This Week in Startups - State of the crypto market, Tornado Cash blacklisted, $COIN Q2 + The Blueprint Part 5 | E1531

Episode Date: August 11, 2022

Sunny Madra and Vinny Lingham join Jason for a fully loaded crypto market breakdown (1:40). Topics covered include: Tornado Cash being blacklisted by the US Treasury Dept, Coinbase Q2 earnings, smart crypto regulation, fixing early-stage crypto governance, and more! Jason wraps the show with Part 5 of The Blueprint: Generalists vs. Specialists. (1:21:44) (0:00) Jason intros today's segments: crypto roundtable and The Blueprint! (1:40) Current state of the crypto market after the massive pullback (14:31) Brave - Download today at https://brave.com/twist to browse faster, search privately and so much more (15:33 Tornado Cash blacklisted by the US Treasury Dept: what is it, what it means for "frozen" crypto assets & more (27:12) LinkedIn Marketing -  Get a $100 LinkedIn ad credit at https://linkedin.com/thisweekinstartups (28:36) How large-scale spam attacks and hacks will change consumer behavior in the still-early crypto industry (37:37) Visa - Learn more about Visa’s online Small Business Hub at Visa.com/smallbusinesshub (38:32) How should crypto be regulated? Should the US create a new agency dedicated to digital assets? Should there be a new set of rules for crypto? (48:39) Did Coinbase let customers down? $COIN Q2 earnings, responsibilities to customers, what Coinbase's platform might look like if altcoins are regulated as securities (55:22) Pseudonymous and anonymous impact on high-profile crypto projects, how to fix early-stage crypto governance (1:04:12 Interesting consumer-facing crypto projects (1:21:44) The Blueprint Part 5: Generalists vs. Specialists

Okay, everybody, we have a great show for you today. Molly's out, so I called in some more air support. I have Sunny Madra and Vinnie Lingam on the show, two of the biggest crypto experts in the world, and they're both good friends of mine. We cover the entire crypto industry this year, the tornado cash being banned by the U.S. Treasury Department and all these funds being frozen and what's the right amount of regulation for our industry, both startups and crypto. Coinbase's Q2 earnings are out, and the boys seem to think that Coinbase might have lost their way. And they have some suggestions for Brian on how to tighten the Coinbase ship. Plus, there are a bunch of interesting projects happening for consumers, including the NFT format, which will geek out a little bit.

And then it's Wednesday, which means another episode of The Blueprint. This week I'm going to cover Generalists versus Specialists and Who to Hire, depending on the stage of your startup. It's going to be another great show. Stick with us. This Weekend Startups is brought to you by 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.

LinkedIn Marketing. To redeem a free $100 LinkedIn ad credit and launch your first campaign, go to LinkedIn.com slash this week in startups. 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. All right, everybody. Molly is on vacation, hard-owned vacation for her after putting in a great first six months here. Shout out to Molly. Follow her on the Twitter. Molly would. And really added a lot of dynamic moments to the first half of 2022. Really grateful that she's joined us here at this

week in startups. Today, I wanted to take on some of this crypto news, but in truth, I'm a crypto neophyte. I mean, I know a lot about it. I've been covering it forever. I know enough to get myself in trouble, but I'm not building in it, and I'm barely a participant in it on the margins. I've only ever bought Doge, actually. Oh, my wife and I bought crypto. We bought Bitcoin back in the day. So I take it back. I've bought crypto in the form of Bitcoin, which we still hold, and Doge, which I still hold, which I bought as a joke. But I'm really excited about the crypto collapse because I believe we are now going back to what I thought was really promising about the first couple of years of crypto, which was interesting people building with visions to build things that actually changed the world and helped people in some specific way. The whole thing got derailed the last five, ten years because so much money was pumped into the system and all the grifts, et cetera. Now, if there's not as much money to be made and it's not as freewheeling and there's more regulation, I think people are going to take their time building stuff and be more judicious. So this combination of, you know, they're not being a big money grab with, you know,

significant regulation coming into play, I think we'll add a level of discipline and authenticity and actual delivery of product. So delighted today to have two tremendous guests on. Sunny Madra is the co-founder of definitive intelligence, which lets users view on and off-chain data. This lets you understand what's happening in Web 3. Welcome back to the program, my good friend, Sandeep. Sunny, how are you? Thanks for having me.

Great. Awesome. This Zoom background you have is amazing. That's the most authentic-looking, open floor plan, modern office background I've seen in two years. Back in the office, J-Cal, got to do it. You're back in the office. Oh, so you went back to the office. office to shut it down and sell the machines and clear out the refrigerator?

The opposite. You know, it's just, as an entrepreneur, right? You can have a lot of productivity when you're face to face. So we just, look, we don't force people to come in, but people are coming in every day. They want to be back in the office. They want to have that environment. They want that separation from home and work. And so it's been exciting.

You literally have developers coming to an office in the Silicon Valley. Correct. This is tremendous. This is an incredible innovation that you've discovered in entrepreneurship. What was it like the first week when people were sitting around? Were people just like, this is crazy or it feels like we're going, you know, like when you go to an 80s party or something and you're like, wow, the 80s were cool? We did the crawl walk run, where we started with coming in once a week to then, you know, the founders and like sort of the course. team started coming in a couple times a week to then started coming in every single day. And then naturally people, people don't want to come every single day.

That's definitely changed. But, you know, they know the productivity is higher and just they want that separation from work and home life. And so it's been really nice. Crawl, walk, run. And then at some point, do you think that this will become a situation where, I don't know, if you don't come in, you're kind of a second-class citizen inside the company. Because that was always what the remote workers were. Before the pandemic, people would forget to, you know, call them in on go-to meeting or whatever.

You know, and they would forget, or if they did call them in, they would forget they were there. Yeah, no, I mean, we all remember that. You know, I don't want to say second-class citizen, but, you know, what will happen is you won't, you won't get to work on, like, sort of the harder projects. Because those projects require, you know, engineers love that stuff, right? where it's like you want to get in on something, you got to work with a team, you're going to be,

go and tap someone on the shoulder, have a conversation. So I think that's what will start to happen, is that everyone will be treated the same way because we're all used to the tools now, which we weren't before like you were describing. But definitely, you know, the harder projects,

the projects closer to the core will be the ones that are happening kind of in person. So you would intend, or the industry, I'll take it away from your company, but the natural order will be, you know, at the HQ, where the founders are,

That's where the interesting stuff is going to go down. And if you choose to be a work from home employee, you might be doing the cleanup work. You might be doing the grudge work. So something to consider. All right, also joining us today, another one of our good friends, Vinnie Lingam, he's the co-founder of Civic. He was one of the earliest people I know talking about crypto. And Civic is a startup that encrypts identity information on the blockchain. Welcome back to the program.

I see, Vinny, you are not in an office. You are in a hotel room. I'm doing my annual vacation in Hawaii. Oh, your annual vacation in Hawaii, which for people who don't know, when you say it's your annual vacation, you go for the year. So you come back to work for two weeks. You check in on the team for one week in the winter and one week in the fall, and that's his annual trip. And you wake up at like 6.30 a.m. to do calls the J. Kellogg. It does. Oh, it's so early there.

I apologize, but thank you for coming in. Anytime. I actually tweeted. I was like, all, I need to get another person to hear. who's actually trading crypto, who's actually building in crypto, because so many people, Vinnie, who have come into the crypto space, they came in long after you and Sonny, they were interlopers. They were there for the money. They were there for the parties.

Taurus. They were there for the speculation. Crypto Taurus. Just, Vin, give me the general vibe in crypto today. Now that, you know, let's face it, some of these projects lost whatever, 95% of their value, they're not coming back, the majority of these projects, I would guess. I wouldn't say, I would, yeah, the majority I agree with. I think there are some that have been hit really hard, but they're really good projects

and just a valuation and timing issue. It's like, fundamentally the problem in crypto is that because you don't have yield right now in a lot of these projects, like with stocks and bonds and whatever else, you get, you know, profits and dividends and yield coming out of it. So the reason to own something is because it pays out something for you, you know, whether it's dollars or pounds or pounds. or whatever. Crypto, we don't really have this yield mechanism figured out yet.

We've got things like staking. You can like get interest as well if you lend it out, those sorts of things. But the yield mechanism and the demand for that token hasn't really, the tokenomics around these projects haven't really been well established yet. And it applies even to Bitcoin, right? A lot of the reasons why Buffett and a lot of these other, you know, the great minds of the financial world don't like Bitcoin is because, well, it looks like a Ponzi scheme, right? It looks like the only way you make money out of this thing is that the price has to keep going up.

And so I'll use actually my, I'll use one of my favorite coins as an example, Falcoyne. Falk coin hit like $230.30. It's down to like $8 right now. It's down 90-something percent. It's going to come back. And the reason for that is Falkoin actually works a little differently to some of the other coins because there's like 17 exabytes of storage. Now, put that in perspective. That's like 300 times Netflix's archive in terms of storage.

capacity around the world. These are, it's like a decentralized Amazon. You have all these storage companies providing storage to the network across the globe. And in order to provide the storage and earn the rewards, you have to stake a file coin because that guarantees that, you know, if you remove the data off the network, you lose money, really, you lose your file coin. And so it's, it's an incentive and it's a native token to the network. Now, there's an example where, you know, you actually have to own these tokens and you have to buy these tokens. if you want to participate in the network. And there's real utility there.

And then they're launching a whole bunch of other things as well around that. But that's the example of a coin that's going to come back. And if you look at the daily activity and how it's growing, it's off the charts and it just takes time. But then there's other coins that just never going to get back the gains, right? So we've seen it throughout multiple cycles. Yeah, yeah. I mean, when you buy Bitcoin, unless you're running a Bitcoin server or you're mining,

I guess those would be the two ways that you would be mining. Mining would be how you would get yields. and, you know, Ethereum, I guess, if you're running a node, would you call it a node on the Ethereum network? That's what they're called. Yeah, they're called node. So if you were running a node

and you were doing the transactions and recording them and building that infrastructure, you're getting paid, I guess, gas fees, right? So you're getting fees for running that node. So those people are making profit, but the people who own the coins, who own Bitcoin, or who own Filecoin, they don't necessarily make a profit from it,

but the people who are staking Filecoin, if people don't understand what that is, if I reflect back to you, essentially people can put their storage that's unused on this network and like Amazon's, I think it's S3 is their story? S3 is their storage.

Yeah, Oglacia, yeah, Oglacia, which is the deep storage stuff, yeah. Thank you. Glacier is like if you don't need instant access to you, you get slow access. So if you were putting your old news broadcast from the 60s and 70s, you wanted access to it but you didn't need to stream it to a million people

that could be on slower storage. So Filecoin is doing that and this distribution network. I always thought was a very interesting project. We actually had an investment in a company called Space Monkey, which was a distributing company when it was a hard drive. Yeah.

I bought one. I bought one, too. And it was that one of my conferences, and we invested in it was great idea, which is if you got a terabyte a hard drive, you put it on the network, you get 500 gigs. You put 500 gigs in the network.

You're automatically backed up, encrypted across the whole network. You would never lose any of your files. It was pretty clever. Before ICloud existed, you know, with Apple and stuff. So, Sunny, when you look at that, the economics, this is kind of like a cold store problem.

It's kind of like having, and you were famous for having built Tinder, You ran the development shop that built Tinder. Communities, dating sites, social networks, they have a cold start problem. And so we had the opposite in crypto, which was everything went off to a hot start. People would be buying the tokens before they existed. They would be buying contracts for future tokens, I guess SAFs. So there was arguably too many people buying the tokens and it was too hot.

Now it's too cold. What is the middle ground to get a project going and get that flywheel going today? Yeah, I mean, I think it comes back to just the fundamentals of even what you look at, J-KEL, when you're investing in companies, right? You know, anything, whether it's Filecoin or whether it's an NFT project or whether it's a new L-1, it has to have users, and those users have to be provided some kind of actual utility. And then that utility needs to have them keep coming back, right? So what we're seeing now is sort of a reckoning, right? We've seen the crypto market go from being, you know, say, $3 trillion down to $1.2 today. And that's a good thing, in fact, right?

Because what's happened is the market was just rewarding behavior that wasn't tied to fundamentals. All you really had to do is three of us can get together. We can create the, you know, the sunny, Vinny JCal coin. We can launch it. It can just have a white paper to talk about what it'll do. And there's so many speculators, like you guys bring tourists in the market that they buy it all up. and then they sell it and no real work was ever done. Now we're going back to fundamentals where real work has to be done.

You have to prove real value. You have to show, it doesn't have to have dividends, right? We've all invested in tech companies that don't have that, but they're producing products and providing a real service to users. And that's what we're coming back to now is we're starting to see that really, really pushed through the ecosystem heavily. That's fantastic. And I think getting back to fundamentals and basics makes me excited about crypto again.

I've actually been, you know, I've been a big crypto skeptic because of the grifts. I was fascinated. Then I was disgusted. And now I am back to fascinated because as a capital allocator and a builder of companies, I love innovation. And so we'll get to some of the really unique innovations that are going on. NFTs, especially membership ones, I'm fascinated by. Doge I'm fascinated by.

And we'll talk about my... We did a transaction last night, right? We did a transaction less out of my doge. I mean, my doge is kind of mind-blowing. It's very rough around the edges right now. But if you squint, you could say... see something very big. You just have to look at the horizon. You're like, oh, I get it. And we'll get to that. I think my does just brilliant. All right, everybody, listen, I love Brave.

I've been using Brave for the last couple of months, and it is so much faster that any browser have ever used, and it doesn't have all of those ads and trackers and creepy stuff happening on my computer. They really have three core products built into Brave. The core browser, which is tight, and it has all these great extensions that just work. They have the search engine, and they have a browser native crypto wallet. Braves browser has over 60 million users already and thousands of daily downloads. Plus, all of this is built on Chromium, which is the open source Chrome project. So you're going to feel pretty familiar with it. All your extensions from Chrome are going to work. But here's the best part. They're going to work like two or three times faster than in Chrome

because they're not going to bog you down with all those ads. And I tell you something, the Chrome extensions are some of the worst offenders in terms of adding a bunch of trackers. You can import your bookmarks, your passwords and settings from Chrome or any other browsers in just one click. So you're going to be off to the races day one. And it doesn't track your website visits, your searches or your clicks. Producer Nick uses it and he loves it. Rachel uses it. We all love having a browser that's fast.

It's truly private and independent. Their search engine is independent. So download Brave today. Brave.com slash Twist to browse faster, search privately and so much more. All in a single click. I guarantee you you are going to love it. Brave.com slash Twist. Let's start with Tornado Cash.

have to talk about regulation. Because this regulation has come down, it's seemingly so fast, so hard in the last six months that I think the crypto world was living in a bit of a bubble that it would never arrive. And now it's arrived. And I guess we have to figure out how intense it's going to be. But there is something called tornado cash, if you haven't heard of it. This is an anonymous way for users to say in Ethereum, or I guess any cryptocurrencies. And what it allows you to do is to basically wash the money, to clean the money, and honestly, and send it to another person. Now, why would somebody want to do this?

My understanding is some countries that maybe have sanctions against them, like North Korea, were using tornado cash to wash money and move money around. So maybe you could tell me a little bit, Vinny, of how tornado cash works, who's using it, and then we'll get to what just happened

in terms of the Treasury Department's actions. And there was a real reason for it to exist as well, J-Cal before going to gets into it, which is, yeah, you know, if you don't, if you want to have a transaction between two people and you don't want to let everyone know about it, it's a legitimate transaction because everything on the blockchain is open, you could use tornado cash for that. Like, let's see you and I are settling a poker debt J-Cal and we don't want everybody to see that on the blockchain. That's the way you can use tornado cash as well. So it's not only for an affair, his purposes. And it's a crypto mixer. Correct. That anonymizes it. I've heard this

described as a Tumblr where a, bunch of crypto goes into this. You shake it all up. Everybody shakes up their other transactions. You've got hundreds of transactions going into a Tumblr and then out comes some output. Is that how it works, Vinnie? Or could you describe a little bit to the audience? I've never actually used it because I've never really needed to in all my years in crypto. I tend to have different ways.

Guilty. Guilty. No, no, no. We would never know if you did. No, but it's not that. It's just like, you know, I don't think it's needed all the time. I think it's the awesome use cases. I'll be a bit more balanced.

I'll be like, okay, I agree with Sunny that there's, there are legitimate use cases for it. I think that there's, you know, I'd say, I'd probably lean more towards the regulator side of things where I say, look, there's a lot of volume going through there and they don't know where it's coming from. And so if exchanges want to be regulated and have licenses and be participating in the AML, KYC sort of regime that we have today, I'm not saying that I agree with it. I'm just saying that's the way it is. You know, you can't touch tornado cash because you just don't know.

it's basically anonymous money at that point. So, you know, if you touch it, you basically are, you know, breaching all your regulations. And so I get why they're doing it. And I think that, you know, if you exclude all the legitimate use cases, there's probably, you know, it is a non-zero amount of illegitimate use cases that's being used for right now. I would say if you just ask me to stack rank what it's being useful in terms of like most used use case, I'd say probably tax evasion is number one. People with mixes don't want to pay taxes to their respective government, so then they mix the money.

So I don't think it's like, it's not like, hey, I'm paying for an assassin. It's more like I just don't pay the government taxes on crypto. I've held for five years or 10 years. And people use it for that reason more than any other reason, I think. At the Sunny, would you agree with that? Yeah, I mean, I wouldn't say tax evasion, but I just think like, you know, people, because there's sort of radical transparency on blockchain. So sometimes people want to have an anonymous wallet, right?

a wallet's been understood and everyone can look at it and they can see all your transactions and who you're transacting with. And they want to move that to a difference at a wallet. So it's not always for tax evasion, but yeah, it's hard to... I mean, this is one of the fundamental things people don't understand about crypto. It's actually very traceable and trackable because you have a wallet and your company analyzes all the wallets out there and looks for trends and people can figure out all kinds of who's got diamond hands, who's got paper hands.

But you'd also figure out, hey, this person seems to have a lot of transactions occurring at this time at night between these wallets. And if that person turned out to be a bookie or a drug dealer or a money launderer, a terrorist, whatever, you then all of a sudden know every wallet that transacted with that wallet. And boy, once one wallet is uncovered, you could really uncover an entire network of behavior. But here, this anonymizes the network, anonymizes who owns it. So the question to me is then, and this gets back to like fundamental human rights, should humans have the ability to transact with each other without it being traceable?

In the real world, we could hand each other cash, but there are safeguards in backstops. I'm just talking about the United States here. You take out more than $10,000. That's recorded in any bank, right? If you were to, but that doesn't mean people can't hand each other piles of cash. But if you go through airports, especially over borders, you have to declare. So we do have some backstops for cash. But here we're talking about there are no rules.

Nobody, it's a, this is a permissionless system. This is a distributed system that nobody controls, right? There's somebody wrote the tornadoes. Just remember, like, we can't apply the U.S. rules to the whole world. The world. It's not fair. Right. So everyone lives in a different.

country, different regimes, some are more presser than others. In some regimes like, you know, tax evasion is a legitimate reason. Like if you lived in an oppressive country that was doing all those things as people, you don't want to pay taxes and you felt like, you know, vindicated there.

Like, it's fine. Like, I think that based upon the country you live and the sort of values you have as a person, there are legitimate reasons to hide your money from governments. Okay, now... Yeah, they might seize it. Yeah, they might seize it. Yeah, exactly. This has happened in the West even, right? We saw this happen.

Exactly. So let's not call the, like, I want to be clear that there are, you know, like we have a very complex web in this world of people, country, states, oppression, you know, ranging from oppression to freedom to justice or whatever. So it's very difficult. So the question I guess you're really asking is, you know, how does a system like this play in the U.S. right now? I think is one question. then how does it play for the rest of the world? In the US, I think, you know, the US government has a very high level of surveillance over financial transactions in the US in particular and the ability to enforce, you know, laws against people who break whatever laws we have to abide by. And for the US

government, this poses a massive problem and they're not willing to have people who are playing with these services touch the existing financial service in any way, shape or form. So, If you've got tainted wallet and a tainted wallet is a wallet that's interacted with tornado cash, they don't want a coin base to be working with you. They don't want to legitimize your funds. Now, if you're another part of the world and you're living in an authoritarian, totalitarian, oppressive regime, and you're trying to get your money out of the country and someone wants, you want to trade with someone and you're about to leave the country and you want them to convert

their Ethereum to pay you, but they don't want to be. be in trouble for it, but they're trying to help you get out of the country because you're escaping because you're in some sort of racial group that's oppressed. That's a pretty legitimate use case. And I'd be supportive of, okay, let this guy get out of the country with his money and let him survive with his family before he gets killed. Like, that's a good reason to escape. In the U.S.

There's probably a very little reason to have that argument, right? So the U.S. Treasury, just so people know what happened, was they put tornado cash on the sanctions list. $440 million in crypto assets were frozen and all the addresses associated. with Tornado, we're put on the SDN, specially designated nationals list. It's like a no-fly list, basically. And if you're on it, you can't do business with anyone in the US.

Just make it very clear what Frozen means. So in the Ethereum network, you can't freeze a wallet, but if you're holding a non-native asset, so in other words, you're holding USDC coin tokens in that wallet, effectively it blacklist those coins, and USC says we're not going to honor those coins. where, you know, it's been, it's been, wow. Yeah.

That's hardcore. Yeah. So, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, like, a moonbird NFT in my wallet, like, no one can block that, right? You can, you can block, you can, you can't send it to someone, but not get legitimately paid for it or whatever else, but you can't take it out of my wallet. You don't have the private keys for it. And the same with the, with the, with the USC coins.

You can't take it out of my wallet, but you can, you can't say these coins will not be on it and have a blacklist. So I try to send it to. Coinbase and sell those coins, they're not going to honor it. And so, you know, the wallet's effectively tainted. And the problem we have right now is that the, so, okay, so this is like, I live in the U.S. and South African, I've got a kind of, you know, multi sort of multi-country view on things. Now, let's look at someone who's never been in the U.S. doesn't live in the U.S. is a foreign national. And he has a tainted wallet. And this is, we're seeing this already. These guys are

saying, well, screw this. I'm going to send, I'm going to send my, I'm going to send outputs to everyone I can find. I'm going to go and drop every public wallet I can find. I'm going to taint all these wallets with, because my wallet suspended, it doesn't matter, I can't do anything with it. I'm just going to spread the taint. And people are just running scripts and depositing coins everywhere. So now, someone sent something to Jimmy Fallon's wallet, because it's well-known because he buys NFTs and shares them. So someone sent a tornado transaction to his wallet. Yeah. So because you have this system where anybody can send to a wallet without permission, you know, it's not like, you know, a bank account where you have to get permission.

It's not frozen. The money, the money, you can still transfer the clients. That's not true, Jason. I can send you a wire if I have your routing number and account number from a previous transaction. You'd have to get my wire number. So let's be specific. If you have funds in the US bank account and it gets frozen, you can't move those funds. If you have funds in a crypto wallet that gets frozen, you can still move those funds. Okay. But that's a difference. So it's not actually frozen, it's tainted. So now the wallet is tainted, and now those tainted outputs are being sent all over the place.

So now, if I was just like, let's say I had $100,000, it's frozen in a wallet, and I'm like, oh, screw it. I'm going to send a buck to 100,000 people. I've just gone and tainted 100,000 wallets. Now when those wallets interact with Coinbase, they can have a million dollars in their wallet. It's like, nope, you've touched, you've touched tornado cash,

you cannot use a wallet. So what happens from here? Because this is all happening in real time over the last 72 hours. Like, what happens when Jimmy Fallon tries to sell his NFT to the next bag holder? Well, you know, the companies that are involved in like forensic analysis will probably clear these wallets and say, hey, look, like this was a transaction that was sent in. It's clear this person wasn't sending to and from. And again, because of the transparency that exists.

So it's a little bit more of a news cycle than it is an actual practical thing. But, you know, and that's where transparency comes in. Because you can say, look, I've never interacted with tornado cash and someone just sent me something. So I'm not a bad act. It's an inbound anyway, right? Like, I didn't request this. This just came in. Look, the same wallet did it to 100,000 people.

They're obviously doing some denial of, essentially like some, it's not a denial of service of attack. It's a taming. It's a spam attack. Yeah. But to be fair, like, their functionality hasn't been built in the past 72 hours, I'm pretty sure. So a lot of these services that are programmatically just shutting off wallets are just doing

it en masse. Hey, everybody. I'm here with my pal, Tom Eschbacher. He is the senior sales manager at LinkedIn Marketing Solutions. And today, we're going to talk about marketing for startups. And LinkedIn did a great new internal report called today in startup marketing. Welcome to the program. Tom. Thanks, Jason.

We've been talking about ICP, ideal customer profile. This is a critical concept for all founders to understand how can LinkedIn help with the startup figuring out who is their ideal customer. It's hard to know, especially for companies who are really getting started. And one of the great ways that LinkedIn is able to help is by providing you additional insight on who's visiting your website from all channels, organic, paid, search, what have you. Our website demographics feature looks at the professional attributes. And I'm talking about the job function, job seniority, company industry, company size, even company name to help you hone in on the audiences that are most engaged with your site.

We can look at this down to the particular page so you can get product level insights. And what you're going to do is take that, share it back with your sales and product team, and add that to the anecdotes that they are bringing to provide a really holistic view of what an ICP can and should look like. Fantastic. You can go to LinkedIn.com slash this week in startups and get the report for free as well as a hundi, $100 from Tom. Well, this speaks to how nascent the industry is. And so now, based on this, you would think there's going to be, just like when denial of service and spam came out, we started to have spam filters. We started to have block lists. We started to have the ability to drop packets coming in and you would have CDNs, content delivery networks that would act as a way to deal with denial of service attacks. So there'll be a series of reactions here.

For example, will people now say to themselves, you know what? I hold 10 cryptocurrencies. I should have 10 wallets. Or I should be, I should have public wallets where the keys are public and I should have some sort of private wallets or I should have a wallet that has the functional. functionality to reject transactions or put them in a holding period where, you know, I have to approve them on the way in. I'm assuming that that technology might exist with certain. Yeah. So that's like, so basically, you know, you have custodians like Anchorage, right? So a lot of funds who are dealing

with crypto, you know, mostly have their assets held in like by a custodian like Anchorage, who will do that stuff. Why did they do that? All the reasons that you talked about, Jason, right? So that, you know, first of all, you need to have multiple people have access to the account. So they help manage those type of things, right? They need to ensure that that wallet is generally not interacting with the rest of the crypto ecosystem so it doesn't get caught in like a scam. We hear, you know, a lot of these stories of wallets getting assets drained out because someone clicked on a link somewhere.

So when they're custodian, custodian wallets, that custodian doesn't interact with anything. It's just basically, think of it almost like a safety deposit box inside a bank. Like cold storage, right? These things are not on, they're not even connected to the net. So you could literally have. have a computer that is not plugged into Ethernet, has no Ethernet card, and it just has like a thumb drive.

I don't know if that's actually how they do it. That would be quite hilarious, though, if there was like literally a job. It's usually online, but they have a layer of software on top. That needs multiple people to interact with it so that, you know, one click, you can't drain your wallet out of something. So, yeah, so that infrastructure already exists because, you know, as funds and, you know, large holders wanted to interact, again, like you should probably have, I don't know where you store your Bitcoin, but you should probably have it

with a custodian in that kind of matter. Yeah, we do. Yeah. So how does it, there's this a phrase that is used in crypto, not your keys, not your whatever coins. Yeah. Not your crypto. Not your crypto.

Not your crypto. So does this change people's thinking on this that, hey, custodians are better to have because wasn't what we saw with one of the recent implosions that people were sending their money into essentially a hedge fund that was buying crypto. And so they didn't actually have access to their crypto. It's a really good point, Jason. And I think the way to think about it is there's different types of custodial wallets.

In those cases, those custodial wallets existed, say, within an exchange, which was doing something else with their assets, right? When you are with a specific custodian-only service, they're not taking your crypto and lending it out and doing something else with it, right? Exactly. So you really kind of have to separate what your custodial wallet provider is doing. Are they just a custodial wallet provider? or are they a provider where you're storing stuff with them? And then somewhere in the fine print when you did that, they said, hey, we're just like a bank, right?

When we put our money with a bank, they take it and they lend it out to other people. And so that was in the explicit understanding with them. But, you know, people didn't really understand that that's what was happening. And then they show up and say, oh, sorry, we've gone bankrupt. We don't have your funds. There was a bit of surprise. The timing of this is also interesting because we had the Coinbase action where there were some Coinbase employees that were front-running the market.

Coinbase doesn't allow you. It's not like an open exchange. They would approve which coins would be tradable and would be listed. So people were front-running the market knowing that, hey, Coinbase has millions of, you know, people using it. Retail investors. Therefore, when you're on Coinbase, it's like an IPO, essentially. I think it's probably analogous, right? All of a sudden, the public, you know, has access to it writ large. And so they now are saying, hey, these were the SEC's position.

I think it was the Southern District of New York and the Department of Justice's position is, hey, these are securities. And now Brian Armstrong is like, what? We put all three through the how we task. We put them through our own thing. They're not securities. So here we are, finally, at the end of the road of are these securities or not in that one instance.

And law firms are putting out notification saying, hey, if you are thinking you're not of security, you may want to think this through. And then at the same time, we have the tumblers, like Tornado, having action with a different part of the government, the treasury. And then on top of that, we have USDC, which is Jeremy Allaire's company. And they are a circle. They have their coins, and they are now printing every day, I believe, I think it's daily. It might be weekly, what their holdings are. And they're like, we're not going to have Chinese paper. here all the tether issues. So all of this is happening in the last,

I don't know, like four or five months? And we've been at this for 10 years and had none of these. So Vinnie, what does that tell you about the regulatory environment? If all of this is happening simultaneously, is this all because the government, this I guess would be a cynical way of looking at it,

you have so many people in the government are saying, hey, everybody lost their money, now's the time for us to start regulating, or is it just, hey, this is built up and got large enough, now's the time to start regulating. The timing seems to me to be the six months after the crypto collapse. It's pretty suspect in my mind, but I wouldn't say unpredictable. This is entirely predictable.

I've got a clip that I posted a few months ago from a podcast I did with Charlie Shrem. I think it was 2019. And in that podcast, I literally said, what's going to happen in the next run is we're going to get crypto to, you know, I think I said four or five billion. I think I think I'm sorry trillion I think I'm maybe said five trillion we've got to four close enough five trillion then we're going to have this market collapse down to whatever 80% down the usual and then the government's going to come in and regulate the hell out of it because we just destroyed four five trillion dollars worth of global wealth in a few months and that's the next crypto cycle I actually like

literally predicted this that's on video three years ago. Crypt market as a whole went to five trillion dollars in less than 12 months that that's that's going to be concerning. It's concerning because if it does tank, it tanks typically 80%. You're going to wipe out $4 trillion in global GDP overnight, and the knock-on effects of that are immeasurable. So if we do see another bubble run or another run on crypto that gets us up to those levels, the response from governments with people losing that much money globally and that much wealth getting transferred into and lost into the crypto sphere would be catastrophic for crypto because if you ever

seen governments respond negatively, now you'll see it happen. It was obvious. This is going to happen, right? Governments only get involved when people lose money. Nobody wants to be the party pooper that stops you from making money. If everyone's making money, they're like, oh,

cool, it's fine. The moment grannies lose their money in some Ponzi, that's when the government locks on the door in every country in the world. It's just, it's... Well, in a way, that's kind of, Sonny, how you'd want the system to work. People can innovate, they can build things. But if people are getting hurt and people are getting scammed,

we want to assume that people doing innovative stuff in the world are doing it in good faith and not scamming people. If it turns out they were scamming people, which there were plenty of grifts and scams here, then you have victims. If you have victims, then you can take legal action. So it's easy to be cynical about it and just say, oh, well, you know, now they're showing up because, you know, it's blown up and they're dancing on the grave of all these projects. It's more like, well, no, now there's actual victims. And if you didn't take those victims money, Sonny, then we wouldn't be taking this action.

So what's your take on it? And obviously we're looking at a U.S. perspective here. Yeah, so a couple of things. Like, so one, look, this happened in the IPO boom, right? SARS-Bainz-Oakley is a fallout of that, right? Same thing. No one stopped it. IPO.com crash, all kinds of new regulation

on what kind of companies can go public. So it's not limited to just, you know, the crypto. We've seen this in the traditional. financial markets before, right? Would you agree with that, Jason? Right? We saw it. 100%. Yes. I mean, the difference would be those markets had a lot of regulation and then people really looked at the regulation and found a way to cheat. And so this is one of the kind of nuances. I think and I think there's a lot of nuance here. There were no rules here. And now for the first time, and I think the SEC and a lot of

the folks said, well, there's a rule book there. Just follow that rule book. We're not making you a new set of rules just because you want a new set of rules. Are you a small? 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 entrepreneurial 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 cardholder 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 Enroll 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. So I guess this is now when we get to Vinny, should crypto,

get a new set of rules here in the U.S. again, we're talking from a U.S. perspective here, because that's where these legal actions are occurring. Should crypto get a new set of rules, or should the old set of rules that apply to people in private and public markets be evolved to take into account the new innovations here? And if so, depending on what you pick there, what do you think the reasonable evolution of the current stack of rules here in securities law would be? I think we need a new agency for crypto. I don't think the existing agencies. So you think a new set of rules? Yeah, a new set of rules. Why? Because

Because, okay, the problem with crypto is this. You've got, you've got grifts around the world happening in different countries in the world. And you have countries where there's just no enforcement actions in those countries. So you could be in, you know, I'll pick on like Nigeria, for example. You can be in Nigeria running a scam. And, you know, they're not very good at picking up scams. We all get out. We all get litters from princes and whatever else trying to get us to wire money to Nigeria or daddy basis.

Like, it gets not spent. You know, if you got the prince one, can you contact them? because he stopped returning my clause after I sent him the $5,000 deposit. I still haven't gotten the $5 million wire back. Exactly. He was calling me every day and then it's radio silence. But he, you know. It's a 419 scam, I think it's called.

It's like, you know, they have a whole code for it. So the thing is like, how do you, what made the U.S. great in the financial world over the past, you know, a couple of decades was enforcement action and, and this really well-regulated, clean markets operating now, obviously, even below the line. there, there's some politicians, other people who act, you know, inappropriately in the financial markets and don't get arrested, we shall not be naming names. But, you know, I think generally the U.S. has been seen as a bastion of sort of, you know, fair market trading and enforcement against, like in Russia, the insider trading is not a thing. You can't get arrested for inside

training in Russia. They don't have that, right? It's not part of their culture. So the stock markets there just operate differently. And so the U.S. has attracted the most capital because of the regulations that it has and the protections it has for investors and for companies, but it comes with a lot of overhead and cost as well. So we have the situation where we're trying to look at something like crypto and realizing and recognizing that innovation happens globally simultaneously right now. It's not something we as the U.S., we cannot control or own all the innovation that happens in crypto. It's not possible. There's more people outside the U.S. and in the U.S. There's more engineers outside the U.S. and in the U.S.

And so there'll be innovations that happen outside the U.S. And if we just say, hey, we're going to just not participate in those. It could become game changing. It could be, you know, it could change the world on many, many levels, and we could just not participate in. So I think it's a problem.

But equally, those countries don't enforce the grifts and laws against the grifts that occur. And so you You're not operating in a vacuum here. And, you know, if you look at securities law and banking, they have a lot a safeguard. You can't really send money around the world. We all know that because there's all these other grifters, you know, Western Union or whatever, take you 5% or 10% of people's money

when they try to send money around the world. So that system's been locked down. The security system is locked down in regional. If you were IPO in Australia, Japan, the UK, Germany, or the US, those are all different markets. They all have different rules and regulations. So, Sunny, what do you think? Should we evolve the existing laws or should we have a new agency for crypto and then how should that agency operate? Should people have to have insurance? Should they have to have a board of director? Should they have to be incorporated? Should they have to have insurance? Should there be a limit to the size? Should there be K-Y-C? How would you, you know, come up with a reasonable stack of regulations and do you, are you with the new or evolving the old? And then I'll give my

perspective. Yeah, I think it needs to be a new set of like a new agency, but that builds off the existing set. It's always good. You know, there's a lot of red tape that gets built. you want to remove some of that. And so that's what you get with the new agency. I think it's like sort of like buying real estate. You know, when you own real estate inside and outside the U.S., right, there's like different rules. You have to deal with different reporting requirements and all that.

So I think there are some kind of good precedents that we can build, but I think tying it too close to U.S. securities stocks, you know, particularly is probably not the right thing because it'll kind of hamper the innovation and hamper the U.S.'s ability to be a leader in the space, which we want it to be, right? And so that's my take. I have two very simple solutions to this. Number one, you don't have to handle this just through regulating the entities that are innovating.

You could educate the public participating. And so I think the number one thing to do is create a license for any American, like a driver's license or a gun license that we have in some states and we should have a federal gun license where you're trained. It should be a four or five-hour course.

It should be a 50 to 150 question test. It should be rigorous. but not insurmountable for somebody with a high school education, basically. And it should act as the course she should have taken in high school to understand diversification, to understand Ponzi schemes, to understand the history of Ponzi schemes, to understand the value, earning, shares, debt, just understand the basic fundamentals of how to evaluate a project slash company slash opportunity. And if it took people four hours to take that course and it cost 50 bucks to get that license,

then people could participate in all private companies. So if you were an Uber driver or a DoorDash driver or you were a recruiter or worked in HR but you were not accredited, you could just take this course and then you could buy LinkedIn shares when it was a private company, right? That seems the most fair to me.

Imagine if when you went to Vegas, they said, hey, if you want to play at these high stakes games, you need to take a course on the odds and what are the rules for blackjack? People would think that was crazy. This is my issue, Jason. I don't think we can,

like it's the same as the accredited investor rules that we have for startups, right? You know this. This is kind of silly. You can go to Vegas and go put $50,000 bucks on Redo Black and nothing, and no one does anything about it. Even worse, a slot machine or a slot machine.

Oh, slot machine. But you go to J-Cal Silicate and you're trying to go put 10 grand in and you're not accredited investor, oh, shit, this is a problem. Like, it doesn't make sense. Well, that's why I think, you know, and in fairness, nobody goes to Vegas thinking they're going to win. I don't think. And it's literally

framed as gambling and they're like spinning wheels and stuff like that. With the vestments, there is this veneer. There is this aesthetic that there is a return that is expected and that we're investing. I like to say, when I actually write my deal memos for the syndicate, I say the bet we are making just to trigger in people's minds, like this is a bet, this is a gamble, this is a risk, just to trigger that in people. But I do like the idea of evolving that. So that would be step one for me. And then step two, I think there should be a sandbox that you can file for for crypto projects.

if they stay under $100 million and under, you know, 100,000 participants, then anybody can participate. No single wallet can have more than X amount. So you can basically say to people, hey, listen, if you want to do something really innovative with no rules, keep it under $100 million, you're responsible, you have to get this license, and you're officially in a crypto sandbox.

What do you think of that idea, Vinnie, that there was this innovative sandbox, do whatever you want, keep it under $100 million in total TAM, you know, or total assets under management, whatever you want to say. And I know that that's a little bit crazy, but because when you do hit a certain number, it's out of your control, right?

People are trading it. But the number of participants is that, you know, 100,000 and 100 million, something reasonable that lets it get pretty, you know, to scale, pretty high scale, certainly higher scale than most startups we ever get to. But nobody, the fallout of it blowing up wouldn't be a billion dollar or a tether light blow up

or a Doe Kwan's company. What was Do Kwan's? Terra. Tera. Tera Loo. Like you wouldn't have a Terraluna level thing. What do you think of my ideas? Okay, so there's some truth that.

I think that the problem with terror is you have all the institutional investors who are supposed to be high signal going and losing their shirts on something which was Karelia Ponzi from the beginning. Like I didn't touch Luna. I could tell you a mile away. And in fact, I was on another show, Tewsport blew up and said, you know, this stuff works until it doesn't. I wouldn't touch it. And in two weeks later it blows up. So, you know, I don't think, I think that that's, the, you know, the, you know, the, you know, The one thing I think which America does really well at,

whether it's startups or, you know, just company formation. And Sunny knows this as well. You guys all, you know, is that there's a pretty good governance system in the U.S. for startups.

Like, yeah, you get the one in a thousand founders that run away with the money, but I actually haven't heard of any legit founders running away and stealing the company money, maybe misappropriating it. Very rare. It's a very rare occurrence.

I mean, they could overpay themselves. They could get themselves an apartment and call in an office. I mean, there's like little things on the margin people could do, take themselves, throw a big party. We've had like big party syndrome, but it usually is not, I took the money and put it in my personal bank account and went to Antigua. It's the exception and not the rule.

I mean, if you look at the YC companies, the tech stars, the support system, the network, the people, you know, the thing is, the moment you have more people, like, you know, joining a company, so you have a board, you have a couple of investors, you have people active in the company, you have other farm. You have a team of people who are like, hey, this guy's working three startups before. This guy's the jet. You put these teams together. You have this network that really works well.

And you can take bets on these people. And they don't have to succeed. That's not the point. They're not grifts. They're experiments that fail. They're not people trying to get money out of investors so they can go and have a big party and fly around in private jets and yachts and whatever else. But that's what happens in crypto. Okay.

In crypto, it's a grift for a lot of these companies and people is like, hey, I've got five PhDs. is from the University of whatever in Russia and Ukraine and, you know, wherever. And we're all working on this stuff. And meanwhile, back at the ranch, they're busy partying all weekends and they don't already care. Because they get so much money in the door in terms of, and the network is not, the culture hasn't permeated across there. In many ways, like, there's an infrastructure layer that helps us with this.

Like, look at Morgan Stanley or, you know, T. Amerit Trade or, you know, take your bank bank of America. If you don't really know what you're doing and you have a broker there, like, you know, prior to online. they would say, hey, maybe you shouldn't buy this, you should buy that. They'd look at your profiles, hey, you know, you should buy these kind of stocks. Like go buy, you know, Caterpillar, you know, United Airlines. Don't invest in this new up-and-com anything Apple, right? Because we don't it's high risk. And I thought, like, in many ways, like that's what some of these exchanges

were supposed to do to folks. This is where I think Coinbase let people down, right? Is that they were meant to be that. They were meant to be the filter to say, hey, look, okay, you can go out onto the crypto rails yourself and go to sushi and buy, whatever you want, but then you really should know what you're doing. But if you don't really know, we're going to be kind of like the brokerage in front of you and we're going to basically help you. We'll be the VC firm. We'll be Sequoia that says, hey, this is a legit enterprise.

I don't even say it's that. I think it's more like we're the Morgan Stanley, right? Morgan Stanley. Okay. We're putting our logo on this. Yeah, we're your financial advisor and we're not going to bring, you know, coins onto our platform and we're going to tell, you know, these folks, our retail folks that are coming in, hey, these are things that we've vetted.

We've done the work to understand. So instead of, if the ecosystem of coins is, you know, there's like 300,000 coins out there. I don't know if people know that. There's about 350,000 tokens out there right now. And there's, you know, probably only, you know, less than 500 that should be tradable. And so I think that's the, that's what sort of some of these companies are supposed to do. And, you know, Robin Hood is in that bucket. FTC, all these guys are in that bucket.

That's where I think the opportunity really lies rather than it. I think they said that's what they were going to do. They were very slow. I mean, the criticism, I remember. member of Robin Hood, Coinbase, and a lot of these was, hey, why can't I trade this? It's I should be able to trade it. You know, it's my money. They were taking that side of the argument.

But to your point, you know, they, they were very judicious, I believe in the beginning. They were growing very slow. People were complaining. And then they went faster. And then even when XRP, when people were like, oh, yeah, this is clearly a security because you gave yourself, you control it. They gave yourself most of it. This is not like, this is very different than Bitcoin or Ethereum.

And you're trying to pay people off to list it on there. You're literally trying to pay people off to list it on there. You're literally trying to. to pay people off to list it on their exchanges, they took XRP off, which I think it was a very controversial move. So I guess people could argue about sides of that. And speaking of Coinbase, boy, they just got, had a really rough Q2, billion dollar net loss. Company was trading at $357 a share, dropped down to 53. It's trading at 98 right now or so. So it was down 85% now. It's down something like 72%. And it's had a little bit of a, a little bit of a rebound, obviously.

they have a $20 billion market cap, but here's the Q2 results, and it's not pretty. Net revenue down $800 million, down 33% from the $1.2 billion quarter over quarter. So that's a 33% drop from Q1 to Q2. Transaction revenue down 34% subscription and services revenue down 3%. So I guess people are not canceling their subscriptions, which makes sense. Trading volume down 30% quarter over quarter and monthly transaction users, 9 million, down only 3% quarter over quarter. So that's fascinating to me.

It seems like people are still transacting on the platform. Assets on the platform, 96 billion down 62.5% from 256 billion quarter over quarter. So that's extraordinary too. They're doing massive reductions in spending, terminated 18% of employees in June. That obviously did not hit the books in time for Q2. Probably would see that, I think if they gave them three to six months, you'd probably start to see that hit in Q4. You wouldn't even see that in Q3. Hiring freeze, less paid media and incentives and all that kind of stuff.

So what, and then obviously have this actions taking against them, and who knows what that leads to, I would thank a huge fine, but I don't know if they give a huge fine for listing securities, let's take out the insider trading thing. Could they reverse and say you can't, these things are securities? So you have to do KYC on everybody and make sure they're accredited investors. Is that a possible outcome here, Sonny? Well, Coinbase already KYCs, right? You can't make a coin base account without KYC. I'm sorry, I meant accreditation, yeah. Yeah, so accreditation, yeah, they, you know, they may have to take the lead of the U.S. government and regulators here. Wow. Yeah. I mean, what would that look like? That would be, I mean, 6% of the country is accredited. It would be basically for trading in alts.

I mean, I think that they would probably allow you to trade USDC, Ethereum, Bitcoin, maybe five coins, which is, you know, 10 coins, which they could say, hey, these are commodities, the legit coins, the rest are old. And I actually don't think it's a bad idea, actually. I think that people should, like, there could be two levels of service at Coinbase where for the majority of users you come in and you, you know, if you want to buy Bitcoin, easy, no problem. If you want to start delving into other things, there's a test that you go through or a, you're not even a test, Vinnie. Like, we have this with our Morgan Stanley account. Same thing, right? You can go in and you can kind of online get a account to buy, you know, securities. But if you want to do options, you have to go through a secondary.

Yeah, exactly. You want to do leverage. You have to go through a secondary process, right? So we've seen this before, and it works fine, and it works at scale, and it saves people. Yeah. Yeah, so this is the more risk you're planning on taking, the more friction has to get added,

which has been the opposite of what we do in Silicon Valley. We try to reduce friction. Hey, have you ever heard of leverage? You now have it. Click here. You ever want a margin loan? You now have a margin loan. Here, click here to turn it on.

So there probably is some middle ground here between just turning on services for people and maybe having them watch a video talk to somebody on the phone, go through three or four steps. Fill out of four. One example, we have a 30-day wait period. People apply for the syndicate.

They get to read the deal memos for the first 30 days. They can't participate in them. We have to get to know them. They have to get to know us. There's 30 days. And that's for accredited investors. I also think, I think,

it's a combination of two things. That's one. The second thing is, Coinbase has got a lot of crap listed on there right now. And that's what Sunny was alluding to. And they probably need to say, look, we're going to have to give people

the secondary process and reduce the scope of what you can buy at Coinbase because like some of these coins are just teams like I don't know I'm skeptical I was I was kind of disappointed with that at scale right is that you know obviously started with Bitcoin and then

you know sort of the blue chip assets but you know towards the end it was sort of really scary what was getting listed on there and you'd say you know we'd go back to where we started the conversation right projects that you know had a good white paper but maybe hadn't had implemented it yet, and so you're buying really into the speculation, which is a bit scary.

I did see there was some project where somebody posed as nine developers. Yeah, that was on Salana. Yeah, it was basically someone recreated, you know, the defy ecosystem really took off in Ethereum in the kind of, say, about a year and a half ago. And then someone went and recreated much of that ecosystem, but just as kind of the same group was just doing it in multiple places and did that on the, the Salana ecosystem, which was a bit scary, too. But it was one person who created nine accounts.

Yeah, it was like brothers. Yeah, two guys. And so they created multiple accounts because they realized, hey, people are basing the validity of a project on the commits. Correct. In other words, developers writing unique sets of code, committing them to the repository, and it becoming part of the project or product, essentially. So by creating nine of them and keeping nine windows up or nine instances up.

Well, they had created, just to be clear, they create nine personas. Personas, right. Exactly. And they pretended like, oh, two guys started project A. These other two guys started project B and the other one with two guys started project C. I mean, that's wild. Yeah, yeah.

Well, that's where the pseudonymous stuff, again, you know, when the going back to what we were just talking about with Coinbase or whoever listing these things, you really should, you, I think it's very, very challenging to list a project on an exchange where you don't really know who the people are, right? And, you know, if there's pseudonymous folks. And I'm not saying any of these were, but these are the type of things that we're expecting the exchanges to handle for us going forward. I mean, this is, you know, if you're going to, the,

I know one of the NFT projects, the high profile ones, was like, we should be anonymous. And it was like, well, if you're selling tens of millions of dollars or hundreds of millions of dollars worth of NFTs. The Yuga guys, right?

They were anonymous just so recently. You don't get to be anonymous in business. I don't know where they got that concept from that like you could start a corporation that generates hundreds of millions in revenue and takes hundreds of millions in investment and you get to be anonymous, but that's not how it works. Yeah.

Under the law. It was kind of weird. I just, I thought their expectation was super naive. It's weird. Going back to Vinnie's points, weird because they're based in the U.S., right? If there may be somewhere else and the jurisdictions and, you know, whatever,

safety reasons for them allow them to do it fine. But like, safety reason is bullshit. Honestly, like, come on. Like, if you are, if you get to be a, billionaire, you get to have security if you feel you have security issues. Like, that's part of what comes with having money, is that you, or owning a big house, you get an alarm system, or if you're big enough, you get a security guard. Everybody else has to deal with that. Some of these folks

were quite young. I don't think they had even the sophistication for that. I'm not defending. I'm just saying, but look, but I think there's layers that should exist to protect people, and we should allow the innovation to keep, we shouldn't kill the innovation. And, but there should be layer with that, actually. Yeah. I like your approach of putting more onus on the exchange. changes to verify these, or they could come up with their own credit rating system. Like, what if they said, Sunny, these 50 projects are super speculative? Yep. They do not pass these five things.

These top 50 pass these five things and just gave you a disclaimer. Just like if you were going to buy like, what do they call it, the pink sheets or something, the penny stocks? Yeah. Like if they were over the counter penny stocks and you said, hey, this has almost no volume, just so you know, this trades this much volume, you're not going to be able to clear this position if you try to sell it. Like, they could give some people warnings, right?

And if you call your broker, like, you know, I've experienced it and you want to buy some, and I've seen experiencing it blue chip. And they'll be like, oh, you shouldn't buy that right now, right? They'll just, yeah, that's part of their job. One of the things I think is, which has been done very poorly in crypto is. And I'll, like, you know, I'll talk about CERIC for a second. When we put, we've got, we still have 330 million tokens on our balance sheet. The company's tokens have never been sold.

We didn't, you know, the ones that we kept behind post-ICO. We never sold that. It's still, it's still there. What we find in the crypto world is that's not the case. A lot of these companies, they do the ICO, then they divvy up the tokens between the founders, and then people start selling it into a run, and they take the cash with the table, and they basically make crazy profits, and then there's a disincentive for them to go and build something out. So I'd like to see a world where you're starting a project, you give your tokens to a custodian.

So I think we actually moved our tokens to Anchorage now. And we, you know, but like imagine you have a project where the team is locking the tokens up with a custodian. They cannot touch it. It's like equity, right? there's no liquidity for a period of time. Yes, you can raise some money through the ICA process, you can pay a salary, whatever else. But the real upside, you're committing to be in that project for years,

there's a vesting schedule, et cetera, and there's a third-party custodian holding your coins. And so you can't just dump it into a pump and dump on retail and everyone else. Like, that would be a huge win for crypto if the founders of these projects didn't sell these coins. That would, I mean, and we did see this in a lot of cases, there were some high-profile VCs who had

very large funds. They were buying tokens. They were buying equity. And, you know, the rules for, it seemed like every time I was involved in, you know, trying to assess one of these companies, and I asked these questions, like, they were like, yeah, well, that's private. And I'm like, wait, what do you mean? It's private. Well, it's private between this person and that party, what deal they have. And it's like, oh, everybody negotiates a different deal. You know, one investor has six months, another investor has three months. You know, then some other investor comes in the last one, the founder needs the money, and the person's like, well, I don't want to have a lockup,

but I got a million dollars here for you. And the other two people don't need to know about it. That's why we have share classes. That's why we have board resolutions. If you want to change the number of board seats. So people were, I think, purposely skirting these rules and basically creating an unlevel playing field. And all that does is create distrust in the entire system,

which makes people not want to participate in the future. The governance and crypto sucks, man. It's terrible. So this is one of the sort of bug bears I have. have on crypto, whether it's in the States, outside of the States. It's just, it's kind of, it's literally the wild, wild waste right now. And it has been for years. And, you know, a lot of people, if you look at the ICOs of 2017 and you look at some

of the stuff that's still happening today, not much has changed. Not much has changed. Well, here, and, you know, this is where the crypto industry should regulate itself, Sonny. It's how, how? How do you reduce yourself? Well, what happens is the leaders come together and they put pressure on everybody and say, you're part of this consortium. So the movie picture association, the MPAA,

and the video game industries came together and they came up with their own labeling system because the government was saying, hey, we're a little bit concerned about these movies and kids seeing certain things. And that's when they said, okay, we'll come up with PG-13. So we'll have PG, we'll have for adults only. Okay, we'll have R.

Okay, we'll have NC-17. And they came up with their own rating system as opposed to having the government censor them. And then, of course, people didn't like the governing agency. There was complaints about the MPAA. they allow too much violence, not enough sex. You know, violence gets PG, sex gets R, you know, maybe, you know, that's a little parochial or whatever the word is.

What if the crypto industry came together? Coinbase said and FTX and they said, we're not listing anything unless the founders agree that they will sell no, none of their tokens for the first four years are locked up and they can sell up to 5% a year after that. And they have to list on their website the number of tokens. I think it's a fantastic idea. Yeah, let me point out something else to you. Like the ethos of crypto is decentralization, right?

So not having these sort of middlemen telling you what you can do. And Coinbase and FTX and everyone else, they have to deal with the onslaught of decentralized exchanges that are coming to the fore as well over time. So their concern strategically is the more we look like a bank and the more we look like the financial system, the more we impose these rules, the more people are going to move to decentralized exchanges.

And so those will exist without them anywhere, and they already do. So how do you like fight the, How do you fight the system? I agree where FDX, Binance, and Coinbase got together and set the rules, you know, it would be great. But here's the other problem. These guys, when they said rules, they like to skirt their own rules for the consortium.

It's like OPEC. It's like cheating, right? If they have a high bar set, but then one of them says, okay, well, we'll let these guys in the door, even though they don't meet the bar. Then the other guy says, well, we'll do the same and they're quieting the back. Like, you can't control these guys. I just don't believe the model works. It is a unique culture. I think that is a very, I think that's a very sad.

It's a very interesting, it's unique culture. And you did have that actually in the movie business. What happened was, people could say, I will not send my movie to get rated by the MPAA.

It'll be an unrated film. And so that's when you saw, remember of the beginning of films and it would actually make the film kind of like dangerous. Like, this is unrated. We did not, we didn't even bother sending it for rating.

And then the big movie chains, the theaters, some theaters would run movies that were unrated. And then the avant-garde art house ones were like, yeah, we'll run an unrated, we don't care, you know?

buyer beware, etc. Okay, let's talk about some cool stuff. Yeah. There's cool stuff going on. I have always loved NFTs.

Now, I do think there's a ton of grifts there, but when you combine an NFT with real world value, that to me seemed like, wow, what an interesting concept. You brought up what Tiffany is doing.

Maybe Sunny, you could set the table here and tell us about Tiffany cyberpunk's co-lab. Yeah, so, you know what these guys did is they did a drop

and they basically said, look, if you buy into this drop and you have like a cyberpunk, they'll give you a unique piece of jewelry in real life. And so, you know, you can see how this allows these businesses and brands to start creating these communities, right? So like, think of Tiffany, incredible brand, right? It's been around for a very long time, right? I think it's part of LVMH, right?

And now what they can do is they can, and they've never really probably made the jump to online in any significant way, other than maybe e-commerce or something like that. Yeah, you can order online. That's about it. It's still very transactional.

Now they can participate in communities. And so they've kind of started to tie together the notion of community, the notion of like a digital asset and a physical asset, and all that's enabled by crypto. And this is where we're away from any of the Gryft type of thing

or anything like that. And I think this is really, really powerful. And that's why we're seeing many of these businesses, especially in this area, start to really, adopt the technology, right? There's like, I think Prada has done something with Adidas. You know, some other brands are doing something for like providence of purses. If you buy

expensive purses, and these brands want to understand like when these move hands so they can kind of remain connected to those folks. And so this is where you're really starting to see the technology shine. And it's kind of really far away from the speculation in these cases. It really looks cool, by the way. If we could pull up an image of it, Nick, there's actually images on the web of the crypto punk pendant or like little necklace. And so I guess the question is then, if you were, does suddenly the NFT and the pendant then exist independent of each other when you unlock it? So I could sell you the NFT of it and I could sell Vinny the pendant or I guess that would be up to the owner?

It would be up to the owner, but it would sort of be weird to separate those things because you'd want it together as a package. And then you'd want like whatever future things come with it. Now, look, Tiffany's also did some things here that, again, like, you know, sort of very big company as. Yeah, there's a great picture of one, right? And Tiffany did something weird is which when you decide to mint with your, if you're the owner of this particular punk, they were assigning

the rights of that punk to Tiffany. And so like this is where, you know, some evolution has to happen because that's, that's right, you know, Tiffany maybe trying to pull a fast one on some folks, but, but look. The IP is the most interesting thing of those NFT projects. The fact that if I own

a board ape I can make my own comic book out of it and then you can make a different style comic book Vinnie could make an adult comic book I suppose

I don't know if there's any food brands people have done food brands off their particular apes right you know Snoop is doing a bunch of stuff with his and so people are doing that now

that to me is the wildest concept is like okay the Marvel IP each character is owned by a different entity and so I own Iron Man I can make my own soft drinks, which in fact, Marvel did.

They sold Spider-Man. Yeah. And then they sold F-Dar Fantastic Four and the X-Man to Fox. They had so, and Conan the Barbarian, I think, was always independently owned, but license. So the Conan IP is also independent and outside of Marvel. So this is a very fascinating concept. What are your thoughts on this, Vinnie? Like, do you think that this is actually the maturation of the NFT space?

So it's interesting because, like, if those you're following the moonbirds could fuffle the past couple of days where... I'm not aware of that. I know that's Kevin. Rose's new NFT, so maybe you could set the stage there.

So when the moonbirds were sold and initially and Proof Collective project was launched, one of the things that you were assigned the rights to own

your moonbird and all the IP are associated with it would vest with you. So it's a, you know, you bought a moonbird so you own

whatever the IP was. And then they made a change a couple of days ago, about a Sunday a week ago, where they moved to something called

C.C. zero, which is effectively a new emerging standard where all the IP and artwork is in the public domain. So I can take your Moonbird and go create a comic book out of it. I can go do whatever I want. And I'm still trying to understand the reasons for zero, I guess. Yeah, CC. 0, yeah, yeah. Which basically means that there's like zero IP, et cetera.

This is all public domain stuff. You own the token still, but the rights to the artwork, the IP, you can go and modify it without permission. You can do whatever you want. I can take your moonbird and do. And so it's created a whole bit of, like I said. Inadvert and Rug Bowl, that's how they would perceive it. Yes. That's their perception.

You had something that was just taken away from you, right? Yes. You had the right and now it's gone. It never feels good. But I think it's on balance. You know, the arguments are like, look, it's just hard to police this, the state of crypto. So if you start from a position where, look, you own the, you own the token, but the, the, the moonbird collection, for example, in the public domain. Some other artists are using CC0 as well.

There's a movement towards it. I haven't spent enough time thinking about it to have a good educated opinion. I think these are the examples where you have to just trust the leaders of the projects and the team and say, look, they've probably thought about this long and hard more than any of us if they think this is good for the project ultimately and for what they're building and their roadmap. You've got to support them and say, fine, because this is the problem. People always go with like, you've seen this with Elon over the decades, right? It's like, oh, he's a really guy, but I don't agree with what he's doing. That's a cognitive

distance. If you believe the guy is smarter than you and you disagree with what he's doing, it means that you don't appreciate that he can see things at different levels. So it's just, I sit back and I go, okay, fine, I haven't sold any moonbirds. In fact, I may even buy a few more right now at the lower prices because

I think Kevin's a solid guy. How did, what do you get with your moonbird? Because I had heard him talking to Tim Ferriss about it on their random show at some point, and they were kind of speculating, Sunny, that, oh, this is going to, we're going to, you know, he was entertaining to Tim Ferrary, he should do one for your fans, and then they, you would just keep adding value to it over time. So if you're a member of that, and I guess there's that fryfish club

that Gary Vaynerchuk was doing, you got like a membership to a club with it. And I think somebody in San Francisco is opening like a competitor to the battery, that's also going to have some sort of NFT kind of for membership. Well, there's, there's Maxwell Social in New York, which I'm an investor in an NFT membership type club. Also, so Moonbirds, for example,

when we were in New York for NFT, NYC, Kevin threw a huge moonbirds party. It was massive. And if you owned a moonbird, you could go.

And it was like, the lines were around the block, people trying to get into this party. Oh, I mean, they sold 10,000, 10,000 moonbirds, but there were probably like

3,000 people at this party. It was insane. Wow. Yeah. So you could only get in with a 20, 30, $40,000, $40,000,

I mean, it was kind of crazy. When they sold those, what was the original price of selling them? 2.5 Eath each. And ETH was about three bucks a piece at that point. So they raised about $75 million, I think. I remember correctly?

So they raised $75 million. Kevin Rose didn't make $75 million themselves. Their treasury got to $75 million. Proof-collective. And then so they'll just throw parties with that? Well, I mean, they're doing partnerships, right? They partnered with like a three-on-three basketball team, right, to offer the incentives there through that,

like sponsorship, tickets and tickets and thing. So it's, think of it like a club, right? Like, I think you use that example before Jason,

right? It's just, it's a club and it has a membership, and by owning the token, you can basically prove that you have, you get access to that membership. Did they pay tax on all those tokens? Or is this set up like a non-profit or something?

No, no, they pay taxes. I think he was probably good about that. So they sell 75 and they have to pay 50% of that to the government and taxes, I guess? Whatever. corporate tax rates.

Corporate tax rates. Yeah. Yeah. It's interesting. You know, I think this is interesting in that if you had a Soho club, you know, one of the things about Soho House was like your membership was always like, well, you know, we could just take it away from it. In fact, New York kind of flushed all.

They were like, New York became too many wankers, bankers, whatever, or whatever. And they were just like, this is too many white dudes from Wall Street. We're going to reboot it and try to get some more artists. And so a bunch of people couldn't renew. Well, the interesting thing is, like, that's sort of why Vitalik, uh, Vitali, created Ethereum, right? Just like a quick 30 seconds there was he had bought, you know, some in-game asset and World Warcraft and then they decided to take that asset away. And he's like, hey, this is crazy. I went, I bought it and it should live forever and there should be a contract.

And so that's why Ethereum is a public blockchain with smart contracts that people honor that. So it actually fits that that story, you know, really, really well. So I was thinking, like, if I started my own poker club, you know, like a, let's just say a moonbirds, so people would just like to play cards. Like that would be the common denominator. And you sold these for, you know, $10,000 each and you sold $10,000 of them, whatever it is, $100 million, blah, blah, blah. You know, what do people get for that? Well, the ability to trade the membership should be codified that that's your membership. You get to trade. So then people are like, well, I don't want to be a club where like, you know, just a bunch of rich dudes can buy all the memberships up.

And I was like, okay, that's kind of reasonable. So maybe you put in the Dow or in the organizing the organization gets first right of refusal to buy yours back. It can be right in the smart contract itself. We're right in the smart contract. So, you know, hey, you want to sell your membership. Great. We get to buy it back. Or if we decide not to, then you could sell it.

Or you have to get three other members to approve the new person who has it. And they have to use their real name, et cetera. Or it could just be chaos. Like anybody does. And chaos is kind of interesting, too, you know? Yeah. This is where I think you're going to see a lot of this, you know, this token-gated membership or, you know, token-gated access is,

is really, really big. We're seeing a lot of it. Like a lot of companies really embracing it. Yeah, I like it a lot. I'm bigger in the space. I think there's so much. Like I said, I think I replied to you about PooleSuite.

Did you check out Poolsweet. Did you check out Poolsweet.com, Jason? Yes, I did. Explain to people what that is. So, so, you know, it's a, I mean, the online theme of it is basically like late 80s, early 90s, internet. I think it's really cool.

Some of that stuff brings up great memories, more like Lizard Suit Larry style stuff. And then they throw these parties around the world, Ibiza, et cetera. They've got this thing called Manadal. They're trying to buy like a location. And you have to own these passes to join in. I think you click on the pit space, send to the pool. There you go.

There you go. So like, you know, it reminds you of like the old Mac desktops and stuff, right? No, no, they're going for like everything from Zork to the original Mac OS. Yeah. Exactly. Exactly. So it's really great thing. You know, follow them on social media.

They have the parties. They have only 2,500 memberships that you can buy. They're pretty cheap right now. I think it's like two each each right now. But they try to create a social club and a global social club using. And if you just look at the way this is designed both, the branding is so on point. The trailers, the videos and stuff, it's just really, really, like, I know, as a 90s guy, this is fun. I love this stuff.

The other one I really like in this space is Royal. I don't know if you've tracked Royal at all. Justin Blow's one? Yeah. Royal. is another one, Jason. That's like, you know, we spend some time. And then, you know, they have some great artists. Nause is on here and they've, they've done some. And so basically, you can go on here and, you know, Diplo did a release. And so basically you buy an NFT that represents some

fractional ownership of the streaming rights associated with it. And then the, the, the, the, the, what's awesome is what gets dropped in your wallet with the USDC is, you know, on a quarterly basis, the portion that you own of the streaming revenues that come with it. And so they just did their first drop, and it's incredible. So of this song, 20% was sold. And then, you know, as the song plays through the streaming services, whatever fraction you own, you'll get that dropped in your wallet. So amazing.

I mean, this is going to also create a lot of tax and legal work. So I hope they've accounted for some amount of administration to occur in, you know, the fees here because there are huge. licensing companies that manage this for the music industry, but this is very disruptive because you get a whole class of artists who say, hey, I'm going to make 10 tracks. I need money to go to Abiza this summer. I want to sell these 10-A-visa vacation tracks for $1,000 each, and that I'll get me my $10,000 to go and throw a party.

And, yeah, I'll still own 80% of the rights. You guys get to own 20%. It's just like a startup transaction. Yeah, yeah. I love that. It's all, you know, it's automatically paid into your wallet. And it just, if your tokens in your wallet, that's where you get your USDC. It's incredible.

So, Jason, we did the, I know we're going to wrap up here. We did the, what was your thoughts on the Doge thing we did last night? So I think my Doge is pretty brilliant because there have been other people who have tried to do a dig version of, you know, like Dig or Reddit with a cryptocurrency in it. And this is one where you sent me some Doge. It's unbelievably cheap. You sent me 15 cents worth of Doge. No, no, I sent you one cent, which is 1.1. Yeah, which is 0.15.

and the fee to send it was, you can see here, like, you know, like a one, one, ten thousandth of a penny, basically. Yeah, so it's essentially free. Yeah, which is awesome, right? We have micro transactions are brilliant. They just have never worked because they create too much cognitive overhead. You have to make a decision. But if they're so low and the transaction fees are sold. And the other reason micro transactions didn't work was because the 15 cent transaction fee would be greater than the, you know,

a hundredth of a penny that you wanted to pay to see the article. Yeah. And so this is a meme social. network. I want to build this into inside actually where every time you vote up or you post a comment or post a job, you just use as a tiny amount of doge or something, right? And so they'll be very interesting to see this. And there's all this news about spam and bots. But like if you look at what they've done, they don't really have that problem because they have this inherent. Yeah. If every time you sent an email, it costs you a hundredth of a penny, then you would have

spammers go like, uh, should I send these 100,000 emails that's going to cost me a hundred. hundred bucks, maybe not. And you'd have some record of the transaction, so you know who sent the spam. If my doge was built into email and you could just have the emails at your top of your inbox had a doge attached to it, it would be very interesting. I, in fact, today, somebody Venmoed me like 10 cents or two cents and said, what do you think of my startup idea? And I was just like, oh, don't.

No, they did on Venmo. In actual Venmo. Okay. In actual Venmo, like real cash. And I was just like, oh, don't do that. You know, like, I don't want you to pay me money. but I guess my Venmo was set to open. I may have to close that or something.

But I just love this idea of like the fact that it's so small that you wouldn't even think about it. You'd forget. And so, but there would still be some friction and some skin in the game. Brilliant. All right, listen,

this went wonderful. I'll put you guys on the books for two or three weeks from now. We'll build up some more crypto news and we'll have our crypto roundtable again in two Wednesdays, maybe Nick, or three Wednesdays. Let's book these boys now, get on their calendars.

Any plugs here, Vinnie, Civic, you're hiring anybody? You got any bag, you're trying to pass on. You got an NFT. You're trying to grift. I'm sorry,

what plugs do you have? Well, one thing I'll say is check out civic. Me if you, if you wanted to like check out in a Salon wallet. So you can go into

survey. Dot me, you type in any salonon wallet. You can view it. We're building some really cool features in there and it's worth checking out. Awesome. And then what do you got over there?

Sonny, you got any grift at you on? I'm sorry, any plugs? And you're hiring anybody. You got any open racks? What are you looking for? No, for people who want to come to the office

and hang out with brilliant people in Palo Alto. We're just like blockchain intelligence, growth, users, if you're doing anything in that space, reach out to us.

Definitive.io. and definitive. Dot I.O. And we should do a session separately, Jason. So we'll get you on there. Yeah, no. You know, definitive I.O is looking at all of this data that's on blockchains and then trying to make sense of it, right? And this is like doing archaeology.

You're literally going out there and saying, hey, what's going on? Any three-letter agencies interested in using this technology in the United States? There may be. Maybe. I've got a full maybe here. Well, I'm an investor in the company, so I got a little tasty poo. Oh, me, too. Once again, we're riding that Sunday pony.

Last time, what did you get? It's like a 3X last time in five years? It was like a 10X in like 18 months? Oh, you know what? I had such a small slice that the 10X didn't register us so much. But now I got a little bit of a bigger slice. Are we going to 20X this one or 10X? We'll see.

We'll see whatever. We don't know. I don't want any quick sales. I'm just saying it right now. I want you to go for the fences here. I'm looking for 100X, okay? All right. Let's do it.

Let's do it. Daddy needs a yum yum. Thanks so much for Sunny and Vinny for joining us for our first crypto roundtable. We're going to have them back in two or three weeks. But next up, part five of the blueprint, where I'm going to talk about generalists versus specialists. Stick with us. Okay, everybody.

It's time for part five of the blueprint. These are quick hit segments. Ten minutes, easy, peasy. Not too long. I'm not trying to be long-winded here or give you too much advice. Just advice that I've seen work in my career and or work in the careers of the founders and the investors. that I've helped build 350 companies with over the last 11 years as an investor.

And then before that, as a journalist, I got to cover a lot of, you know, really successful people and ask them probing questions. And so today, I want to talk about going from a generalist to a specialist and how that is really an amazing strategy for somebody young in their career and who wants to have a dramatic impact on a project, a company, a startup, etc. The first four we discussed already, branding yourself with a breakout skill was episode one of the blueprint, when to quit your job, was episode two, building and leveraging a network, part three, and then number four, creating versus waiting, and having a bias towards action. Those are the first four. And you can see

all of them at this week in startups.com slash the blueprint. That should take you to a page with all of the episodes there. And when we add the next five episodes, you'll see the next five episodes there. So what is a generalist? What is a, what is a specialist? A generalist is somebody inside of an organization who can quickly learn and manage any department, learn any skill and manage any department, any job function. They're generalists. They're just smart individuals who can quickly figure out how to get a project done. And then there are specialists. These are people who they do one thing better than anybody. Sometimes you call them virtuosos. There's a book called Range, why Generalist Triumph in a specialized world.

This is by a gentleman named David Epstein. I actually haven't read it. But he does make a great example here. Tiger Woods was a specialist. He specialized in golf from before he was even a year old. He hit Gladwell's 10,000-hour rule, which is debatable, the 10,000-hour rule, because he did focus practice early in his childhood.

Focus practice is different than just playing the game. It's, you know, having a coach, being videotaped, doing specific drills that make you better. It's like a considered approach to getting good at something rather than just picking up a guitar and playing random chords, doing it in a very deliberate measure. That's that focused practice, right? And this was obviously led to a legendary career. Roger Federer, the tennis player, he was a generalist. He played basketball, tennis, wrestling, and he swam. And when he was encouraged to move on to higher advanced levels, he just hung out with his friends. Being a generalist, it makes your mind understand how to become. good at a specific task, right? So what you learn in basketball of how to move that giant ball, how does it apply to tennis? Well, in both you have backspin, right? How does wrestling or swimming apply to tennis, right? Well, moving your body around, right? And moving in different dimensions would be helpful. And you see this with mixed martial arts, right? I practice taekwondo my whole life,

really heavy on kicking and doing forms, Kada. There were other people who do jujitsu, which was a lot of grappling and on the ground. There were people who practiced. boxing, right, which is no kicking at all. There are people who practice tie boxing where there's kicking and punching. All of these things added up to now modern MMA, where people, if they're a specialist in one, you're very quickly going to run up against somebody who's a specialist in the ground game if you're a boxer or if you're really good at kicking and you're not good on the ground or at boxing, you might find yourself in a boxing match, right? And so you have to be well-rounded today to, you know, win at the game of mixed martial arts. I think it's a pretty good

metaphor, because sometimes things are messy and you wind up on the ground and especially in business. So I talk to founders about this all the time. The group of people who start a company are not the people who eventually run a company at scale. And that's just because they might actually, the individuals who enjoy zero to one going from nothing to the first customer, to the first product, to the first product market fit, the first paying customer, those people are incredibly creative and they'd like to tinker and do whatever it takes to get that product completed. Now, to get from 1,000, 10,000, 10,000 to 100,000 to 100 million, this takes a level of focus on very specific, quite frankly, sometimes boring activities,

like financial engineering, like tweaking pricing, things that, you know, a creative person who wants to build the first version of a product just might not be interested in doing. You could see that in a car manufacturing, right? you know, building the first roadster and just conceiving of the first electric vehicle built from the bottom up, I mean, God, it was a world of challenge. Then building the factories and trying to build a million cars a year, two million cars a year, three million cars a year, that kind of scale requires, oh, I have to understand how to do this one machine, the pressing machine, or the battery technology, or just the redoing the HVAC. Very specialized, right?

Very specialized gains are required now at Tesla to make the batteries last, 1% longer in 20 different ways, right? The first time, they're just trying to get a battery car on the road and get 100 people to spend $150,000 on each one. That's why being a generalist is such a great hack, basically. You need to be able to really, as a generalist, find information on your own, find answers to questions on your own, and to build up to 50, 60, 70, 80% of what true expertise in a vertical is.

And when you have, let's say, five different things that you do at 70%. You times those numbers together is 350%, right? So it's almost like knowing three and a half skills perfectly. Now it's very different because being perfect at something, the gains between 90 and 100% could be really amazing, right? The person who is amazing at making a logo is very different than the person who can make the logo at 60% of the perfect Nike logo. But the first Nike logo was not gorgeous. you can iterate there's time in a startup to make each of the job functions get better. So what you're doing as a generalist is you're able to work on five things concurrently. You know, they say we got to be able to chew gum and walk at the same time. This is chewing gum, walking while making a phone call and talking to somebody while thinking about a solution to, you know, some other problem in your brain. I mean, you've got to be able to do five things at once. This task switching is particularly good for some types of brain.

and some types of personalities. People who like to have multiple windows open at a time. Other people like to have one window open at a time. Knowing I actually have the ability to do both. And so I've chosen to pick a couple of things that I'm very good at and really double and triple down at them later in life. But early in life, I didn't have any money to hire other people. So when I started the Silicon Allie reporter, I had a camera in my pocket and I did the

research. I went to a couple of photos first. I said, what's the best camera for taking really crisp pictures but not having to do any work? And they were like, okay, this specific camera has a Carl Zeiss lens on it. And it is only two or three hundred bucks. And it's going to take great pictures. And the digital SLR is going to be $3,000.

You're going to have to take a course. I was like, give me that one. Boom. And I took all the pictures in the back of the Silicon Island Reporter magazine. I didn't have the money to hire a photographer. I got the $200, $300 camera. And I would walk up to people and the person, God bless them at the B&H photo. They were just so good at what they did.

They would, the guy told me, just take a close up, get really close to the person. don't, there's no zoom on this thing. Just get right up on them and take a picture of two people, you know, sitting next to each, standing next to each other would be great. You know, taking a wide shot, it'll be okay, but it's really good at those kind of party pictures. I was like, perfect, that's what I need. And then I moved on to the next thing, ad sales.

I said, how do you sell ads? I said, well, I'll just ask people and I'll show them a version of the ad. I'll make their ad for them and then show them what it would look like in the mock up of the magazine. And so I would just ask people, hey, it'd be really important for you if you sold people and somebody early in my career gave me one piece of advice. because I talked to salespeople, said, sales is transference of enthusiasm.

And I said, I'm enthusiastic. That's all I needed. I went to people. I said, this magazine's incredible. We got to look at this, look at this article. And I was talking to them about all the magazine, and then I said, look, and I put your ad here. And they were so taken with my enthusiasm

for creating the Silicon Islander Reporter, a magazine about the internet in 1995 in New York, that they were like, sure, I'll give you $250 for each ad, and I'll buy four ads in advance, and I'll give you $1,000. I literally talked people into that. Then I went on to, how do you print a magazine? And I was like, huh, I looked at magazines.

It was too complicated. I looked at newspapers, too complicated. And then I looked at newsletters, and I had seen a research report. And I asked the person, like, how they did it. And they said, oh, I used tabloid. And I said, I'm sorry, what's tabloid? Is that like a type of printer? I said, no, it's a size of paper.

And I said, what's the size of paper? And they said, well, you know, like eight and a half by 11 and, you know, legal and A4. And I was like, I don't know anything you're talking about. And they took out like a binder and they showed me there were different types sizes of paper. I said, I had no idea. I knew there was like a letter size paper. I didn't know this tabloid. He said, yeah, eight and a half by 11.

So it's 17 by 11 or whatever it was. You just, it's two pieces of a normal letter is tabloid. He said, oh, why is that important? He said, well, if you saddle stitch it. And I said, what's that? Oh, that's when you put a two staples in the middle and you fold it in half. What you can do is you would print the cover of the magazine and the back of the magazine on one side. And then the inside cover the magazine and the last page of the magazine right before the back cover, the inside back cover.

that would be one page. Double-sided. You've got, if it was a 16 page, you'd have page one and 16 on one side, and then you have page 2 and 15 on the other side. I was like, okay, this makes sense to me. If I have eight tabloid pages, on either side, there's a page.

So if there's four of those, four times four is 16. I only need four tabloid pages. Like, yep. And so then I went to a printer, and I did that. It was the cheapest way to do it. And then I moved to print

that was more like newspaper, and then I moved to Glossi. Then I moved to having a salesperson. and then I moved to having multiple salespeople. Then I moved to having photographers working for me. And I learned how photographers worked and how up and coming photographers worked and how owning the rights to it and doing work for higher work worked as opposed to licensing the photographs. These were things that I wasn't capable of gaining all that knowledge originally.

But I gained just enough, the 50% to build good enough. And in a startup, you know, and when you're kind of bootstrapping, good enough is good enough. That's why they call it good enough. I would get to good enough. And then I just said to myself, oh, let me go back to photography. Let me go to the next level. Okay, what about the cover of the magazine? I can't take one of these party pictures

and put it on the cover of the magazine. And then I asked Jan Wenner and Graydon Carter how they did their magazine covers. They gave me some great advice. I studied the magazine covers out there. I just basically went to the, I looked at, there were some books that I found that were like the best magazine covers ever.

I just basically cribbed the ideas for the best magazine covers. And so mature artists, immature artists copy, mature artist steel. I just stole some great ideas. And again, that keep iterating doing multiple jobs. Now, as the organization grows, this is where you can become truly transcendent as a creator in the world, as a leader in the world. Because you did all this, when you talk to

a photographer and you tell them, hey, we need to own the rights. This has to be work for hire. The person you'll know immediately how to have that conversation. And the person is savvy enough and you say, here's the work for hire contract. The person says, oh, I'd like this caveat. If you resell it, can I get 20% or whatever. Then you can negotiate that. Then what happens is you start to understand so many different aspects of the game that your mind can process decisions fast. And you can process who's going to be good at something. Fast.

And speed is really what it's all about when you're creating projects. The faster you go, the quicker your success. If you take your time and you go really slow, you might have an overnight success 30 years in the making. But in startups, specifically, you're trying to go fast to not run out of money and to beat your competitors. There's a time to go slow.

There's a time to go fast. Generally speaking in startups, you want to go fast because most decisions can be reversed. and so you just go as fast as you can. A generalist seems like somebody, you know, who could be derided, right? They say, oh, this is a master of none, right? They're a jack of all trades, but a master of none.

It's kind of meant to be derogatory. It in fact is hugely valuable in the actual world. The challenge, of course, is to know when you need to be a jack of trades and when you need to be a master. And what I like to do is hire people who are so passionate about a vertical, that I know they're not going to get bored with it and that they're going to keep iterating and that for them getting from 87% of perfection to 91% is going to be super fulfilling. And I know for myself, do I really want to spend my time making the sales team 2% more effective

every month for the next five months? I might not want to do that. I might understand that's important, but I might find somebody who's better at that job than me. And this is really the fine art, is knowing when your startup needs to start putting people into these roles. Now, if you get a CFO on day one and your company's got $50,000 in the bank and you're, you know, or 100,000 in the bank and you're going to an accelerator, there's nothing for the CFO to do. There's no transactions occurring. There's no treasury to manage. You can't

possibly have that person at your organization. So when you hire a certain level of person is what's important. A CFO, you know, you probably need to get to, you know, that $10 million in revenue to really need one. When you're at three, four, five million, you could be outsourcing it. You know, maybe you get a finance person when you're between five and ten, a director, a controller or something. And then when you get over ten, you know, yeah, maybe ten, twenty, thirty million, you get a proper CFO in there to manage it. Knowing that comes from knowing the complexity of the job over time. Jobs become more complex over time. When you're making Uber, and it's their first version, how important is the Uber taxi logo? It's not. If you look up the Uber taxi logo, it was ugly. Now you

go. But, you know, look at the Uber logo now. It's amazing. And over time, they had more money so they could hire outside firms to do design. I remember at Medium. Evan Williams gave me a tour and, you know, we're friendly. And I was like, you have eight people working on design here. And I was like, medium is so simple. He's like, how do you think we made it simple? Those eight people, I said, but what do you do with all their work? And he's like, well, we'll work on, you know, a certain aspect of something like, I don't know, the sharing buttons. And we'll, they'll make 10 different versions, two people will work on it, we'll have a meeting about it, we'll say which two themes we thought were best, and then we'll iterate on those themes, and we'll have a three-week

process just to make the sharing buttons. And I'm like, you'll put six weeks of designer time, six times 40, you're talking about 240 hours of designer time on the share buttons. Well, you know, medium was very big at that time, and it was had tens of millions of users, was making millions of dollars in revenue. For him, that's how he ran the organization. but on day one, you know, you would just use the share buttons that came natively, where you'd find some generic, you know, open source or Creative Commons sharing buttons. This is historically different, right? You could pick it yourself.

You could design the website yourself. You could design the magazine yourself. You could design the menu yourself. But then over time, you might get a pastry chef at your restaurant, right? So the chef might make, you know, might buy really great gelato and make one dessert at the restaurant. So the dessert's got gelato and it's got like a blueberry crust. rumble. Restaurant gets popular.

Yeah, you're making a lot of money. Yeah, you may get a pastry chef. Now you might have a five item. And you can always tell which restaurant and what stage they're at based on looking at the pastry chef station, right, and the desserts. Some folks phone it in. Some folks have six desserts. They won't get these incredible lists.

You can tell they're all very bespoke. They're making the ice cream in-house. That's an example of when mastery comes into play, right? Fine dining is another great example. And in the beginning, you could just have one chef. They make a couple of appetizers, a couple of entre. a sandwich shop, whatever it is, maybe a side order or two. They keep it simple, and those can be very successful as well.

That's your blueprint. Be a jack of all trades. Go from a generalist and then learn how to manage the masters of their trade, or pick one if you find out that you love one of them. But it is such a great way for you to build your career and to learn a lot. And all of that learning is super important. I find every time I learn a new game of skill, it helps, you know, when I play chess, It helps my poker when I play poker.

It helps my age of empires. It'll help me with my backgammon. Learning those different games of skill. They all, you'll learn about randomness. You'll learn about strategies. And the strategies in backgammon, you know, sometimes you want to run and try to go really fast. Sometimes you want to be conservative and block.

And you can change those different game styles, right? You could be an aggressive poker player. You could be a tight poker player. You could be a variable poker player. There's all different strategies you could deploy. And trying different ones makes you good at whichever one you eventually wind up choosing. And CEOs generally come from a background of product or sales or generalists, right? And so the path to being the boss can come many different ways, but generalist is probably the best of all.

The generalist is still probably the best of all because you can relate to each of your lieutenants. You've done the job. You have their respect. This has been the blueprint. Thanks for tuning in everybody. If you have ideas for the blueprint, you can email me directly, Jason at caliccanus. is my email for life, or you can just hit me on at Jason on Twitter. Okay, everybody, thanks for tuning in.

Make sure you stay tuned for the rest of the week. We have another great founder interview. Okay, Boomer and my guy Howard Linsent is joining the podcast on Friday, and Molly will be back. I know the Molly stands are, they're Jonesen to get Molly back on the pod. She's back next week. Follow Molly and I on Twitter, Molly Wood at Jason at TWA Startups. See you tomorrow.