This Week in Startups - Crypto news: Do Kwon arrest warrant, ETH merge, Orange DAO + The Blueprint Part 10 | E1560

Episode Date: September 15, 2022

First up, Jason is back with the tenth and FINAL edition of The Blueprint, where he explains the seven ways to create wealth (2:12). Then, Vinny and Sunny join J+M for a crypto roundtable, covering: Do Kwon's arrest warrant (24:04), the ETH merge (49:54), an Orange DAO breakdown (1:14:24), and more! (0:00) J+M tee up today's topics! (2:12) The Blueprint Part 10: The seven ways to create wealth (13:01) Visa - Learn more about Visa’s online Small Business Hub at Visa.com/smallbusinesshub (13:57) The Blueprint Part 10 continued: The seven ways to create wealth (19:20) J+M catch up on the current state of early-stage dealmaking (22:39) Brave - Download today at https://brave.com/twist to browse faster, search privately and so much more (24:04) Vinny and Sunny join! First topic: a South Korean court issued an arrest warrant for Do Kwon (36:51) OpenPhone - Get an extra 20% off any plan for your first 6 months at https://openphone.com/twist  (38:07) How to make crypto safer for retail investors (49:54) ETH merge, insane stats on crypto power usage (1:14:24) Orange DAO breakdown (1:33:23) Vinny challenges Jason's Disney Jay Trade FOLLOW Sunny: https://twitter.com/sundeep FOLLOW Vinny: https://twitter.com/vinnylingham FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood Subscribe to our YouTube to watch all full episodes: https://www.youtube.com/channel/UCkkhmBWfS7pILYIk0izkc3A?sub_confirmation=1

Hey, everybody, we have an insanely awesome crypto roundtable. You're not going to believe it. Back with us again, Sunny Madra and Vinny Lingam. So many stories on the docket. Let them know what's coming up, Molly. It is outstanding. We're going to start with, I mean, it feels like an hour and 45 minutes ago, which it was the Doe Kwan arrest warrant in South Korea, the state of crypto scams,

and what it's going to mean for the future as the bad guys wash out. And we talk about the Orange Dow. This is a distributed autonomous organization. Basically, it's a venture fund combined with a group of 1300, YC alumni, trying to figure out how to front run the market. Really good idea. But devil's in the detail. So we kind of break it down and try to figure out what it is.

And everybody, welcome to my nightmare, which is Bitcoin energy usage. The merge is happening. The ETH merge going to drop electricity usage in ETH mining by 99%. So we're going to go through some of the energy consumption stats in the crypto world and have a bit of a spicy combo. And we're going to kick off today's show with the final version of the blueprint where I go through the seven stages of wealth creation.

This is going to be a great show. Stick with us. This weekend startups is brought to you by Visa. Are you a small business owner? Did you know that Visa's online small business hub has tools, discounts, and resources to help you run your business? Learn more at visa.com slash small business hub.

Brave is an internet privacy company on a mission to protect your personal info online. Download Brave today at brave.com slash twist to browse faster, search privately, and so much more. All in a single click. And open phone. As a startup founder, a lot of mistakes are easy to roll back. But using your personal cell phone number as your company number is in one. of them. Open phone makes it easy to get business phone numbers for you and your team right on top of your existing devices. Visit openphone.com slash twist to get 20% off your first six months.

Okay, everybody, it's episode 10 of, of the blueprint. What an amazing seriousness has turned out to be. We just did it as a little idea because, well, people ask me for career advice all the time and it gets a little repetitive. And being able to do this series means I can send people to this week in startups.com slash the blueprint and let them get a little bit of career advice. Again, it's not just from my career, some of it is. It's also from investing in startups and watching other folks on their career journeys and being friends with folks who I've seen become very successful.

I want to just have a discussion about money and wealth, very uncomfortable topic. And people want to get rich. people want to have financial security. That's amazing. There's a bunch of studies out there. A lot of them say in the modern world, in the Western world, if you make over $70,000, $80,000 a year, the pressure for money goes way down. You don't have this existential crisis. Oh my God, I'm going to run out of money. Now, if you live in San Francisco, that's going to seem like a joke. If you live in Nashville, it's going to ring true, right? There's different places in the world with different costs of living. I recognize that. I think I read a crazy statistic that New York apartments were up to 4,000. or $5,000 a month each. So obviously, this general rule of the $70,000 a year salary does not apply. But there is a baseline, depending on where you live, where you feel comfortable and the stress goes down. Now, if you're an ambitious person, the stress never goes away. It's never going to be enough. You're never going to be content. This series is not meant to be your therapy. I don't know what trauma you got. I don't know what drives you. I'm just trying to give you some facts in terms of how to become successful in your career.

There is a little hierarchy of how money is made in the world. And I've really given this thought over time, because I'm actually writing a book about money. That'll be my second book coming out in 2023. Hopefully, if I get it done. And one of the things people want to know is, how does money come into my bank account? You just have to think through first principles about this.

How does money get into your bank account? That's the question everybody wants to know. Well, there's a pretty obvious one. You can get a salary. That is kind of like the first level of making money. You could make an hourly salary. You could drive Uber. You could work at Starbucks.

You could get a job out of school, whatever it is, a salary. You do work. You get paid. Okay, great. Pretty straightforward. And you can optimize for your salary, but there's kind of some limits here, right? There's caps. People are only going to spend a certain amount on a person's salary.

If we were talking about a sales executive, you know, some incredible sales executive in SaaS has an amazing book of business. work at Salesforce or NetSuite or wherever. It's incredible $150,000 base salary. They're making $150,000 in commissions. It's incredible. $300,000 or you're the VP of engineering and you're at a startup that's raised at Series B and you're getting $200,000, $250,000. Congratulations. You're starting to hit that upper bound of salaries. You can even see the upper bound of salaries. You look at public companies and see what they compensate the top five or six people. And you'll see a salary line. But then there's the commission.

line, which comes next, or bonus. Commission bonus, you know, similar, but different. A bonus kind of goes with salary. Consider your salary plus bonus. A lot of places, if they're doing well, they're profitable, we'll give two weeks of salary as a bonus at the end of the year. Two weeks of salary out of 50, you double it to get the percentages. You can count on two, four, five percent of your salary. So you make a hundred grand, you get a five-k bonus. It's nice. It takes the edge of Christmas. Maybe you get to go on a little vacation. The second way is, You get your salary, now comes commissions. We're talking about that sales executive before.

What that means is somebody says, okay, you sell a million dollars, we'll give you 5% of that, you make 50K. And of course, if you want to work twice as hard or you're two times more efficient than the average salesperson, you can get to 2 million in sales and make 100,000 in commissions. So that's nice when you get a commission for something, right? It uncaps your ability to make money in one way, but if you're a good founder or you're a good manager, you're going to reset the commission structure every year. You're going to say, hey, last year you did two million in sales. This year, your target's $3 million. Last year, we paid your

$5% on the $2 million, made $100K. This year we're going to go for three. We're going to give you 4% on the first million, 5% on the next million, and 7% on the third million, right? They kind of create incentive structure for you. So the commissions will be looked at. And if somebody starts making too much in commissions, the boss or the owner of the business, or whoever's in charge, if it's a big company, might say, you know what, this person is crushing it too much. We're going to get rid of them. We're going to cut them. And we're going to have three, you know, young guns come in and reset the salary structure. And you, do you see that on a TV show like this new one industry where somebody's got this book of business? They've been printing

money for the company for too long. And they're just like, yeah, these young people can do it for less money. So again, salary and commissions, you can make money, but there's going to be some ceilings and people might tweak it. Because if you demand too much salary, somebody might just say, listen, I can hire two people for that cost. I can hire three people for that cost. You can't push people too hard or else they will replace you, which you would expect them too.

So we talked about that earlier in this series of the blueprint in terms of just testing your market. And the way to test the market is to just look at consulting revenue, which is the third level here of seven that I've identified in terms of making money.

If you have other ones that I'm missing here, Jason at calicanus.com. I'd love to hear your feedback. if they don't fit into one of these seven buckets. Consulting revenue is just say, hey, pay me $100 an hour, and I will do UX design for you. And then you sell out your time, you sell out your 2,000 hours you want to work a year,

at $100,000 seat, you make $200,000. You were working in a 75K position, 100K position, 125K position. You went consulting. Yeah, there's more expenses. You have to do your own taxes. You have to withhold. You have to pay for your benefits.

You have to find customers. There's all this other nonsense and stress that comes with it. That would be abstracted from working in an organization. But you could uncap your, where you could do the next sort of level up in uncapping your pricing. So if you become somebody who's known is a genius in U.S. And you did this incredible U.S. design for Robin Hood. Maybe somebody will pay you 500 bucks an hour and they'll hire you for 100 hours and you have a $50,000 job that you can do in three weeks. And you're like, wow, this is incredible.

But you earned it, right? You made Robin Hood and Com. You've done two of the great apps of all time in terms of UX design. I happen to be investors involved in those. Top of mind came to me. So that's where consulting revenue can start to also. You could see what the market will bear. If you charge too much, you say, I want $5,000 an hour.

Well, you better be making, you know, Steve Jobs's logo for an X, right? I think he famously spent $50 or $100,000 on that logo. It was worth it. And that was a long time ago. The equivalent was spending $500,000 now probably at $250. But he felt it was worth it. Steve Jobs, he's got the money. Why not?

Okay, fourth on the list, stock options. We all know what these are. You work on a startup. You get some options. You got lottery tickets. They were priced in some 401a at $0.09 each. Company went to $1.00 while you were there. Then they got their Series B.

They went to $5. All of a sudden, they went public at $20. You are sitting on $10 options. The stocks trading at $20. And $10, let's say, for easy. of math, you made a $20 profit for each share you got and they gave you, I don't know, 10,000 shares, right? So you made 200 grand.

Fantastic. Stock options. And also in commissions, in stock options, you would put carry out of venture firm. You could debate that, but they're kind of different than commissions because those are capped at a certain percentage. Stock options and carry would be number four. So if you can, if you're lucky enough, my lord, to get carry in a venture firm or to get stock options and they work out. There's like the most accessible lottery ticket uncapped.

This is now when you're starting to get into an uncapped place, right? The thing becomes Uber, Apple, Tesla, whatever it is. My lord, that's when true wealth can come into your bank account. Salarine commissions, you can get wealthy. Consulting revenue? Yeah, you can get wealthy. Stock options and carry. Okay, now we're talking about uncapped. So one, two, three, kind of capped. Four, now we're uncapped. We're in the uncapped category of wealth creation. Number five, creating IP and getting royalties for it. Okay, what does this mean? Okay, you wrote a book, you're Stephen King.

You created this incredible series of characters. And you made the book Kujo or Carrie or whatever it happens to be it. And somebody wants to license it. They want to option it. Okay, you wrote the book. Some publisher has the rights to the book for 20 years. Somebody else wants the paperback. They get the rights to that.

Somebody wants to make it into a comic book. You sell the rights to that. okay, now somebody wants to make a TV show, you sell it, somebody wants to make a movie, you sell it. And that's why there are people who collect IP and want to own 100% of it, like Disney did. Shout off Bob Eiger, Marvel, Pixar, Star Wars, they own all of it. They don't have to pay a licensing fee. But previous to that, when Marvel was independent, or George Lucas was independent, ching, ching, ching, ching, ching, ching, ching, every time somebody wants to use a Marvel character, they cash at the register, boom, give us some money.

Every time you want to do something for Star Wars, you want to do a, Christmas special, you want to do a new action figure, you want to do something at McDonald's? Yes, I will take a royalty. I will sell you, license you my IP. And what do you need to create that and have that uncapped upside where you can keep monetizing your IP? Well, you need to be creative as heck. You need to be a virtuoso. You need to be so good at what you do that you can get that money in and that people want your IP so much. It's a very rare. It's a very rarefied air of the, you know, million people who are going to hear this video, I would say maybe 5% of you

are going to be able to do this. You're that talented enough. That's not a dig to anybody else. It's just that IP is a bit of a race, right? And so if you're watching Star Wars, you can't be watching Star Trek. And if you're watching Star Trek and Star Wars, you can't be watching Game of Thrones.

There's a certain limited number of hours in consumption. And that's why, you know, the 100th,000th horror novel makes no money. The 10,000th makes maybe a little bit of trickle. and the top thousand make 90% of the revenue, and the top 10 or top 5 may make, you know, 50% of the revenue. This is a power law type situation, just like venture capital. So if you're Michael Crichton and you created Jurassic Park,

my lord, that IP giveth forever, which is why Universal wanted it so badly, and I think they own it. Are you a small business owner? Did you know that Visa's online small business hub has tools, discounts, and resources to help you run your business? So whether you're a business beginner or an entrepreneur, expert, find the solutions tools and tips you need to help take your business to the next level. Plus, if you have a Visa Business Credit Card or debit card, you can get access to card

holder benefits like Visa Savings Edge, a savings program which can help you save on everyday business expenses like Office Essentials, Travel, and more. When you enroll your Visa Business Card in Visa Savings Edge, you'll have access to valuable offers, which can help Turn qualifying business purchases made with your enrolled Visa business card into savings for your business. Learn more at Visa.com slash small business hub. Once again, that's visa.com slash small business hub. Visa, a network working for everyone. Okay, now we get to number six. This is, again, a very niche thing, but it also has relatively uncapped upside. If you're a dealmaker and you can buy a company, like a private equity person can, or a banker, or something. Or, some,

somebody who's a dealmaker like Michael Ovitz at CAA, shout out, talking about Jurassic Park. He was able to broker deals. And when he brokered those deals, he was able to capture some commission. He was able to capture some IP, some licensing for all time to come. So those deal makers, they don't exist in the world that often. But when they do, they can get paid forever. In fact, I think CAA wound up having some kickers. And I read this in one of the books for Jurassic Park itself, another example of IP,

created by Michael Crichton, exploited by Spielberg in the form of the movie, and then exploited in the theme parks and sequels, series. My kids watch an animated series now. There's Legos. You get the idea. Well, somebody brokered that deal, and that was Michael Ovitz. He got Spielberg, he got Michael Crichton, he got Universal, he got them all together. And those people can, as orchestrating those deals, one plus one, equals three, and they get a major fee. finally at the pinnacle of wealth creation is the founder. Founder says this deserves to exist in the world. I am going to start this weekend startups, all in podcast, inside.com, com.com, Uber.

I want to manifest a new thing in the world. 99 times out of 100, it does not work. But the one time when it does, if it does provide value, oh my lord, the person who found it and created it, they get a special amount of credit and uncapped upside, i.e. Michael Crichton, George Lucas. We can do it in entertainment. We can do it with McDonald's. You can go watch the movie, The Founder. And you can see, it's a great performance by Michael Keaton, by the way, and a great song, boom like that by Mark Knopfler of Dyer Shreid's fame, one of his great solo tracks, boom like that. And if you watch the founder,

you'll see there were founders of McDonald's, but this other brokered guy came in. Ray Kroc, he said, I'll license the brand from you. Give me the McDonald's name. And then he went out and licensed it. He owned it. They kept the two original stores. He paid them a small royalty. Then he bought them out and owned all of it.

And like Disney now owning Marvel and owning all the characters, I think they've swept them all up except for Spider-Man. They get to exploit them for all time. Ray Kroc did that. He was the broker dealer in number six who came in and then became the founder. In fact, his autobiography is the founder. That's how it works, folks. Now, if you want to trump the line, you could just start a company.

That works for some people. What I suggest is you look at this list of seven, the big seven, and you start working your way down the numbers. Yeah, you get a salary. That's nothing wrong with that. That's how I started. Get some commissions. I had some commission revenue in my life. I was never sales executive, but we had some commission structures for landing new clients

at some companies I was in. I was a consultant. I did do consulting with people. and I got paid hourly. And then I never had stock options because I started creating stuff. And so I very quickly, you know, got to creating IP and magazines and stuff like that. I never brokered deals, although venture capital is could be considered in that area of brokering deals, dealmaker, some way capital allocator, and getting a commission, a carry

for that. So you can, when I say number six is brokering deals and commissions, venture capital falls into that, and of course founders. Those last three, five, six, and seven. are where generational wealth is created. The first three, that's not going to be generational wealth. That's going to be a great lifestyle for you, a great wealth for you.

You know, when you start making over $100,000 a year, you start getting to $150,000 a year as a young person in today's dollars, 2020 is when this was recorded. You're going to be in good shape. You're going to be a really good shape. You put $10,000 a year, invest. Amazing if you can get to that level. It's really hard to get there.

Most of your contemporaries, unless you're some rich kid, listen to this from a trust fund. A lot of your contemporaries are never even going to get to that level where they get through that one through four even. They're making money. They get a great salary.

Maybe they can get great consulting revenue and they get some stock options. Very rare to even get to that fourth level. If you can get to the fourth level of this stack, then you're starting to create generational wealth. You may leave something for your kids. Stock options and carry, that's when it starts to kick in. And it's really great if you can do that without having to take the risk of being number seven the founder because now you're putting it all in the line and you're going to suffer and

you have pain and stress, not everybody's built for it. So four is like a really great sweet spot. And then after that, when you're in that sweet spot and you get a hit, you can make you dangerous. Put a little cash in your account and then you can do anything. So I hope this is helpful for you. This is the wealth creation stack, one through seven. And this is the final episode of The Blueprint.

Go to This Weekend Startups.com slash the blueprint to watch all 10 episodes. And I'm going to do it again next year. I think I'll do it in Q2 or Q3 of next year. and if you have any ideas, four topics you'd like me to cover about your career, about being a better executive, I'd love to hear it. Jason at calicanus.com,

CC producers at This Weekend start upst.com so we can put it on the list of topics you want to hear me cover and I'll see you next time. Bye-bye. It is Wednesday, Molly. We have made it to the halfway mark. Second Wednesday of the month. It's the second Wednesday of the month.

Oh, so we're almost to the halfway mark of the halfway mark. Yeah, what happened? I'm sorry, but what happened? How did September? I literally just like was looking through email and I saw one from August 31st that I had not responded to and I was like, whoa, whoa, whoa, what it has? How did this? What's today's date?

Two weeks have occurred already, September 14th. We're halfway through September and I feel like I'm supposed to be in Italy right now and it's August. I don't know what happened. My summer's gone. I'm going to be skiing in about three weeks. I don't have my moms. Wait, what are my fall? I don't know my fall decor.

What's mums? It's, I discovered this on the East Coast. It's totally a thing where everybody puts out a pot of mums. They're these cute flowers. And like you put one on each side of your door. It's like the, it's like the Connecticut decor of fall. And I'm like,

I'm in on this. I'm doing this. I'm with producer. This is the important startup news of the day today. It's fall mums season. But also, I know why Howard Stern, you know,

went to like this crazy deal with, with Sirius where he just takes the summer off. Like, doing a daily show is exhausting. I mean, it's fun. You get into a rhythm. and I look forwarded to it every day,

but it does make time go by at a brisk pace. I really had vowed like six years ago to never do a daily show again. Six years ago, I was like, I'm never doing a daily show again. And then the next thing I know I'm at Marketplace doing two, two shows a day. You were on the two for right. The two for, and then I'm like,

I'm going to become a VC and do a podcast six days a week. I told you. I have really good advice for you. Like, if you're, if you're trying to figure out how to get more time on your schedules,

right somebody, you just add 10 hours. Exactly. You just decided to work 10 hours more a week and you're told good. I'm dumb as a box of rocks. I'll tell you what. No,

it's great. It's so much work. I'll tell you the good thing. I tweeted today. Welcome to the show. But I tweeted today. And I was talking to our president, Mike,

you know, this whole thing where when you're trying to get into a deal last year. Yeah. And the deal's closing and you don't have time for diligence. That's all reset. And you can get to meet a company, meet the founders, ask them some questions, do some diligence,

have a second meeting, maybe a third, answer their questions. You know, and kind of, I don't want to say take your time on a funding, but have a reasonable, let's call it 15 to 30 days to make a thoughtful decision about going into business with somebody. And that's really good for both sides. So just for people who are angel investors who are listening, if you're a member of the syndicate.com, of course, the syndicate.com slash climate. But it's a great moment to just, I think, be an angel investor. It feels like the old days where high quality companies, high signal, great founders,

and you have a little bit of time to be thoughtful about consummating, you know, what becomes a 10-year partnership in many cases. That's fair. That's nice. It's nice to know you can walk instead of sprint, although it's not my style. It's a little slow for me. It's starting to feel like magazine timing around here and not daily news timing. I'm just kidding.

Totally not. You can, of course, try to close a deal quickly. But, you know, no, it's never, I don't think it's worth it. It's nice to be able to be like, thought for a minute. User privacy is one of the biggest topics in tech right now. And if you care about your privacy, you need to check out Brave, B-R-A-V-E. Brave is going to shield you from trackers and ads and cookies and all the creepy stuff that track you across the web.

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All right. Well, speaking of thoughtful, we have two of the most thoughtful people in the crypto space and every other Wednesday, 26 times a year. These two gentlemen, two of my close friends, two besties and of course now becoming besties with Molly herself, they're coming in to educate us on crypto. We are crypto-sceptics, I believe, but crypto-curious. Am I describing our position? Yes, I think that's 100% accurate.

Crypto Curious. Yeah. And so cautiously open-minded. Cautiously open-minded. And so with us again, Sondi, you can call him Sunny. He's the co-founder of definitive intelligence. I'm an investor in that company. And that company lets use his view on and off-chain data to understand what the Web3 user base,

what the community is actually doing. Welcome back to the program. Good to be back. Sunny. Also with us. Go ahead, Molly, you can introduce the other guy. Share the love. I'm not looking at them, not the dog.

Also with this Vinnie Lingam, co-founder of Civic, a startup that encrypts identity information on the blockchain. And your new startup, remind us of the name again. You've got a new startup. Wait room. Yeah. Wait room, yeah. That's it. For setting.

Wingroom. One-on video conferencing. Like drop in for people who are operating on previous time where it's like everything's got to happen like this. drop-in meetings. We're focusing on stand-ups, stand-up meetings and office hours, so you can just get a, you know, in a virtual space, get people to line up to ask your question or chat for five minutes. And we've really lost the whole water cooler culture,

knocking on someone's door in the office culture at work and no offices anymore. And we're trying to create the virtual version of that. So which we like to. Is it designed for enterprise? Is it designed for consumers or you're kind of trying to split the difference there? Yeah. We actually launched it a few months ago. We tried the influencer market.

And from a business perspective, I mean, we had lots of people using it, thousands of people using it. But the problem is that influencers don't always want to go on a regular basis. So it's very lumpy in terms of usage for influencers. But when more we speak to companies, the more we're just seeing everyone's having Zoom fatigue. People want to have, you know, use this product on a daily basis. We use it for stand-ups every day. We get our stand-ups in the company done in less than 30 minutes. Everyone gets like two minutes to give a quick update.

very, very, very efficient. And so we're basically repurposing it for for S&B enterprise teams, et cetera. Weightroom.com, W-A-I-T room.com. Nice. That's a great. Great. The chat, by the way, is, of course, also noticing you have a wait, it appears you have a weight room behind you.

Lots of puns. Lots of puns happening in the chat today. Is that a tonal behind you? Is that a tonal? Oh, that's a total. Look at that. It's like a flex and a flex. I don't have a tonal competition. Do they have a total competition mode where we could,

you know, like go. I would totally do that with you, Jay. Come on, let's do it. It'd be fun if we'd also. Vinnie, you know, it's interesting, Vinny and I did like a competition one time where we just held each other accountable. We would do a workout every day and we'd send each other our workouts or we were doing a steps bet.

Steps bet as well. All that was like really increased our performance. I love that kind of. I think we got to start with the breaking news that, uh, about Tara Luna. We have a solid agenda. here. But I was wondering if we would see a perp walk at some point, if we would see somebody actually arrested due to a crypto, excuse me, I'm a little, I got a little bit of a sort third today, if we'd actually see this. Maybe, Molly, you could queue up what breaking news has

happened just at this very moment. Yeah, so it has been breaking, I think just this morning, maybe last night, that a South Korean court has issued a warrant for Doquan's arrest. That, of course, is related to the Terra Luna Collapse, Doquan, and five others, as far as we know are currently located in Singapore. The allocations include violations of South Korea's capital markets law. Doquan has been contacted for comment but didn't reply. The terror collapse, of course, in May was the kind of lynchpin, right, that started the current, you could say, crypto winter that were in.

Thoughts on this? And like, is this going to be the closing of this particular chapter and then we can move forward, do you think? And by the way, Doquhart is tweeting. Breaking news, To Quan is tweeting right now? This is kind of weird when you're on the lamb to be tweeting but I guess this is the world we live in

so additional breaking news. What are you saying? What are you saying? It just tweeted like it's on your screen. Is it the sun or is that the moon? Is that the moon? It's a Luna. Luna?

What is that? It's the moon and then somebody replied to him I like Doquan, L-O-L and then he sent an emoji kissy face back. so okay so he's doing fine yes he's very stable yeah i mean i'll i'll start by saying um i don't think he's the worst offender in crypto a low benchmark to be sure you know i i think that um it's probably he probably had good intentions and bad governance uh which is what what often happens when these things collapse look i say that prefacing that if they find any un you know like unsavory conduct

then I take that all back. But my understanding is that he basically did what the bankers did in 2008, where you privatized profits and you socialized losses. And none of the bankers in 2008 went to jail for that. So he probably did something of that. Now, if you tell me that, hey, the guy was dumping Luna the day before and crashing the system and he's got a hidden bank account in Switzerland, I take it back.

But from what I can see right now, all he did was replicate what the banking system, you know, kind of did in 2008. interesting. Yeah, I would kind of say, you know, Molly, to your point, like, what does this mean? I think hopefully we can get some clarity building on what Vinny said is what happened. And, you know, we really, I think everyone needs to know, and then from there we can kind of move forward. So I actually think it's a good thing if he actually, you know, comes to it and we all learn what happened and then we can kind of build the safeguards around it so we can move forward together. I think without it, if it remains in like kind of a shroud of mystery, it's a little bit problematic for everyone. And then the trust factor is way low. But I think, Vinny, you make a really good point, too, and it sounds like some of this comes down to maybe the difference between laws in South Korea related to capital markets and laws in the U.S., which are still pretty minimal. I think it's not even an illegal thing, right? So I think on a global basis, we have a high variance between, you know, governance and ethics and morality across the spectrum, right? Where I come from in South Africa, I think that the governance levels are a lot, you know, the bar is a lot higher or used to be when I'm a lot. I grew up a lot higher in terms of, you know, ethics, morality, etc.

When you move outside South Africa to other countries in Africa, it just slides downhill. Even in the U.S. and other parts of the world, it's like, well, you know, people take a lot more risks that they shouldn't take. So Africa's biggest problem actually has been, it's been a very conservative country from, you know, apartheid and a whole bunch of other things in the, you know, between 50s and 2000. And so my point is when it comes to corporate governance, it's something which we just don't, like, I've seen them craziest stuff happen all. around the world where, you know, founders go and throw massive parties and pay themselves

over they want and this and that. And the crypto world, that's just amplified. And so in certain countries, the behavior may be illegal, you know, maybe, you know, unethical. It may put shareholders out, whatever, but it may not be illegal. And so I don't know what the climate in South Korea and what the laws are there, but I can say there's a very broad spectrum in terms of what's acceptable or what's not when you go country by country and governing structure but govern structure and culture by culture. Yeah, this is a really interesting one because my understanding of the Korean market was they have, they vacillated between being super conservative when it came to crypto.

Then the people of Korea embraced it in such a major way that the politicians became permissive. And then, of course, we get a collapse like this and people are upset. So now they're vacillating back to, you know, maybe enforcing rules. So do either of you know the crypto market in Korea? Because I remember when these crypto projects were launching, one of the playbooks was who sell to retail in Korea. Is that actually accurate?

Because I did have companies that were pitching me, say Korea was like in their top list of places to, you know, do an ICO, to do a coin offering to launch a product. I mean, I put, I don't, I don't, I don't, you may have a take care of this. I don't personally know what the, what the market is. I do agree that I have heard, yes, I otherwise, that it is very consumer-focused. And that is the problem, by the way. I mean, for those of you who think that I'm a crypto, you know, I'm not a skeptic, you know, in the same way that Jason and Molly are. But I do think 98% of these things are scams.

95%. There is some very high percentage number. I think that's the same way. Yep. That's the same way that we are. Yeah. I'm the guy looking for the 5%. Right? Out of 20,000 crypto projects, I want the top 50 or 100 to invest in that are going to last and survive for the next five or 10 years.

Majority of these things are rug pulls. They get you to put money in. There's some guy promoting it, hyping it, selling it, volume goes up. And then they just pull the rugging you, the team dumps, then no one really believes in the projects. The other sad thing is actually, there are also a lot of good projects where investors who have got long-term views get into it. And whether it's through third-party groups that are pumping and dumping the coin or whatever, it is, they mess up those projects. So you have these externalities that come into play where people go, oh, this is a great project. Let's pump the coin. Let's sell it to retail. Then let's dump and get out. And it actually affects the project as well. And Sunny's got a lot of this data because of his company and what they do there. But it's very, very sad the way crypto is

right now. But if you ask me, should it be regulated? I don't know how you can regulate it when you have 180 countries. You quite even agree on how to fix the world's energy. problems right now. Yeah, I think just building on that, like financializing before product market fit is really risky, right? You know, you guys, you know, Jason and Molly, you see this in your investing business, right? So if you financialize these things before they've kind of achieved actual traction, it's danger, and that's what's been happening a lot in the crypto markets.

Now, the flip side is all the data is available to everyone, so it's not as opaque as it is, say, in startups where you have to rely on the company to provide you that information. you can look at their on-chain behavior, you can see what's happening, you can see who the holders are, you can see what the transactions look like, and so you have to kind of merge those things together in this new world.

If they are sophisticated, right, you have to know how to look on the chain and have tools for that. Are there a lot of tools for that? Yeah. There's a decent amount now. Yeah. There's you.

But this is the problem. This is the problem. Retail people that you're putting in, I mean, put an example, you're putting in 500 bucks into a project. Are you going to go and spend 20 hours researching it or even 50 or like 10 hours. Like most of the time, it's like,

I'll put 500 bucks in, I'll put a thousand bucks in. You know, you don't have the time to do the research. You kind of rely on word of mouth, you know, friends. Like,

I see some in the comments here and people ask you like, what's the definition of a scam? How do you, you know, look, it's very simple. When the intention of the project is not to build the technology,

but to enrich the people behind it, that's kind of a scam in my mind, okay? And the opposite would be, for example, I mean, I always use a good example. Like,

Civic did a token sale in 2017. You look at it on chain. We're still sitting with 330 million tokens. One third is still there. We haven't sold any. We did the ICO. We've built a whole bunch of stuff, credit nonprofits, et cetera, around this.

But I haven't taken a profit out of it yet. I'm still waiting to solve the product market fit issue, solve the industry issues. What we find otherwise on other projects is people go and run these ICOs. They take the money. And if you go and follow some of these founders on Instagram and wherever else, what are they doing?

Flying private jets, yachts, huge part paying for ecosystem funds and shit like that. It doesn't, I mean, you know, whatever. This is not going to end well, and it hasn't already. I mean, I didn't touch the whole Terra Luna thing either. I didn't put money into it for lots of reasons. Like, I've got issues in stable coins and how they're done. This is a very complex ecosystem.

And unfortunately, they're preying on retail, people who just don't understand it. And maybe it's like lottery tickets, right? You're putting 500 bucks in a thousand. Modern day boiler rooms, right? We saw this in stock markets. in the early days as well. Just regulation has to come in and help with these things. On the program today is Darina Kulia.

She is the founder of Open Phone. Welcome to the show, Dorena. Thank you so much, Jason. Great to be here. Now, what mistakes do most founders make with phone numbers in their startups? Really, delegation, right? Because what ends up happening is that as a founder when you're starting, you do everything.

You are the salesperson, the support person, the... You make the coffee, you do HR, marketing, sales, recruiting, everything. Yeah. you have people joining the team and what ends up happening is if if as a founder your phone number let's forget about the privacy the spam all that problem let's say it doesn't exist but you're not going to want a year into your company two years into your company to have all the support calls or all the questions come to you because now you've just hired your support team why did you hire them so that's another reason why having that separate number makes so much sense because you can

always delegate those calls to your team as you grow all right everyone. everybody, here's your CTA, the old call to action. Twist listeners, 20% off any plan for your first six months. Just sign up at openphone.com slash twist. And if you got an existing number, no problem. They'll put it right over. Openphone.com slash twist. O-P-E-H-O-N-P-H-O-N-E. Dot com slash twist today for 20% off. Let's pull the thread on this data question and how you could maybe try to identify the 5% because, Sonny, you're saying the data's available. And you're saying it's really hard to dig through that data. Like, should retail just stay out of this for a while until those signals become more clear?

Like, what are the, what is the smoke that you should look for that says, no, this thing is a dumpster fire as opposed to this is part of the teeny, teeny percentage that is real or could grow into something really meaningful? So if we take a step back, Molly, right? Think about penny stocks, right? Someone's commenting on this in the chat, right? So in penny stocks, like what, there's some level of risk that's very similar. but you have reporting requirements, right? So those companies have to basically, you know, do quarterly reporting, talk about, you know, a bunch of standard metrics.

And so the same way that you would, now, does everyone who invest in penny stocks do that? Probably not, right? They get a call from someone in a boiler room saying, hey, I heard about the stock. It's going to go through the moon. There's deals about to happen. All stuff that really, you know, shouldn't be happening. And so I think very similarly, there are a bunch of standard metrics, like to ask your question, yeah, you can look at how many holders are there, what, what,

what hold concentration looks like. And there's lots of tools. You can use definitive. There's other tools out there as well, like Nansen and Do that you can go to and get this information from. And so I think the beauty of Web3 more so than even like say those, these public companies is that because the asset itself is digital primarily, all the information is online.

So all the stuff that you'd want to look for or questions you want is like, what are your daily active and how many people are transacting and how many holders are there? Is it all, you know, what Vini talks about is one third of the. tokens are held by the company. You can go and verify all that. And I think, you know, that, now what will probably happen is there'll be institutions that will start to develop that will do that for you and say, here's a bunch of safe

things that you can invest in because we've vetted those things through the on-chain analytics. It'll literally, it'll be like our syndicate model. Like somebody will do, we'll do all the diligence and then we'll send it out to the syndicate and say, like, we are confident that this is a good deal. And then, yeah, exactly. Exactly. Exactly.

Well, that's a good point. If you want to, sorry, Jason, if you want exposure to crypto and the, The problem is this, okay, when the high-in-eaters individuals have exposure to crypto through funds like, you know, multi-coin, I'm a partner there. But we have minimums, like $250K,000k, whatever into the funds. So you can't just come in with a $25, $10K, $5K check. It doesn't work. So there's this unfortunate problem where the people who actually understand the space and

have the skills can't really service retail. And retail investors have to just go and pick a random coin on Coinbase or whatever exchange they're on. and hope for the best. And that's half the problem. So what really is missing from the industry, I think, is a large-scale fund where it's curated, but you can have more than 100 investors or more than 1,000 investors, each putting in 5K, 10-K, whatever exposure they want to crypto.

And that fund is managed by people who are saying, we're going to pick the top 50, 100. There'll be some allocation to some risk assets. Most of it sits in Bitcoin, Ethereum, Solana, Falcoy, whatever. and it's a balanced portfolio and don't take unnecessary risk with pump and dumb coins along the way. That's what should happen. The problem then is you've got the regulatory history, right? And then we can go into, I think we're going to chat about the orange Dow and how they've done that as well later on. But there's some issues here.

But that's ideally what we need is people not just buying lottery tickets. And as you're saying, you know, you put out one of these projects. There are people who specialize in pumping and dumping. So even if the team had great intent, now there are people who say, okay, there's a new offering. We got in this thing for a penny. Let's all get in on it. We run a whatever, those telegram rooms, I guess, are where most of these happen or in Discord. And I've seen them.

I've screenshot of them. They're literally named like Pump, Pump, Pump. And they get people instructions. Hey, buy this coin. At this hour, we're going to do it. Do not sell until this hour. And you know, that power hour is when the original people are obviously selling. It's happened to good projects.

It's happened to lots of great projects and honest projects or honest guys. Like, I've seen it. I've been part of teams where, like, nothing was sold by the team, but everyone else, you know, externally came in and pumped it. And that's because the regulations, you know, there's no real, it's not regulated, right? Anyone can do that. Unless people follow the rules that already exist, which they're not, they're kind of suspending disbelief that this is another rule set. When the SEC is saying, as we talked about, I think maybe two episodes ago on the Crypto Roundtable, that, you know, hey, maybe follow the rules. that already exist. There is a corollary to this. I mean, if you were to look at equity crowdfunding sites,

there are high-quality ones like Republic and C-Invest. I'm not an investor in either of those, but I know the founders of both. And I've actually used both to raise money for Inside.com because we wanted our newsletter readers to be able to invest in the company, small amounts of money. It's worked out wonderfully, delightfully. The problem is there's a whole cohort of another hundred of them that will put any company up. All they care about is the fees. fees. So just be very careful. And then many would argue SPACs had a similar issue. There were some spacks that were absolutely real companies. BuzzFeed went out by a SPAC. It's a real company with hundreds of millions of revenue. But there were ones that were incredibly speculative that didn't

even have products in market. I guess the truth social, the one that Trump is doing, I believe it's called truth. That hadn't even watch, right? It was just like, here's a pitch deck and we're using some open source stuff. So buyers do need to beware. What would kill specs is if you just lowered the listing requirements at the exchange and said, look, people can list these things. The moment they're profitable, this cash flow or whatever, and these are the rules. And you lowered it. You wouldn't need to do a spec. This is where I am conflicted.

And the devil is in the details. I think it would be amazing if you could take companies public earlier and people could participate in them with some protections, right? It would be nice if people could invest in an Uber or LinkedIn. I've talked about this many times, Molly on the pod. you know, in the first five years of the company, I suppose, to year 10. Well, check out, check out this. I mean, have you guys seen long-term stock exchange,

Eric Reese's company? I'm a seed investor in that. They've done amazingly well. Explain what it is and what the mission is. Yeah, of long-term companies. Basically, it's public listings. They've got, you know, they're trying to get a higher standard,

but more long-term. So instead of focusing on quarterly earnings and quarterly growth numbers and basically being a slave to the street, you publish what the long-term prospects of the company on what you're trying to do, and you get investors who want to back it for the long term to do it, and it's a regular, you know, it's a regular, it's a regular stock exchange, but they're not trying to go after companies that are going to be run quarter by quarter,

because that's where things fall apart. And so, I think they've listed Twilio there recently, and they've crossed this at Asana as well. But it's a different type of stock exchange, and they've got, I think they would, I'm not sure this is in yet, but they were doing, trying to do something around voting where the longer you hold the shares for, the more votes you get, that sort of thing in the governance of the company. Like, that's very powerful, right? It's like day traders shouldn't really have a say in voting on company issues. If you, you know, like, I think that there's, there's something to be said for the longer

you hold a share, the more voting power you have. So if I've held a share for 10 years, I should have 10 times more votes than a guy who buys it yesterday, right? At least 10 times, maybe more. Which is something crypto actually with smart contracts would be uniquely qualified to do. So just to wrap this one piece up in terms of regulation, in terms of the actors who are, you know, doing these projects and the ones who are around it, perhaps, you know, the next phase, you know, decade two of crypto for, if we're calling this the second decade, maybe the principles of these projects taking ownership and building into them some thoughtfulness that creates downside protection. In other words, hey, anybody who buys this token, the token, you know, will trade at these intervals. But if you're buying them, you know, in this pre-sale or whatever, you have to hold them for five years.

And here's a list with all the rules. So if you did buy it a penny and you were, you know, the famous example of Jason Horowitz, as Jack would say, like, you know, meet the new boss as the old bus. That was the big criticism is that, you know, all these open, you know, supposedly open new projects in crypto. were just owned by the venture capitalists again and who front run the market. That's the allegation. I don't know if it's true or not exactly. It's hard to know. But just having complete transparency on that, do you think there's a possibility,

sunny of that happening and then given what you're doing in terms of tracking this, if people said, here's the cap table and the cap table rules. Like here is a public cap table. Here is the disclosures of who owns these things. And here are the rules by which they live. wouldn't that change the whole industry? Yeah. In fact, this is the direction it's going in.

Bologi had a really good post at the end of last year called Mirror Tables. And that's what he was sort of leaning out in there. And there's a few companies building in this space right now, actually. And I think that infrastructure for around that's starting to happen because people are asking the same question that you did is that, hey, it's meant to be this really transparent thing. But then all this stuff happens sort of off chain. Why isn't everything on chains that everybody can see it? and we all have access to the same data, which is sort of the underlying ethos of crypto,

is that everyone has equal access. It's all available. And so exactly, this is a really good post. Everyone should read it. And there's a few companies building in this space, which is really exciting. And I think as this comes, as the companies that are building this come together,

and in fact, one of the companies inside the Orange Dow thing is doing this as well. So I do start to think that there's going to be some convergence happening here along the lines of what you're talking about, J.C. What's interesting to, and then I really want to ask you guys about the merge,

or rather bait Vinny. But what's interesting is that there's sort of two ways, it seems that we could go forward, at least based on this conversation. And one of them is, one of them is centralization, right? Like when we talk about a centralized fund to say, you know, the J-Cal of the investment side of this,

like, yeah, we've done all the research. You can safely invest in these coins in these projects. Like, that's great. That's continuing to replicate the financial. system that we already have and centralize and put gatekeepers in between this opportunity that was in theory meant to be the opposite of that. Or, Sonny, it seems like what you're proposing is use the tools of the technology to solve the problems that are inherent in the technology.

Because an unregulated ecosystem will always kill everything around it, right? It'll just grow out of control and eat it alive. But it seems to me that if you are a crypto proponent, you should be looking to the tools built into Web3 to solve the issues we have now. Because like, look, no one's going to behave if the power law is in the room. Like, there's no universe in which everybody's going to be like, we all agree to follow the rules for the health of the ecosystem. Like, nah, there's money to be made, son.

Yeah. Yeah, no, I think you're right. And I think that that era, you know, as JCal called it a few minutes ago, like the era we're coming on is with these tools now. And so we'll see more of that. And we'll look back and we're like, oh, my God, I can't believe there was a time we were investing in these projects. We had zero transparency.

on what was happening. Now we have these tools and everyone has access to them. And that democratizes everything in the way that we think, I think it should be, right? And then it's sort of what you guys are doing continues to be out there for the specialty and the knowledge that you guys have. But it allows anyone else to kind of go out and say, hey, I've got these collection of assets that I've vetted through these tools

and you should invest in those things, which I think is great for the ecosystem. All right. Let's talk, Heath Merge. Let's do it. We are 11 hours away. It's interesting if you just do a search for ETH merge on Google. They literally give you a countdown clock. So this is such an anticipated event that Google made, do a search producer Nick for each merge.

And it's pretty funny. They literally made a countdown clock on Google. You know, Google will make a widget for things that are important, you know, like a movie or something. Like that 11 hours and 43 minutes. But that's because it's so awesome, right? Vinnie, everything about it is perfect and 99% less electricity usage and it's going to make it so much more efficient and all the transactions are going to settle immediately and Nirvana will arrive. Sounds like Salana.

Oh, talking to the book here. Okay, we got a book talker. That's what I'm here for. But I mean, to be fair, you know, they're moving to proof of stake, which is what Salon is. And look, there's a 99% chance. Everything's going to go fine. I had a conversation last night with another VC in the space, Cryptoviec, and we're discussing, like, what are the issues here? And I said, look, it's highly probable that this, I mean, let's say almost a certainty that's going to go through smoothly. However, if there are any bugs, issues, attack vectors that may exist on Ethereum

or a layer two that's using Ethereum or something else, it's unlikely it would have been disclosed prior to the merch. Just because the test nets are available, everything's fine, any malicious actor or hacker is not going to tell you, hey, I figure out how to steal money out of this thing after the merge. They're going to wait for it to happen, then steal the money, okay? And so that's the issue here. Now, it's probably not going to happen.

But if it does, I think we should at least assume it's a non-zero percentage chance. It can't be zero. You agree, Sunny? Non-zero chance? Yeah, always a non-zero chance, right? Okay, so it's always a non-zero chance. So then I'll just challenge you both. to give us, what do you think the chance is?

1%, 2%, I think well below 1%. Okay. I think somewhere between 1 in 250 to 1 in 1,000, but it's not... 1 to 10% chance you're saying, wow. No, no, 250 to 1. So like 0.4%. Oh, I see, 250 to 1, that's something that happened. So well under 1%.

So you're both well under 1%. Got it. Yeah, under 1%. It's been technically reviewed. It's really good, et cetera. That's not the issue. And I don't think Ethereum itself, I think the chance of something wrong with the Ethereum chain is probably less than one in a thousand, okay?

The issue is with the collateral damage around all the other systems that rely on the Ethereum, the main chain, right? So there could be some, again, the surface area is very, very, very wide and broad. So what you're saying is there could be another project. Yes. That interfaces with Ethereum that, hey, the code could just break. Yes. And we don't know.

And someone who encoded a variable or something and everything is, you know, and, and they didn't see it coming because the attacker didn't reveal it with the testing, right? Because they're not going to. Because why would they? Well, walk us through, though, the benefits and why it's worth it. Give us the like the merge 101 for people who are new to this, you know, proof of work from proof of work to proof of stake transition. The most important thing is, first of all, it reduces Ethereum inflation because now you're a real. rewarding stakers as opposed to minors. And it reduces the amount of energy consumed by the Ethereum Network.

So it makes it very green like Solana. And it's a lot better for the environment. So I think that from just those two points, and I think there are other things that will speed it up and make it cheaper, et cetera, over time. But just those two are just good enough for me right now. This is a very important move. And it's about time.

It's taken a lot longer than people thought. So I think that, you know, between, look, this is the thing. If people are listening to this, if you're trying to invest money in crypto, just buy Ethereum, Bitcoin, Salana, and you're probably going to be okay. Like, you don't have to go chase off to coin number 300 down the road. Yes, you could make 50 to 1, 100 to 1 on that. But the risks are really high. You're probably going to lose your money because you just can't pick. Just pick the winners.

Like, just play on some of the winners. I know people, like, you know, people always ask me about, what do you think about Cardano and Pocodoc and all these other things? Look, the safest bet today is Bitcoin. I mean, the second safest bet is Ethereum. And my opinion, the third safest bet is Solana. Not investment advice, but explicit investment advice. We got to start at the top. You don't know what safe?

Turns out these are, turns out these maybe aren't securities. So it's like fine. No, no, but it's not even about that. It's about like the fact that if you just look at the volume, Solana does more transactions than every other blockchain in the world right now. Mm-hmm. I mean, yeah. But 90% of them could be garbage for, really?

Oh, really? Yeah. Because the transaction costs are so low or infinitesimal that there's just a lot of garbage transactions on the chain. So I think that's a noise on the wire. Could be more noise. Does the, not entirely. I mean, there's probably some percentage there. Sunny, go ahead.

I think you were going to answer the what's good about it question. Yeah. Look, ultimately, I think this Vinny touched on it, it lowers the energy consumption, which is very important. It's been a big criticism. And I think it's limited the amount of institutional investment that could happen. And I don't know if you guys deal with it in your fundraising. but a lot of institutions start asking that type of question around investing, right? Are we investing in something that's like bad for the environment?

Ultimately, I think there's a five-step process that they're going to undergo to get sort of transaction speeds up and things like that. And this is like sort of the first step. And we talked about it a little bit last time, right? This doesn't necessarily right away lower gas fees or anything like that, but it puts things on a path to increase transaction speeds and ultimately, you know, lower gas fees, but not not in this particular event, but it's like sort of the first major step of,

I think a five-step process that the Ethereum network will undergo in the next couple of years. And then I think it goes into like 100,000 transactions a second or something like that, which then Vinnie will say, so long I can do today. Yeah. This is a chart. I'm not sure how old it is,

but it was just showing, and I think it's relatively directionally correct, the amount of energy consumed by one Ethereum transaction, producer Nicky, you pull it up, versus 100,000 Vs, transaction. So it is known that if you want to have a distributed network doing work, it's not as efficient as the one that Visa has been grinding on for whatever, three, four, five decades and whatever two, three paradigm shifts probably from mainframes to

mini computers to, you know, client server to cloud computing. But if they're, if they're even using cloud computing right now. But my lord. And try to contextualize these numbers, like a single Ethereum transaction is currently 200, uses 205. kilowatt hours, which is equivalent to the power consumption of an average U.S. household over six days, seven days. What? Wow. That's obscene.

I mean, the, hello, welcome to my rant already in progress for low these last few years. Because this is, I mean, what I wonder is that as we make this, as, as, as Eve makes this transition, does this start to become a problem for Bitcoin? Because like, it's indefensible. Like, I'm sorry, the energy usage is indefensible. and continues to be so, and I have been saying this for years, but it's like, at some point, to your point about institutional investors, if you've got Solana and you've got Ethereum and you've got proof of stake projects that are using a lot less electricity, can you justify as an institutional

investor with presumably some kind of a net zero goal having any Bitcoin holding? I will take the other side of that argument. Yeah, that's go. I think that if anything, Bitcoin is going to be one of the things that, accelerates the move to renewable energies. So one of the things keep in mind is the more expensive it gets to mine Bitcoin, and the more you can't use marginal energy consumption, you can't use electricity at home, you can't use gas.

So those miners have to move to places where renewable energies are being used and are cheap, so next to nuclear plants, etc. And if the price of Bitcoin grows high enough, it actually accelerates us as a species to renewable energies, because it cannot consume the traditional sort of fossil fuels. It has to rely on clean energy like nuclear. And that if the demand for nuclear grows substantially because of the amount of miners that need to mine Bitcoin, geothermal included,

you're actually going to see an increase in supply because it takes years to put these plants up. So the thesis on a 10-year, 20-year trajectory is that Bitcoin can accelerate us to renewables by forcing by the market actually saying, we don't trust government Fiat, we don't trust printing of money the way it's happening right now. We do trust Bitcoin. So the demand for Bitcoin goes up.

It increases the amount of security required for the network. And then those miners cannot go and burn the fuels that you're using in your home. So, you know, it's a virtuous cycle at that point. I have been hearing this argument. No, I know it seems like a stretch.

Yeah. Well, it's a 10-year argument. Like, I've been hearing this argument. But power plants are five years, seven-year arguments. Like, this is the problem we have in energy. Exactly. And wouldn't you rather have a power plant, like I would much rather have a nuclear power

plant come online to power Europe than to power more mining. But how do you get priced at? It's not going to be additive. But this is the problem. So this is where capitalism beats politics, okay? In a political world, we'll go back and forth arguing all day long about nuclear and green and blah, blah, blah. And when you have this like huge, you know, thousands of Bitcoin miners, all.

saying, hey, we'll move to a country if you put up a nuclear power station, and the country goes, hey, dang, let's do it. We'll put up a nuclear power station today, move your mining equipment here. All of a sudden, you have real fair market global competition for cheap electricity, and you're going to see more nuclear power plants, you know, spot up around the place. I actually wonder if that's true. Like, I wonder if. Oh, absolutely. If you, if you said, if South Africa said today, okay, and I live in San Diego, but if I went back to South African became president and I said, okay, we're going to go and put up three nuclear power stations across the country and make it a tax-free zone for Bitcoin miners to set up data centers,

mining equipment, and we're going to give you the cheapest energy in the world. They'd line up. They would line up. And they would basically bring power to Africa. So then it would take 10 years to build that plant. And right now, you have Kentucky and Montana saying, just come here because we have coal. Well, it doesn't matter because coal is. No, coal's going to be priced out.

This is the point. all the marginal, all the marginal energy, all the non-renewable energy, it will be priced out for powering Bitcoin mining within two years, probably three. So we already have this problem. I mean, guys, people can't afford to run their kettles in England. How are they going to afford to do Bitcoin mining? It's not going to happen. I wonder if there is an energy disruption, Molly, I wonder if crypto becomes one of the victims, because if, like, this is really interesting, if Europe has this really cold winter. And people are running mining.

Texas, right? You already had a situation in Texas where they basically were like, hey, guys, you need to turn these rigs off, right? You need to shut down mining to preserve. Oh, did they tell them to do that? Yeah. So are there any rigs in those regions now? Are there rigs in Europe?

Do you think? Well, there are rigs in Europe. So a lot of European miners, I mean, for example, Iceland is a huge mining operation of Iceland because of geothermal electricity. So what I'm saying isn't, guys, what I'm saying is that if you think, It takes zoom out. Take a zoom out view of the world. If you have a Bitcoin miner, you know, is next to a coal plant and the price of it goes up

5x, you jump on a plane, you take the miner with you, you go sit down in something like Iceland and you use geothermal or you go next to a nuclear power station where it's cheap. Bitcoin mining operations will move to where the cheapest electricity is because they don't have a choice. They cannot operate at high electricity costs. So I think it's a relationship argument. I think both of you guys are right. In the long term, I think Vinny, you could be right.

that this will create demand. And in the short term, I think you're right, that people might burn stuff that's bad because somebody might be like, I got a bunch of coal sitting here and I'm willing to burn it below market in some crazy country that doesn't care about the environment.

I actually think like, I actually think like with technology, you have like, no, you have like Moore's law, right? Which is, and versions of that. And I shared something in the chat, if they can pull it up of like the typical energy usage

of different types of transactions here. So you see like a Google search, down to light bulbs and charging your iPhone, right? And so, look. Why don't you read that for the audience, just so people get the idea? Yeah, so like a Google search is like a thousand jewels, right? A charging your iPhone is 45,000 jewels, right? And, you know, watching an hour of television is 540,000 joules.

And so, look. And a single Solana transaction is 1,800 jewels. Yeah, it was not fair. And then two transactions, 126,000 jewels. And look, look, my, I think all of this, will just keep improving, right? And so I think technology will just find a way to trend towards, you know, the top of the thing here.

We've seen that happen. And I, that's why I think calling it out is important like you are, Molly. But I think saying, hey, technology doesn't work around this. I think that's impossible. And then you've got to look at all these other things here. I think it's important. I mean, fundamentally, when I say, is it a problem for Bitcoin, right? It doesn't mean that what happens is the financial incentives are actually go towards

Alana. Read the chart from the bottom up, Molly. Because that's where it gets really interesting. This is exactly what you're talking about. One big point transaction is 12 million jewels. Okay, one hour. 120 million. Yeah.

So 12 million, yeah. He's 12 million jewels. So, okay, running your air conditioner 10 hours a day is 120 million joules. Okay, that's where your energy consumption is, folks. Watching an hour of TV or playing your video game, 540,000 joules or 700,000. So of one hour of air conditioning versus one hour of TV is, 14x. So just keep that comparison in your head. PlayStation, playing watching TV, 500,000 joules, hour of air conditioning for 12,500 joules. Okay, just keep it in your mind.

Yep. Now we go up to an Ethereum transaction. One of the current ETH pre-merge in 11 hours, 692 million. In other words, it would be the equivalent of air conditioning your home for 70 hours or so, 60-70 hours, for one Ethereum. But, That's not all, folks. One Bitcoin transaction is 7 billion jewels, which would be the equivalent. Remember, there's a cap, right? There's a cap on how many transactions per day Bitcoin can run. I know, but this is bonkers.

I never realized the scale of this. That's the issue. It is unbelievable. But the flip side, J-Cal is, look, how much they cut Ethereum down from $692,000 to $100,000. That's a huge deal. And one more turn of that. And look at what Solana's already doing to Vinnie's point, right? And so,

yes. Everything kind of, you know, I think things will train in this direction. Like, I made Vinny totally heated, but what I really meant was people should invest in Solana and not Bitcoin. For exactly this reason. I have more, I have more Solana than Bitcoin. I mean, the thing about Bitcoin, look, but Bitcoin, I think is, and Chamath, our friend Jamath says this, you know, he said this years ago, and I always stuck with me.

He's like, Bitcoin is insurance for Schmuck. That's it. It's like, look, you've got to own some of it in case everything goes to 1% sure. 1% chance, whatever. You got to own some of it, but it's not the biggest part of my crypto portfolio because I just don't, I don't think that, I think there's a good chance that it doesn't actually become the most useful to out there.

I'm a free market guy. I'm a free market guy. However, when something is this out of whack, I just want to bring it up. Would the Western world be wise to look at the cost per transaction of these and step in and say, listen, Bitcoin, other services, you need to get your transaction costs lower by this date or else this penalty, i.e. attacks, i.e. whatever, will come into play. Or do you think the free market just makes everybody sell their Bitcoin at some point and move? Free market. This is the thing, Jason. Like, the more intervention we do in these markets,

the more we're not going to push innovation and figure things out. Like Bitcoin's still number one by foreign law, you know. Why? I mean, you've been watching the news this summer, though, right? You saw the dried-up war and the like, I'm just saying at some point you pick your crisis. And if your crisis is like existential and a third of Pakistan is underwater, you go like, we're going to ban this. And I'm not a proponent of it.

But I do think we're going to get that conversation. So Vinny, you're free market. Okay. So let's take another argument. I'll go to you. If I said to you today, all the energy in the world is free. Okay. Would you care?

Of course not. Yeah. If we had a thousand nuclear tactical, small plants up and running, obviously, we stopped the discussion. The largest nuclear actor in our solar system is the sun, right? We have solar energy. So, okay. So if we had free energy, this wouldn't be a problem.

So then let's start. So that's the first principles question. Okay. The next question would be, so then why is energy not free and why is this a problem? And then the question is because we are reluctant to move from oil, gas and non-renewables. Why? Because special interests, corruption, paying off governments.

So if you go down to from first principle of working up, you realize that we're living in this world that's being created by the people before us and being maintained by the people in power. We're making the money. You're making the money. Let me bring you in here. Energy is free from the sun. It is.

And we just need to figure out how to harness it or use things like nuclear. Okay. Sunny. Why? I think this is it the first question I want you. answer is, if it is true that the free market will work this out, why is Bitcoin still number one? Let's start with that. Vinny touched on a little bit. It's sort of been around the longest and the most secure. So there's just like sort of a, it's never been hacked. It's been around the longest. People feel comfortable with it. There's the notion that there's only 21 million

possible bitcoins, right? So there's sort of an end game to everything that's happening there. And it's not a, it's not a network that even though the transaction energy is pretty crazy, like we saw, there's not a lot of transactions happening there. It's not like a, it's not a visa network that's, you know, costs hundreds of thousands a second. So I think that that's why you kind of will remain to see it there. Here's my second question for you. Yep.

Then now that we've got that established, it's because it's been around the longest, the most secure. We get it. Yeah. Why hasn't Bitcoin? Maybe it's going to move to three point question here, but I appreciate you answering the question so concisely. Number two, why has Bitcoin not taking transaction costs as seriously as Ethereum and Solana?

I mean the energy energy per transaction why haven't they saw Ethereum obviously was motivated to solve it maybe they felt like Solano was clipping on the earth I don't know the reason but why is Bitcoin not addressing this Well I think Vinnie can probably tell you more

because you've been involved deeply in this for a long time but I think the community that it's taken to cause this merge to happen which you know we saw that energy efficiency it takes a lot of people and there's just not as many people in the Bitcoin ecosystem now that are willing to undertake that to make it happen. Laisiness or lack of resources.

Is that correct, Vinnie? Everybody is making money. No, it's not that. The issue with Bitcoin really is that there are no changes that are being permitted to the network. So yes an example. And I fell out with the Bitcoin community in 2017. I mean, look, I'm still, I was a Bitcoin maximalist in 2017.

Now I'm done. I'm happy to look at other things like Solana and more inefficient things. I think there's a Bitcoin has a place. I just don't think it's like I'm super, I'm most passionate about it as it was in 2017. For one simple reason, you could drop the cost per transaction on Bitcoin 10x by increasing the block size 10x. For example,

from one megabyte to 10 megabyte, you could do it. But there is no will within the community to make any changes to the base layer of Bitcoin. So you can't fit 10 times more transaction. In fact, look at Bitcoin Cash and Bitcoin SV. They've scaled it to 100x,000 X. It's not actually a, it's not a technical issue. It's a philosophical issue.

We don't want Bitcoin to change. The architecture can handle. But they don't care about the environmental footprint. They care more about their own interests. I got it. Yes. So then what I'll ask you, Sonny, is I know that you are a holder of Bitcoin or have been. Does this make you change because they're unwilling to change, because we know energy use is acute and is a very focused issue.

does this make you change your position on being long Bitcoin? Why are you holding Bitcoin instead of moving to Solana and Ethereum where we see one, I don't know, is it one one thousandth now of the energy? Or more? Why are you holding Bitcoin if this exists as a concept? And Bitcoin is your largest crypto holding. Yeah. I mean, I would break it down in a slightly different way, Jake.

When I look at like sort of my world of investing, and I still haven't gone through myself, I think in order to do that fairly, you have to look at everything you invest in, right? Whether there's even public equities and what energy impact they have, right? And so I'm not doing that there. So why should I just look at that one asset and do it? And so I think if I'm going to get to that moment, and this is kind of being a challenge, I was trying to pull this up. Like, I don't, Molly was a bit up in arms on the energy consumption there. But I'm sure if we look at other things in our daily lives, like on an aggregate basis, it's a lot more than even what Bitcoin is doing. Those charts, you know, they make it kind of really,

pop out. And so I think if you're going to do that, you have to look at it like really holistically, right, and say, let me look at everything in the way. You haven't done the hard work to look yourself in the mirror and say, geez, do I need to change my portfolio allocation here? It seems to me the logical thing to do here, Molly, and I'll bring you in now. The logical thing to do here is if you think energy is an important issue for the world and is this charged, so to speak, would be to make a trade based on that. It does seem to me if we're here on this tip of the spear podcast, breaking this down so acutely and so deftly that somebody in politics somewhere is going to get this message. And then maybe consumers are going to start

to say, why would I own Bitcoin instead of owning these ones that are more energy efficient go mom? I mean, fundamentally, although I obviously have a strong opinion about this, that is my question. When I say, is this going to become a problem for Bitcoin? I'm talking about this PR question. I'm talking about exactly this, which is at some point, people, policymakers, investors, financial institutions with net zero goals will start to make this calculation. And it'll be a huge part, I think, of the crypto ecosystem. Look, I think that the Bitcoin sort of maximalist and the Bitcoin mindset has a point. I went from being a hundred percent Bitcoin to maybe 20 percent Bitcoin in terms of

like my passion and views. That 20 percent is my schmuck insurance that, like, put it this way, if you believe that this, that the leaders of the world are highly organized, competent, you know, orchestral bunch of people who can fix up all our problems, you should own zero Bitcoin. But if you think there are a bunch of incompetent fools that are going to basically trip over their own laces in the next couple of years, you should probably own more Bitcoin than you have right now today. And that's where the camp I'm in is I think that they're going to screw up. I think that then as a unit of account, people start saying, well, can we trust the pound, the euro, the dot? Let's just try.

trust Bitcoin or maybe it's Solana or Ethereum or some crypto. And then the world starts transacting in a different cryptocurrency or different unit of account. Right now we use the dollar. But if Putin manages to get people off, like the more we fragment the market in terms of away from the dollar into other currencies, the more these cryptocurrencies become a unifying layer for the world. All right, Molly.

You and I were talking about DAWS. We're obviously going into our public raise, starting, I think I'm doing my first webinar tomorrow for Launch Fund 4. We're doing 506E public raise. Other people are now looking at DAOs and funds. And one that has, we've talked about it myself. I've talked to Sunny and I've talked to Vinny about this possibility. The Orange Dow.

This is fascinating to me. This is the most fascinating story of the week to me. This is if we start a Dow, it's going to be because of this story right here. Well, this was your idea, Jason. You had this idea for anyone else. I give Jason credit for the first person to probably put this idea out there. All right. So the idea is the Orange Dow, the YC alumni crypto collective backing Web3 startups,

which just three weeks ago raised $80 million. We should note, thanks to Sunny, that before we get into it, YC does not have any official affiliation with Orange Dow on CrunchBase. It's described as a decentralized venture capital organization. Most of the money from its raise came from strategic investors and layer one. on blockchain's Al-Granda Nier. The fundraising was also backed by an undisclosed number of Dow members and a few institutional investors.

The GP actually is Ben Ha of Ikenhas Cheeseburger, who explained that the Dow itself is structured as a Cayman Islands Foundation company and the fund is run as a separate legal entity by Ha and a few other general partners. We've kind of been kicking around generally this idea about whether crypto is going to upend venture capital and it sort of seems like this is that. Is that fair? Or could be that the start of that? Let's just talk about capital formation because I think a lot of people who are watching this may not understand the breadth of like how capital forms.

So if you have a venture capital fund, you have limited partners. They all put a minimum commitment in, say, $100,000, $2,000, $2,000. If you get $40,000 together, you have $10 million, so on and so forth. So you scale it up. And as you need capital, you draw down from that fund and you do capital calls and people put money into the GP, the general partners. effectively they have a place they hold the investments for the benefit of the LPs.

So here's the issue. When you, with the moment you go long tail and long tail is lots of smaller investors, it's a lot more work to get $5, $10, $15, $20,000 from 1,000 people than to get, 40 or 50 people to give you

$250,000 to a million dollar checks. And so there's a cost of managing all that. There's a reporting compliance cost. And then there's also like, you know, whatever someone does a capital commitment for 10K and then they don't pay up. And it's less likely that you have big LPs reneging on deals than when you have a lot of smaller LPs trying to get money out of them. And it's just, it's extra work.

So you probably have to collect the money up front. And then you have to look at like what's the fund size, what's the return profile. And the problem you can then have is if you do it, if you did a billion dollar fund with five, 10K investments, the economics just don't work. It's too many people. You put $5 grand in, you get $6 grand back. No one's going to care that much about it. It doesn't scale.

So you've got to find the right sweet spot. And what is that sweet spot? What Yisi is done here with 1,000 effectively founders or alumni is probably the right sweet spot. You probably want to have a $50 to $100 million fund with no more than $1,000 people running small checks and probably collecting all the money up front. So you don't have to deal with the capital core structures that you have to do in regular VC. And so I think they've actually done a pretty good job in this so far. But they've done it outside U.S. jurisdiction.

They've gone to a foreign country. I think somebody came in, Bahamas, wherever, and they've gone and created this because the U.S. doesn't facilitate this in the same way, especially in the crypto world and regulations. So this is a bit of regulatory arbitrage, but I think they've solved for the capital formation part. Well, in your notes, you also pointed out that they're skirting not only those U.S. regulations, but the way that a Dow is supposed to be formed, right, with this two legal

entity structure? Yeah. So there, and like you guys probably know a lot more than I do, but there's a Dow and then there's like a venture fund and there are two actually separate entities. And so they, the venture fund, which has limited limits around how many people can be involved in it, they've worked around that by creating a Dow as a separate entity, I think in the K-Mence or something like that, right? So they have like a thousand people in there, but less LPs inside the fund. And what I was actually going to ask you guys, because I feel like you guys have spent more time thinking about I was just putting together what I researched from it. Like would this, does this framework actually work for what you guys are thinking about? I'll kind of flip it back

around to you guys. You know, okay. So they formed their traditional venture capital fund. They did it properly. They're not breaking any laws. Yeah. It has nothing to do with crypto. That's all fiat money. They're not investing if eith into a company or they're not getting eth from somebody's wallet and then, you know, voting to invest into something. Okay. So let's put that aside for a second. They did everything right. It's just a standard venture Fund are going to be else. So what is the purpose of the Dow? You took some really good notes, Sonny, and you're thinking about it. And I think they're taking the Dow and saying the Dow is going to be for due diligence, deal sourcing, and post-deal help. So in a venture fund, you might have some

associates, you might have some associates, you might have some researchers, you can have some principals. They're out there. They're pounding on the pavement. They might have venture partners, scouts, of course, trying to find you, hey, you should check this company out. So if you aggregated all the YC folks and you said, hey, go to this Discord and then talk about the companies. And then the venture fund partners look at what they're saying and then just cherry pick. It's kind of like just creating a giant scout program, calling it a Dow. So to me, it's a scout program looking like a Dow, but you have to remember, there is also going to be tax treatment and issues around the Dow. And that's where I think there's going to be some legal details here.

Those 1,300 people are going to have to be pre-vetted. There are, going to if you're I don't know how you distribute so let's say you have 20% profits a carry let's say this 80 million I'm going to just say it goes three X like a standard venture fund that's three X 380 times 3 240 minus the original 80 160 in profits 20 million of 160 roughly 30 billion dollars in carry so let's say this 30 million in carry it's a thousand people okay everybody gets 30,000 dollars or this person gets more for having done this they voted, you know, how does that even get distributed? When it does get distributed, what is the tax treatment of it? Is this long-term capital gains? Is qualified small business? Is it income?

Because they did work? So are they getting paid an hourly rate? If these people are doing work, then you might be forced to pay them. They could sue you post because you were using their labor. It's very, very, even with this as clean as you could make, it structure, there are a lot of checkboxes and issues that I think they're going to have to work on around tax treatment, how these distributions happen. I also think the Scout program, obviously super valid. I was the first Sequoia Scout. Scout programs are now everywhere. So that part's valid. Consensus building is not how angel investing works. That's not how great investing works. It's not about consensus. It's about people really doing diligence and spending hours and hours, not the wisdom of crowds. So I wonder

if having a thousand people is as good as it might be better to have just had a hundred or 50 even to do this work and to just pay them cash. It's funny. When you read the details, it sort of sounds vaguely similar. Like if you squint, it looks a little bit like our firm and a syndicate doing a public fundraise just with 16 other layers of complexity attached that don't seem totally necessary. And I don't 100% see the obvious.

benefit of the 16 layers of complexity. Yeah, it's sort of, you know, that's the thing that was confusing is that, you know, you get a, I think you get a lot of deal flow from it because you have the thousand members and they're all at YC alums, but then you have to deal with the overhead associated with that and say, you know, and is that tradeoff worth it? I think that's difficult. Sounds like you might get too much inbound. Yeah. If this is be $80 million fund writing 100K checks and then do 500K followings and the winners, whatever it is, they do 100K checks into 400 companies for 40 million?

That's a, that's a, yeah, 440, 400, yeah. 400, I mean, that's a lot of diligence. And then they said that these 1,300 people are going to do diligence. It's not actually how diligence works. So I'm not sure how they're defining diligence. Diligence is boring and arduous operational work. Can I see this contract? Can I see this IP assignment?

Can I go check with the registrar that you are, in fact, a Delaware corporation, you know, do you have any lawsuits? I mean, it's something that administrative operational people with administrative and operational excellence need to do. And it takes 10 hours. It takes 20 hours. Deligious is actually just a very simplified view of it is. It's just fact checking, right?

That's all it is. Correct. You have a set of facts. I mean, you guys know I do shock tank in South Africa. I'm one of the shocks on the show. When we go, you didn't know that, Molly? No, that is awesome. So when we do shock tank, we go there.

We hit like 60, 70 different pitches in 10 days. and we create a season, right? When I'm up there, what you see is 15-minute clip of what happened. It's actually an hour and a half session. And I have a notepad. I'm writing down all my notes and the guy says my revenue is $5 million or whatever it is and blah, blah, blah. After the show, we do diligence.

And all I have is a bunch of people in South Africa and my VC fund there going and doing fact checking. And they go, hey, you said your revenue was this. You know, half the deals don't go through because on the show, the guy said something was a bit of a stretch, you know. In some cases, I'll try to lie. We have this contract. We have this patent.

Oh, it's a patent pending. Oh, you know, those are the things. So all diligence is, is fact-checking. And the only time I mean, I don't do diligence a lot in early stage because there's just no diligence. A guy's like three guys are in the slightest. There's no diligence to do. It's like, yes and not year.

But the moment the company moves further along, for me, it's always about the people. So if it's founders of worked at previously that I trust, I don't need to fact-check. Sonny, did I do any diligence on your company when we're going to be? We just did this round. No, a serial founder, you don't have to. You don't have to. You know these guys know what they're doing. So the diligence process is like if the way to do this, by the way, if you want to scale this up, is you start a fund where you only invest in second or third time founders that have got a track record.

And you said, look, we don't have time for diligence. So if sunny comes, if any comes or someone we know comes, we'll write the check is now we can just skip the diligence because we there's a trust. But when there's no trust in a low trust environment, fact checking and diligence is important. I don't know who they bring on to the show in Shropank. I have no idea. I've got a fact check. It wasn't a referral from Jason or Sunny or you or whatever. And that's how Silicon Valley built itself, right?

Silicon Valley create this trusted network of founders and entrepreneurs. And you could trust people if, you know, they had an exit or they've taken money before or whatever. And through word of mouth the network, you just write checks and do the angel. You cannot do that anymore. You don't, like the geographic limitations of Silicon Valley have been destroyed. It's now people anywhere around the world. The guy can say, hey, I'm in San Francisco. Meanwhile, you're sitting in, you know, Russia and you wire the money and it's gone,

and you just didn't know because it's all virtual. Whereas you can meet, you know, like, it's very different. So are you saying that you think this decentralized diligence process could work fine? That this kind of fact checking, you could just outsource it to these 1,300 members and like, you know, the companies will send the PNL. I mean, we're asking for like bank statements, P&L, credit card statements, right? It's more the compliance risk, right? if you're purporting to be a financial advisor or a fund manager and you're making investments

and you don't do diligence on someone and you mess up, there's some liability and risk that you have to take into a consideration. It doesn't matter as much of me as an individual. If I go lose $25,000, $100,000 because I didn't check on the fact check on someone. That's on me. But when you're managing money for other people, there's a higher bar. And that's really the issue, right? So if you said, look, it's a trusted network, YC founders, you probably still have to do some diligence checking at that point, but it may be lighter weight, right? Just need to do the basics. And so anyway, that's just my two cents on it.

Yeah, I wish them luck. I think Ben's great. I like the innovation in it. You know, we have tried, and our syndicate is kind of close proxy to a Dow. And Angelus is kind of syndicates writ large, I think, are like the precursors to Dow's. What I don't see in any of these Dow's is an understanding of what the syndicate members want.

and it turns out what the syndicate members want most is for us to do a bunch of diligence for them. They don't want to do the diligence. They want us to source the deals. They don't want a source deals. And they want us to manage the investment post the investment to make sure the founders are on track. We're getting updates and they have every chance of success

and that if there is an opportunity to invest more in the winners, i.e. pro rata, we're there. So what I think this orange Dow will learn quickly is that maybe what investors want is not what they think over time. Because I have tried. I thought, I got 11,000 people, Molly, and the syndicate, they're going to be incredible. We'll have them sourced the deals. And then it turned out our team was better on sourcing deals.

Right. Or they'll help us with diligence, right? They'll be a resource for us to lean on and like, eh. There's another problem in the VC investing world was Jason, you probably know all too well. The best deals are the ones that there's no syndication space for because there's just no allocation. So you basically have a get an allocation. It's by being a famous investor,

by being a value added investor. You have a selection bias, right? So the deal that you're going to get in from people sending it to you are going to be the ones that nobody wants to back them. You know, we didn't talk about that. They'll get a net. This is the thing they're going to have to watch out for

is the negative signal that the non-full-time people are going to be getting the remnants of what deals have enclosed. So this is not meant to make anybody feel bad, but let's say they're the top, the aces in the deck at Y Combinator, those get funded by the YC partners and friends of them before Demo Day. Absolutely. They never make it to Demo Day. The top 10, 20 companies opt out of doing Demo Day and they raise their funding.

So that means all that's left in the deck, let's say, are kings or queens and less. I would argue all the Aces and Kings are gone from the deck. Yes. Those eight cards are out. Now you're dealing with the other 44 cards. Which, by the way, significantly changes the return profile. Because you look at YC, Dropbox and Airbnb and all those, if those were taking out of the portfolio,

it doesn't look that good anymore, right? Right. So if you're at Demo Day, I think you're playing Queens and below. Does it mean you can't hit a set of Queens? You could. You could. So then what is the Dow going to get? I think the people going to the demo day, you know,

are probably going to be on equal footing with the Dow. Maybe these people are going to the alumni demo day. And that's the other thing people don't realize. This is a hack of the demo day. before, I think it's the week before, or just a couple of days before, they do the alumni demo day, then they do the regular demo day. If Orange Dow is sending 1,300 alumni to the demo day or even 10% of 130, and they're scouting them, they could front run the dentists and, you know, seed funds coming to demo day.

So anyway, no conflict, no interest. This is super conflicted. And I think YC has always been a, you know, and the entire game in Silicon Valley is a, conflict game. You know, if you're a part of the PayPal Mafia, if you're part of the Airbnb Mafia, you would get first shot at those companies if you're part of the Stanford mafia. So this is a way, I think, to get early access. These alumni, these 1300, now that I think of it, could be on bookface, which is the internal network for YC, they're on bookface. They're seeing all the companies 12 weeks before demo day. Oh, I just figured it out. It took me 15 minutes.

There's nothing like decentralized and high-bullent and philosophical about this at all. it's just to get an edge. In that case, maybe I want to be an LP. Now we love it. Now we're like genius. Well, no, think about it. On book, I believe somebody from YC can correct me if I'm wrong, but the current crop of class is put on bookface, you know, early in the class, not after they graduate.

So if they're on bookface and they're talking, these 1,300 alumni are getting access to them week zero through week 12 and the public's getting access week 13. They're front running the market. This is a hack to front. run the market and pay those folks off with Carrie. Brilliant. Love it. I really want to see a SPAC meet DAO concept because I feel like there's a way to use a SPAC.

No, no, no, no, not an actual Tao, not an actual doubt, but stay with me here. Molly, that tells me one thing. It means it tells me you have not spent enough money and lawyers in your life. That is true. I have been blessed in that way. That is 100% true. But no, no, no. Like, what if you could bundle?

Like, there are all these businesses. We, you know, we keep saying that this. is random, I know, but stick with me, that like the worst meeting that we take is with the $40 million business as a VC, because the $40 million is a great business, but it's not investable. And I know all these people who are like, I just want to build a small business, a sustainable small business that's great for my community and the world and me and whatever and I make a good living, but like it's not investable in VC and also I can't get a loan because whatever. Like, what if there was a universe in which you could bundle really great businesses into a spec and

use the public markets to allow them to have access to capital that they can't get through venture or banks. A collection of companies. Yeah. It's not a doubt. But use specs that way. Like evolve this mechanism that could actually do really great things for companies that need capital without having to have like predatory debt or aren't venture investable.

Or we could just make a test for people to become sophisticated investors and let them invest in private companies and get them all the updates. You know that that's in Europe, you're allowed to. I mean, all of this is about access to deal flow. And in Europe, I think there's a website called CrowdCube. There's a couple of them over there that have done very well. They're like Seed Invest and Republic here, except anybody, you don't need to be an accredited investor.

So imagine if Angel List and the syndicate could let anybody invest. That's how it is in London, in Europe. Real companies use it. And they get early support from their local communities. And they have had small businesses on those kind of websites. So imagine your, imagine you had somebody who wanted to make, I don't know, an event center, restaurant, cafe, community center, and it was going to cost $5 million to build. You could actually launch it on one of these sites, let the public pay into it, and they would

have equity in it. So it could be a for-profit as opposed to a Go-fund me. But let me comment one thing on your portfolio, Jason. I'm interested in knowing why you're so bullish on Disney. Oh, yeah. Let me preface that with saying I'm a huge Disney fan, but, After Bob Eager left and Chepec took over, I think that the company is going south because I don't think he knows what you're doing.

That's my question. Okay. Great question. Here's what I believe. Bob Chavick is the parks guy, right? He needs to learn the other parts of the business. Of course, it's going to be any transition is going to be bumpy. Bob Eiger's transition.

There was a lot of questions about that. He rose to the occasion. And there is a chance Cheapick doesn't last. Bob Eager comes back. Who knows what's going to happen? What I believe is that one service will have a billion subscribers. and I believe that one service will be Disney, Hulu, ESPN. They'll have one billion people.

It'll be the largest subscription business ever created for anything. So Verizon has over 100 million. Netflix has, whatever it is, 200 million collectively. The Disney assets of over 200 million with ESPN, Hulu, all that stuff. So my bet is they will hit a billion, no matter who's the CEO based on their IP collection. when they hit a billion, if the average is, let's say, $6, $7 globally for this, let's just say six, you're talking about almost $100 billion in subscription fees. It's never existed in the world as a cash cow business.

And so I believe there are two companies, three companies in the running for that. Netflix, which I still think is a little overvalued and they're kind of lost, but I almost j-traded them. I believe one of brothers is the other with HBO. and then I believe Disney is the number one. So I think those are your top three in the category, and I wanted to bet on two of them. So I picked those.

And as a value buyer, I would be totally in your camp. I think it's a phenomenal company. And there's 65 like PE ratio right now. I think it's extremely overvalued. And I think they just don't worry about the P. I worry about the top line growth. I know.

But the problem is they're not competing. As a customer who's been to Disney parks and Disney cruises and whatever else, They're sold out. Well, no, no. Actually, no. What's happening right now is like this COVID paranoia with Disney is killing Devon. You look at all the other cruise liners, for example, today. Oh, I don't know about cruises, but Disney parks have been sold out, like, since the reopening.

No, no, no, no. They're not sold out. They reduce the capacity at the parks because of everything. Basically, Disney's become this like COVID paranoia entity where whether it's the cruise liners or the parks or whatever else, they're basically restricting their access to Jersey service. They did capital. Really bad customer experiences. All my experiences have been terrible because I think that they,

they've got a bunch of like woo-hoo's running around trying to like, if people want to walk around unvaccinated, that's their problem. Let them go in. But like, you know, it's affecting the bottom line. And the other cruisers are all being sold out. And Disney's cruisers, which is the place that largest, one of the largest. They're basically restricting and saying vaccinated people only. And I'm Vax.

I don't give it, I don't give it damn. But from a business perspective, you're finding that people are really, really complaining about the fact that Disney just thinks COVID's still an issue. Also, you have to, I mean, in addition to all of that, Disney has raised its prices dramatically, right? It's so prohibitively expensive that as a discretionary purchase for fans, like, I'm, there is no universe in which they're losing goodwill. They're losing goodwill. And I don't know how much longer the company can handle. I mean, let me tell you one thing I've known about companies in my life is between 18 and 24 months. months after a CEO departs is when the wheels start falling off if the new CEO is not up to task. It never happens immediately.

It takes a while. And so I would wait for the 24 month mark after Iger disappears and to figure out what's going. Because he's not even chairman anymore. I think he stepped down as chairman. So he's out of this totally. Yeah, I mean, they had a big huge public fight. Like either Chapic gets nuked and Iger comes back or Chapic is the guy and I'm with you.

I'm not sold on. I love Iga. Iger. I'm not saying I don't love Iger. I would much rather Iger be in the seat. The fact that he's fighting with Chepec means that he's seeing all the holes that we're seeing. So anyway, from the J trading portfolio, I wish you well. You don't like it.

I think the timing is. Remember the goal of the J trading portfolio. Can we just do this all day? 10 years. Five X. Five X. Cash on cash in 10 years. That's the goal.

I'll beat you at 5X because I will go and buy Disney at, let's see. I'll buy it at like 70 and I'll make it. I mean, you might get in at 90. I can see that happening. But when it goes into 90, I'm buying more, Vinnie. I'm buying more. Sunny's bringing us back to fundamentals here. I think bringing back to a topic, as soon as they get into like some form of

crypto like NFTs on those collections. Then you're shorting? No, that's the time it goes to the next level. Well, maybe. Your ticket should be. Your ticket should be an NFT. Yes, exactly. And the NFT should include your picture and you should be able to take your picture.

We didn't get to it this time. guys we should next time. I think we're going to time out here. But this proof of attendance, a proof of attendance protocol tokens are really, really phenomenal. So it's basically like if you attend an event could be like a concert, it could be a conference, and you're given a token associated with that. And then other activities which go on there could be advertising, things like that, you can tie back to that token. So the V-controls. Is it open protocol that somebody wrote? No, no, it's just, it's just a notion of giving, it's a concept. It's a concept. So imagine you have a conference, you give everyone a token, right? Exactly. Yeah, Po-Apps. And so you give

everyone a token that's there. That's a proof of attendance. Think of it like Web 3-4 square or something like that, right? And so once you're there, and then if there's other marketing activities or post-loyalty things you want to do, you tie it to that, I think once Disney starts to kind of uncover this and tie it into not just proof of attendance, but proof of watching and things like that, and you know, people are talking about NFTs they've done for Marvel. But I think they haven't even scratched the surface. I think it's incredible. P-O-A-PS, Poax, proof of attendance. But it's a collectible.

It's like getting those little badges when you go to Disneyland. You get little like small badges worth five bucks. No, I know, but they're digital, collectible, tradable. And like, I did see that somebody just sold for a half million dollars, a full ticket to Michael Jordan's first game. They didn't go. But they happened to have the two full tickets sitting in their dresser somewhere and they found them. and that was Michael Jordan's first name. Some maniac bought that for $500,000, Billy.

I'm not sure who would have spent $500,000 on that. I want to add one last thing. Back on the Disney ran for a second. I just remember why another reason why I'm going to go. Over this summer. I'm in for streaming. Don't mess with my, no, I like you banging on my J-Trade.

Okay. So over the summer, Sunny and I went to Hawaii. We happen to stay at two hotels next to each other. Okay. I stayed at the O'Lon. which is the Disney resort for a week, and Sunny was next to four seasons. Yeah. And what happened was I got service in my room every two days and they would just change the,

the towels and stuff. That's it. Okay. And we were paying an obscene amount of money and the four seasons got twice a day service. This is Vinnie just trying to, I mean, look, I think again, it just comes back to there's, there's so much opportunity upside. I'm with, I'm a J-Cal on this. I think there's so much. You're making the J-Trade? I'm not making it.

Okay, so wait, wait, wait, Vinnie, Vinny is fading. Vinny's fading the J-trade and Sonny's following the J-trade. I like it. Let's all go. Let's go. If you guys want to, you got to just start, I want to do some J-trading in crypto. So next week, I want three choices and I'm going in, I'm going to buy something next week or two weeks from now. I want you to each of you give me your best pitch on your best two ideas, and I'm going to pick the best one of the four.

Sound like a good deal? We'll bring it to the next one. Let's do it. Will you each bring me to? But you can't compare notes. And my goal is 5x. So I want a real project. 5x in 10 years.

5x in 10 years. 10 years. 5x and 10 years. The market doubles every 10 years. What's that? Crypto won't be here in 10 years? 5x in like one year is what you look for. No, no.

I don't want that. I want something that. I want 10x in too much. I want to beat the market. I want this to be like a top tier venture fund, double the market, you know, 20% IRA is kind of what I'm thinking, you know, in my portfolio. And then I'm going to go stay at the Alani and I'm going to be like, thanks for not changing my sheets every day. That's really environmentally responsible.

Hashtag first. Can you believe this? This is how he's making his trade. Here's how you make your trade. Obi-Wan, Mandalorian, She-Hulk, Little Mermaid with a diverse cast making thousands of young women of color cry on. their TikToks, they know what they're doing. They're doing a little mermaid with a person of streaming.

I don't disagree, Jason. I just think that I just think that in the short stuck on the hotel. Why are you staying this? Be like J-Cal and go to the Amman Hotel. Come on, guys. Shoot the locks off your wall. Spend some of that Bitcoin.

Go to the Amman Hotel. Come on. That's it. That's it. We're done. A great episode. Everybody. Amazing.

Let's get them some plugs, Molly. As we wrap this up. Yep. Amazing. Where can everybody find you? Sunny, you start. definitive.io. We're doing a lot of interesting things.

Blockchain intelligence, reach out, blockchain growth, web three growth. What is it, 50K a year? How much that cost? It is. Yeah, 50K a year. I need at least one person to sign up every time. That's the cost of having,

signing here. You can find me on Twitter at Vinnie Lingam and obviously waitroom.com, W-A-Troom.com and fun stuff coming there. Thanks, guys. This has been fun of check. All right.

We'll see you next time. You guys can drop off. See you next time. time.