This Week in Startups - Nikola Motors update, El Salvador launches $1B bond to build “Bitcoin City” on a volcano | E1331

Episode Date: November 23, 2021

Full news show today! First, a quick update on Nikola and Trevor Milton's situation (1:35). Then, Jason reacts to a video of Jordan Peterson getting "orange-pilled" (23:10) and the announcement of El Salvador's Bitcoin City (31:51). To wrap up the show, we do another "We Live in the Future" segment about a speeder hover-bike by Japan's A.L.I. Technologies (46:46).

It is a full news day. My favorite day of the week is when I get to do tons of news. And we do a quick update on Nicola and Trevor Milton's situation. It is not looking good for this company or for Trevor. Then I'm going to react to a video of Jordan Peterson getting orange-pilled, which I first saw on the Pomp podcast. Basically, he is amazed by how Bitcoin works and turns energy into actual money. And then we're going to talk about El Salvador's Bitcoin City built through.

the power of a volcano and a bond partnered with BitFinex. The whole thing seems pretty red flaggy to me. And we're going to wrap with another segment of We Live in the Future with another speeder bike type product. This one comes out of Japan and it is wild. Okay, stick with us. This weekend startups is brought to you by Our Crowd helps you invest early in pre-IPO companies alongside professional VCs. If you're interested in investing, you can join Our Crowd for free O-U-R-C-R-O-D.com slash twist. LinkedIn jobs. A business is only as strong as its people and every hire matters. Post your first job for free at LinkedIn.com slash twist.

And Lemonio. Need to speed up your product development without draining your budget. Hire vetted engineers from Europe at lemon.io. Go to lemon.io slash twist to get 15% off for the first four weeks. Okay, we've got a Nicola Fraud update. The electric car maker is expecting $125 million fine. And Trevor Milton, their former disgrace CEO, is scheduled to start his trial in April. Their market cap has crashed massively from $34 billion to now under $5 billion.

To catch you up on what's happened since he was on the podcast, Milton was indicted on three counts of fraud in July by the Department of Justice. Each count carries a maximum jail sentence of between 20 and 25 years. According to Reuters, that's a, you know, a total of up to 75 years in prison if they were served sequentially. I'm not sure about the law if those would be served concurrently or sequentially. But let's just break down the crazy year and a half that Nicola had to refresh everybody in the audience. They spacked on June 3rd, and they started trading as NKLA. You can search. for NKLA and Google and get their stock history or in your iPhone app.

And if you look at that history, it is dismal. Here's a chart for those of you watching the YouTube video at YouTube.com slash this week in. And it has been a massive fall from Grace. In late June, Nicola peaked at $34 billion as a market cap. They were trading at about $70 a share. Now they're trading at $11 a share. And they're worth $4.5 billion approximately.

I think with no product and no revenue, this is a $450 million company maximum. I don't know what their cash position is, but I would give them like $1 million above their cash position because they're going to be embattled in lawsuits. It might even be better off just giving everybody their cash back right now. So they're worth $4.5 billion right now. The cash position's around $500 million. I would give them a valuation of $1 million above their $500 million cash position. because they're going to burn through 100 million on legal fees, no doubt.

It's going to be a complete disaster. This company will probably be a zero, be taken private and or just be delisted. That's my best prediction. And I'm pretty good at these things. So we had Trevor Milton on episode 1090 back in July of 2020. You all remember that episode. If you haven't seen it, it is, if I dare say, a virtuoso performance by me as an interviewer because I kind of got the sense that this kid was full of shit.

and I just let him talk. And some people are like, you're being too easy on him. I made a strategic decision that me confronting him would not be as effective as letting him talk. Because the more he talked, the wilder it got. And it got pretty wild. I had heard somebody as an interviewer say, a famous interview at some point said, you know, just ask a very basic question and let the person talk is probably the best interview technique that always stuck with me.

At the time, Niccolo was trading at $30 a share. at about a $13 billion market cap. Milton, if you remember, was ousted in September of 2020. After activist shortseller, Hindenberg research, they named these things wonderfully, published a report alleging that Nicholas' contracts and progress were greatly exaggerated. And it turns out that was true.

We covered this on episode 11, 12 in September of 2020 after the Hindenberg report was released. Now, in July of 2020, Milton was indicted by a federal grand jury on three counts of fraud. you can see episode 1256 for that one. Quote from a U.S. attorney that worked on the case via the Department of Justice press release, and I'm quoting here. As alleged, Trevor Milton brazenly and repeatedly used social media and appearances and interviews on television,

podcasts, hmm, and in print to make false and misleading claims about the status of Nicholas trucks and technology. They definitely watched our podcast. But one time, I'll take a shout out from the Department of Justice and be really thrilled about it. They definitely watch our podcast. And again, Trevor Milton's trial is scheduled to start on April 4th, 22 in New York. Please let that one be televised.

And I guess if it's a federal one, my understanding is federal trials are not televised, and it's up to the local jurisdictions if they will be televised. That's why Theranos is not televised. According to a freight waves article, Milton requested the trial be moved from New York to Arizona. A federal judge denied this request because Milton bought and sold shares on the New York-based NASDAQ. his defense as per the freightwaves.com article quote, Milton claimed he should not have been charged in New York for securities fraud and wire fraud because his alleged illegal behavior occurred in Arizona where Nicholas headquartered or Utah where he lives. I guess he wanted the home court

advantage and he is not going to get it. On July 29th, Milton surrendered to authorities, pled not guilty to the charges and was freed on a hundred million dollars in bail. Quite a bell payment. Interestingly, he used two properties in Utah as collateral for bail, according to CNBC, he bought a 2,000-acre Riverside estate in Utah for 32.5 million in November of 2019. Pretty good-looking house. I might put a bid in on this when this goes to auction. Yeah, I can put 20 million on that one, and I could have all the Nodie gang come over and we'll have a big party for this week and start-ups at that 2000-acre estate. That's pretty good. This was after he sold secondary shares during a $250 million raise that valued Nicola at $3.2 billion.

in September of 2019. So you can check out Milton's estate. According to the late times, it's the most expensive residential purchase in Utah history, which is surprising because I think 32 million is the average apartment in Manhattan right now and the average starter home in L.A.

He's also facing civil securities fraud charges from the SEC. Milton sold another $70 million worth of stock in the pipe. That's the private investment in a public entity. When you do a SPAC, you can also put together a pipe, letting private investors invest in that public entity, and I asked him about this on episode 10, 90. You can check out his answer in this two minute and 30 second clip from our interview.

I'll play the whole thing so you can hear it. The SPAC puts the money in. You have a pipe, a private investment in a public entity that occurs at the same time. But then you sell $70 million in shares at that same time. Is that correct? Yep. So how do you, I mean, that's something people were really critical of. Why, if you're so long the vision, would you take $70 million off the table in, you know,

before the products even launched, that was a red flag of red flags for me and for others. Yeah, there's a lot of people have asked me that and criticize me. And here's the real answer to it. When we did, when we were going through this, the pipe put in all their money at $10, you know,

at the $10 share price, essentially, which is the pre-IPO price for everybody. The SPAC put in the thing at $10 as well. And the pipe, these big funds like Fidelity, P-S, you know, all these different groups that were in that are in here, Black Rock, all these other groups. They came in and they said, look, you got too much control, way too much. You own the board, you own.

What was your ownership at that point percentage-wise, Walpard? Well, I gave up a lot. So I had 70% of the company, and I gave about 30 to my employees. I wanted them to all become rich. And so I gave, I wanted them all become, you know, I don't want all the money myself. I want to share it with, I want to share it with people that are to have a family. You created a 30% employee stock option pool. Well, I gave away probably about 15%

directly and then the other 15% through the option. So it was over 30% of my stock was diluted. It was taken off 30% of the top to those guys. And I still had 40% of the company. Yeah. And I'll make, you know, hundreds of people wealthy and their generations to come after it. And that's what I like in life. But the answer to why the stock was sold is they came to me and said, look, we want you to,

we don't want you to be the CEO and the executive chairman. You got to choose one or the other. And I said, and I asked them why. I said, what's your reason? and they said, well, it's not healthy to have one voice everywhere to control everything. And I said, I can see that. That's actually some wisdom in that. And they said, we want you to have a we want you to be locked up longer. We want you to be here for a long period of time. We want you to take $1 salary and also the whole executive team. This is what's not, this is what no one ever

reported on. All they did is report on the bad, right? Because it gets headlines. So the entire executive team came in and said, okay, we're going to take $1 salary. And that's, and we get stock bonuses, that's it. And they said, Trevor, we want you to reduce down some of that, some of that control. And they said, we'll buy some of those shares from you so you can live on this. You're not focused on money during the time that you are running this company. We want you to have some money out now. It's smart. And we want you to focus on Nikola, not focus on how you're going to pay your bills or pay for your house or whatever else. All right. I'm getting a lot of Grant Cardone vibes from that guy or like Billy McFarland. There's great polls from my notie chat room now telling

me, uh, who that guy, who does that guy remind you of when he talks? My God, it seems. like he is, yeah, he just seems like he is working you in the interview. All around the world, tech companies are innovating and driving returns for investors, don't I know it? Well, our crowd analyzes many of these companies, and they search across the global private market. Then, they select the ones with the greatest growth potential. And finally, they bring them to us, me and you.

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All right, remember Jason's rule if a company is ever valued over a billion dollars before they have a product in market, it's likely a fraud. And I use the word likely there, it's not always. Theranos, Magic Leap, we don't know about Magic Leap. We'll see, Nicola, just so many companies when they get valued. It's either a fraud or it's going to be a failure. What was the famous video site that raised $2 billion and was worth a bunch of money? Quibi, let's just pause for a second. If Nicola does get $125 million civil penalty and they're burning a bunch of money and they have $586 million in cash as of September 30th,

they're going to run out of money right quick. Quote from their new CEO, Mark Russell, we're looking forward to bringing this chapter to a close with this potential settlement and to focusing with renewed determination on building the future. Good luck with that. I think they're going to run out of money. That's the most likely scenario. And who would pour money into this train wreck? The stock is going to crash as my best guess from $11 to $1 in the next year.

I don't think you'll be able to short it because who on earth would take the other side of that trade, but maybe it could. I don't like to short things in a crazy market like this. They did manage to extend their runway by pulling together two common stock equity line purchase agreements, these agreements. total 600 million and let Nicholas sell equity to Tumium stone capital. I've never heard of them. They've already used 47 million from that one. If they sell those shares and dilute the current equity holders, Nicola management forecast closing the year with $831 million cash.

Penalty would be paid out over time, I guess. Maybe not all up front. But they're not going to be making revenue anytime soon. So I get the sense that this company is toast. They started trial production of battery electric vehicle trucks, Bev in the second quarter of 2021 at their partner Evico in Germany. They've completed

eight tree B-E-V-Gamma trucks. What a terrible name. And have started pre-series truck production in October of 2021, whatever that means pre-series truck production. When they start using these kind of weird terms as opposed to started production

or they're in pre-production, you know something's up. And just on branding, the tree, T-R-E-V, Gamma trucks is a terrible brand. Just say gamma. They started production on the gamma. That's how you were branded. One word, cyber truck, one word, Rivian. Don't give things for names. They do expect their trial of fuel trucks by the end of 2021. Those are the ones that would do hydrogen refueling. I don't think they're going to get any of this done. I'll be honest. I think this is going to be a wash. And just as a note,

when you read about these orders, I would put zero value on any of these orders unless they've been paid in full or 50% because they can be canceled. So, you know, if people say they have 100,000 orders from Amazon, like one EV company is saying, you know, I don't think

that that matters. I would say if they paid for a thousand or 25% of them, then you could just take the total number, 25% deposit, divide by 1,000, they have 250 orders. That's how I would think about it. So even with Tesla, they have a million

orders, pre-orders for cyber truck of $500 each. Okay, they have $500 million in cash pre-orders. You know, that's incredible. Of course, and a million's incredible, but they could be canceled. And I would think in Tesla's case, 10% do get canceled because they have such

amazing products, but in this crazy stuff where people have never produced a car, my lord, stop putting companies that haven't produced their product at sky high valuations. It's a recipe for disaster. For those of you watching on YouTube, here is a progress picture from October 30th. They have 50,000 square feet left to build. Not too inspiring when you

put it against like the Gigafactory or a Tesla factory, which I think this would be the reception area at a gigafactory. I think this would be like the snack room at one of those giant Tesla factories. What a disaster. So great to have him on the podcast. It's such a great historic document for us. I don't think they're going to get anything done. How do you avoid founders like this? Well, it's very simple. You follow the rules of Silicon Valley. We have a milestone-based investing program here in Silicon Valley in the tech industry for a reason. You work for a year or two, you get some funding. You work for another 18 months, you get some funding. You don't say to a person, hey, you have an idea, we're going to take you public and give you a billion dollars in cash or

$17 billion in cash, whatever it is for a company that has yet to produce the goods. Let's stick to what's worked up until this point of time, which is milestone-based funding. There's no reason to give people a decade or two decades of funding in advance. It's a recipe for fraud. It's a recipe for people who want to get rich quick to come in, raise all that money,

and then walk away. And who gets left holding the bag? All the public gets left holding the bag. So very simple, everybody. Don't give people money until they've proven they can do the job. Whether it's Adam Newman, who was flooded with capital, by Masayoshi-san or it's Nikola

or even, you know, Quibi or magically people should get some product to market before they get these sky-high valuations is my best advice. Okay, while I was talking about the Nikola situation live, one of our Notie Gang members,

those are super fans of this week in startups who have notifications turned on on YouTube. What that means is when I go live, which is kind of random, but usually in the morning Pacific Coast time, they get a notification on the phone. They click it. They get to just listen to me riff about the news and they actually get to watch me record the podcast. And we're doing that increasingly with the guests as well. So the guests can take live questions anywhere from 75 to 500 people show up concurrently at a time.

Probably incumulatively, it might be over 500. But they're like the real true, you know, one percenters of the show. You can join them at YouTube.com slash this weekend. You hit subscribe and then there's a little bell next to it. You hit the bell. Now it's not just a YouTube subscription, but it notifies you. So that's just a great thing to do with your, you can have two tiers of YouTube subscriptions. You can have the people who you subscribe to. So when you go to YouTube, you see their stuff. But then you have the people who are like the creme de la creme, that when they post a video, even if it's a pre-recorded one or a live one, you get an alert. Anyway, he asks that, what do I do here, J-Cal? You know, I own the stock. I said, well, what price do you own it at?

And we can pull up his question here. He says his average price for Nikola is $13.78. And Nicholas is trading at $11, so he's going to lose $2 per share here, which isn't actually that bad. I would sell it all immediately. What people do is when a stock doubles or triples, they will sell the stock to lock in the win. This is almost always a mistake to lock in the win and not let some of it ride because you want to ride your winners, as we've always said. Google, Facebook. There are people who sold their Facebook $15, $25, $25.

Famously, Chimot sold a bunch of his. if I was talking to my brother, if I was giving advice to my mom, again, this is not general advice, but this is the advice I give to a family member. That's like a quasi disclaimer. You've got to make your own decisions and be smart in life. But I would say, if something is going down, you've lost face in the company, the news is all bad, you hate the stock. Get out of it. Sell it. Move on. Then take that money, because all money has value, and then figure out a plan to have that money grow. What people do is they ride it all the way down to zero. I think Nicola is going to be a zero, maybe a dollar stock in a year.

I think it's a disaster. They're going to be embroiled in all kinds of lawsuits and shenanigans is my best guess. You know what I say I phrase these things? Like I add that that's my guess. That's my prediction. That's so you understand that I can't be sure here, but that's my best guess. Now, what do I think is going to do really well? Well, you can easily take that money and put it into Google, Disney, Facebook,

Microsoft, Google, you know, those big names that we know 10 years from now, the companies in all likelihood Netflix are going to be around, be valuable, have some giant consumer base. So your money should go up greater than the inflation. Who knows, you know, long term, but I like to think in tenure. Then you could come down and you could look at the emerging companies that are like Google was 10 years ago or Amazon was 10 years ago. Who would I put in that bucket? well, if you were to look in that, you know, kind of a hundred billion, let's call it a 20 billion to 100 billion range, I would have put slack in there. They're not to get sold.

I would put Airbnb in there. I put Uber in there. DoorDash is pretty overvalued. You could put Lyft in there as a takeout candidate, but I don't like buying this the number two. So I would say Airbnb, Uber, Coinbase, Robin Hood. Now I'm in two of those four names, but that's what I do for a living. I might take a battered Peloton because I do think that that's an incredible company

with a great strong base of users. Roblox is in there. My wife owns a little bit of Roblox that she bought because she likes it. She doubled her money, I think. She bought it at the IPO. Those companies are like strong companies with strong user bases and strong revenue. So, but they're not as big as Google's yet, right? They don't have billion trillion dollar market caps yet.

They have those 50 to 100 billion. So then you're looking for that, let's call it 5, 10, 20x. Maybe see if one of those becomes the next trillion dollar company. I put stripe in there too probably. I would put square in there as well. Those seem like really great companies. Don't know enough about Cloudflare, to be totally honest. I think that's a commodity business like Amazon's web services that they're up against in terms of cashing the web.

So I'm not so sure about that as an infrastructure play, but you might put actually Twilio in there because they own SendGrid and Segment. That's like a really, I might swap out Cloud for that company just because I know the company better. That's just me. So anyway, that's my advice to my family member if they were in the situation you're in. You have to do what's best for you. I would just use that as a thought experiment. I would ask yourself, are you riding a broken company down or are you betting on an up-and-coming company? And then maybe the other option is to take that money and just put it in, what is it,

QQQQQ is like the NASDAQ or something or a Vanguard fund that's very low fees or wealth front. And just let it grow 7, 10, 15% or whatever the market is. averages. Great question. Before we get into the ad, I want you to go to LinkedIn.com slash twist and post your first job for free. Just do that right now. First job posting free. LinkedIn.com slash twist. Okay, now on to the ad week. Today, many small business owners are busier than ever. Time spent searching for and interviewing the wrong candidates takes away from growing your business. That's why LinkedIn jobs has made it easier to get the candidates worth interviewing and you're going to get those candidates faster. And your first job posting is free.

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Of course, apply because they're giving you something for free. Next up in the news, a really interesting clip I saw. I actually saw it on Pomp's podcast or his live stream. Canadian professor and YouTuber Jordan Peterson has been orange-pilled. And it's kind of an interesting moment. Orange pill is that moment in time,

because Bitcoin's, I guess, official color, like this week in startups and launches is orange. And inside's my favorite color. It represents basically, meaning you buy into Bitcoin and you're going to have laser eyes. If you take the blue pill, that means you like fiat, money, debt, and you're blissfully ignorant.

So let's roll the tape here from Jordan Peterson. If you don't know Jordan Peterson, He's a somewhat controversial. He kind of got bundled with the alt-right professor who became famous because he got into an argument with some woke students. And he really seems to care about young males and has created a bit of a following with that Reddit in-cell young male crowd that is kind of feels like they are maybe hated or told they're bad and don't have a lot of, let's call it, guidance in the world. world. And this clip comes from an interview he did with Dr. Seifadine Amos. Seifedine, I hope I'm pronouncing your name correct. Seifadine is the author of the Bitcoin Standard, the Decentralized Alternative to Central Banking, which was published in 2018. He's also a professor at Columbia

University. Yeah, to get electricity from the north of Ontario to Toronto needs a lot of wires, or you need to, you know, if it was gas, you need to put it on tankers or on trains or in pipelines. All of that stuff is pretty expensive. But with Bitcoin, you just need an internet connection. You take the Bitcoin miners to where that energy is, and then you can monetize that energy and turn it into Bitcoin. It's magic. So what's the net effect of that on the price of electricity worldwide?

Is that deflationary with regards to electricity cost? I think so. I think this is a point that I'm making the Fiat standard, which is that, you know, we've had Fiat subsidize all these dysfunctional forms of energy over the last 50 years that have led to the grid becoming unreliable. And we have Bitcoin, like the vigilante savior that it is, coming in and providing a global subsidy for anybody who can make electricity at a cheap rate to monetize that. That's absolutely mind-boggling. It'll take me like five years to think that through. And it seems to completely contradict the idea that Bitcoin is a waste of the world's resources.

It's a complete opposite if this monetization idea is actually true. All right. So what you're having happened there is this epiphany with Jordan Peter. in which of course Bitcoin people are going to just, you know, going to be like, yes, you understand it. What they're saying there is, it starts with this realization that, well, why would you set up $350,000 in mining rigs to mine Bitcoin to get $350,000? If you just go on Coinbase and buy it, you would have had to wait for the servers to come, set them up.

So all things being equal, if you could buy $350,000 worth of servers and then turn it to $350,000 with a Bitcoin eventually. Let's assume you don't get the servers back after that. In this bot experiment, why wouldn't you just buy it? So it's like, of course I would. But then he says, wait, but if you can buy electricity cheaper, which we all know, nuclear, hydro, if you're stealing the energy like people were in authoritarian places reportedly like China, people would roll these things up to a hydro plant that was throwing off

more energy than it could actually send through the cables. Or some people talk about it natural gas. Sometimes there's more gas coming off of these pipes. and gas refineries can actually be used, but they still have to burn it. And so it's kind of wasted and they need to ship it somewhere. That excess energy can be turned into money. Okay, that we all understand. But the next piece is, wait a second, if I'm making energy and I can make money from it,

and I don't have to send it over a cable, well, that's an incredible thing. But that doesn't take into account is should we do that? Should we do that? And the issue there is we shouldn't waste energy. In other words, we shouldn't build up production, certainly if it was dirty energy. gas, coal, anything like that, we should not be making Bitcoin from dirty energy. I think everybody can agree with that. That's what's being left out of this.

And the incentive, obviously, if you can make money and not bother building the cables to send it to somebody's home or a factory where it's needed, wow, we're destroying the environment. We're burning carbon and spewing, you know, all kinds of horrible pollutants into the air, burning the ozone, creating global warming, and destroying the ecosystem. just to make a quick buck. So that's the problem is we haven't sort of put that in here. But let's play the next clip.

Why wouldn't they just buy Bitcoin? It seems to be to be a lot simpler than mining it. If it costs $350,000 to make $350,000, why bother with the mining? The short answer is if you have a way of securing electricity at less than $0.5 per kilowatt hour, then you should get into a Bitcoin mining business, which is, lower than most rates everywhere in the world. So if you have a source of energy that's isolated from the grid, or if you have a cheap wave securing energy, then mining Bitcoin is great.

So does that mean that Bitcoin is a very good way of moving resources from places that can produce electricity very cheaply to other places where electricity is more expensive? It makes the cheap electricity much more valuable. Absolutely. This is weird. That's a weird thing. It's very weird. I think it's going to have a very profound impact on the global energy market because

for the first time in history, we have a way to sell energy that is location independent. A lot of places in the world have a lot of energy. But it's very expensive to get that to the population center. So the north of Canada has a... So you don't need wires. Exactly. Jesus, that's weird. The problem with this is I don't think it is true.

We really do not want to incentivize people to not send the electricity to a city and instead just burn it to make Bitcoin to make money, because again, we're burning natural resources to do it. The only time we would really want to do this is if it was a very low-cost natural source of energy like hydro, wind, solar, sure, why not monetize the excess there and then use it for those folks to then invest in more renewables? And that is the positive effect. So what should happen on a global basis is we should ban Bitcoin miners from using non-renewable sources of energy, perhaps, if this does become an acute issue. There's no way to know exactly what's the total footprint

of the energy usage right now. I know some people have tried to make estimates about that. We really should think about either Bitcoin has to figure out a way to reorganize itself. In other words, do an update to use less energy. I think they've tried to do that over time. Maybe they have. Somebody can fact check me on that.

Producers at This Weekend Startups.com. If we ever get something wrong, we'll correct ourselves. And we'd love to, you know, get sources of good information. So if there is a source of how much energy is being used and the percentage of energy being used from non-renewable to renewables, we should just ban any Bitcoin miners from using coal, gas, oil, whatever is dirty because that's not good for society. Bitcoin doesn't provide enough value for society to use that kind of non-renewables.

But with renewables, you know, hey, that's actually pretty awesome. And maybe this will drive the price down. If there is demand for energy and Bitcoin miners can figure out how to use solar, wind and they put some of that money into actually creating energy sources, that's what I would love to see. If it is, in fact, the future of society, that energy equals money, which is kind of what we're saying here, well, then they would be pretty great for somebody to come up with a fusion reactor or a nuclear reactor or some, you know, amazing new solar technology that was super cheap to build and that we could, in fact, turn into money that then could be put back into doing it.

I think by the time this all gets hashed out, maybe Bitcoin will use less energy and we'll have renewable technology that will continue to lower the cost per gig a lot, whatever. So an interesting moment in time. I thought I'd share that clip. And again, I saw Pomp were reacting to that person. So just give Pomp a little credit for surfacing for me. He's Anthony Pompiliano's guess. He's 90% in Bitcoin.

He's a maniac. And he's really interesting guy. And we're going to do a collaboration with my guy Pomp where we, we stream. to his audience on his YouTube channel, my audience on my YouTube channel. Hopefully the subscribers cross over and we share some audience together. That's kind of the idea I did it with Justin Conn.

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Okay, check it out, everybody. Lemon.I.O. slash twist. Okay, in our next story, as an example of renewable energy in Bitcoin, El Salvador wants to create a crypto-funded Bitcoin city. Neurovolcano! According to their president, Naib, Bucle, I hope I got your name correct, Nib, just like the last segment we talked about this project, is hoping to use the volcano as a cheap source of geothermal energy. Remember, back in September, El Salvador was the first country to adopt Bitcoin as a now. national legal tender, whatever that means. The Verge noted that this makes it cheaper and easier for migrants to send money back

home to El Salvador and could improve citizens' access to financial services. According to CNBC in 2020, El Salvador received nearly $6 billion in remittances, which was 23% of its GDP. So Western Union and other transfer fees have a material impact on their economy. Yeah, you know, the craziness here is you could lose half your value in Bitcoin, right? we saw Bitcoin have multiple instances where it went down 25 to 75% over the years. Pullbacks are the norm. Do you really want to tie your currency to that kind of volatility?

Well, an established stable country does not want to put themselves on a decentralized, crazy, imaginary money, store of value concept here that is uncontrollable. But an emerging country with nothing to lose that already is dealing with issues, maybe for them it's not such a risk because they're already in a risky currency their own. NBC reported that the Bitcoin City will have residential areas and commercial areas like restaurants and an airport. Okay, obviously, if it works, they would do that.

The only tax collected in the zone will be a value-ad tax, a VAT. So if you don't know what a value-ed tax is, because it is foreign to most Americans, investopedia, which does a really good job of defining these things. they define it as a VAT is collected on a product at every stage of its production during which value is added to it. From its initial production to the point of sale, the amount of that the user pays is based on the cost of the product, less any cost of materials used in the product that have already been taxed at a previous stage. The value added tax is a type of consumption tax,

obviously. Key takeaways, the value added tax or VAT is added to a product at every point on the supply chain. or value is added. Advocates of VATs claim that they raise government revenues without punishing the wealthy by charging them more through an income tax. Critics say that VATs place an undue economic burden on lower income taxpayers, although many industrialized countries have value at a taxation in the United States is not one of them. So super, super confusing for Americans to understand it. To fund the city, El Salvador's planning to raise $1 billion via a Bitcoin bond in partnership, the digital assets infrastructure company Blockstream, according to CNBC. The bond offering would happen in 2022 entirely in Bitcoin. That's a savvy move because

all these people around the world who are Bitcoin advocates and ship their Bitcoin to them pretty easily. So it sounds almost like a Dow. And a bond is kind of like a Dow when you think about it. It's like a structure. Just not a decentralized one. It's a centralized one. 500 million would be used to purchase Bitcoin. 500 million will go to harnessing the energy from the volcano and mining. That's a kind of interesting split. I wonder how they came up with that. When you see an interesting number split like that, that's indicative of maybe a money graham. have been people haven't actually thought this through. Like, is it exactly 500 million to get the energy from the volcano mining? Like, is it 276,000? 276 million? It's really exactly

500 million and they're just rounding it up where they're rounding it up to a billion. Kind of weird. According to Blockworks, which I've never heard of, the Bitcoin bond will have special dividends dispersed on an annual basis generated by the staggered liquidation of Bitcoin. So they will sell Bitcoin each year to pay for their bondholders. Interestingly, El Salvador picked Bitfeneg's securities to issue the bond. The same company behind Tether. What could go wrong? Oh, my lord.

If you didn't know this, the new president of El Salvador has a very mixed reputation. Some people consider him a dictator and they think he stole power. This is probably not the person that you want to, and he actually refers to himself as the world's coolest dictator, but this is probably not the person. that any project, technology, or otherwise would want to tie themselves to, except for maybe Bitcoin. Laser eyes. Have fun staying poor.

It's pretty toxic to put yourself in alignment with this individual. But it's going to be an interesting experiment. So I'm here for it. If they are able to raise a billion dollars in Bitcoin from the bunch of crazy Bitcoin, you know, billionaires out there and then they get payback and they're able to build a city based on it, sure. Secure the bag, El Salvador. Get that money.

Build 10 cities. If you can get 10 billion, let's go. If you've got other places to get free energy, let's go. Their ability to execute on this, their partnership with BitFenex, there's so many red flags here that this looks like a mini-golf location. Like, this is red flags everywhere. Stay the heck out of here. I would not go near this project.

How is this better than people just investing in Bitcoin directly is, of course, what you'd ask yourself, well, maybe the bonds will be more acceptable into the financial system. You know, the guy Michael Saylor, who has the laser eyes from micro strategy, which was, I think, a failed company that had a checkered past. He just decided to turn it into a Bitcoin holding company, essentially, and he just bought as much Bitcoin as possible. He's the guy who famously said, sell everything you own, buy Bitcoin, get loans, buy Bitcoin, just do everything you can. It's his thesis, which, I'll be honest, you know, he's been quite right for some period of time. When the market pulls back, of course, he looks like a moron. and then when the Bitcoin doubles, he looks like a genius.

And that is the nature of, you know, this new imaginary monetary system that is highly speculative. And I think fairly obvious to everybody, a bubble. Some people think it's not a bubble, but they're usually the ones who have a vested interest in getting the next person to buy Bitcoin. And that way, Bitcoin has a very MLM nature to it, pretty obvious. Once you own Bitcoin, you really want to tell people buy it, buy it, listen, I own seven figures worth of Bitcoin, bought at $100 to $200 a coin. but I'm not sitting here telling you to buy it because I don't know where it's going to go. I think it could go back down to 30 as easily as it could go up to 300. I will say in Bitcoin's defense, my number one issue with Bitcoin was like the manipulation

of it and the fact that it could be hacked at some point. It's becoming, I believe, less manipulated as more people hold it and don't sell it because there's less opportunity to manipulate it because there's a fixed amount of circulation and these big players seem to be buying it and not selling it. So then how do you manipulate it if there's just big holders, right? It'll be kind of hard to manipulate it. And then two, shockingly, with all this money at stake, nobody has figured out a way to hack the Bitcoin network.

You can hack people's wallets, obviously. You put a gun to somebody's head and asked them to put your ATM code in as well. But I've got to give Bitcoin credit for those two issues. So do you think the lack of transparency in crypto could lead to more crime is another question that people have asked me? Well, El Salvador has nothing to lose here. They have one of the highest crime rates in Latin America. Over 1,300 homicides in 2020. They've got some serious gang problems and the prisons are controlled by gangs.

Just type in El Salvador, Amnesty International or El Salvador, human rights or El Salvador dictator and get educated. I think this guy from El Salvador is a really bad actor. And he's just glomming on to the Bitcoin community in order to, you know, work them. I think literally the Bitcoin community is being worked by a bad actor here. and the Bitcoin community is so desperate for any pump moment that will make them, you know, make the Bitcoin go up that they're like, oh, there's a country that's buying into it. They really never double-click and drilled down to find out that this guy is really a bad individual.

Like, do your diligence, folks. As of this morning, Bitcoin's at 57K. It's far off its new all-time high, which it hit on November 10th, 12 days ago, of 68K. So people are dumping it again. But 57 is an incredible return from the $3,000 I think it bottomed out at after it peaked at 20K, which was the other previous high. So it's trending up and down, but generally up. And we'll see if that continues.

I'm going to continue to hold my Bitcoin. I think it's like one of those bets I made with a very small fraction of our net worth, or I should say my wife made that I supported. It's a very small fraction of our net worth. I think only one or two percent of your net worth in Bitcoin or any cryptocurrencies, maybe even up to 5% if you like to speculate, nothing wrong with that. If you've done your homework and you actually understand these projects and you want to go up 20, 30, 40, 50%, and it was your full-time job.

Like, I could see people doing that. I could understand people doing that. It's not for me, but I can tell you, like, my net worth is over 50% in tech startups. Yeah. And it's because it's my job, right? You'd be surprised if it wasn't, right? And it's very hard for me to get out of them because what am I going to do? Sell my shares in Square or Uber or, you know, com.com or Robin Hood.

No, I still believe in these companies. Like, is there a better place for me to put my money? No, these companies are fantastic, so I stick with them. All right. All right. Everybody loves our segment, W-L-I-T-F. We Live in the Future. Well, here it is.

A Japanese drone startup is building a Hoover bike. I kid you not. For those people watching, here you go. This looks like something. out of Star Wars or Tron, two giant blades spinning with a bunch of smaller ones and there's person sitting on the top of it looks like a speeder bike with these giant fans and it is hovering almost perfectly. It's got a little bit of yaw to it going left and right and there they go. They're hovering around. So it is not far from being reality that instead of riding on road

will be riding on air. These hover bikes could. It look like spinners from Blade Runner, to be honest, but more like a motorcycle as opposed to sitting in them. The spinner from Blade Runner will be here in our lifetime and you're going to see people playing with these things on tracks. The first part

is CGI. So just for clarity, there's a small part of this in the first part where it lifts off the ground that's CGI. I'm not sure why they CGIed it. That's kind of a bummer. But the CEO, Dice K. Katano, said the bikes will not be able to flyover Japan's pack roads in the near future.

Nor will they be allowed on the roads, I'll be honest. According to Reuters, they are targeting supercar fanatics as their customers. Here's a picture of the CEO posing with it. It's pretty good looking. Looks like it's going to be a lot of fun. According to Pitchbook, the company ALI Technologies has investors including Mitsubishi, and they've raised $28 million since 2017. Those numbers tend to be low because there can be financing that you don't know about,

recent ones. But if you compare, this. and pricing to the Jetson 1, which we covered on episode 1322 earlier in November. If you check out the split screen video here, while I read off the comparisons, the X-Turismo is $680,000, the Jetson-192, so obviously Jetson 1 gets that one. X-Turismo is a conventional engine plus for battery-powered motors, so I guess that means gasoline. Jetson 1 is eight electric motors. Flight time, X-Turisimo is 40 minutes because it's using gas, obviously.

Chats in one, only 20 minutes, so half. And they both interestingly go about 62, 63 miles an hour. You know, in terms of which one's cooler or which one would be street legal, none of these things are going to be street legal until you can prove the safety of them, i.e., they're not going to fall on somebody's head. But you could see these very easily being used in theme parks or on racetracks and people loving to go out and spend their time using them. You're not going to see these in cities.

But it is possible that on country roads or something like that, they could get an exception to drive them on roads. But then what's the point you can easier drive in a car? So these are limited use until maybe 10, 20 years from now when you can be guaranteed that if they fly over cars on a highway like the 10 freeway, they're not going to land on them. In order for them to not land on those, they're going to have massive redundancy, be proven in the field, have much better battery life like maybe triple or dribble or drew. and they're going to need to have somewhere to land. So these are really interesting. I wonder how high they'll eventually able to go. You know, is 10 feet realistic, five feet?

Because they would need to clear other vehicles. This is really interesting. I think they're going to be a lot of fun to drive. And I think they'll be for entertainment value. Search and rescue comes to mind. Maybe policing the border. You could see people zipping along, you know, the perimeter of some, you know, campus or something with these.

But private use, private road. or areas. Yeah, could it be used in ski rescue? Maybe. I don't know how they would deal with snow and wind on a mountain. Probably not well. I don't think these can go across water, but maybe eventually they will.

That would be interesting. If they did work across water, you could see people, you know, using them to go across the East River, Hudson River, Sydney Bay, Melbourne, any of those Bay cities like we talked about for VTOLs. So these are kind of like VTOLs, but they're closer to the ground.

Anyway, we are living in the future, and it's pretty freaking awesome. We'll see you next time on this weekend startups. Bye-bye.