and you go about your daily life, most of that is deductible if you're doing it the right. way and it'll save you a lot of money at the end of the year.

Most people don't know that because they don't know how to set up different entities. They don't have an expensive tax guy because they're just on their own. And so in this whole world of like businesses of one that are being built now and the way we are working is fundamentally changing. How do you go and create products for these people? It's by listening, understanding what those pain points are and where they're missing out. And being there and immersing yourself. Yeah. Did I ever tell you this like what I did 2017, 2018 when I went back to college?

No. There's like articles, I think, you know, written about this. But basically I was running a company called Islands and it was like Slack but for college. And I was living in San Francisco. And, you know, and the people around me were just like tech people. And I had never like, you know, my, I never, I dropped out of school. Grew up in Canada where, you know, the U.S. system's a lot different. And my exposure to college was watching Van Wilder.

You know? So we end up hiring a team in Alabama, which is like the most college area of all time. The college area. And the team and I immersed ourselves in Tuscaloosa, Alabama, and we did a whole college roadshow where we spent six, eight, nine months immersing ourselves with, you know, the students to come up with a product. that would work. And we landed in Tuscaloosa with a product that we thought work, and we left Tuscaloosa with a product that worked. And it was all through this, like, daily kind of interaction with college students. And I think that's the missing, like, there's so many great products out there, and the only missing ingredient is the immersion. So what's the lightest touch, like make this

tactical? If I'm a person listening to this, what is the lightest touch? What is the lightest touch? way for me to start immersing myself within different communities. Is it Discord? Is it Red? Like, how would you do it? If I decided I wanted to go do something like this. Not everyone wants to hang out in Tuscaloosa at a frat party. Yeah, that's pretty heavy. That's like a heavy touch approach to community immersion. Exactly. The more lighter notes are that's the platinum. Give me the bronze. Like I want the bronze version. How I could do this at home at night. So I think the beauty about Facebook groups, Reddit, Discord is it's these communities, right and you can just teleport yourself into these groups and communities so i think it's about

making a list of like the most interesting for example like creator communities um teleporting yourself there and dissecting the conversations and also like creating posts speak their language yeah comment um and then try to get them into like smaller group conversations so if you're in a discord with 10,000 people, it's hard to actually build intimacy. How do you get them into like, you know, a group chat, a WhatsApp group, whatever, of 20 people? And that's when a lot of the key insights come. Yeah. I think it's so interesting because it applies so broadly. It goes beyond like you can talk about it with tech, NFTs, web three. This is huge. This is how I learned was I just went and dropped into a bunch of these discords that were happening around the different NFT projects and

lots of money along the way and did some stupid stuff. But I learned a lot by being immersed in into the community. So it applies to tech. I also think there's just really interesting, more blue-collar, like meat and potatoes-type stuff with this. I was driving the other day, and this like biker gang in Connecticut drove by me on all of their Harleys with all of their gear. And the first thing that came to my mind was just like, holy shit, this is an amazing, fervent, enthusiastic community of people, bikers. They love it, they live in it. Every weekend, they do it, and they spend tons of money on this hobby. There has to be, a ton of businesses that can be built around that community, providing them what they need.

One of the smartest marketers I ever met, I was on a flight from Vilnius Lithuania to New York City. Don't ask. It's maybe for another episode. And the guy next to me was the CMO of Harley Davidson. Yeah. And I noticed because he was wearing, he looked like, he looked like the leader of the hell's angels, you know? He was wearing all leather patches everywhere. skulls everywhere.

And we started talking. And he basically told me that they do immersion. And they, you know, like that's the difference between Harley. Like Harley is an incredible case study around like start with the community and then build with the product. Yeah. And not every business has to be something like massive venture scale business. And there's something really interesting around creating these micro businesses for

those fervent communities and you can bounce around. And especially with how easy it is to create products now. I mean, you could go spin up an e-commerce brand for a specific niche community that you found on Reddit, immersed yourself in on Discord, wherever it is, very, very quickly. And that's especially true in financial services in Pintech, right? Because you don't need that many customers to create a huge outcome. And, like, it's also really easy with the infrastructure that exists. Mercury, this company I have a small investment in, it's a bank for startups.

And their whole thing was the same Clay Christensen model of disruption. They were like, we're going to create the best banking product. for startups. And this is what we're going to do. We're going to make all the things that suck much easier. And nowadays, they just had to create the customer-facing ecosystem. They didn't need a banking license, actually. You could go get a partner bank on the back end. So all they focused on was beautiful, intuitive design, an amazing product. And it just works. And it works when you do something like that. And so I think it's really interesting. There's a real opportunity for it. I do think we're at a point where we should bring someone in a jam with us on this.

And we have someone amazing coming in for this specific topic because Howard Linson has a background in all of this. He was one of the first investors in Robin Hood. So like when you talk about disrupting financial services, what better business exists than that. Stock Twits, I know he's an investor in Rally Road, which is a really cool business that's fractionalizing investing in everything, opening up this huge opportunity for this investing class, the rise of investable assets. So I say we bring him in and let's continue to jam with him here. He also invested in islands. Oh, smart man.

So he understands, you know, niche communities and not going big. So let's bring him in. I'd love to hear his point of view. Awesome. Let's do it. All right. Where do you want me to look? We're just having a conversation.

Yeah, yeah. All right. Say I get bored. You just, I mean, there's a lot of pressure. All right. Super excited to welcome you, Howard. Cheers. You're kind of like.

I've known you for how long? 10, 15 years? Since you were 11? Pretty much. So like two years? He's kind of like my like Canadian. I mean, I'm Canadian. He's like my uncle.

We both have like skinny legs. My biking legs is skinny jeans. You have skinny legs and skinny jeans. But I don't know. I kind of feel like we've got like similar vibes. You're into community. I'm into community. Yeah.

I've done finance stuff. You feel that way or is this a one side situation? I think I have in community. And I believe in community. I don't think it's a good business. You know, it's great to build communities. Yeah. It's not a VC, as I've learned over the years.

Is Reddit a community? They stopped with the community? Yes. Is Reddit a community, you know, define community. There's different communities within it. But it's very hard to build a community. So it's a term that's thrown around a lot that people should use more carefully.

I think it became a term because of really, estate, build a community. Right. And that's very hard to do. It just became this sexy buzzword. Just like everything else in the VC world, capture one word, and you're like, oh, community is the word of the day. So we're just going to talk about community and we're going to do massive valuations.

It's a creator economy. Everyone's like, oh, creator economy. If you put that in your pitch deck, it's $100 million post-money valuation. It doesn't matter what it is. Yeah. Well, I think we're entering the first time where community has a chance to be worth something from the start because it doesn't have to be VC funded. Like I said, I don't think community is a VC fundable idea, much like media's been, in general, a terrible.

We need community, we need media. Does that mean it should be VC funded? No, I think in the Web 3.0 world, which, yeah, of course, I wish I was born yesterday, even though I've had a good life. But, like, you always say, oh, if I normally have the technology had been around, we finally, theoretically, maybe closest to the potential. like we talked earlier, of having community start in a way that should scale without having to sell your soul for VC money. Because once you take money, that's a different type of community. So go deep on that for a second. What do you mean by that?

That's all I have. Yeah. We can there. All right, guys. So talk to me about that a little bit. So when you say you don't need the VC money, you can scale community in the Web3 world without having to go. raise a bunch of cash at the outset. What does that mean? Like, make that tactical for people that are listening. Well, that's a good question. I mean, make it tactical. I mean, of course

you can rate everybody. There's a lot of money out there. So let's just, it's 2021. It's October. I don't know when this all air. It's real time. So let's say this air is in 2023 with editing. But no, it's, it's October 2021. You have all the pieces together, right? You have incredible liquidity so people will fund a lot of different ideas. You have incredible platforms, both in the old school platforms, like Twitter, Facebook, Discord, Telegram Signal, WhatsApp. You know the risk of building on someone else's platform. You're their bitch, you know, VCs have said, like if you build on someone's platform, or if you build on someone's roads, or if you build inside, you know, in someone's backyard, you prepare to be sued or screwed.

But now we have this whole new super freeway or super highway being built, or many of them being built and scaled, and they're wired in a way that you can build on top of them, theoretically. They're not fully decentralized. I'm not quite sure how to label all this stuff yet because I'm not a super technical person. I don't think they're fully decentralized. But you have a lot of choices. And then you can build stuff on top of them. And they're open in a sense that the rules are a little more set.

Like, here's what you pay, there's fees. And in that world, these are like open highways where people theoretically can build something and then really think through who the rules or what community means and then figure out how much money it really needs to build a community. And then make a thoughtful decision about how much money I need. What's my real goal of this community? Who do I want in this community?

And, you know, in Web 2.0, it really was exciting, right? Like Twitter came out and they were open and Facebook was open. And the VCs all piled in and they were like, everybody's open. But guess what? We learned to make money. you have to kind of close things off. And if you raise enough money, the VC starts saying we need to at least show that we intend to be revenue focused or profit focus. And that's the beginning of the end.

And with Twitter, they were an open API. And so at the beginning, when we built StockTwits, it was like a no-brainer. I don't know tech. Twitter was this amazing real-time product. And at the beginning, I was like, you know, when we were, you know, we meant to the dollar sign, I was like, I just want to talk about stocks on Twitter, but I don't, hashtag doesn't really make sense. And if you searched hashtag Apple or hashtag Google, there was no context.

It couldn't been, I'm going to the market to buy an Apple, hashtag Apple, or, you know, I hate Google. You know, like there was no context. So when we came up with the dollar sign and said people talk in a certain language, there was finally a way to use Twitter for like-minded people. Right? Just like the hashtag would help you work again. So we had a decision to make. And at the time, I'm not a technical person.

So we went to Twitter and we were like, you should just do Twitter finance, like Yahoo finance, like all the old companies before. But they were like, no, we're open. You guys just go run with it. And, you know, so we like, I don't think I believe. We went and raised more money to build our own platform assuming they were going to screw us. Like, you know, as BC say, you know, be careful of being someone's bitch. So we had a decision to make, like just let it be what it was,

knowing it would never be a real business, or try and create like a fork in Twitter system, and we went the fork road. And that's a hard road to build. And now you've got to go build your own roads, and you've got to go do your own curation, and you've got your own garbage and your own infrastructure to keep up.

So you've got to really think through community. Now, in this new world, where there's, everybody's been on board of the internet. Now there's hundreds of millions of users and there's more than just one platform that's more than just Twitter and Facebook. It's pretty exciting. And there's communities everywhere.

So now you have to decide how big I want my community to be like for you guys, who is part of that community, what format do we want that community to be. And maybe everybody owns a piece of the community. That wasn't possible before. Yeah. How do you, like I'm curious for your perspective on this, Greg,

because you're doing a lot. I mean, you're a community guy by trade, but you're doing a lot within Web3 now and at the intersection of all this stuff that Howard's talking about. It's really interesting. So, like, what do you perceive as the opportunities there that exist?

And, like, bring that back, too, to investing and, like, investable assets. Everything is investable all of a sudden. And so we're in this world where you can invest in anything. Like, how do you think this all kind of comes together and what are the opportunities around it? Well, I would actually bring it back to Howard

and kind of be like, if stock Twitter, which were to be invented today, would it be Web 3 enabled? Would you allow people? Yeah, it would have to. I'm shocked that it hasn't been, but I think, and it will be. Like, it's just in a matter of time. Because if I am 56, I'm not building anything new.

I'm like in, I'm in harvest mode. I'm in harvest. I don't know what they call. You're not in the third time. I'm inspired by other people, but like my goal is when I have a really good idea is to get drunk. And hopefully it goes away the idea. It's like the old Mesopotamian rule. I was like, get drunk and see if it was a good idea the next day.

But my idea is now, like, I'm 56. You know, we've been building stocks for 12 years. It's a big company, it's profit, big company in terms of revenue and profits. And we haven't raised a ton of money. But it took a real long time. We had to make so many hard decisions along the way. And 12 years is a long time. I think a lot of founders don't really ask, and a lot of venture capitalists don't really

talk that talk with the founders at the beginning, which is like, this could take 10 years. Like, how much do you love what you're doing? And those are honest conversations that, you know, especially when you're building community or a media company, these things are grueling. Like what Henry Blodget did at Allie Insider, there's not many people that can do that stuff. And there's an investor in Henry at the time in Allie Insider, whatever, business, whatever you called it in 2007, he was that guy.

Like when I met Henry, I was like, man, that guy can take a blow, right? Like, he just keeps coming. And so media and community are, like, very different. As it comes to, like, Web 3.0, if I were to build stocks with today, for sure, but I'd have to pick the right blockchain. Is it Salon it, is it on Pocod or is it on, I mean, these names are silly, but, like, it's polygon, is it flow? So there are, like, complicated decisions, and, or do I just build it on?

discord and does not make it a huge business and charge 20 bucks a month and find like minor people or just start my own substack or beehive or whatever it is that I'm going to do. So there's all those decisions, but at least their choices. Right. And this goes back to investing. You know, until Robin Hood and Coinbase and Itoro, which is, I was an investor and even before Robin Hood, you had basically, you had the 1999 bubble, which gave us, you know, Super Bowl commercials and E-Trade Baby and D.TEC and TD Ameritrade and Schwab and like there's hundreds of

of options in 99 and and and even and so you had this big boom in stock trading and and uh you know people like to make fun of Robin Hood and coinbase but 1999 these guys were pretty irresponsible these Super Bowl you know where people were like day-trade and they were glamorizing day trading at your office and there was a you know the E-Trade baby day trading from their crib. Yeah. And now we're so mad at Robin Hood for like, like, I'm not saying Robin Hood's right at Roar.

I'm just saying, we're so mad at Robin Hood for free trading. Yep. Or, you know, not telling us the whole truth and nothing about the show. The payment for a lot. I know. Exactly. We're holding people to the standard that in 1999 was ridiculous. The brokers were getting away with.

But it was a new revolution. So now this Web 3.0 revolution is, an unintended consequence of centralization. You had centralization. Everybody's so worried about Facebook and how do we regulate Facebook? Guess what? Didn't need regulate. I mean, obviously you can regulate them all you want, but they're not in Web 3.

They're stuck in Web 2. They can't get Libra off the ground. They're not in Poked up. They're not in Pokedong. Maybe they're hoarding Bitcoin and driving the price up. We don't know. But even if they're hoarding Bitcoin, what are you going to do with it? It's just gold at this point.

And if they're hoarding Ethereum, like, what does that mean to them? So, and they're not in the compute business theoretically. So they've been disrupted by just technology, not the regulators. They're disrupted by printing money so good that they just forgot, like there's other technology that's kind of come along. So that's why investing is exciting. So, you know, full circuit because we're like talking about investing. You know, you had the Internet bubble,

And then you had basically two choices, you know, stocks and bonds. And the government has slowly made bonds. There is no bond. It's the government. So basically, you know, it's stupid. It's rigged or whatever you're going to call it. And 100% of the U.S. population owns bonds. They may not know it or their financial buyers recommending it.

And the only decision is do they own 20% of bonds or 30 or 40. And while all this is happening, everybody's been allocated. by their financial advisors, some kind of portfolio. Web 3 comes along, which is basically just a new stock market, which is why the argument about whether the securities are not is silly, they're just stock, like there's securities for sure. People are buying and selling them, and everybody's arguing about semantics, they're just security.

So eventually they got to be regulated or called the same thing as what stocks are. But really, they're a response to like 40% of the country's assets. They're in bonds, which are just a government regulatory, I don't even know what they are. They're just terrible. Or they're a bad investment at 0% or 2% interest, right? So not to get two in the weeds, but when someone who has 40% of their bonds can theoretically

take 5% of that money, put it into a crypto and stake it at an earn 8% or 6% a year, they basically got the exact same return using one fifth of what they were using in bonds. Now they have all this free money to go take extra risks. So we live in this world where the government printed money, technology is doing its thing. COVID added a new twist and they have three massive things happening at a time when, you know, people have all this extra free time and boom. As I like to say, speculation has become entertainment. And so gladiators, when the Romans had all this time.

they were fighting wars and moving people in rome just said you know what we got a lot of fucking time let's have people kill each other and we'll watch kill some lions whatever and you know guess what people did this time they're trading and and if they get killed here's what getting killed is in 2021 you lose 30 grand on a stupid ass trade right you put it on reddit guess what yeah you got killed on your favorite and you didn't die you just blew up your account so gladiators in 2021 is showing Reddit that you blew up your 30K account. Guess what? You dust yourself off. Yeah. This is what the media doesn't get. Yeah, you're an idiot. Maybe. But you just learn something that you were never going to learn. It's the man in the arena. It's the man in the arena.

Except you have a second life. And you'll get two gigs and you come back strong with 10K. And maybe you approach it a different way this time. That's investment. Yeah. It's also. the ultimate, the gladiator analogy is really good because it's literally, like, the whole thing that happened in January with Melvin Capital and GameStop. They're just acting like God. They're just... But it's literally like the reason those people became

heroes, like boring kitty and the whole I don't know who they were if they were heroes. They were just... In the media, I mean, like in... But again, this goes to be in... Investing is the purest form. Yeah. You were on the ground. Lines are coming at you. People are yelling in the stands. But at least you're not risking your life.

That's the digital version of gladiators. We all now get to be Melbourne Capital for a day, for a lifetime, whatever. But our account is the true truth. If it's 10 grand today, what's my goal? It's not to go to zero. It's to go to 100 grand. Okay, so there's a million ways to go from 10 grand to 100 grand. It is a game.

Everybody's arguing. No one wants to admit it that investing is a game. Who cares what you call it? The goal is to go upward to the right. And some people want to do it overnight, which is hard and carries extreme rest. And some people are willing to get there over 10 years. But you don't know until you start. And so now people all have a chance to stake themselves, 100 or whatever.

And everybody's arguing about what we're going to call this, which is silly. In the meantime, young people are just doing it. The other thing that's interesting about it to me, and you brought it up, is we're in this new environment where it's not the establishment people within financial ecosystem that have access to these like arbitrage plays of generating outsized returns anyone anyone in this room anyone here can go and do these unique staking mechanisms within the web through ecosystem and generate outsized returns right now right in this environment and that is a fundamental shift it used to be that it was only like the insiders that

were able to do this and so the insiders are pissed because suddenly anyone Joe Schmoe on the street is able to go and do these things and generate this returns and so that they start calling it and CNBC comes on the air and they start talking about how it's bad for the ecosystem and how these people are going to get wrecked and it's going to be this terrible thing. I think it's just, oh, there's been a generational shift in the ability to go and generate returns. Suddenly anyone can do it. Yeah, I mean, it's a really good point. Again, we've got to choose our wording carefully because not everyone has access.

Sure. Like, we like to think this is what got Robin Hood in trouble. This is what gets anyone in trouble. We're democratizing this. No one's doing anything. These are all on-ramps to what we love, which is the Internet. It's the same thing as people bragging, whether it's Tramoth or me or anybody brag, Jason, Calcan. It's a bull market. It's hard not to make money.

That's true. So everybody's brag. It's the Internet. Before the Internet, 90% of businesses failed. The last 20 years, you've got to make really bad decisions to fail. It doesn't mean, it's no shame in it, but you've got to make more bad decisions to fail in an Internet era. than in a retail fixed world era. The cloud expanded the playing field.

And then you throw the money printing in. It's very hard to lose money. Okay. People need to like just stop thinking they're that smart. Now within that context. Everyone's a genius in a bull market. This has been a never-ending boom, which is fabulous. Call it what it is.

But the point is now the table stakes have been lowered. You can fractionalize your body. Right? We wouldn't be here where we were. Vanguard had said 10, 12 years ago, they were already figured out fractionalization. When you bought the S&P 500, they knew that you could buy 0.5 shares of Apple.

Like they had figured this out. All they had to do Vanguard is say, we're opening our API. We're gonna allow people to buy the S&P Vanguard 499. Like I would like to buy 500 stock and I would like to take out Wells Fargo and Goldman Sachs and tell them that I took them out, text them for me and say, fuck you, Goldman Sachs and Wells Fargo.

What Vanguard decided to do is not offer that technology to everyone else. You had to buy the S&P 500. That pissed entrepreneurs off. They didn't know what was pissed them off. It sure pissed me off. It's like, wait a minute, Betty Lou wakes up. She hates Wells Fargo. She hates Lehman.

She hates Bear Stearn. She hates Goldman Sachs, 2008. But she wants to participate in the S&P 500. She wakes up, and every month she's fucking contributed. money to Wells Fargo, Goldman Sachs, whatever. That was infuriating people, even though no one was talking about it. So basically, all that's happened in the last 12 years and beyond is the unbundling of Vanguard. I want to own the S&P 400, less these six destructive, I own the S&P 294.

And people just, it took a while for people that, and we're still not even explaining what it really is. Vanguard had this. There should be no Robin Hood. There should be no any of this stuff. It should all still be C&BC and Vanguard and Goldman Sachs. They just didn't give their technology. They hoarded the technology. They stayed closed.

They stayed closed. I love that. The unbundling of the S&P 500. That's all it really is. And it's mind blowing in the sense that it took so long. Right? We went, and this is why we have an explosion. Finally, people have more than 31-ditchell flavor.

It's like basket of ramen. This is like Dornbush's law. It's like these things take much longer to happen than you think. Especially in finance because of the regulation. And that was very hard for me. I was a financial believing in fintech before fintech was a thing. It was like I was way early. And it's very intimidating when you can't, I don't, I'm not a tech person,

so I didn't know how to express it. Because the S&P made sense because I couldn't beat the S&P 500. You can't beat them, join them. But there's something just so maddening about it that Wells Far could act badly and if you put $100 a month in your 401k they were getting it doesn't matter how badly they behaved the game was rigged yeah they wake up and they're getting stock their stock bought that's corrupt as corrupt could be even though John Bogle had great intention yeah and this is why I believe first of all passive

investing with a lie there's no such thing as passive investing with Vanguard is a very active portfolio every month or quarter they kick out poorly performing So it's a quant fund. So people are really buying an active portfolio. It's just packaged as passive. And so we've never been passive because passive is a dumb idea. You should garden. If you let your lawn just grow, yeah, it's going to look like shit.

Same thing with manskeeping. If you let your, you know, your balls hair grow, you're not going to get late, according to young people. And I say that as an investor in Manscape, but like the... Great company, brother. It's an amazing company. It's so much like investing when we looked at Manscaped at the beginning. And the kit and Paul was a really great entrepreneur. And I just thought it was a genius idea.

Because I'm disgusted. Like once you hit 50, it's not about Manscape, it's about I can't even look at myself in the mirror. I'm disgusting. And so you're grooming, whatever you're going to call it, you're just shaving all day because you're just repulsed by your own image. And... Something to look forward to. Oh, it's terrible. It's terrible.

It's terrible. Which is why you get married. Which is why you get married. I mean, if you're single and 50, you're screwed. You're shaving all day. Constantly shaving. This is why I got married. And then once you shave, they don't tell you this.

You're shaving forever. Like, the stakes go up. Just hair grows and crazy. It's just like terrible. I think I know my big idea from the day. No, but so anyway, so when he was pitching us Manscape, I went to my nephews. And I was like, they're all 20.

I'm like, this seemed genius. But guess what they all told me? They were embarrassed to admit that they manscape. Because it's none of my business. So we got bad information from the actual user of the product. It's no different than trading. If you ask people if they'd trade or trade, they're going to say, no, I'm a passive investor.

So again, this is just people, sometimes you can't get the information, even if you ask the right people. And so manscape worked so well is because they offered a product, that people wanted and no one was admitting to them. That's just when you get outlier wins. And they created the branding. People go, I don't believe people are trained. No, it's what people wanted.

They didn't know that they wanted it until it was presented in a design in a package that made it just incredibly appealing. Free trading had been around for a while. Zappo, Zeko. And I passed on it because it was a, but it was desktop. And it just didn't, it was before the iPhone in many ways.

And it took the iPhone. And it took Robin Hood and who knew it would take to 2014 was when Robin Hood launched. That's like not that longer. It should have happened 2007 or when the App Store launched. So it took a long time. And no one can predict the land and the why. But in the end it was a great packaging. It was a latent or there was a demand that no one was admitting that they had.

And then you obviously had the money printing in COVID. And then you had crypto and you had all these extra choices. and you have fractionalization and you had all this unbundling and it's like, bam. And now people are like, it's bad. I'm like, good luck trying to put that back in the box. There's no shit all it wants.

That's what's the same. Like people are saying, what? Just fucking figure out a tax and figure out something fair and let the people... And you can't put the genie back in the bottle. No, and when you say education, because I agree education of you,

but what does that mean? Here's what I mean. Give people a list of people. I don't even know how you educate people. They have all these tools. at home. They're not going to learn it in school. The parents are going to see. They're on Discord. They're on StockTwits. They're on Twitter.

They're on Telegram. They're hearing rumors. They're hearing things. They're playing with things before other people. They're using Roblox. Let them figure this shit out. I think you're educated by getting punched in the face. And like you're better to get punched in face when you're 28 and have five grand. Yeah, exactly. And when you have when your parents

hand you're 30 million that they were high like they did, you know, like you do a state playing, give your kids 30 million. Then you're going to teach them how to invest. Yeah. But we'll have a boardwork. That doesn't make sense. People will get punched in the face.

We'll learn. There'll be a cycle. It's how it works. But I do think that, like, you, you're learning through playing the game. It's not. What do you think of the whole, like, NFT space right now? I'm curious your perspective. I'm just so fascinated.

Forgetting the terms and everything. I'm just, first of all, I'm happy. But it's scary because I'm old, and it's just I wish I could, you know, stay in the Discord rooms. Like, Discord wasn't built. You know, Stockto's was built for what it is. Tickr-based search. It's genius. Twitter could have been that and still can't theoretically do it or buy their way to do it.

Discord and Slack are communities. Like, they're not based on, like, real-time looking at an object, you know. So, you know, something new will come along or we'll keep innovating at stock. Like, you know, it's up to us to think how people like searching for things. But what's amazing about NFTs is No one knew even the best crypto people like they were just Bitcoin Ethereum and you know then NFTs just what You know it's taking still people arguing if it's a thing

Of course it's a thing people are doing it You can't deny something that people are doing and having an endless amount of fun Yeah, we're sad to be and it's 24-7-365 Yeah It's fucking it's for thoroughbred Yeah, you have to be a thing You can't just be some fat bond trader. You have to understand community.

You have to understand technology. You have to understand how to behave. You have to have social skills. You don't have to be in a high rise. Don't have to be in New York or San Francisco. This is where the democratization doesn't mean it's open for everyone. You still got to like engage in, you got to show up at the stadium. But it's your effort.

You can make serious money. Of course it helps to have a stake. Yeah. Okay. That's never going to be fair. Some people are born on third base. I'm born on third base. We're lucky.

I don't know. I can't put it back in the box. I'm not going to apologize forever. I'm just going to pass on the information that I think I can get. But everybody should be building a stake. Somehow it could be through your one domain exercise. Steve Martin called it your special purpose. Back in the movie The Jerk, everybody has a special purpose.

They sent him out onto the street. He didn't know what he was doing. He spent three days in front of his house because he didn't know what to do in the movie The Jerk. But everything comes back to some movie that we saw 30 years ago. Eventually he figured this shit out. You know, and he got his first woman,

and he went to the circus. People should go watch the jerk. It's a life story. Oh, my God. I got to see it. Yes, you should. So these are just things that are rights of passage. And I have two, you know,

I'm an empty nest with two kids out in the world. They're learning. You know, get your first apartment in New York. You know, like, these things have to happen. COVID slowed down that process. And during COVID, kids had time, so they learned how to trade. They were just bored. I know we're running up here at the end of time.

So want to wrap up, maybe just each one of us, like, your one big idea. Like, what was your big takeaway? I feel like I learned a ton just from the 20, 25 minutes that we had with Howard. So what was it for you? I mean, my aha moment, like, I've never thought of the S&P 500 as fractionalization. You stole mine. You know. They figured it out, right?

They just were like... Unbundling the S&P 500. I've never thought of it that way. Seriously, that was amazing. I was like, this is a new thing. You know, Rally Road, et cetera. Like, this is new. But it's kind of all that's new is old.

Yeah. Raleigh's too new. What took so long for Raleigh, and I'm an investor in Raleigh Road. It's talking my book. What I loved about Raleigh, I'm not a car collector, but I love the idea of fractionalization.

Raleigh was so far ahead of its time because people really hadn't yet hadn't been honest about what we were really doing, which first you had to unbundle the S&P. Robin Hood needed to exist, and NFTs needed to exist, actually, before Rally World became cool. Because NFTs are purely digital. Rally Road's like training wheels for a digital world, right? So Rally was too far ahead, and now the time is theirs, but it took NFTs for Rally Road to be cool,

because for people that can't go full digital, but let's just say that's 99.5% of the population still. Like, let's be honest, NFTs are really early still, because even I'm not doing it at any kind of interest level. I want to, but I'd rather go buy a crypto punk, a piece of a crypto punk on Rally World, where at least I feel I own it and the SEC approved it. Like, there's different levels of the game. And you have SMP 500, it's great. Vanguard. There's a million ways to do it.

Then you have, blow your brains out, like, take your chance, spin the wheel, learn how to play the game, build your own portfolio. Then there's that at scale, which is NFTs and make your own portfolio. And then it's just too hot, too loose, too tight, to, you know, there's something for everybody. Yeah. So we covered a ton. We're going to get into a lot more in the community. I know we're going to be in there after this releases, jamming with all of you, super excited to do it. This was a blast.

I learned a ton. The unbundling of the S&P 500 blew my mind a little bit. So I'm excited to dig into that more. Appreciate your time, Howard. This is a blast. Thanks for coming on to the first episode of The Room Where It Happens. Cheers. Cheers.

Cheers. Good to see you. Yeah, good to see it. Were the cameras going? I hope so. Okay, one more time. That would be a mic show. Wait a minute.

Howard. What a legend. That was fun having him in here. That guy is a legend. Yeah. He's fun, man. He's a fun guy to be around. I had never spent time with him in person, so it was really fun.

So we got to get takeaways. What was your one big takeaway from that conversation? I think a lot about unbundling. You know, I've written about the unbundling of Reddit. I think that's huge. When he mentioned the unbundling of the S&P 500, for me, like, that blew my mind. And I think there's a bunch of areas that you could unbundle that, like, people are not thinking about. A lot of people think about, you know, now, especially unbundling of Reddit,

unbundling of Facebook, unbundling of Instagram. But what are some lesser known areas, which you can. unbundled. The unbundling of Spotify, you know, the unbundling of Airbnb, etc., etc. So I'm like, tonight, I'm going to go make like a map of like a bunch of areas which I could go unbundle. And I'm pretty excited about that. Yeah. Sounds like a fun conversation to have in the community as well. So we should pop in there after this episode releases and we will get in there and talk about all of this because that sounds like a really interesting one. Yeah, what do you think should be unbundled. Next. So for me, my big takeaway from today goes back to early in our conversation.

We talked about what I brought up that framework, the Clay Christensen model of disruptive innovation, and this whole idea that you can just provide the best product or service for a very niche customer and use that as your wedge to take down an entire industry. You can go in, and it goes to that same point of unbundling. But in financial services in particular, which is where we talked about it, there's an amazing opportunity to do that. These incumbent players in a lot of industries, but financial services in particular, are playing this game where they are so wide-reaching that they're not actually providing a really good service to anybody anymore. And if you want to come in and find a market where you can be the best provider for X customer, it's a pretty

cool opportunity that exists out there. So that was it for me. That's a big light bulb. It's a big light bulb, and I think it applies broadly. And so I'd be excited to get in there, get in the community. We'll talk about it after the episode, and we're excited to engage with you all on this. So look forward to it. And until next time, from the room where it happens, cheers. A little different there. Today's show is sponsored by AppSumo, the leading digital marketplace for entrepreneurs and a great way to get your product in front of one million plus entrepreneurs,

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Check out Mercury.com if you want to see it for yourself. I wonder what founders will do with the time they say by starting with Mercury, you know? Build great products. Grow their businesses, I'd guess. That's a pretty good guess. Thanks, Greg. You're welcome. Join our free community at TRWIH.com.