#547 Mike Gonzalez on Building A New Category In Finance

Mike Gonzalez is the CEO and co-founder at Trace, the first service desk for finance teams. Before Trace, Mike developed a deep empathy for the problems finance teams face as the VP of Finance & Strategy at Zenefits, where he led FP&A. Before that, Mike built and managed financial systems at Facebook. In this conversation, we discuss working at Facebook and Zenefits, building finance teams, real-time data, financial planning, asset allocation, startups, and entrepreneurship. ======================= Public Rec is the first to bring tailored sizing to leisurewear so that you don’t have to choose between comfort and style. They make leisurewear in waist and inseam sizes because they believe comfort starts with a better fit. And when things fit better, they look better. No tailors. No settling. No stress. Comfort and style, all in one. Check out publicrec.com/pomp and use POMP10 at checkout for 10% off your order. Step into a better fit today with Public Rec. ======================= As one of the largest and oldest Bitcoin exchanges in the world, Kraken is consistently named one of the best places to buy and sell crypto online, thanks to our excellent service, low fees, versatile funding options and rigorous security standards -- but this is only part of the story. We’ve been on the forefront of the blockchain revolution since 2011: http://www.kraken.com ======================= Unstoppable Domains makes crypto easier by replacing your address with [AnyName].crypto. They allow you to send and receive over 70 cryptocurrencies, including BTC, ETH, and LINK with a single blockchain domain. Go to unstoppabledomains.com and get [YourName].crypto to make your crypto life easier. =======================

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Mike Gonzalez is the CEO and co-founder at Trace, the first service desk for finance teams. Before Trace, Mike developed a deep empathy for the problems finance teams face as the Vice President of Finance and Strategy at Zenefits, where he led FPNA. Before that, Mike built and managed financial systems at Facebook. In this conversation, we discuss working at Facebook and Zenefits, building finance teams, real-time data, financial planning, asset allocation, startups, and entrepreneurship. I really enjoyed this conversation

• 0:44Anthony Pompliano?

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• 1:29Anthony Pompliano?

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• 2:10Anthony Pompliano?

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• 2:52Anthony Pompliano?

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• 3:34Anthony Pompliano?

  Why is it slash r slash pomp? I don't know, but that's what they told me. So go to unstoppabledomains.com/r/pomp and go get your domain today. All right, let's get into this episode with Mike. I really hope you enjoy this one.

• 3:48Speaker 01

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 4:19Anthony Pompliano?

  All right, guys. What's up? Bang, bang. We're in a studio. We'll have more on that later. Today, I've got a special guest for you, my friend, Mike, probably one of my best friends. We've got all kinds of crazy stories that we are not going to talk about on the podcast today. But we used to live together in San Francisco, along with a bunch of other people who we will not bring on the podcast because they're too outrageous. What's up, man?

• 4:41Speaker 02

  How you doing?

• 4:42Anthony Pompliano?

  I'm doing great. You were the first person in this room.

• 4:44Speaker 02

  It's nice. Got a good setup here.

• 4:46Anthony Pompliano?

  Yeah, Mike sat down and he looked around and it was one of those looks of like, oh shit, this is real.

• 4:52Speaker 02

  This is big time.

• 4:53Anthony Pompliano?

  All right, let's start. I actually have notes. I'm going to be really serious for like two episodes and then I'll go back to being myself. Let's just talk about your background first. We met at Facebook, but before your Facebook, what did you do?

• 5:06Speaker 02

  Before Facebook, I was a consultant, so spent time building financial systems for big Fortune 100 businesses, GE, TAE, Kraft, Simon Property Group. So right at the start of my career, just thrown into the deep end, building financial systems. First day on the job, they dropped a 300-page user manual on my desk. They said, Oracle, Hyperion, Strategic Finance, you got two weeks, go figure it out. So it was pretty intense, but I think for me, I felt really fortunate. I was just working with finance executives, learning the ropes and building the financial systems, you get the chance to build their financial models. So you understand every single driver, all the different levers, how the business model works. And so being able to work across a bunch of different industries, seeing a bunch of different processes,

• 5:51Speaker 02

  helped me early on in my career, build these mental maps of like, okay, this is how corporate finance is done. This is how, when you watch CNBC and you get the earnings and it's like, okay, we are, here's our earnings projections, here's our guidance, here's how all this is done, here's all this is made. That accuracy becomes so important. So yeah, really fortunate to start off my career building those types of systems. Did a project with Facebook, a couple of few weeks into it, project was going really well. The VP of Enterprise Engineering took me on the long walk in the middle, in the middle of Facebook and started recruiting me. And you know, I was, you know, at the time, living in Chicago, had a condo, like, life was kind of set, like, was really kind of, you know, had good friends and like, my family was there.

• 6:36Speaker 02

  Gave me an offer to join Facebook and, you know, he was like, exploding offer, you got two weeks. This was like, right around Christmas. Ended up accepting the offer, New Year's Eve, moved out of my place, New Year's Day, I was in San Francisco. And I think we stumbled into each other like, a couple of weeks after that.

• 6:52Anthony Pompliano?

  Once you go on the walk, they got you. For those that don't know, at Facebook, if you go on the walk, they have you, because there's a long walk, to look how great this place is. And then they're like, oh, by the way, here's an offer, you should take this. And then you take it. That's how they get you there. All right, before we get into Facebook, because I feel like that's like, a very specific situation. These financial systems, I think most people don't understand, like, how intricate and complex they are. So you mentioned, like, projecting earnings, literally down to the cent, right, or to the dollar. And is it fair to say that, like, all this is, is just people are taking all the inputs, they're then saying, all right, we're going to run it through our historicals, plus whatever we think are the new inputs, and then literally gives us an output for this system, and that's

• 7:36Anthony Pompliano?

  how we're going to, like, literally manage the business. So on a day-to-day basis, we can tell, are we a header below the projections, where we believe we're going to be? And like, really, that's like, kind of what is the heartbeat of the business to some degree, right?

• 7:46Speaker 02

  Absolutely. I mean, at the end of the day, it's all about, you know, a business is about, you know, taking in cash to generate more cash and driving those returns. And what's interesting, you mentioned, kind of like, the day-to-day, you know? And I think, the problem with current state financial systems is you don't have that day-to-day visibility. And I think, people spend a lot of times, building these financial plans. And the way that typically works is, the finance team will work with Board of Directors, executive management team, and they'd say, okay, here's roughly what we think the business should look like. Very top-down exercise, planning very strategically around, okay, here's the initiative that we want to do, here's the market share that we want to take, here's The growth profile that we think we need to have. And then that always kind of cascades down to the different department leaders and the business leaders.

• 8:31Speaker 02

  And so then there's this really big exercise to say, okay, here's rough shape of what the business should look like, guidance. Then every single functional head in a business, VP of Product, VP of Engineering, Sales, Marketing, every single group kind of has their guidance and their targets. Then they go operationalize that and they say, okay, what projects do we want to do? Who do we need to hire? What pieces of software that we need to buy? And they substantiate those targets with what people describe as a bottoms up build. And so this is like bottoms up everybody in the business. What are they actually going to to do to execute on those plans? Make sure that they can hit their goals, hit those targets. And so there's a lot of kind of just information that cascades down and then it needs to cascade up. And that's a long process, like it takes a really long time to do those plans.

• 9:15Speaker 02

  I mean, people typically, you know, start that process, maybe Q three, or they start thinking about this stuff for the for the following year. And then almost all of Q four sometimes for some of these businesses is consumed with this planning exercise. And then what my biggest insight was is being a part of that at so many different businesses, being part of it at Facebook, leading the finance team at Zenefits, building these financial plans is you spend all this time creating those plans and immediately as you say, okay, this plan is done, it's set, it just collects dust, you know, and it just sits there. Then people actually go off and execute, you know, like, okay, we've set our annual plan. Literally two or three weeks later, you know, your marketer is like, uh, actually, I'm going to double down on this project, punt on this project. Instead of a full time hire, I'm going to hire a contractor, you know, and they make all these different changes.

• 9:59Speaker 02

  And that is really tough to capture from a finance team who spent all this time building this model. It's just, it's just a model. And so that's kind of what brings us to Trace where I've like, I've learned these insights, solved this problem. And I think finance, it needs to be more real time. It needs to have that day to day visibility. What are the actual decisions that people are making? And how does that impact our financial results? And that's exactly what, you know, so we founded Trace a few years ago to solve that problem where we help people make those day to day decisions. They can purchase, they can hire, they manage their projects. And then we helped give them real time. How does that actually impact our plan? And the way that takes effect on our product is you get, you know, a top down target and then people can execute. And then you can make sure that you set that guidance.

• 10:43Speaker 02

  You told Wall Street like what you're going to do. Let's make sure that as we're executing, we have that day to day visibility into, into. Yeah, how we're going to, how we're going to do, what we're going to do. The other way to do it, the old way is like, set our financial plan. Everything happens, we add everything up in the accounting system and then we hope that it matches. And then we try to do like an analysis and understand that variance.

• 11:05Anthony Pompliano?

  It almost feels like there's a, a complete disjointment between the finance team and then like the rest of the teams. Right. And the rest of the teams, they're getting told by the finance team, hey, your budget is to hire three people. And we need, you know, $10 million of revenue from you this year. And then the team's like, okay, cool. And then they go and they kind of do whatever they want and they hope that they come back with the numbers. And, you know, I'm over generalizing, but like to some degree, the finance team doesn't really know until they come back, whether it's on a weekly, monthly or quarterly basis, what those financial performance numbers look like. And so it's almost like this infrequent, non-real time understanding of the business. Right. And, and that's where you get some of the quarterly projections and numbers and stuff like that.

• 11:46Anthony Pompliano?

  So it sounds like the solution here is just make it as dynamic as possible, shorten the feedback loops and make it more real time. Right. And that's essentially what you guys are ultimately trying to do.

• 11:55Speaker 02

  Absolutely, absolutely.

• 11:56Anthony Pompliano?

  All right. So let's talk about Facebook. I'm going to tell a quick story to tell you how, how good our friends, Mike and I are. Some of our old colleagues may listen to this and just laugh. I used to ping Mike on Facebook and Messenger, which the company uses. And I'd be like, hey, man, uh, are you busy? And he'd be like noon, he'd be like, nah, I got like some free time this afternoon. I'd be like, all right. And then we would put a meeting invite on our calendars for like, you know, 30, 45, maybe an hour. And then we'd go to the gym.

• 12:29Speaker 02

  For the same time.

• 12:30Anthony Pompliano?

  Yeah, and we'd go to the gym and we'd work out and it would just be like meeting with Mike. And literally we'd go to the gym and we would just talk about, we usually would actually talk about like business related stuff. But that was our like escape is if we had a slow day, we'd go do it. So we're, we're, we're pretty good friends and we've been doing stuff together for a long time.

• 12:46Speaker 02

  Yeah, we used to also wake up 4:30 AM, take that first shuttle in, no traffic, get the first ones in the office.

• 12:52Anthony Pompliano?

  People, I, I'd laugh, the whole Miami thing is like, man, in San Francisco, uh, back in probably 2010, 12, 13, 14, like, nobody cared about the tech industry. And then all of a sudden they had like Facebook and Google and LinkedIn and all these buses going through their city. And they were like, hey, who are these people? Like, not cool. And so I think that like, that's the big thing that Miami's got to be careful of is that like, right now, nobody cares about the tech people. But if you go and you do crazy stuff, then they're probably going to care a lot.

• 13:18Speaker 02

  Yeah, yeah. I actually, I actually always give you credit for that. Cause when I was living in Chicago, I was a consultant, big Fortune 100 businesses, you know? And I used to watch CNBC. I really cared about the markets and like, you know? And then I moved to San Francisco and, you know, Facebook was a publicly traded company at the time, but started getting immersed in the world of startups, you know? And I think being friends with you opened my eyes. You were already a successful entrepreneur. You sold a company in the past. And I think our relationship and our friendship is really what opened my eyes to like actually digging deep. And I, you can probably even remember back in the days, I was like working on all sorts of side projects. I was like, you were, you introduced me to like the first engineer I've ever worked with, you know, I was tinkering on, on all sorts of things.

• 13:58Speaker 02

  And it's amazing, you can, you know, fast forward like, you know, five years later, it's actually took the plunge, you know, left, left the job, went all in on starting something.

• 14:07Anthony Pompliano?

  I, I used to enjoy on Friday nights, Mike and I, before we'd go out, we would get drunk and then we would argue over all kinds of dumb stuff like, hey, man, what do you think about this company? Like it's trash. He'd be like, I think it's going to be great.

• 14:18Anthony Pompliano?

  And you win some, you lose some. And so we always laugh about it. Uh, what was your biggest takeaway from working at Facebook? Like, what do you think was the thing that, uh, from working in, and maybe describe a little bit about like the role that you had inside the finance team? And like, what was the biggest learning?

• 14:31Speaker 02

  That's a good question. I often think if I can go back to Facebook, what I would do differently sometimes. That's a question I always ask myself. And I would have like networked aggressively. And I think when you're inside of those businesses and you have a chance to work with so many smart people, so many dynamic people, knowing that I would have been an entrepreneur, I wish I would have just met as many people as possible. Instead of just going to the gym with you every single day. It's like, it's an amazing place to go spend time and just learn the ropes and really network, you know? Cause I think you realize as you're building your companies, like being able to recruit great designers and great engineers, like all of that matters so much. But to your question, like what did I learn the most?

• 15:12Speaker 02

  You know, I think what I learned was I wasn't a good fit for a big company, to be completely honest. I think when I was at Facebook, you know, I was responsible for building financial systems, FPNA systems, kind of the top down, more strategic models. We were building five and 10 year models to do, you know, data center planning and like really long term strategic planning. And I think what I felt I needed was like, I saw what those before before me at Facebook had built. And I was like, I want to go build, you know? And I think that was probably the biggest learning for me. I always tell people, yeah, I was at, I was at Facebook for five quarters and people laughed. They're like, you're such a finance guy. You think about things in terms of quarters, you know? And it was enough cycles for me to learn that like, actually I want to go build, you know?

• 15:56Speaker 02

  And so that's where I started looking earlier stage, not founding, but you know, going to like series C, series D, where it's kind of like at that stage where you need to build a lot of that early infrastructure. So that was, yeah, that was definitely my biggest, my biggest learning.

• 16:10Anthony Pompliano?

  All right. And then at Zenefits, I always joke that you are my one friend who went from, I got a new job to I'm running the place basically on the finance side at Zenefits. And it happened in like a year, I think, or maybe a year and a half or whatever. What did you start at? And then how did you get to, well, you're the VP of Finance, I think, right?

• 16:29Speaker 02

  You get VP of Finance.

• 16:30Anthony Pompliano?

  And kind of talk through just like the building process and like what systems you guys had to build and like what you learned there?

• 16:35Speaker 02

  Yeah. I came in at IC, IC level. I think at the time there was really not a team. Being built yet.

• 16:42Anthony Pompliano?

  I see for those that are listening is individual contributor.

• 16:45Speaker 02

  Individual contributor, yeah. And I think the, the, the, there was really no foundation. I think, you know, our kind of directive was go build up the finance, go find it, build the finance infrastructure, you know, and get this place ready to go public at some point. We need kind of to grow. I think at that point, we were about 500 employees when I joined. By the end of that, that first year, we were 1800 employees. So it was like insane growth. I joined just before we closed the big 500 million series C financing. And so that was fun to be a part of. I didn't lead the financing, but I was able to participate, help build the models, help prepare the presentations. And I think, you know, early on, I brought just discipline to how we built our models, how we presented, how things were organized.

• 17:29Speaker 02

  I think, you know, David Sacks, who was CO at the time, joked that like my formatting on the models probably increased our valuation by like a billion dollars. Just the cleanliness aspect of it. And that discipline extended into as we started to build. So I, like I said, I was so fortunate in my early days, my, the first few years of my career. To, you know, work with those big Fortune 100 businesses, understand organizationally, how were they set up? How, what are their processes? What technologies do they use? And so that I learned the playbook. And I think when I joined Zenefits, I quickly implemented that playbook to say, here's what the modeling environment should look like. Here's what our team structure should look like. Here's the portfolio of services that we need to provide to our business partner.

• 18:11Speaker 02

  Here's kind of how all this should, should orchestrate. And I think once you kind of lay down that foundation, it really establishes yourself as a leader on the team. And so I think that got me a promotion to director. There was a lot of change happening at Zenefits. Zenefits grew way too fast. We ran into some compliance issues and then we had some tough decisions to, to make. And I think one thing that you know about me is, you know, I think. Always always okay to speak my mind, you know, and I think when times get tough, I think, you know, having somebody who, um, you know, is willing to make tough decisions that are the right decisions for the business becomes really important. Uh, and I think that kind of what earned me my seat to kind of take over, take over more of the finance function

• 18:53Speaker 02

  and to participate in board meetings, uh, and to help drive some of those decisions around restructuring, uh, which are really tough things to do. Um, but at that point, I mean, it's, it saved the business for sure.

• 19:04Anthony Pompliano?

  Yeah, it feels like that's one of the stories of Silicon Valley of like, you get all of the experiences wrapped up in 12 to 18 months, right? Like, hey, it's a rocket ship. Hey, things are now kind of unsteady. Uh, we've got the compliance or kind of regulatory issues. We've got, uh, change of leadership, like all these different things that we've got to restructure the business. Like you really get a lot of experience very, very quickly, uh, which if you're going there to learn is like actually the ideal kind of, uh, you know, path that, that the company goes through.

• 19:33Speaker 02

  Yeah.

• 19:34Anthony Pompliano?

  What was the biggest thing you took away? Like when it's all said and done, you walk away, right? You go start a business, but like, when you think back, like, what's the thing you learned?

• 19:42Speaker 02

  Uh, I think it's business fundamentals matter, you know, and, and it's, yeah.

• 19:46Anthony Pompliano?

  Shocking, shocking, alert, alert, 2021, breaking news.

• 19:51Speaker 02

  Yeah. And it's, and it's crazy, right? Because you look at some business where the unit economics are upside, unit economics are upside down and investors are still piling cash into these businesses. And the playbook has worked in some instances where it's like, even though the unit economics are upside down and unit economics being looking at for what's the unit of value that, you know, delivers, you know, uh, future value for this business. And so a lot of software businesses, it's like a license or a seat or a user, you know, or for Uber, it might be a rider or something along those lines. And so for every dollar that we earn from, you know, that unit, are we able to get $3 in the future? And a lot of times these businesses are like, actually, we're going to pay a dollar right now to get 80 cents in the future because we're going to go win

• 20:36Speaker 02

  market share and expect that that dollar will be worth $3.

• 20:39Anthony Pompliano?

  Yeah, we'll build future products or whatever.

• 20:41Speaker 02

  Exactly.

• 20:41Anthony Pompliano?

  And that 80 cents will then grow to 120, 150, $3.

• 20:44Speaker 02

  Yeah. And you have to be really, really careful. Careful about where you apply, apply those principles. Uh, and I think, you know, Zenefits at one point had um really strong unit economics in certain, in certain areas in terms of uh its ability to um. So Zenefits provided free HR software and then monetized as an insurance broker. Really disruptive model, you know, I think people, everybody needs HR software. As soon as you start a business, you need HR, HR software. And to get that software for free and then also have just, you know, somebody be your insurance broker. And that, you know, and you can provide that free software in exchange and that, you know, broker commission that you're able to get. It, it, it's really valuable, you know?

• 21:25Anthony Pompliano?

  I gotta, I gotta admit something real quick. Uh, I wanted to test it out one time. So I went in and I put like, uh, you know, name, whatever. I don't know, I got like three clicks in the funnel and I was like, I don't have time for this. Like, I'll come back and check it out. Alex from Zenefits is still emailing me. I don't know who Alex from Zenefits is. I don't even know if it's a real person, but still emailing me. I've unsubscribed, I've blocked, etcetera, but I'm still getting emails. So Zenefits definitely knew what they were doing.

• 21:49Speaker 02

  That was awesome.

• 21:50Anthony Pompliano?

  They, they were relentless.

• 21:52Speaker 02

  Keep up the relentless. Yeah, exactly what I was gonna say.

• 21:56Anthony Pompliano?

  When you decided to leave, did you know you wanted to go start a company?

• 21:59Speaker 02

  Uh, I did, I did. Yeah. And so I, yeah, when I decided to leave, it was on the, on the, on the, on the plan to go start a company up.

• 22:07Anthony Pompliano?

  All right. Why Trace? And what, what the hell do you guys do? I think people see it and they're like, wow, these guys have like great investors and like they're smart, but like what is finance systems?

• 22:15Speaker 02

  Yeah, yeah. Well, Trace is the first service desk for finance teams.

• 22:19Anthony Pompliano?

  All right. What does that mean?

• 22:20Speaker 02

  We help people in a business purchase, hire and manage their projects. Those are really the fundamental building blocks of any operating plan. It's what people do to, you know, deploy and invest uh their, their resources and their, and their capital. And most software businesses, I mean, 60 to 70% of their spend is on, is on hiring and headcount. And then they purchase things like software, uh, you have professional services and contractors. Trace facilitates all of that work. Uh, and so it gives people a, a mechanism to go, you know, get those things done. Um, and then it gives the finance team visibility. Into what these people are doing. And so the old world of this process is like,

• 23:02Speaker 02

  you know, you collect a request and you like stamp it for approved and like those people go get these, those things done. What we do is we collect this great information. We automatically give finance teams forecast. So going back to that, you know, example that we said, we need to give people real time visibility into into how their, you know, business is going to perform into the future. We give that to people automatically. And so this is kind of like a paradigm shift. I think people always think about these old traditional financial models. We're kind of flipping on its head and saying, you know, you need to collaborate with your business to collect these requests. Let's maximize the use of these requests and understands what what's committed, you know, what is my committed spend? What's my committed forecast? What's pending approval? What's been approved?

• 23:41Speaker 02

  And how does that impact my business? And that's powerful information set like a finance teams to accurately, you know, manage the business. One of my friends, he's a he's a head of finance at like, you know, one of the top SaaS companies. He says it best and he's a big fan of basketball. He's like, the current finance tool set is like a coach, you know, coaching a game and not being able to make any adjustments until the game is over, you know? He's like, coaches have to be able to make adjustments in real time. And the way to do that is to collaborate with the business, understand the decisions that they're making, understanding how those decisions will impact the broader financial system, financial plan, and then make adjustments and tweak. And that's what Trace allows people to do.

• 24:22Anthony Pompliano?

  All right, before we keep going, how do people go buy the software? Because if you run a business of what size, what's the ideal customer size?

• 24:30Speaker 02

  I think once you have around 100 or 150 employees, you typically start to have just enough distribution, enough people across the business where it starts to make, starts to make sense. You have a finance team in place. We're still trying to figure out what the upper bound is. We just closed our first enterprise deal.

• 24:46Anthony Pompliano?

  Nice, nice, sales.

• 24:48Speaker 02

  Yeah, it was a 1500 person business. There are going to be 2000 employees by the end of the year. And so our, you know, our goal approach is like, let's focus on growth stage businesses now before they have all of this infrastructure.

• 25:00Anthony Pompliano?

  So like 100 to 1500?

• 25:02Speaker 02

  100 to 1500 is a good kind of.

• 25:03Anthony Pompliano?

  All right, tracehq.com.

• 25:06Anthony Pompliano?

  By the way, for those that don't know, if you talk to the sales team, Mike's brother, Matt, he runs a sales team, right?

• 25:13Speaker 02

  Runs a sales team, yeah.

• 25:14Anthony Pompliano?

  All right. He's an absolute animal. He will explain to you why you're an idiot if you haven't been using the software. What's it like starting a company with your brother?

• 25:27Speaker 02

  I mean, it's amazing. It's amazing and it's hard at the same time. I mean, I can't lie and say it's been like, you know, perfect at every single step of the road. I think the CEO VP of Sales was always an interesting relationship as is. And then you know me and Matt, I mean, we are.

• 25:43Anthony Pompliano?

  I've got, I've got four brothers, you've got one and we're all very similar.

• 25:47Speaker 02

  All very similar, yeah. Him and I are like so competitive, but at the same time, we have the same goal. We want the same things. It's honestly been one of the most rewarding things in my life. Me and Matt, I mean, we have a really special relationship, as you know. He's my brother, he's my best friend, but I, I love him like, like a father, you know? And I want him to do well. I always want him to succeed. And so it's, yeah, I think him and I being able to work towards the same thing, it's, it's incredible. When I'm working weekends, working nights, I jump into Slack. It's like, you know, whose little bubble do I see there? It's like, it's Matt, you know? It's like the guy is just, he's just getting after it, you know? There's been tensions, there's been hard times, you know? And I think, I think there's like little brother, big brother things that happen, you know? And we always manage through those, those things.

• 26:32Anthony Pompliano?

  But, but isn't it fair to say that actually you would have tension with like any executive team, right? Just naturally as you build a business and it's easier to resolve with your brother? Cause you can just be honest?

• 26:42Speaker 02

  We can be honest, yeah. But I think when there's other executives, there's a level of professionalism for sure, you know? And like him and I, we keep it professional like all the time. But I think we also like, we also like let, you know, things come out as well, like, and have a little bit more heated and heartfelt debates, you know? And I think it's a superpower, you know? Cause when you, when you have that trust with somebody and you know that at the end of the day, they, at the end of the day, nothing else matters. You can make zero dollars, like they just want you to be successful. And that's the root of the relationship. And it's like that family bond, you can get through anything, you know?

• 27:16Anthony Pompliano?

  But but you could like, and the only reason I know this is because I do it with my brothers. Like, yeah, you're a professional, whatever. And then there's one moment, you're just like, dude, I will whoop your ass. Right? And the younger brother say the older brother, older brother say the younger brother, whatever. But like, that eventually comes out. And then everyone's like, all right, chill. You want to go get some food? Right? And then like, and it's perfectly fine. And you pretend like it never happened. And it's weird to other people, right? But I think to like people who have brothers specifically, right? It's just like, that's like a natural thing.

• 27:43Speaker 02

  Yeah.

• 27:44Anthony Pompliano?

  And so it's a, it's unique. And as I've worked more with my brothers, like, you realize like, you're like, exactly what you're saying. Like, yeah, I want them to be successful. But like, hey, man, don't forget, like, you know, you're the little brother.

• 27:57Anthony Pompliano?

  So all my little brothers and Matt, you know?

• 27:59Speaker 02

  Yeah, yeah. And Matt's like, yeah, I'm the little brother, but I'm the bigger brother.

• 28:03Anthony Pompliano?

  My youngest brother's taller than me and he reminds me all the time. All right. So with Trace, the whole idea here, I mean, it's like a no brainer, high level idea of just like, hey, we should make this more real time. We should have more like, almost like streaming information, right? If we have people who are making decisions and forecasts and they don't have information, then they can't be effective with it. If we can then build software to get them the information faster into more real time, they should be more effective, more efficient, all that kind of stuff.

• 28:29Speaker 02

  Absolutely.

• 28:29Anthony Pompliano?

  Okay, great. Makes sense. How do you build the product? Because part of this, I think, is like, most people are, especially those that haven't built SaaS software, or I guess, you know, software as a service, they're just not used to building for these big enterprises, right? They're, they're used to thinking about like, oh, let's build a mobile app, let's build a website, you know, something that is more consumer facing. What changes in the product development cycle for you as you guys look to service, you know, really big customers that couldn't pay you a lot of money? But also, there could be five different types of customers within one single, you know, customer base, right?

• 29:02Speaker 02

  Right, right, right, right. Yeah, it is tough. It's a balance. I think you'd need to start with like your insights or the problem that you, that you want to solve. And I think we were very clear around kind of like, yeah, the insights and the trends that we wanted to tackle with, initially thinking through the scope of what we wanted to build. You know, I knew that we were, it was, I wanted to do something in the finance space and solve these specific problems around just collaborating with the business and collecting this information and just automating all these routine F P and A tasks. So I've been there, I've done it, I've been in the seat. And so I think we, we kind of know, you know, Where we can provide value and really where we can differentiate from other players in the market. And then it's, it's just like tactically, okay, let's, you know, now we

• 29:47Speaker 02

  have like a big vision, you know, and we think there's a huge category to be defined here and to be captured here. How do we tactically go do that with like, you know, a few million bucks of a seed round and like, you know, a, you know, handful of engineers. And that's where it gets a little bit more difficult to say, okay, where do we start? What's our entry point with customers? And, you know, how do we, how do we navigate from there to then continue to unlock and build towards the vision? And so that is a process of just talking with customers, understanding their needs, defining requirements. And when you're building for the enterprise, there's not a lot of shortcuts that you can take, you know, especially when you're dealing with financial software, the security of that information, the security of that data, working with the legacy, like accounting systems

• 30:31Speaker 02

  that you have to integrate with to get data. All of those are kind of just table stakes. You know, you have to do that. You have to do that really well. And increasingly with things like security, you know, you have to be like SOC two compliant and you need to make sure that you're protecting people's data. And so that's core infrastructure that we built in from the early days. So compared to like building a consumer company where you're just like, you're just throwing ideas out there and you're just trying to find a lightning strike, you know, with, when you're building an enterprise company, you have to be really thoughtful about how you architect the system and, you know, how you sequence things to deliver value to customers. I'm really fortunate to be working with an incredible co-founder and CTO. His name is Martin Destagnol. He sold his last company

• 31:13Speaker 02

  to Box, led product and engineering teams there for four years. Serial entrepreneur. So I think he just understands how to build, but coming from Box, he understands, you know, the importance of synchronization, you know, and, you know, Box makes sure all your files are synchronized.

• 31:30Anthony Pompliano?

  There's somebody coughing in the room. This is not allowed. When we're in person, there's no coughing allowed. All right, keep going. Sorry. Leave that in. Don't edit that out.

• 31:39Speaker 02

  Yeah, so Box, you know, he makes sure that everything was synchronized, you know, and it's the same thing when you're dealing with financial data across systems, you need to make sure everything is synced. And then you also need to make sure that those documents are secure, you know, and Box handles, you know, government documents for government agencies. And so that security aspect really came into play as well. And so we were really able to think about, you know, things like, you know, users and permissions, what users have access to, what pieces of the different product, what can they see, what can they not see into the foundation early. And that's really going to be helpful as we continue to scale and service these bigger customers. Because we built the infrastructure anticipating, okay, we want to go serve big enterprises, you know, down the road. And so that's good that we have that, that infrastructure.

• 32:22Anthony Pompliano?

  When you think about what this will empower, right? So the software, we're just going to say it works. We know that the customers are using it. How does it change a business, right? Like, what is the outcome once they use it in terms of somebody buys into the vision? They say, yes, I want the real time information. Does it lead to more revenue? Does it lead to just better forecasting? Does it cut costs? Like, how do you think about the impact on an actual business?

• 32:49Speaker 02

  That's a great question. I'm going to start-

• 32:51Anthony Pompliano?

  Mike, all I do is ask great questions.

• 32:54Speaker 02

  Yeah, that's fair. I'm excited for the questions at the end, talk about aliens and stuff.

• 33:03Speaker 02

  Yeah, so I think I'm going to start with like a few different areas of where we deliver, and where we're going to create change. So first is just from like a cultural perspective. And I think like Trace, it empowers people. It empowers people across the business to hire who they need to hire, purchase what they need to hire, to manage their projects. And I think, I think finance is kind of shifting away from this old guard of like gatekeepers and, you know, people who just say no. And they're realizing the real way to lead and the real way to get results is by empowering people and holding them accountable and allowing them just to execute and move with speed. And I think that's kind of the first shift that, you know, finance will create in a business.

• 33:45Speaker 02

  It allows finance to be a collaborative partner to the rest of the business and an enabler of the rest of the business to allow people to move with speed. The downstream impacts of that is now we're giving all of our business partners a way to collaborate with us, to give us information, to get us in their minds of like, what are you thinking about doing? And all that information can then go be used to just supercharge existing financial systems and finance teams. And so it starts with, you know, giving that real time forecast to finance, which is like an insight that finance teams really haven't had before. You know, they're really in the dark without getting this information. Or if they want to go try to create this in the old world, it's, you know, it takes weeks, you know? And at that point, it's already too late.

• 34:28Anthony Pompliano?

  I mean, this sounds ridiculous and I can say this, you can't. But like, it's basically dinosaur type approach to doing this, right? Where it's like very static, it's a kind of top down centrally planned type environment. To what you're talking about is basically where the world's going, right? It's just real time information that now I say, okay, we thought X was going to happen. X didn't happen, Y happened. If we take that input and we change it, rather than wait till the end of the quarter to make any change, we should probably change it on day three of the quarter so that the rest of the quarter isn't screwed up. Because one of the inputs we made into the model is wrong.

• 34:57Speaker 02

  Absolutely, absolutely.

• 34:59Anthony Pompliano?

  That's like a no brainer. Like actually coming from somebody not from the finance department, these big organizations, you're like, well, you guys haven't been doing that, right? Like, it's kind of crazy to think about just how, how hard it must be to do this job without real time information.

• 35:14Speaker 02

  Right, right, right.

• 35:15Anthony Pompliano?

  Right?

• 35:17Anthony Pompliano?

  One of the pieces of the software that's really fascinating to me, and I actually, I should have said this in the beginning. I'm an investor. Mike was nice. He's, he's, he's going to try to make us all rich. So he'll be much more richer than I am, but that's fine. Is collaboration in terms of, you guys start out collaboration pre pandemic. So everyone's in the same office for the most part, right? And we're using the software to help everyone kind of work together better.

• 35:41Speaker 02

  Yep.

• 35:41Anthony Pompliano?

  Pandemic happens, people literally scatter all over the world. It's like collaboration and collaboration software is more important than ever. Talk a little bit about just like what this does to the internal communications of teams as they start to use the software.

• 35:54Speaker 02

  Yeah, I think, well, the first thing is, you know, kind of when the pandemic hit, every single finance team was put on tilt, you know, and then they were saying, okay, like, what if we have to cut expenses by 20%, 25%? What do we need to do, you know? And so using a tool like Trace to have the visibility into what's committed, what's not committed, when are renewals? When can we get out of this contract? You know, when is this contract end? Those are some of the questions that we allow people to answer so they can just sleep easy, you know, at night, you know, knowing that they have all this information and they don't have to go dig through Google Drive or Box folders analyzing specific contracts, kind of enter information out. So we could have helped people really get started. And then from there, executing on new financial plans. At that time, as people were kind of just trying to figure out the new world, they

• 36:37Speaker 02

  were just like, okay, iterating, you know, scenario one, scenario two, scenario three. And then when you pick a scenario, you need to go, you know, execute that scenario, you need to, okay, socialize that and then collaborate with people. And collaborating on financial decisions and information is really, really difficult thing to do. I mean, I think there's just like a ton of, you know, information, there's a ton of documents that needs to be, you know, you need to have like both tools that allow you to collect this information, to collect these documents. But chatting then in Slack without the context of this information is really difficult, a really difficult thing to do, you know? And, and, you know, even if it's just like, for an example, if I want to talk about a number in my financial, I might say it's at the intersection of this department, this

• 37:20Speaker 02

  account, you know, this location and this, and this date, you know? Just so we can make sure that we're talking about that same piece of data or information. And so Trace allows people to, you know, have productivity tools to get their jobs done, but then also collaborate with that information right there, you know? So if I want to ping somebody and say, hey, we got this renewal coming up, like, should we renegotiate? Should we go look for new vendors? Do we want to cancel this? All that can happen in the product and having that collaboration in context is really, really helpful, especially when you can't just go knock on somebody's desk and be like, hey, I need your help, you know, we want to make this change, like, is it good to go? And so I think it's, it's increasingly important to have good productivity.

• 38:03Speaker 02

  Tools with collaboration deeply ingrained into the experience while we're working remote.

• 38:10Anthony Pompliano?

  It almost feels like right now you guys are taking the data, you're saying, hey, we're going to help you do, you know, more with this data in terms of real time and streaming and all that. Then two, it's like, hey, we're going to help you communicate and collaborate around the data. And then eventually if you can basically kind of almost like sync your hooks into an organization, right? To some degree of, okay, now we've got the data and we've got you collaborating here. You can build all kinds of products in a product suite that just continue to solve problems for these finance teams. And in some way, it feels like maybe there's been more software built for the consumer like finance, right? Whether it's taxes or, you know, P and Ls and stuff like that than it is for these like kind of growth stage, you know, technology companies. And if you can really just essentially establish that entire category

• 38:55Anthony Pompliano?

  and be the product leader there, then it's a no brainer, right?

• 38:58Speaker 02

  Yeah, absolutely.

• 38:59Anthony Pompliano?

  We think that's why I invested.

• 39:02Speaker 02

  Yeah, we think there is a new category here, you know? I think there's like categories of financial planning systems, there's categories of accounting systems. And I think that there's, we think that there's this new category that's based around collaboration and workflows and analytics.

• 39:15Anthony Pompliano?

  Does it have a name? Do you guys have a name for it?

• 39:17Speaker 02

  We call the category finance service management and service is a very key part of that category name. Cause we think about the portfolio of services that finance needs to offer the business. The problem with the incumbent systems like the, the planning systems or the accounting systems is they're really built for finance. They're not built for the people in the business to collaborate with those tools and to use those and to use those tools.

• 39:39Anthony Pompliano?

  So the tool, the current tools are built specifically for finance teams to do finance activities.

• 39:43Speaker 02

  Power user tools for finance.

• 39:45Anthony Pompliano?

  Yep. And what you guys are saying is no, we need to give tools to the finance teams that help them work better with the product team or with the customer service team or whatever else. It's just providing connectivity between the finance team and the rest of the organization.

• 39:57Speaker 02

  Absolutely, absolutely.

• 39:59Anthony Pompliano?

  I'm convinced myself this is even better business than I thought. Damn, all right.

• 40:03Speaker 02

  We don't actually compare a category to, you know, existing financial categories. We say it's most analogous to IT service management. So IT service management and finance service management. IT service management. Companies like ServiceNow and Atlassian and they built incredibly valuable businesses around a really simple concept of a ticket. You know, you need anything from IT, you go create that ticket. It was kind of like the core of, you know, what those systems started as and that doesn't really exist in finance. And interestingly, a lot of people use Atlassian's Jira product for some of these workflows, you know, where it's like, I need a workflow ticketing system for purchase requests or hiring requests. And so they end up using generic workflows, but they're not built for it.

• 40:42Speaker 02

  You're not built to understand your financial data, you know, to do all of the connections with your financial systems and give you all the outputs that Trace is going to be doing. But so from an, from like a, from an analogy perspective, we're most similar to those businesses. And I mean, you know, ServiceNow is a hundred billion dollar business, Atlassian, fifty billion dollar business, two of the top 10 enterprise cloud software companies. So we think there's huge category upside to the, to the, to finance service management.

• 41:07Anthony Pompliano?

  All right. So you've raised a good amount of money for early stage technology company. Walk through what that experience has been like and kind of what are some of the tips and tricks that you picked up as you went through the fundraising process? So if there's a founder out there who's like, hey, I'm about to go raise capital, like what are the things that you found that worked for you?

• 41:24Speaker 02

  I think that's, it's a great, it's a great question.

• 41:26Anthony Pompliano?

  I told you only great questions.

• 41:30Speaker 02

  I think people say that's a great question when they're trying to like buy themselves some time.

• 41:32Anthony Pompliano?

  I know. I'm not going to call anybody on it. I've called on people, I've called people out on it before, but go ahead.

• 41:39Speaker 02

  We were fortunate to have a great early investor, Jeff Clavie at Encore Capital. He calls, he's, you know, the OG of seed investing. He's been doing it for a really, a really long time. It wasn't early, it wasn't easy for us, you know, to get started on the kind of the fundraising trail. And so first piece of advice is, I think people give this advice all the time is test your pitch with friends and like, you know, you know, people who you can really trust and dial that pitch in before you go kind of talk to your ideal, you know, investors.

• 42:08Anthony Pompliano?

  So it's basically start with the people who, not necessarily you don't want, but start with people who either aren't actually investors, but can give you feedback. They may be people in the industry or people that you trust and know. And then almost move in and go pitch the people who like, they're nice to haves first. And then work your way up to the people that actually you want.

• 42:26Speaker 02

  I think that's a good idea. I think you'll have a good feeling when that pitch is kind of dialed in and your story is really dialed in. And it takes some time to kind of iterate on that. I think we met Jeff at a good time. I think he was a believer in the category, believer in the potential, and really a believer in the team. And so we initially raised a $3 million kind of seed financing. And that allowed us to go build our early team, develop these kind of proof points. We brought in some institutional investors into that round. And so we brought in Redpoint, Greylock, and NICA, all in about equal amounts. And they're typically a little bit later stage investors. And so I think there's always a question that an entrepreneur needs to ask themselves.

• 43:07Speaker 02

  It's, you know, if you're going to bring in a later stage investor, that brings signaling risk at the early stages. So if they invest early on, they decide not to do subsequent financing, that can be a bad signal to other investors in the market. At the same time, you get their brand, you get their power behind you early on. And so we made the decision that instead of bringing in like two big institutional seeds, Encore Capital is just primarily a seed investor. You know, and Jeff will say his job is to go, you know, help us get that series, series A done. He's not going to lead the, lead the series A. We made the decision to bring on those, you know, bigger investors. And for us, it worked out to be a great, a great decision. We were, we had, are fortunate to be working with Sarah Gao at Greylock. She's been an incredible partner from the very beginning.

• 43:49Anthony Pompliano?

  Why?

• 43:50Speaker 02

  She's, she deeply understands our market and what we aspire to do. I think she's a true believer in the category and the potential. And she's done the work to speak with CFOs in her network. You know, they introduce us to customers that we can go chat with, even early on, before we were at the stage of our product being ready to sell. You know, she would sit in on the demos and actually do the work, you know, and you know, it's, it's, it's rare to have a partner that's going to like, you know, of course, open up the Rolodex, introduce you to folks, but then actually go and sit in the meeting and see how it goes and get that feedback, you know? So even in the early days, when we're still developing our product, you know, you can see how, you know, finance people respond to it, like, kind of like you responded. It's like, yes, we need this. It's like, why is this?

• 44:33Speaker 02

  Not been done before, you know, and you can, you can develop that conviction over time. And so then when we see opportunities to raise more money, move faster, you know, we want to increase and accelerate on the, on the product roadmap. We've had supportive investors and Greylock has continued to invest in us, which is, which has been fast. It's been allowed us to, you know, hire our first founding lead designer. We're currently hiring for engineers. So if you're an engineer looking for a job, come talk to Trace or go to, go to POMS crypto.

• 45:04Speaker 02

  Depending on, depending on what, what, what type of, you know, sector industry you want to work in.

• 45:08Anthony Pompliano?

  Wait, wait, hold on before. All right. So if you're an engineer, you should go talk to Trace. I'm super impressed by Sarah going to the actual meetings.

• 45:14Speaker 02

  Yes, she's.

• 45:15Anthony Pompliano?

  That's incredible.

• 45:16Speaker 02

  Yeah, she's a, she's a, she's a great partner. She, she's when her and I meet, I, I, I say I enjoy the meetings because I always learn something. And that's of course, you know, you love to chat with people that you always get to learn, learn stuff from. And you can actually have a good sparring partner when they understand and they've done the homework. So I think it's pretty, I think it's pretty rare to have found that.

• 45:34Anthony Pompliano?

  Any other investors or advisors that have like stuck out in terms of either over delivering? Or like, you're like, hey, look like they're super valuable that, uh, doing something that people normally wouldn't do.

• 45:44Speaker 02

  Yeah, a couple of people come to mind. I mean, you're, you're, you're the one of the.

• 45:47Anthony Pompliano?

  No, you can't.

• 45:48Speaker 02

  You're one of the first person that come to mind. Cause I mean, I think, yeah, I think we were fortunate to have you and I think you came in. It's not like, you know, you write, you write big checks for big companies. You do big deals and big rounds.

• 45:58Anthony Pompliano?

  Yeah, big deal.

• 46:02Anthony Pompliano?

  Man, I'm gonna cut that. That's gonna go somewhere. I don't know where we're gonna put that, but that was a great fucking clip.

• 46:07Speaker 02

  But, but the beauty of it is, is like, you know, you have a small check in trace, but every single time, and obviously we're friends, so it's a little bit different. But every single time I call you, it's like, you know, I have somebody that I can get feedback from. Good, good feedback. So I always appreciated that. Somebody else who comes to mind, a couple of people come to mind. Charlie Keivers, he's the CFO at Carta. He's an investor in us and you know, it was in our early deal, we didn't have a lot of allocation to share. So it's not like a, a big check, but always supportive. I mean, whenever we want to meet, he gives us his time. Whenever we have resources, like he shares resources. He's always willing to make introductions. And there's a handful of people like that that are just like the true believers. Uh, and yeah, so, so fortunate for, for all of them. I can, I can go on and on with.

• 46:52Anthony Pompliano?

  Well, what's fascinating to me is just the, the common thread through a lot of that, I think is like time. Right? And, and if you think about it from, uh, um, all these kind of solo capitalists or people who are rating angel checks, et cetera. Uh, we've got a couple of companies that I've put, you know, pretty big checks into. And then there's like 20 checks that are literally like a thousand bucks, 2,500 bucks, 5,000 bucks, whatever. Um, and now founders are starting to use like angels has a new product where basically you can kind of pool a bunch of really small checks. It's one line item on your cap table. So maybe you want people with big audience or people who are an expert in a specific space or whatever. And, uh, what's fascinating to me is if you could talk to the founders like, oh, those people are way more helpful.

• 47:32Anthony Pompliano?

  Right? Like, you know, maybe I've got like one big investor who's really helpful or has opened up the Rolodex, kind of like what Sarah, it sounds like has done, has done for you and, and Jeff as well.

• 47:41Speaker 02

  Yeah.

• 47:41Anthony Pompliano?

  Uh, but then there's like, oh, this person who's like actually really, really valuable to me. Doesn't even have that big of an economic stake, but like they're always there. I know I can call them whatever. And to me, I think that's the argument for like, why people should do more angel investing. Right? Is because you forget that, uh, that person's actually getting value out of it as well.

• 47:59Speaker 02

  Yeah.

• 47:59Anthony Pompliano?

  Right? Like there's probably very few people who wrote a small check who are like, oh, this can be life changing. It's more so they're either learning, they enjoy it, they want to help people like, like there's some other non-economic benefit to them for doing it.

• 48:10Speaker 02

  Yeah.

• 48:11Anthony Pompliano?

  And so it's, it's fascinating to hear that like the time investment, the, the access is, is, uh, almost more important than the money.

• 48:17Speaker 02

  Yeah, absolutely. I think there's a rise of the operator investor right now. And I think increasingly we're seeing a lot of great operators who are, you know, C level, VP level, starting to write checks. Um, and, and I think entrepreneurs are learning that those are some of the best people to have on your cap table. Uh, in our most recent financing, we brought in a syndicate from Fog Ventures. Uh, it's Operators Guild is the network and it's like 500, you know, operators who are VP, COO, CFO type folks. And we were able to bring together a great syndicate, uh, of, I think we have like 40 different, you know, VP CFO level folks. Um, and you know, I think it's early in terms of like our relationship with them, but we're already getting so much from them and so much from that network.

• 49:01Speaker 02

  I think increasingly entrepreneurs are going to want those types of folks on their cap tables who can really, really help.

• 49:06Anthony Pompliano?

  For sure. All right. Before I let you go, I want to talk about investing in general. Have you done anything in crypto?

• 49:14Speaker 02

  I own, yeah, I own crypto, I own Bitcoin.

• 49:17Anthony Pompliano?

  All right.

• 49:18Speaker 02

  Well, I mean, okay, let's go back, let's go back to, yeah, times at Facebook. I think it was like, what, 2014? We were, I know this, you weren't like huge into crypto at the time, but you, we were talking about it. We were on the shuttle, you know, there's probably a Giants game, so we're like sitting waiting, 45 minutes, just sitting on the shuttle trying to pass time. And we were talking about buying crypto and buying Bitcoin. And I'm, I started doing my homework, you know? And then one day I'm like, okay, I'm just gonna, I'm gonna, you know, buy some just tiny allocation. So we're on the shuttle, I got my wifi going, I go to Coinbase and I'm like filling it out. And then they, they asked me for my license and I'm just like, all right, that, that's where things stop. Now you don't need that. I'm not putting my license on this website, yeah. And so looking back, that was a little bit, little bit of a bummer.

• 50:02Speaker 02

  Wish I would have done that, but I think I've, I've gotten it. Honestly, I think your conviction in it and your conviction along the way is like, I've done my research and like, I've come to believe that like, you know, this should be an allocation in anybody's portfolio. And I'm not, I'm not, you know, I'm more of a...

• 50:19Anthony Pompliano?

  You're not a 95% guy?

• 50:21Speaker 02

  I stick to my finance principles.

• 50:24Speaker 02

  But at the same time, it's like, let your winners ride, you know? You know, when you were debating with Jason Calcanis about this, it's like, well...

• 50:30Anthony Pompliano?

  Jason Calcanis got a Fiat haircut. I love Jason to death, but he's got a Fiat haircut. Just so we're all clear, for anyone who's been watching this podcast or watching Andrew Schultz's podcast, Jason is the one who started the Fiat haircut whole situation. I love you, Jason. You didn't see me in Miami, so you're gonna get that right there on the chin, but I still love you. That's the whole thing, go ahead.

• 50:48Speaker 02

  Yeah, I mean, let your winners ride, you know? And I think that's something that he believes. And so if, if, you know, Uber ends up becoming 95% of your portfolio, I mean, like, you gotta, you gotta let your winners ride.

• 50:59Anthony Pompliano?

  What else are you invested in? Like not dollar amounts, but just like from a percentage basis, just ballpark. Is it mostly equities? Is it like others? Like, how do you think about in today's world, creating a portfolio? Like, how do you think through that?

• 51:14Speaker 02

  I think you need, it depends on your time horizon, it depends on your risk profile. I'm, you know, a big believer in the enterprise software asset class. And I think, you know, of course I'm building trace and so a lot of my eggs are in the trace basket. But I really believe in just the opportunity in just cloud, cloud software. And I think what we've seen is like in that, in that asset class, I mean, we can talk about, you know, Bitcoin now being a trillion dollars. The enterprise, enterprise cloud or cloud, you know, asset class, the two trillion dollar asset class and the top five companies in that top five are a trillion dollars. So you can compare those top five to, you know, to Bitcoin. And see like, how do those two things stack up?

• 51:57Speaker 02

  I would say that it makes sense for people to have good exposure to the cloud, the cloud category. And when you, when you look at the cloud, it was, you know, roughly 600 billion a couple of years ago, you know, and now it's two trillion. It's, it's coming back a little bit as interest rates are going up and multiples contract a bit. But I think there's still just so much upside and I think you're seeing that in, in the markets, you know? And I think you're seeing some of these public guys

• 52:26Speaker 02

  come downstream and get deeper and deeper, you know, and go more and more upstream. And that capital is kind of continuing to flood up into, into startups. And I think there's just, there's huge opportunity and those numbers I just gave were for publicly traded companies. When you think, when you look at private unicorns, companies valued over a billion dollars. That represents, there's like over five, 500 unicorn, yeah, unicorns. And that represents only two trillion in, in value as well.

• 52:52Anthony Pompliano?

  Those four trillion total.

• 52:54Speaker 02

  Really big numbers. Yeah. And those are for unicorns. So there's even more at the earlier stages. And you, we, we talk about asymmetric bets and how Bitcoin was, you know, one of the, one of, if not the greatest asymmetric bet, you know, of all time. I think you're still seeing that in early stage businesses and the cloud software, cloud software category.

• 53:13Anthony Pompliano?

  Matt, we talk about all the time, right? Like, uh, from a professional standpoint, a little bit different personally, but professionally, uh, when. I think about allocating capital, if you invested in Coinbase's seed round or Series A or bought Bitcoin on the same day, Coinbase's equity actually outperformed Bitcoin, right? Now, maybe at some point in the future, that doesn't end up being true forever or whatever, but like up until now, that's true.

• 53:36Speaker 02

  Yep.

• 53:36Anthony Pompliano?

  There's a lot of businesses that are very similar to that, right? BlockFi, Gemini, Kraken, like all these different companies.

• 53:41Speaker 02

  Yep.

• 53:42Anthony Pompliano?

  And so I think that it's less about like equity versus like crypto assets, right? Or these liquid tokens.

• 53:48Speaker 02

  Yeah.

• 53:48Anthony Pompliano?

  And it's more so about like sector bets, right? And if you think about it, probably the two best sectors in the world to have bet on over the last five years, it's like cloud software and crypto.

• 53:59Speaker 02

  Yeah.

• 53:59Anthony Pompliano?

  Right? And maybe there's one or two others you could throw in there, but like those are basically the future, right? In terms of the way that people are going to get software delivered, they're going to pay for it, etc., and all the cloud stuff.

• 54:10Speaker 02

  Yep.

• 54:10Anthony Pompliano?

  And then two is like this whole reworking of a financial system.

• 54:13Speaker 02

  Yeah.

• 54:14Anthony Pompliano?

  Like outside of those two things, you'd be hard pressed to find two other sectors that you'd want to go bet so heavily on. So I think it's more, it's less about like they're competitive and it's more so just like, I don't know, there'd be like five sectors that, you know, in hindsight, people look at and be like, oh, if you were along those sectors, you could have been an idiot and make money.

• 54:29Speaker 02

  Absolutely.

• 54:29Anthony Pompliano?

  Right? And like cloud software is definitely one of the five.

• 54:31Speaker 02

  Absolutely. Yeah, just go long technology.

• 54:33Anthony Pompliano?

  Yeah. I mean, we could talk about Warren Buffett and Charlie Munger's recent comments because I think both you and I respect them very deeply, like from a, just this historic run. But like, they don't understand technology at all.

• 54:48Speaker 02

  Right.

• 54:48Anthony Pompliano?

  Right? And like, it's pretty crazy to hear the like flippant conversations and, and the responses to like all these questions. And to me, it's like very weird because I think we know that like athletes are a great example, right? Athletes like go through this process of they get better, they improve, they get better. At some point, they peak.

• 55:09Speaker 02

  Yep.

• 55:09Anthony Pompliano?

  If they're a professional athlete, hopefully it's when they're a professional and then there's kind of this like decline. And if you're really, really good, like maybe a Tom Brady, who, you know, he's 0-2 in the Super Bowl against Eli Manning.

• 55:21Anthony Pompliano?

  He's been able to stay around for a really long time. He plays into his 40s, right? And like that peaking, where did he peak? Did he already peak? Has he got the future to peak? Like, nobody knows, but eventually like he'll decline, he'll have to retire.

• 55:33Speaker 02

  Yep.

• 55:33Anthony Pompliano?

  In business, you obviously have a lot more longevity, right? But like at some point, like, yeah, there is a decline.

• 55:39Speaker 02

  Yep.

• 55:39Anthony Pompliano?

  And so is it? Sixties, seventies, eighties, like by ninety, you've probably, you know, on the way down, which again, doesn't take away, like if you were so much better than everybody else, like you could have declined fifty percent in your skills and evaluations, uh, abilities, et cetera, and still be better than everybody.

• 55:56Speaker 02

  Right.

• 55:56Anthony Pompliano?

  Right? But it just feels like there's an entire generation of people who like completely miss cloud. They completely miss crypto.

• 56:02Speaker 02

  Yeah.

• 56:03Anthony Pompliano?

  And I still think through, is it an age and like a demographic thing? Is it a just experience thing? Like if you don't grow up with a super phone in your hand, do you actually end up just not understanding the importance of cloud computing? I don't know, but it feels like even when you listen to earnings calls and stuff like, there's a lot of people who still are like, I don't know. And you're like, dude, what? Like you don't believe in cloud computing or like, that's not like a material thing for you moving forward. And so, I mean, you know, this stuff better than I, but it just seems kind of crazy that there's still people who, uh, maybe, maybe they don't not believe, but they just are, uh, less convinced that that should be like a big part of their portfolio.

• 56:38Speaker 02

  Yeah, it is interesting. And I think there's like some strategy aspects to this as well, where it's like, all I want to do is compound my money at like eight percent, you know? And if, I mean,

• 56:47Anthony Pompliano?

  Eight percent? Damn, we're gonna have to talk about this crypto stuff when we get done. Eight percent Bitcoin is up and down eight percent in a day.

• 56:55Speaker 02

  Yeah. Well, I'm talking about some of these old school, you know, money managers where it's like,

• 56:59Anthony Pompliano?

  Oh, okay.

• 56:59Speaker 02

  Yeah. If I'm at eight percent, I'm doing my job, you know? And I only want to take on enough risk. I don't want to take on, you know, any risk. I just want to compound at eight percent and I will do that for the next century, you know? And I think, and that's, it's a smart way to play it, right? Cause if you just look at compounding and being in the market, uh, you know, I think this is the stuff that we need to start teaching our kids. It's like the basics of, you know, compounding and financial literacy, but those mental models around how you can get that eight percent and what that looks like is changing, you know? And Amazon is the prime example of this. How many people missed Amazon because Amazon wasn't generating cash and, and, you know, Amazon was just piling cash into, knew it, knew it, just driving it, investing it right back into the business. And that's the same thing with a lot of these.

• 57:43Speaker 02

  Cloud, cloud software businesses that are, you know, running on subscriptions and ARR models where they're not getting every single piece of cash upfront. And I think these businesses have to, they're investing a dollar because they're going to get $3, you know, over some, over some time horizon. And so early on, these businesses are like, oh, they're not generating cash or they're not generating earnings. But if you understand how the model works from a subscription and this like lifetime value of every single customer that you get has a lifetime value assigned to it, you know? And so I will invest a dollar, you know, if my lifetime value is going to give me $3 over time. And it takes time for that to play out. And I think now that people are starting to see that, you know, these businesses actually

• 58:27Speaker 02

  can print cash. It was hard to see that early on. And so I think, you know, Berkshire has invested, you know, in, you know, some of the high-flying companies now, I think Snowflake, they were, they were in, and I think Snowflake trades at the highest multiple like in enterprise software right now. So I think that one's probably like, Horn's probably sweating. He's like, I, I know he didn't make that decision, somebody on his team did, but it's cool to see them finally starting to understand like how these business models work and how they can print cash over time. The top five enterprise or top five cloud software businesses are going to do 100 billion in revenue next year. They're going to print 20 billion in cash. And so these businesses can just, you know, once the machine is working and at scale, deliver incredible

• 59:12Speaker 02

  returns for investors. And I think that's why investors assign, you know, I think the category trades at 20x, you know, revenue. And I think it's because people can anticipate what those revenue streams and that growth will, will look like into the future with, with a relative high degree of accuracy. So yeah, investors love those businesses.

• 59:31Anthony Pompliano?

  And it feels like they're really sticky too, right? Like, once somebody starts using the software, I mean, you've really got to screw up to, to get somebody to leave. And so when you start looking at the retention, it's like, whoa, this is not only a great business to begin with, it's also then you got the customer for, you know, years. What better business than that, right?

• 59:52Speaker 02

  Absolutely. Absolutely. And like a lot of these businesses, it's not just retention where it's like, we kept every single customer. We got a hundred percent retention. A lot of time those contracts will increase, you know, and so then you can say my dollar retention, if this was a, this was a $10 contract, this year it's a $130 contract. Now my retention rate is 130%. And when you start modeling that out, where my customer base as a whole is going to be, you know, say it's dollar retention 120%, 130%, now you're getting a compounding rate on just your existing revenue base, not to mention what you're bringing in net new. And so that, you know, is a compounding factor. You, of course, you can discount it, but you know, once you start getting into modeling what these businesses will look like with that high retention rate,

• 1:00:34Speaker 02

  you know, you're not even looking at maybe an annuity stream that it looks like with some, you know, end insight. Now it's looking like a perpetuity of the way you model it and you discount it. Um, and so they, there's just so much value to extract from when those business models are working. And the software, to your point, is incredibly sticky. You know, a system like Trace integrates with your accounting system. All your, all the people in the business are using it.

• 1:00:56Anthony Pompliano?

  They're not getting rid of you. It, once you're in, they're not getting rid of you, but it's not because you like came up with some trick. It's because it actually works.

• 1:01:03Speaker 02

  It provides value. We solve problems. We deliver value. Absolutely.

• 1:01:05Anthony Pompliano?

  Like they, they need to use the software in order to run their business better, which is like, the crazy thing is, uh, how do you build a great business? Just solve people's problems.

• 1:01:14Speaker 02

  Absolutely. Yeah.

• 1:01:15Anthony Pompliano?

  Right?

• 1:01:15Speaker 02

  Yep.

• 1:01:16Anthony Pompliano?

  All right. I could talk to you all day. Uh, uh, my notes, I didn't use them one time. So I'm going back to no notes. Fuck the notes. Um, three questions. One, what's the most important book you've ever read?

• 1:01:26Speaker 02

  Most important book I ever read?

• 1:01:31Speaker 02

  I would say the, the most important book, um, to me right now is called Survival to Thrival. How to build an enterprise, how to build an enterprise startup.

• 1:01:39Anthony Pompliano?

  All right. And. Survival to what?

• 1:01:41Speaker 02

  Survival to thrival.

• 1:01:42Anthony Pompliano?

  Thrival.

• 1:01:43Speaker 02

  Yeah. And it's a book that was.

• 1:01:45Anthony Pompliano?

  Is that a word?

• 1:01:46Speaker 02

  Survival to thrival. Yeah.

• 1:01:50Speaker 02

  And it was a book written by entrepreneurs who built, you know, cloud software, enterprise software, and it's been awesome for the journey. And I, we give it to every single employee who starts at Trace, because it talks about the early stages of founding, finding product market fit, finding go to market fit, you know, and I can say as we've been on this journey with Trace, I felt like I'd be like, okay, we're on page 38, we're going to page 39, you know, and it's really nice to, you know, that people have been like sharing this information. And so for anybody who's out there that's like thinking about starting a business, you know, you can do it, you know, have the courage, you know, there's so much information out there. There's no limiting beliefs. It's like you can go do whatever you want.

• 1:02:32Anthony Pompliano?

  Facts, facts. It's probably the thing that you and I agree on the most out of anything in the world is like, there's an entire group of people who literally think the world's like, I don't know, conspiring against them. And then there's a group of people who are just like, dude, I'm gonna go do what I want to do because I can. Right? And it's like, if I want to be, you know, successful entrepreneur, I can go do that. If I want to learn investing, I can go do that. If I literally want to go be a piano player, like I can go figure out how to do that. But it's this like self-starter mentality, right? And this like, as I'm fond of tweeting, like, no one's coming to save you. Like, like it is on you. And I think that that's kind of the way that you guys have built Trace and, and really just live your life, right?

• 1:03:11Speaker 02

  100%. And if there's one thing that I can, that I aspire to do as I, you know, build Trace and have more success is for like kids who grew up in, you know, rough areas or rough neighborhoods, you know, like, like we did, who they don't know these things, right? And they think that like their world is constrained to this box, and it's only this box that they know. There is literally no box. There is

• 1:03:34Anthony Pompliano?

  You have the internet!

• 1:03:35Speaker 02

  No constraints. Like you can literally go do what, do what you want, you know, and just dream big, aspire big, and just work, you know, work relentlessly and don't stop.

• 1:03:46Anthony Pompliano?

  Sleep schedule. Eight Sleep. For those that don't know, I've been asking this question for Eight Sleep for a while now. I'm an investor in the company because literally it changed my life. My brother and I have a competition as to who can sell more Eight Sleeps. He beat me last month for the first time ever, which is crazy. I think that he conspired with Mateo, the CEO.

• 1:04:09Anthony Pompliano?

  I know that you're really into health and fitness. Just look at him. He literally works out every day. I can still beat him at basketball, though.

• 1:04:17Anthony Pompliano?

  Facts. So let's talk about sleep.

• 1:04:19Speaker 02

  I have a question. I have a question. This is gonna be a great question. What's the worst you've been beat in a game of one on one basketball?

• 1:04:27Anthony Pompliano?

  I don't think I've ever lost. I can't think of a single time I've ever lost a game in basketball. If it happened, I don't remember it. Why? Go ahead. Tell your story.

• 1:04:36Speaker 02

  We were playing with a 4:30 AM shuttle. We get to Facebook 5:30, 6:00, something like that. And I think we decided not to lift that day. We go play basketball or play one on one. I think you beat me the first game. And I think we ended up.

• 1:04:47Anthony Pompliano?

  Well, I should have stopped there. That sounds like the lesson of this story, but go ahead.

• 1:04:51Speaker 02

  I think it was like, okay, so then I won like the next two. I think it was like our fourth game that we're playing. We're playing games to 11, ones and twos.

• 1:04:57Anthony Pompliano?

  Yep.

• 1:04:57Speaker 02

  And I just got on like the hottest hot streak of my life.

• 1:05:00Anthony Pompliano?

  I'm not gonna admit I remember it, but I remember it.

• 1:05:02Speaker 02

  I was banking in threes from like, from the.

• 1:05:06Anthony Pompliano?

  Not even from half court. Like, I think he was on the other end of the court and he was literally like throwing it underhand. It was just going in. I was like, this is absurd.

• 1:05:12Speaker 02

  I think I made six straight shots and it was just like 11-0 game over.

• 1:05:15Anthony Pompliano?

  That did happen. I hate to admit it, but that did happen. That's actually the only time I ever remember losing. The other two that you said, I don't remember.

• 1:05:21Speaker 02

  It's funny because if like that happened with me and Matt, my brother, he would just like, it would just be completely out of his mind. He would not, not have remembered.

• 1:05:27Anthony Pompliano?

  Like Mike? Mike isn't even good at basketball. I literally beat Mike every time I play him. All right, sleep schedule. What, uh, what was it like? And then how has that changed over the pandemic?

• 1:05:37Speaker 02

  I used to be, uh, yeah, I used to be a, you know, sleep, sleep when I die guy, you know, like, let me sleep like five hours a night. And especially when I was like, you know, at Zenefits and I was really dialed in into just career success and making an impact. And then I think I've always just been big into studying and research, especially like around my body, working out, like what feels good. And I've really come around to the idea of just, you need to get, you need to get more sleep. And so I would love to get eight hours every night. I'm a, I'm a big believer in Whoop and I think the Whoop band, I've been using it for two years. Yeah. I wish I was an investor.

• 1:06:14Anthony Pompliano?

  What does it tell you that like you actively use? Cause I, I think like Whoop, Apple Watch, like they all tell a kind of different metrics. What's the thing like when you wake up and you look at the metrics, like what's the thing you look at?

• 1:06:24Speaker 02

  Uh, so I look at, when I wake up, I look at sleep. It's like the, literally the first thing I do.

• 1:06:28Anthony Pompliano?

  Okay. Like how many hours I got?

• 1:06:30Speaker 02

  How many hours of sleep that I got? It gives you a recovery score. So it looks at your heart rate variability. And I think eight sleep tracks heart rate variability as well.

• 1:06:37Anthony Pompliano?

  I didn't know what this was until like a year ago and HRV is like the most important thing that all these people tell me they look at.

• 1:06:43Speaker 02

  Yeah, yeah, yeah. And so, yeah, whoop gives that to you in a score. So then it tells you like, okay, you worked out this hard yesterday. Here's what your sleep recovery was. And so, you know, here's your recovery rate and you want to be like yellow, green. You don't want to be in, in the red. And so I look at that. I look at my resting heart rate. Um, and I think.

• 1:07:01Anthony Pompliano?

  What, what are you putting up resting heart rate?

• 1:07:04Speaker 02

  I'm like in the high thirties. Um, so.

• 1:07:06Anthony Pompliano?

  What?

• 1:07:06Speaker 02

  I'm somewhere like around.

• 1:07:08Anthony Pompliano?

  Dude, wait, whoa, whoa, whoa, whoa, what?

• 1:07:10Speaker 02

  My resting heart rate is like recently it's been around thirty eight to forty. Interesting.

• 1:07:15Anthony Pompliano?

  Bro, are you alive? Thirty eight to forty is your resting heart rate? I thought mine was low. I'm at fifty.

• 1:07:20Speaker 02

  Yeah. Matt, Matt, my brother, he's at, he's at thirty five, which is like.

• 1:07:25Anthony Pompliano?

  Does his heart not work?

• 1:07:26Speaker 02

  Which is like Lance Armstrong type, you know?

• 1:07:29Anthony Pompliano?

  Wait, thirty eight to forty is your resting heart rate?

• 1:07:32Speaker 02

  Yep.

• 1:07:33Anthony Pompliano?

  Dang. Man, I was flexing on people with fifty. Cause my brother's at fifty three and I was like, Joe, you're not even that healthy. Thirty eight to forty.

• 1:07:42Speaker 02

  You should get a whoop.

• 1:07:43Anthony Pompliano?

  Yeah, ma- maybe, maybe it's the Apple Watch is, is bad data. All right. That, that must be what it is. I gotta get a whoop and then I'll have thirty eight.

• 1:07:49Speaker 02

  Well, it's fun. Cause.

• 1:07:50Anthony Pompliano?

  Actually, I'll have thirty seven.

• 1:07:51Speaker 02

  Yeah.

• 1:07:53Speaker 02

  By that time I'll be at thirty five. What, what I love about it is like you can have a team, you know? And so it's like me, my brother and my dad's in it, you know? And so like every single day.

• 1:08:03Anthony Pompliano?

  Look at everybody's.

• 1:08:04Speaker 02

  We can see activity, like how hard you worked out, you know, you can see, you can see your recovery. You can see your hours of sleep. Um, and so, yeah, it's great. I also look at like calories burned. And so every single day it's like, okay, how many calories did I burn? How many calories can I assume? And so then you can kind of play around with it, you know, in terms of like, do I want to, you know, gain? Or do I want to lose a little bit of weight? So it's awesome to have this level of insight, you know?

• 1:08:26Anthony Pompliano?

  One of the first times I remember going to the gym with you, uh, was in San Francisco. I then went to a crunch gym. Shout out crunch. Uh, and I think. We went there. I'm pretty sure that we were trying to see who could bench more. But towards like the middle of the workout, I was like, you want to go for a run? I remember you just looked at me and go, I don't run. I remember being like, okay. They're like, damn, all right. And then you were like, the most cardio I do is like going the stair stepper thing, like the, you know, the stairs that rotate. And I remember being like, damn, man, he, he's in a different world.

• 1:08:58Speaker 02

  But you had, you always had that football player strength, you know, like I would be doing workouts and we put two twenty five, you know, and like we would, we'd go for 12 or something like that, you know, and then you would, you know, you would probably like start dying down, you know, you'd do like eight. And then we'd keep going up and then we'd be at like three fifteen or three thirty five. And I'm like, done, I'm gassed. And you're just like, I'm like, where did that come from?

• 1:09:19Anthony Pompliano?

  Just one or two.

• 1:09:20Speaker 02

  Like, where did that come from?

• 1:09:21Anthony Pompliano?

  Yeah, I mean, you know, you ain't got, when you gotta do it 12 times, like if your, if your life matters, then you just gotta do it once, you know, just push somebody away, whatever. Just, I'm not into doing it a bunch of times, just, you know, just say, I could do that one time. My, my brothers give me a hard time because, uh, they're all weaker. Every single one of my brothers is weaker than me. Just put that on the record. But when we go to the gym, they're like, dude, you work, go to the gym and you work out for 25 minutes. I'm like, yeah, I don't got time to be like sitting around playing. They've like got music. They do this, that. I'm just like in and out. And so, uh, literally now the joke is like when we go, the second we walk in, like you done already? Yeah, whatever. All right. Third question that you could ask me one is, uh, aliens, are you a believer?

• 1:10:01Speaker 02

  I am, uh,

• 1:10:03Anthony Pompliano?

  Oh my God, don't tell me no.

• 1:10:05Speaker 02

  I am, I'm like, I don't, I'm not informed, but I see enough where I just don't know, you know? And I'm not going to do the homework to like figure out if there, if there's aliens or not, you know?

• 1:10:16Anthony Pompliano?

  Do you think that there's a higher probability or a lower probability?

• 1:10:19Speaker 02

  I think that there's probably something out there. There's probably aliens out there. And I think like, yeah.

• 1:10:23Anthony Pompliano?

  And it depends on your definition of alien.

• 1:10:25Speaker 02

  Yeah.

• 1:10:25Anthony Pompliano?

  Right. It's like, just probably not little green men, but it's probably like life, whatever.

• 1:10:30Speaker 02

  Yeah. If aliens, if aliens were real and they did come, like we would probably be friends with them.

• 1:10:37Anthony Pompliano?

  Yeah, I mean, I tell Plin all the time that like, she's like, what would you do if an alien showed up? I'm like, go to the bar and get a beer. What's up, man? You want to go back to my country? Sure, I think it's on another planet, though. Would you rather go spend a year on the International Space Station? Go underneath the water to the depths of the ocean for a year? Or go to Mars and not be able to come back? If you had to pick one of the three? This is my, this is my new thing to ask people.

• 1:11:06Speaker 02

  I'm picking none of the above. I would like to stay in my condo with my laptop.

• 1:11:14Anthony Pompliano?

  I'm more scared of the ocean than I am of space.

• 1:11:17Speaker 02

  Why do you say that?

• 1:11:19Anthony Pompliano?

  I guess like if in either situation, if anything happens, like you're dead. But like, there's just something about like being underwater at the depths of the ocean. And being like, yo, I can't get out. Like, I don't know, it just freaks me out. Like, space kind of feels like, you know, we're floating out here, chilling.

• 1:11:35Speaker 02

  Would you, would you, would you go to space?

• 1:11:38Anthony Pompliano?

  If I could come back. But like, I asked my youngest brother, John, the other day, I said, hey, would you go to Mars if you couldn't come back? And he actually had a great response. He goes, well, what's there? Like, am I going to hang out with people? Am I going alone? Right? So it's kind of like, if you knew that it was like a better, like, what if I told you Mars was better than Earth? Then, okay, like, maybe, right?

• 1:11:58Speaker 02

  Let's go check it out.

• 1:11:59Anthony Pompliano?

  Yeah, yeah, well, I'm not going to go first. I do appreciate, though, that everyone got mad at Elon Musk because he said he was going to create the laws on Mars. And he was like, they were asking him, like, what are the laws going to be? He's like, we'll figure it out when we get there. And they're like, you can't do that. And he was like, okay, well, you go and figure it out then. And everyone gets real quiet, right? So it's like, we just don't know. Like, I think that's what's so much fun to talk about, right? It's like, how long would it take to get there? You read, they're like, oh, they created oxygen on Mars. Like, wait, what? Like, okay. Then they're like, oh, we found this, like, ice. Well, that sounds like we got oxygen and water. So like, that sounds like we might really pull this thing off. And it's like, in 50 years. Are there going to be people on Mars? Like, probably.

• 1:12:39Speaker 02

  Probably.

• 1:12:40Anthony Pompliano?

  They just flew a helicopter, right? Like, sure, and it was a little, you know, robotic one with it, but like, dude, imagine 20 years ago telling people we're gonna fly a helicopter on Mars. They'd be like, you guys are crazy.

• 1:12:50Speaker 02

  Yeah, I, I, I still got some exploring in Miami to do, so I'm good.

• 1:12:56Speaker 02

  There's enough city here for me to go explore.

• 1:12:59Anthony Pompliano?

  You could ask me one question. What do you have?

• 1:13:01Speaker 02

  Um, well, I guess first I would say that like, um, I think this is awesome. I think the platform that you built is awesome. I think it's awesome to see you on CNBC. As somebody who's known you for a while, like seen you on CNBC, I'm like, man, that is awesome. Like, that is super cool.

• 1:13:17Anthony Pompliano?

  It's pretty ridiculous.

• 1:13:17Speaker 02

  Yeah, as a friend, I'm happy for you. I'm proud of you. Uh, I think what was interesting to see is like, you've been such a believer in this for so long. Uh, and to see like when Bitcoin crashed like 3, 4K and like held your conviction and had held your belief. Uh, and knowing some people who are like not, maybe not friends, but acquaintances like attack you on Twitter, call you a grifter, like all this stuff. Like, I don't think people understand like how disciplined you are, how hard you work and like, you know, that like, this is not just some like overnight success. It's actually years, you know, decades of like hard work and dedication. Uh, and so what would you say to the haters?

• 1:13:59Speaker 02

  Other than buy Bitcoin? What, what, what do you want to tell those folks now that we've like 15 to 20x from that, from that law?

• 1:14:05Anthony Pompliano?

  I mean, to be honest, like, I just kind of feel bad. Like, people always ask me like, what's the most fun part about Bitcoin? And like, look, the memes are awesome. Uh, the dancing on graves on the internet is hysterical, right? Like, I enjoy it just as much as anybody.

• 1:14:21Speaker 02

  No, no, no, no. The best, the best meme is this, is like the Snoop Dogg where you get the hat and you get the little, you get the cigarette. That's literally the best.

• 1:14:28Anthony Pompliano?

  Doug life.

• 1:14:29Speaker 02

  That's literally the Doug life meme is literally the best meme. When I saw that, I'm like, all right, Ponce made it.

• 1:14:34Anthony Pompliano?

  I don't remember who made the very first one, but when I saw that, I literally was like this. I may put this on like a TV on my, on my tombstone when I die, just so you guys all know. No, I, I, I think that, uh, the part that I enjoy the most about all of this is, uh, I got a message, uh, the other day. Actually, hold on, I'm gonna read this out because I don't wanna mess it up, but I get these messages like this. Probably on a, uh, daily basis, if not daily, then I get them for sure weekly. And this one specifically, uh, was interesting because, hold on, where is this?

• 1:15:13Speaker 02

  Yeah, I mean, there's just so many people out there who, uh, probably just appreciate the dedication to it.

• 1:15:19Anthony Pompliano?

  So this is a person who I don't wanna show, so I'll just show you, but basically they've messaged me a lot.

• 1:15:25Speaker 02

  Yep.

• 1:15:25Anthony Pompliano?

  And the last time they messaged me was back in March, uh, and they were like joking around all this stuff. Yesterday at 7:18 a.m. They said, "Today is my first day of my retirement. Thank you, Pomp, for helping me see the light. Best regards." Then they put their name.

• 1:15:42Speaker 02

  Yeah.

• 1:15:42Anthony Pompliano?

  And I like, get those messages, and I have no clue who this person is, uh, literally it's a Student Anonymous account.

• 1:15:50Anthony Pompliano?

  And I have no clue what they did to get to this point. So they could have been 55, 60, 70 years old, right? They put $10,000, it went up, and then all of a sudden now they've got money, they can retire. Uh, or they could be like literally like a 25-year-old kid and, you know, whatever. But I think like what people forget is, there's like, uh, and this day's a little old. There's probably at this point over 100,000 wallets that have more than a million dollars of Bitcoin in it.

• 1:16:17Speaker 02

  Wow.

• 1:16:18Anthony Pompliano?

  Right? I think, I'm pretty sure that's correct.

• 1:16:21Anthony Pompliano?

  When you think about what that does to like an entire generation of people, it's crazy.

• 1:16:26Speaker 02

  Yeah.

• 1:16:27Anthony Pompliano?

  And then that's just Bitcoin. And you look at all this other stuff. And so, uh, recently Barry Silbert, uh, from Digital Currency Group, he tweeted out and he was like, "The amount of wealth creation is like staggering in this industry."

• 1:16:40Anthony Pompliano?

  That's all great, but who cares about like the money as much as like imagine being somebody who wanted to retire couldn't and then all of a sudden does something that they can retire. So like, that's all the positive stuff that I enjoy. When you flip it around, you look at like the hater side.

• 1:16:54Speaker 02

  Yeah.

• 1:16:54Anthony Pompliano?

  I just always go back to like, I feel bad for them. Like, man, you have such a shitty life that you're literally on the internet, talking shit to somebody who you don't know. Right? And then like, the best part always is like, I'll DM them sometimes. And then they're super nice, right? Like immediately they're like, oh, I'm so nice, like whatever. And so it's just like, uh, when you look at it almost like empathetically and you're just like, man, that's really, you woke up this morning and that is what you decided to say on the internet.

• 1:17:24Speaker 02

  Yeah.

• 1:17:24Anthony Pompliano?

  Like, are you okay?

• 1:17:27Anthony Pompliano?

  What you realize is like, one, it's easy because it's like super non-personal, right? So people can attack people like all this kind of stuff. There's pseudonymity and whatever.

• 1:17:34Speaker 02

  Yep.

• 1:17:34Anthony Pompliano?

  But then the second thing is just like, if you meet them in person, they would never say that. And by the way, you would never like say anything back either. And so like, I think like for all the benefits of the internet, there's downsides.

• 1:17:45Speaker 02

  Yep.

• 1:17:46Anthony Pompliano?

  And so if you asked me this question two years ago, I said all kinds of crazy stuff, like really crazy stuff. Now I just kind of look at it and I'm just like, man, like you, you can participate in this just as much. And so I'll, I'll tell you, uh, one last story before we go. I went to dinner recently, uh, Plano was there with me. I don't want to say who was there, but there was very successful people there. And one of the people was, uh, a hedge fund slash private equity person. They had no clue any of the Bitcoin crypto and stuff. And at one point during the dinner, they started to go on and on and on, all about, uh, the GameStop longs. We're manipulating the market and screwing the hedge funds.

• 1:18:31Anthony Pompliano?

  I just sat there, listened for a little bit and Plana was looking at me like, I know this dude ain't gonna sit here and not say anything. And so at some point, I just very cordially was like, yeah, but like, aren't the hedge funds manipulating the market as well with all of their research and, you know, their comments and going on television and like all this stuff and everything?

• 1:18:50Speaker 02

  Yeah.

• 1:18:51Anthony Pompliano?

  And to his credit, he was like, oh, that's a good point, right? Like, that's fair. But I think that's like what the internet's done, right? Is like, the internet didn't necessarily like swing markets or do anything. All it was, it created more accessibility. And then it allowed for everyone else to do the same thing that the hedge funds are doing, right? Or do, or professional investors or whatever. And so to me, like, the people who are mad about this, usually, like, there was a guy literally today who told me, uh, I tweeted out and I was like, if you're a young person, don't go work at a traditional bank or traditional asset manager, like, all of the innovation and most of the returns we're being forced is gonna be in crypto, like, go get a job in crypto. Of course, this guy runs like a $4 billion hedge fund, which, by the way, if you're on a $4 billion hedge fund and you're talking shit on the internet, like, you should be doing way better things or your investors should take their money back.

• 1:19:33Anthony Pompliano?

  And so he basically was like, look, uh, this is stupid advice. If you get a job offer from like Goldman Sachs or Susquehanna or any of these places, like, you should go take it. And I was like, hey, man, like, you're confusing. Like, take Susquehanna, for example. They're not a traditional asset manager. Like, they're one of the biggest players in crypto. So like, sure, go work, but go work on their crypto desk. And he was like, oh, uh, trading equities at Susquehanna is better than any job you guys have. And like, the response I wanna say, frankly, which I didn't, I actually typed it out and deleted it because it wasn't worth my time, was like, dude, we can compare your hedge fund returns to like, literally strangers on the internet who just held Bitcoin for the last five years. So they destroyed you and you're charging two and 20 and they literally are better at your job than you are, right? And so like, sure, returns end up like being the scoreboard.

• 1:20:18Speaker 02

  Yep.

• 1:20:18Anthony Pompliano?

  But at the end of the day, like, all you're seeing is like, it's fear. They're literally scared. So if you're trading public equities, you're doing all this stuff, you have a decision. Either you can adapt or you will die. Like, you, your business will be disrupted because everything is gonna move to the open public blockchains. And so when I just think through that, I'm like, all right, so if somebody's being aggressive or like negative, either literally something's probably wrong and like be empathetic. Or two, like, they're fearful. And like, when they're fearful, like, hey, man, you see the same thing I do. It's just, either you operate out of fear or you operate out of optimism. And like, optimism always wins.

• 1:20:52Speaker 02

  Optimism always wins.

• 1:20:53Anthony Pompliano?

  Yeah. So like, you know, whatever. Fuck off.

• 1:20:59Anthony Pompliano?

  I mean, you know, at some point, literally, you just throw your hands up and you're just like, whatever, I'm gonna do my own thing, like, knock, yeah, knock yourselves out, whatever. So, by the way, if you're a young person, you go work at trading equity somewhere, then you probably should have an intelligence test, because that's probably not the best thing to do. So, all right, man, tracehq.com?

• 1:21:16Speaker 02

  Tracehq.com.

• 1:21:17Anthony Pompliano?

  All right, where can people find you on Twitter?

• 1:21:19Speaker 02

  Mike underscore underscore Gons, two underscores.

• 1:21:23Anthony Pompliano?

  All right.

• 1:21:24Speaker 02

  Tough to get it, tough to get a handle.

• 1:21:26Anthony Pompliano?

  Yeah.

• 1:21:26Speaker 02

  Mike Gonzalez is a common name.

• 1:21:29Anthony Pompliano?

  Do you want to tell a story real quick?

• 1:21:31Speaker 02

  Uh, no, we'll save it for next time.

• 1:21:35Anthony Pompliano?

  All right, thank you so much for doing this.

• 1:21:36Speaker 02

  Thank you for having me. It was fun.