EP 29: Multicoin Capital’s Kyle Samani Joins the Crypto Debate and Chat Helium, Also Amazon-One Medical and Productivity at Big Tech

In the 29th episode, Multicoin Capital Co-Founder and Managing Partner Kyle Samani joins the crypto debate and discusses Solana and Helium’s wireless network. Zach breaks down One Medical and their acquisition by Amazon, plus Rashad Assir comes on to discuss going viral. (0:00) Intro (1:06) Welcoming Rashad (4:34) Going viral (5:22) Changing the work culture (8:19) Perf cycles (14:31) Cash cow (19:59) Google investing in people (23:03) One Medical (29:50) Welcoming Kyle (34:26) Solana (37:54) Progression of different funds (39:08) What got you into crypto (42:43) Financial markets (51:25) Gas fees (56:24) Underlying crypto issues (1:04:55) Helium (1:14:52) Nova Labs (1:23:48) Equity and capital formation (1:26:49) Lessons about risk (1:30:10) Critique of the US system (1:36:06) Bitcoin is nonsense (1:40:01) Outro Mixed and edited: Justin Hrabovsky Produced: Andrew Nadeau and Rashad Assir Executive Producer: Josh Machiz Music: Griff Lawson 🎙 Listen to the show Apple Podcasts: https://podcasts.apple.com/us/podcast... Spotify: https://open.spotify.com/show/5WqBqDb... Google Podcasts: https://podcasts.google.com/feed/aHR0... Follow on Socials 📸 Instagram - https://instagram.com/cartoonavatars 🐦 Twitter - https://twitter.com/cartoonavatars 🎬 Clips on TikTok - https://www.tiktok.com/@cartoonavatars About the Show A Saturday morning podcast hosted by Logan Bartlett (Partner and Managing Director at Redpoint Ventures) covering the tech news with his friends and other people with industry expertise. Executive Producer: Rashad Assir Producer: Leah Clapper Mixing and editing: Justin Hrabovsky Check out Unsupervised Learning, Redpoint's AI Podcast: https://www.youtube.com/@UCUl-s_Vp-Kkk_XVyDylNwLA 🎥 Subscribe on YouTube: https://www.youtube.com/channel/UCugS0jD5IAdoqzjaNYzns7w?sub_confirmation=1 Follow on Socials 📸 Instagram - https://www.instagram.com/theloganbartlettshow 📱 X - https://twitter.com/loganbartshow 🎬 Clips on TikTok - https://www.tiktok.com/@theloganbartlettshow About the Show Logan Bartlett is a Software Investor at Redpoint Ventures - a Silicon Valley-based VC with $6B AUM and investments in Snowflake, DraftKings, Twilio, and Netflix. In each episode of The Logan Bartlett Show, we sit down with the people behind today’s most important startups and extract the tactics, lessons, and frameworks they’ve learned the hard way. Conversations span hiring to GTM, product, growth, fundraising and everything in between - collectively forming the ultimate playbook to make you a better CEO, investor or board member. Tap follow and enable notifications to stay ahead of the game.

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

• 0:04Logan Bartlett?

  Welcome to the 29th episode of Cartoon Avatars. I'm your host Logan Bartlett. What you're going to hear on this episode is a conversation that Rashad, our producer here, and also known as the TikTok guy and I had with Zach about a recent all hands that Sundar Pitchai from Google had in which he requested more productivity out of workers. And Rashad made a joking video about it that went fairly viral. And so we talk about that. We talk about productivity in the workforce at these big companies. Zach and Rashad's experience both working at Google. And then on the back half of the episode, you're going to hear a conversation Zach and I had for a little bit about about Amazon buying One Medical. And then that dovetails

• 0:46Logan Bartlett?

  into a conversation with Kyle from MultiCoin in which we talk about different crypto use cases. We talk about MultiCoin's investment in helium, how Kyle got into crypto in general, a bunch of different stuff. So really good conversation here. Thanks to Kyle for joining. So we'll go right into the conversation we have about Google here now. Rashad, you had a viral video, what, last week, making a joke about Google's culture? So why don't you give a little bit, we're bringing the producer on for the, I guess, the first time with Zach. Normally Rashad's been kind of the stand-in when Zach's gone. But Rashad, what happened? And maybe give us a little bit of the what's happened since?

• 1:30Speaker 01

  Yeah, I should go through and read the comments. I feel like they were mostly supportive, but basically, there was this article came out last week about Sundar at his all hands. I remember we used to attend these when I would, like, Looker got acquired by Google. So I was at Google for two years and it was every Friday.

• 1:48Logan Bartlett?

  Sundar, the CEO of Google, for those that don't know.

• 1:51Speaker 01

  Yeah. And he would address the company. And I guess in the last one, he made a comment about the productivity is not where it's supposed to be, and we need to embody more of an entrepreneurial spirit. So I remembered Zach's thing on LinkedIn, that his title is just vacation for the time you were at Google.

• 2:12Logan Bartlett?

  I forgot, Rashad, how long were you at Google?

• 2:14Speaker 01

  Officially, two years, but the deal took like a year to close. So they were in this weird like middle ground of like operating as usual, but not really.

• 2:24Logan Bartlett?

  So, so how long was actually, is that, is that the third year or is that part of the two?

• 2:29Speaker 01

  Yeah, I left basically at the beginning of the third year, what would have been the third year.

• 2:33Logan Bartlett?

  Got it. So you had two years actually formally under Google.

• 2:36Speaker 01

  And it was great. I mean, the, the culture, I mean, all, all of the perks that they talk about were proven to be very much true.

• 2:44Speaker 02

  When you left, did you, did you take the snacks with you?

• 2:47Speaker 01

  I still get invited occasionally to lunch.

• 2:50Logan Bartlett?

  Rashad rolled in with a bunch of Cliff bars in his pockets to the first day at Red Point. We're like, dude, we, we can.

• 2:55Speaker 02

  I remember, I remember lobster day at one point. That's when I knew.

• 3:00Logan Bartlett?

  Zach, when were you at Google?

• 3:02Speaker 02

  Uh, 2010 to 2012 in the, in the New York office. And I would take the white chocolate pretzels home with me because those were the best.

• 3:13Speaker 01

  Dude, their micro kitchen, their kitchens and their like staff and I mean, it was like half open because it was still COVID. So it was this weird time that I didn't even experience the full-fledged version of it, but there were sushi, there were different cuisines on different floors. It was open pretty much all day.

• 3:30Logan Bartlett?

  Wait, so Rashad, give the, give the context though of what happened. So you made it, you made, so this happened, Sundar gave his all hands thing, increasing productivity and so.

• 3:40Speaker 01

  Yeah, I basically did like a sketch, slightly exaggerated impersonation of what I imagined to be that call where he's basically like addressing the company at large, but in a very like Google, like we have to be sensitive to our staff and we don't want to piss anyone off way.

• 3:59Logan Bartlett?

  Good afternoon, Googlers. I called the meeting today in response to our latest earnings.

• 4:04Speaker 01

  We done [__] up. Going forward, we're asking that all employees, and please don't take this the wrong way, actually sign like be on like you have come into work. Not saying every day or anything, just like sometimes if you haven't logged in in 60 days or more, IT should be reaching out shortly to reset your passwords. If you're currently in Ibiza, Mykonos, Tulum, or San Tropez, we have charters back to our main offices for the remainder of the summer. Effective today, we'll be enforcing that all employees do log eight hours per week.

• 4:34Logan Bartlett?

  So you did that?

• 4:35Speaker 01

  Yeah, it crushed on TikTok and LinkedIn and uh but now I'm getting a bunch of hate messages from my old coworkers for uh exposing them. They're like, dude, if I get laid off from Google, this is like 5% your fault.

• 4:49Logan Bartlett?

  We gotta note that it was making the rounds at the VPs at Google, that like it was being sent around as like, uh, I think people were laughing, but uh, I don't know.

• 4:58Speaker 01

  Yeah, we got a message from Facebook and uh from someone at Facebook saying the same. It was making the rounds with the VPs, but um I'm trying to anchor and use this as an excuse to get either Sundar or Mark on the pod, uh but no, no success yet.

• 5:15Logan Bartlett?

  Yeah, that's good. Yeah.

• 5:17Speaker 02

  It's gonna take an FBI search warrant to get one of them onto this podcast, so.

• 5:22Logan Bartlett?

  Yeah, exactly. But Zach, you were saying about like actually changing the culture and how hard, I mean, like taking this to the actually uh insightful level while it was a very funny video, like, I mean, this is a real thing. These are big companies with very amazing products that they've built that sort of have monopolies or quasi-monopolies. Um, I mean, these are real things, like changing these cultures of of companies and trying to get people when they get used to perks and stuff like that. I think famously or notably recently Zuckerberg gave his big speech about like we have to dig in, right? And like this

• 6:02Logan Bartlett?

  is our chance to really show that we can still grind. And then an employee followed up with their next question about like, well, what about COVID holidays? Does that still exist? And you know, it was reported by the media that like he was about to blow a gasket, right? Because he's he's like backs against the wall. It's wartime, blah, blah, blah. And then the employee's like, right, right, those vacation days. So I mean, this is very entrenched in these companies.

• 6:28Speaker 02

  Yeah, it's. It's incredibly difficult to change because so much of like, in my opinion at least, and I worked at Google maybe 10 years ago, but so much of a company's culture is based on how they reward behavior in the promotion process. If you think about, you know, at a certain scale, you're not really there for the mission. I think people are there for the, the pay and the perks and then, you know, they want to get promoted and they want to make more money and they want to have like career progress. And so, so much of like how a company rewards behavior in terms of promotions drives the culture and the productivity. And if you really want to drive a complete change in, let's talk, we'll talk about Google's culture for a second, which tends to award more like

• 7:12Speaker 02

  technical skill and creativity as opposed to effort.

• 7:18Speaker 02

  You've got to push a massive change in the reward system, which means you have to like tie your managers, managers, managers' performance to output. And then you have to have them hold the next layer accountable. And you've got to drive that through both the functional management and through HR. And you have to hold the entire team. It's a lot of work to drastically change how a company values, you know, certain skills versus effort versus output type of thing. I'm sure it can be done, but at Google's scale with hundreds of thousands of employees, that is not an easy task. That's like a hundred person task force for two years.

• 7:57Logan Bartlett?

  Yeah.

• 7:57Speaker 02

  Which they might use, by the way, that like might be a good idea. Like, yeah, maybe a productivity task force that changes, you know, rewards culture is actually a great idea, but you have to be willing to lose people. You have to be willing to fight the mob for that to actually get implemented.

• 8:10Speaker 01

  And to their credit, I think, like, I don't want to sound ungracious for the time I spent there was great. And I think there were some really smart people. One thing I thought was going to be heavily bureaucratic that actually turned out to be pretty good and a smooth running process was their like perf cycles. So it's like highly structured, but they have it. So it's qualitative.

• 8:33Logan Bartlett?

  I'm sorry, perf is performance reviews or something?

• 8:36Speaker 01

  Oh, sorry. It's like, yeah, performance reviews that happen, I think semi annually. And like, uh, there's a full-fledged application built that gets sent out to your managers, peer reviews. It's like. Kind of take some time to do, but like, you know, it's, it's great.

• 8:54Logan Bartlett?

  What does it do a good job of? I mean, it sounds like it's comprehensive, but like, what is that actually? Uh, is comprehensive actually good in this case? Or, or what? Like, did it make you feel good that you got a lot of good feedback? Like, what did that actually solve for you?

• 9:09Speaker 01

  You know, I feel about pats on the back, Logan, but, uh, it was, I think it did a good job of like assessing this person's impact. It was a lot of, it was very engineering and I was on the sales team, so it didn't, a lot of it didn't apply to me. But like, it was all about what is your impact to the greater team? And what is one thing you could be doing to be doing greater impact and things like that? Just, I don't know, it just felt very, it felt very structured and it always felt like I got something coming out of those meetings, uh, with my manager.

• 9:38Logan Bartlett?

  It was like your joke in the, in the bit though, like what ice cream makes you feel most productive? Which, which non-very ice cream or whatever? Yeah, it sounds like it was good for that. No, but it's interesting. I mean, a lot of this time it takes a new CEO coming in to actually enact this change, right? It's really hard for the same person to suddenly crack the whip in a, in a different environment. I mean, everyone sort of talks about like the wartime CEO, Ben Horowitz, P time CEO thing. But like oftentimes, I remember, I mean, one of the best business books I, I've, I've read that I really enjoyed was Louis Gersner's, Who Said Elephants Can't Dance, right? And it's about coming into IBM when they were in terrible shape in like 1992 or whatever it was, 89, something like that.

• 10:22Logan Bartlett?

  And like trying to change this culture of inertia when their share price started declining. I think part of the problem here, it's really hard to do, uh, when you're the one that's been steering the ship. It's almost like, you know, you need a political office where you need the, the referendum and the people behind you to actually enact the change, uh, to get done. But then also, um, it's, uh, I think these businesses today just have such a monopoly, right? That there's like, especially on search for Google and, you know, the browser in a lot of cases and the email client and others, right? They actually don't need to be insanely efficient to, uh, make the business run as is.

• 11:05Speaker 02

  No, not at all. The other thing is like, there's a difference between. And you think of it from like a priority standpoint, there's, you know, how do you reward the top performers? How do you find the people who are exceptional? And make sure they have active coaching and career pathing and pay increases and all of that. And at least in my experience, the Google HR process and what Rashad you experienced, and I had the same thing when I was there, the perf process is a lot more about spotting the top five or 10% talent. And it's not really geared towards managing out the bottom 10%. They kind of said, well, if we're going to pick a side, let's focus on like identifying the rock star talent, not to overuse the term rock star here.

• 11:50Speaker 02

  But, you know, to change that to be one where you're trying to actually manage out the bottom 10 is another complicated process. They have to, they have to start from, from scratch, in my opinion.

• 12:02Logan Bartlett?

  Yeah. The rewards themselves, I guess, and how they manifest, how this actually like manifests itself in a culture standpoint. I, I, I found that like, in general, a lot of people don't have a bias to action. Uh, just, and this is true of startups as well as, you know, venture capital firms, as well as big companies. Like a lot of people are just much more comfortable operating within the lines, right? And, and having some guidance. And then when you give them guidance, encouraging them to go forward. And that's the way, I don't know what percentage of people, probably a, a low percentage of founders, probably a, uh, you know, a slightly higher, but still low percentage of, of employees that work at startups.

• 12:45Logan Bartlett?

  So probably a decently high percentage of people that work at a company like Google. There's certain comfort in it, right? There's like, you're kind of given a set agenda to go forward on.

• 12:55Speaker 02

  Uh, I was going to say, we, we experienced this. Logan, do we use Zoom mostly? Zach, were you using Google Meet, uh, during COVID?

• 13:04Speaker 01

  Like whenever that was 2020, like March, you know, apocalyptic COVID times.

• 13:09Speaker 02

  Zoom. Yeah. Cause I mean, I wasn't at Google at that point in time. We were using Zoom at, at Flutter.

• 13:13Speaker 01

  Right. So obviously Google made us switch all to the Google suite of products and one of them was Meet. And I experienced this in terms of just like priorities and what they could get done. If they, if they really like put their resources towards it. When COVID hit, all these companies were scrambling for good cause to say, you know, we're going to help our customers. We're going to give these products out for free. And Google Meet at the time was like this bifurcated between meet and hangouts. And it was super confusing. The UI sucked. Like it was always blurry. It never seemed to like work just right. And then in like five subsequent weeks, we get updates for like company wide updates about how we're helping on the COVID front.

• 13:56Speaker 01

  And the like product velocity for Google Meet was absurd. Like it went from like the max capacity was 10 people to like a hundred people to like 500 people in one meeting. Like the, the demonstration of like what they could do was, was pretty amazing. Like pretty remarkable. When everyone actually rallied around it and all these genius engineers were like focused and working on something.

• 14:23Logan Bartlett?

  We're going to cut this part of you saying nice things about Google, by the way, just so you know. That's not like all your friends that are mad at you or this is going to be eliminated from the podcast, just so you know.

• 14:31Speaker 02

  It's really hard, right? Like you basically stumble upon this cash cow. You're like, all right, we've got this machine.

• 14:39Logan Bartlett?

  Google search, you mean?

• 14:40Speaker 02

  Yeah. Google search. We're like, here's this machine where somebody tells me exactly what they want. And I don't even have to ask them. They actually tell me without them asking. And then like, maybe, maybe what I can do is like show them an ad for the thing they already told me they wanted. And you're like, that is literally the best business model in the history of the world. And so you don't want to mess with it. Right? So you actually end up in this culture where your, your core cash cow. Is a little bit of like a sacred thing where actually moving fast and breaking things and doing constant updates has a potential pretty big negative effect. And then you, you know, you swing into these other product areas and you still have the same people and the same culture and the same management and some of that, maybe most of

• 15:25Speaker 02

  that culture ends up like pushing over and because you don't have a crisis and you don't have like a ton of competition, you never get that like push that Rashad saw with Google Meet. I noticed it as well. I had some startups I was working with who were using Meet and you could see it get like incrementally better. They still don't have a desktop app, which drives me insane. But whatever they could do in the browser, they got, they got better. And it's just hard, right? Because you're managing like two distinct, not just two, in their case, probably like 10 distinct cultures. And some of the things I think they did actually really well back in the day was they kept, like as an example, they kept YouTube separate, right? YouTube had its own brand, its own leadership, in some sense, its own culture. You know, Android, at least in the beginning, had a similar

• 16:09Speaker 02

  kind of hands-off, like really strong leadership that would drive at least as fast as they possibly could. To me, unless your core culture is at like pace, it's going to be really difficult to have any sort of, this is the, this is the like move fast and break thing project and this is the like move slow and don't fuck it up project. It's really hard to do that without breaking the, the products apart. And Google has always kind of struggled to do it. And then they make a few unbelievably good decisions with YouTube and Android in particular. And there's just like one glaring exception to me, which I can never put my hands around how this happened, because it makes no sense in the grand scheme of things, which is Google Photos. Because of all the like core Google products, Google Photos

• 16:53Speaker 02

  is one of the most remarkable pieces of software I've ever used in my entire life. It just nailed it. They nailed every piece of the use case from like the indexing to the search, the auto backups, to the way they display it. It's phenomenal, right? To the point where it's like one of the only products I see my iPhone, I don't use an iPhone, but like some of my iPhone friends using. How that happened? In the suite of Google is like still shocking to me to this day. So whoever drove that project is probably one of the best Google employees they've ever had.

• 17:21Logan Bartlett?

  I've actually never used Google Photos, so now I'm gonna have to go.

• 17:25Speaker 01

  Dude, that's what I'm saying.

• 17:26Speaker 02

  Well, cuz it's it's good software. That's probably why you're.

• 17:29Speaker 01

  Even with that, with like, it's it's undisputably better than the i- Apple Photos, whatever iCloud sharing app. That thing is is a nightmare. Like you try to create a shared album, you send it to you. Dude, I sent it to you. No, send it to me again. Like.

• 17:45Logan Bartlett?

  Yeah, yeah, no, that's terrible. That's a terrible. Yeah, Apple deserves.

• 17:48Speaker 01

  But still, Logan, people like it's still got the green bubble effect because it's a Google product versus like.

• 17:54Logan Bartlett?

  Oh, totally.

• 17:55Speaker 02

  Logan, this is what we need to do. We need to find the PM or whomever drove the Google Photos thing to launch.

• 18:00Logan Bartlett?

  It just invest in whoever that person is.

• 18:03Speaker 02

  I would just wanna hear the story. Like, how did you do this in a sea of products that move at the glacier pace and have like?

• 18:12Logan Bartlett?

  When did this happen? Because because Maps has been successful and obviously, you know, Gmail's been successful and analytics. I mean, I know that was somewhat of an acquisition, but analytics is so like there there have been other stuff, right? And like slides or docs or whatever it is. What what do you think makes this uniquely better? Is it just like significantly better than the alternative where, you know, Gmail wouldn't be that case?

• 18:36Speaker 02

  I guess like maybe if you look through the products that have eventually broken out and gotten to great scale, right? Gmail, Maps, Photos is a good one. It's actually like one of the most popular apps, not just photo apps, just apps in general in in the world.

• 18:52Speaker 02

  Historically, it's kind of been when there's an established but not great product that you can like iterate on, you can tweak it. So you have this like initial game plan that you don't have to devise yourself. You can be like, all right, make that thing that's like mediocre just better. Uh, and that was true of like iCloud Photos and that was true of Maps with MapQuest. And that was true of, you know, if you go all the way back to, um, even Google Docs to a certain point, right? There was like the desktop Word app. You're like, hey, what if we could all write in the same document at the same time? So there's like a little bit of a map for them. And I guess in that case, they've they've done like reasonably well. The Photos one stands out to me just because. It was one where Apple was first.

• 19:35Speaker 02

  And like usually it doesn't work that way. Like usually it works the other way around. And Apple somehow was first and screwed it up and Google built a better product. And how that happened, I couldn't tell you. They just, they figured out all the little annoying sharing and backup and where my photos sit.

• 19:52Speaker 01

  The face AI thing that like recognizes the person and then you can just search people and then find pictures of that thing.

• 19:59Logan Bartlett?

  I mean, Apple's decent at that, but I, I agree. I mean, Apple's not great on these like software product builds and stuff. One of the things I'm not really sure about. I mean, obviously we have these businesses that are more profitable or entrenched in a very literal like they're, you know, they scale infinitely in a way that historical monopolies didn't, right? And then you have all these

• 20:24Logan Bartlett?

  things that are built into them in different ways that kind of lock them in more and more. And then you have a generation of entrepreneurs that are running these companies or operators, as the case may be, that are, have read all the business books and have like studied all the disruption and change management and theory of all this stuff in a way that people in the early 1900s or whatever, you know, the automobile people couldn't do. And so I, I wonder, you know, all these like side bets that Facebook makes or Google makes or, you know, Amazon makes. To what extent is it that their core business is so much better versus that they just know the playbook of disruption?

• 21:05Logan Bartlett?

  And they're like trying to assess all this stuff out so they don't get disrupted as well. And so they're trying to innovate. Versus we just haven't had a new platform change that's really, you know, occurred to unlock those specific companies. And I think you're seeing Facebook get chipped away at right now in a meaningful way. But Apple, you know, Google, Amazon, they've been pretty resilient in like their ability to continue to innovate. Look.

• 21:31Speaker 02

  There's a lot of smart people who work at these companies. Like, let's not forget, like, really sharp people who are very skilled and went to school and got promoted 15 times and kind of, you know, work hard. Obviously, like, there's a component, it's probably 20% of employees at all of these companies that don't do shit and probably shouldn't work there. But the reality is there actually are like a lot of reasonably great folks and they are well compensated. Right? That's how, I mean, one of the things I would argue that Google figured out probably best and others copied was, "Well, hey, we have this amazing business model. What if we just, like, paid more than the companies who don't have this business model? So that we don't keep losing people and we can attract some of the best minds?

• 22:15Speaker 02

  And if we grab all the best minds, like, good things will happen because we have the balance sheet to do this." And that's, in a sense, what they were able to do, right? It was, you kind of threw money at the problem and they did it in the right way. Instead of investing in, you know, one specific product, they invested in, in people. Yeah. And that has paid off over and over. And my guess is the common theme in the successful projects versus the unsuccessful projects is just, "Who is the individual in charge?" I think a lot of this always just comes down to like one or two kind of remarkable, headstrong leaders who just fight through the crap and get it done.

• 22:56Speaker 02

  And the difference between success and failure is kind of, "Who did you put in charge?" And that would be my guess. The thing about One Medical is interesting to me and I haven't, I truly haven't spent enough time looking at it. I've been focused on other things. But I think many people are a little confused about One Medical's underlying business model and like some of the nuances about it. I'm not, this is not about like good or bad. It's just kind of like classically how One Medical has made its money. You know, being a high-end primary care shop where you have longer appointments and you have nice offices

• 23:38Speaker 02

  and you have offices in very expensive places tends to mean that you have... A much more expensive underlying cost structure than a classic primary care office that you would see in wherever, across the country, right?

• 23:55Logan Bartlett?

  Yeah.

• 23:55Speaker 02

  Have more cost inherently, assuming the doctor paid basically the same, which I think is probably accurate. So One Medical has compensated for this underlying cost structure being more expensive, or theoretically compensated for it by doing two things. One is they charge this subscription fee. It's essentially a yearly fee of, I think, something like $200 or $250 per person to help cover the cost of the fact that everything is a little more expensive. The other thing they've typically done, which I think is, people don't realize, is they've typically aligned themselves with a local hospital system.

• 24:34Speaker 02

  And they've become essentially affiliated with very expensive healthcare systems like a Mount Sinai in New York. And that allows them to get the rate card that a Mount Sinai or equivalent system gets for reimbursement, meaning they get paid by commercial insurance companies at a higher rate because they're billing underneath the larger hospital system. That's actually the business model, right? Like, it's a rate arbitrage with a large healthcare provider who has negotiating leverage. It's not just that.

• 25:12Logan Bartlett?

  Well, isn't it? Everyone says the primary care business is like a wedge, right? Like, everything else, primary care doesn't really make any money compared to everything else around the ancillary services for the business, right? And so, whenever you looked at the financials of the company, it was always trading at like some stupid revenue multiple compared to like what their profitability was and growth rate was and all that. And it was one of these, like, the market's so big and you can monetize so many different ways, but they never did.

• 25:46Speaker 02

  I mean, look, people talk about like, the market is so big, but it, I would, first I would question, like, well, which market are we talking about here? Because One Medical's business model requires people who are willing to pay $200 to $250 a year in a cash fee for access. That basically limits you to major cities across the country right away, right? You've already like shrunk the market because of this cash component. Plus, there's a brand and consumer expectation that you're going to One Medical. And they're very nice, by the way, very, very nice offices.

• 26:19Logan Bartlett?

  I'm sure it's wonderful.

• 26:20Speaker 02

  Wonderful, right?

• 26:22Logan Bartlett?

  It's for like yuppies, right?

• 26:24Speaker 02

  Yeah, it's for you and me and Kyle, basically, to go to have like one medical care. And like, it's very nice, but that also, there's an expectation of the office, which means it's more expensive. There's an expectation of the time that the doctor said. So I think this idea of like, well, primary care is big and therefore the market's big is like, true. But this is not primary care in the general sense. Like, this is a very niche, somewhat bougie, primary care that works in major cities and wealthy populations. And it's, you know, it does work, but in those populations. And then it's like ancillar, like which ancillaries? Because the reality is like, most One Medical members are younger and healthier.

• 27:03Logan Bartlett?

  Yeah.

• 27:04Speaker 02

  And so they tend to not have the consistent ancillaries you would think of in like a Medicare Advantage population that are 65 and older. And actually, most of the like theoretical money to be made in primary care is actually in the Medicare Advantage and Medicare's risk-taking segment, which is 65 and older. And it's this whole totally different business model.

• 27:22Logan Bartlett?

  All the Oak Street and City Block and all that stuff.

• 27:26Speaker 02

  Oak Street's probably the best example. There's ChenMed, there's Agilon, there's a few others. But it's, it's not the primary care things most people would know because it's exclusively focused on that Medicare segment. Anyway, I don't know, I'm, I'm normally like, I see the Amazon strategy. Like, this is really sharp. It's a market expansion play. You can bring your like cost efficiency structure and analytics to it. You can make, you can do real work on this business. Like, the Whole Foods thing made a ton of sense to me. This one, I'm not sure I get it yet, but I haven't, I have to think a little bit more. And a lot of it comes down to.

• 28:04Speaker 02

  It's really an insurance mechanism to get like, like One Medical makes this money because of these affiliations with large hospital systems and that's not Amazon's game. That's not what they play. Amazon plays direct to consumer cost efficiency. So like, what's the theory here? I'm not sure.

• 28:20Logan Bartlett?

  You know what's funny is we're going to litigate this and it's so important in the healthcare world or whatever, but it's a $3 billion acquisition by a $1.2 trillion company, you know? So like, it just, it's so small to Amazon that like, we actually, I mean, sure, it seems it's big and it's important and you know, whatever, it should be scrutinized, but Amazon, like, this is a tuck-in acquisition of all tuck-in acquisitions, kind of a flyer on, who knows? It could be bundled, if it's bundled with Prime and it increases Prime's stickiness by like, a couple of basis points, like, it's probably accretive to them, right?

• 28:56Speaker 02

  I think you pretty much nailed it. Like, that's probably it. It's like, this is such a small bet. We can bundle it up. We can take One Medical's underlying technology, the appointment booking and medical management and messaging and all that, and maybe we can unbundle it and offer it up as like, virtual Amazon care and we don't have to build the tech stack, because it is an annoying, complicated tech stack to build, because it's very healthcare specific. So I could see them thinking like, we're going to take the tech and apply it to this national virtual care model that a Prime member gets? That makes sense. That's probably the best, that's probably the best example I've heard so far, Samani walking me through it. So like, yeah, that could be, that could be it. But I agree, it's such a small number.

• 29:38Logan Bartlett?

  I don't know, I just made that up. Look at you though, us getting you finally to talk about healthcare on this, with a mic behind your face, you know? It's, it took us long enough here. But Kyle, thanks for, thanks for joining.

• 29:50Speaker 03

  Hey, guys.

• 29:51Logan Bartlett?

  How you doing?

• 29:51Speaker 03

  I'm good, how are you?

• 29:53Logan Bartlett?

  Doing well. Where in the world are you? Are you in Austin?

• 29:55Speaker 03

  I'm at my condo in Austin.

• 29:57Logan Bartlett?

  Where in Austin are you?

• 29:58Speaker 03

  Uh, downtown.

• 29:59Logan Bartlett?

  Nice. I lived in Austin for some part of the pandemic. It's, have you been there for a while?

• 30:06Speaker 03

  Born and raised.

• 30:07Logan Bartlett?

  So, uh, maybe give us your background. How, so take us to MultiCoin and your most recent fund.

• 30:14Speaker 03

  Sure. So, uh, I guess quick background on myself. Um, hi, everyone. I'm Kyle Samani, co-founder and managing partner. At MultiCoin Capital, born and raised in Austin, that's where the firm is based today. Been programming since I was a little kid, studied finance at NYU. I met my co-founder, Tushar, at NYU and we became good friends in college, bonding over our shared interests at the intersection of software and finance. After college, did a tech startup in the healthcare space that ultimately didn't go anywhere.

• 30:42Speaker 03

  Got into crypto in 2016, discovered this thing called Ethereum. I had heard of Bitcoin, but quite frankly, wasn't very interested in it. But I discovered Ethereum is pretty cool because you could program it and do stuff. I like doing stuff and kind of fell down the rabbit hole over the course of 2016 and into early 2017. By spring of 2017, realized I developed a full-time internet hobby and made the decision to turn that hobby into a profession. So we launched our liquid fund on October 1st, 2017, and we've since added.

• 31:09Logan Bartlett?

  What is liquid fund? Like, what does that mean, liquid fund?

• 31:13Speaker 03

  We have an open-ended vehicle. It can go long, it can go short. It has a portfolio of liquid tokens. It can also make liquid investments as well, but predominantly liquid.

• 31:24Speaker 03

  You can imagine we have a big pile.

• 31:25Logan Bartlett?

  How'd you go about actually launching, I mean, launching that? So you're coming out of a healthcare startup and you, you know, you're a programmer by background and interested in finance. But like, how do you actually go about raising capital and, I don't know, getting the access to set all that up? Especially, I mean, now crypto funds are much more plentiful, but at the time, I assume that you were doing a lot of novel stuff.

• 31:46Speaker 03

  Yeah, I mean, we had absolutely no idea what we were doing. We got it done primarily as a function of luck and willpower. I mean, I've probably taken a thousand LP meetings in the last, you know, five years. I don't really take LP meetings anymore, but like, we used to take a lot of them.

• 32:02Speaker 03

  And, you know, just pitch people and it started off with, hey, I think this guy is 50K he can throw around, you know? And we were taking 25K, 50K checks at the beginning.

• 32:10Logan Bartlett?

  Did you know what types of things you were going to invest in? Or did you just think, hey, crypto is interesting and I'm spending a ton of time doing it? And so give me money and I'll find where opportunity exists. Like, what was the actual pitch early on?

• 32:23Speaker 03

  Yeah, I mean, early on, it was, hey, you know, we know stuff going on in crypto. We can outperform some, some data index. And it wasn't a lot more refined than that. It took us a few years to figure out what our source of alpha is. I think we actually should have been more honest with ourselves when we started. Hey, what is our source of alpha? And, and been more disciplined about that and we did not. It's okay, we learned from our mistakes and have refined our, our thinking and processes over time. We are, we are now pretty clear about our sources of alpha. But we were just young and immature and just running as fast as we could. And, um, you know, got a little lucky along the way.

• 33:01Speaker 03

  Today, you know, where our focus, or actually where we think our alpha is, a few things. I think that both the easiest and the hardest is having a longer time horizon than everyone else. We do not make investments unless we intend to hold them forever. That doesn't mean we will have to hold them forever, but, but the bar has to be when, when you buy the thing, that like, assuming things go according to plan, you will be holding it 15 years from now.

• 33:25Speaker 03

  And we don't really get out of bed to do anything else.

• 33:29Speaker 03

  And it took us a while to appreciate the importance of that, the power of that, and actually the structural source of alpha that that represents.

• 33:35Logan Bartlett?

  And are your LPs, I assume you're taking in LPs that, how is that actually structured? I guess, because I saw you guys closed a fund as well. And so how, how does that, how does that mechanism actually work with a fund cycle?

• 33:47Speaker 03

  Yeah, so in our liquid fund, we can hold stuff forever. LPs have to redeem and obviously we will sell an asset to fund the redemption.

• 33:52Logan Bartlett?

  Got it. So that's structured like a hedge fund, basically.

• 33:55Speaker 03

  Correct. In our, in our venture funds, um, our aim is to return assets in kind. So like, we have made the largest in-kind crypto distribution ever with Sol out of Venture Fund One. And like MultiCoin GP has never sold a single soul that it has taken as carry. I've never sold a single soul that I own personally outside of the fund. And like, we continue to hold those assets because we want to be long those assets ourselves. And again, this comes back to my original point of we want to buy things that we intend to hold for 15 years or longer.

• 34:26Logan Bartlett?

  That's, I mean, impressive. Solana right now, just for people that don't, I mean, it's, it's one of the top, what, five most popular cryptocurrencies out there. You, you guys got involved at what price? It went up to what price and what price is it today?

• 34:42Speaker 03

  Uh, started at four cents, went to $250 and now it's about $40.

• 34:46Logan Bartlett?

  Wow.

• 34:47Speaker 02

  When you guys invested in Solana, were you just in the coin or were you also in the financing rounds?

• 34:53Speaker 03

  There, there was no equity of Solana Labs that was ever sold. Solana Labs only ever sold tokens via SAFTs. Um, and we were by far the largest owner of Solana SAFTs.

• 35:01Speaker 02

  Where did their operating capital come from to hire their employees and?

• 35:05Speaker 03

  Selling the SAFTs.

• 35:07Speaker 02

  So selling the coin to the market is how they fundraised?

• 35:10Speaker 03

  Correct.

• 35:11Speaker 02

  Got it. I thought that was illegal.

• 35:15Speaker 02

  But I, it wasn't, wasn't the whole, I mean, and this is where I do get confused about the nuance. Like, wasn't the idea of an ICO essentially frowned upon if not pursued by the SEC? And what makes the, what's the distinction? I'm truly asking, like, what's the distinction here between them selling it to hedge funds and venture funds to fundraise for their operating capital versus an ICO? Is it just like accredited investor status or what's the difference?

• 35:42Speaker 03

  Yeah. So Solana Labs has never conducted an ICO. Um, the closest thing they did to an ICO is they did a coin list offering in March of 2020, about a week after Black Thursday. Uh, and that was a, uh, not allowed for US consumers. You had to be KYC'd and it's all non-US people who engaged in that token offering that, that auction cleared at 22 cents. Um, the token then started trading shortly thereafter on Binance, um, among non-US participants. At some point later, Coinbase chose to list the asset based on whatever criteria they use and then FTX and others, et cetera.

• 36:17Speaker 03

  MultiCoin invested in Solana SAFTs pre-token launch. Um, and we had a lockup after the tokens were launched for, it was a nine-month lockup. Uh, and, um, you know, the general theory here with, and those, those SAFTs were sold as Reg D securities. Um, right?

• 36:36Logan Bartlett?

  And maybe, can you explain what a SAFT is? Uh, just like in simple terms?

• 36:41Speaker 03

  Simple agreement for future tokens. So obviously derived from a safe. And those are Reg D assets. And the regulations on Reg D say you cannot resell a Reg D security to another accredited investor for either third or 90 days after you purchase it, I forget which one. And you cannot resell it to the retail public for 365 days from the date of initial purchase. That was complied with and then to the and started trading on international markets. MultiCoin has never sold Sol in US markets. And I don't think we ever will. And like, yeah, there's a weird gray of like, okay, this token starts trading internationally. People start buying it Coinbase and FTX and Gemini and Kraken start listing it.

• 37:25Speaker 03

  Like, what is it or what is it not? Obviously, this is being, you know, litigated today between the SEC and Ripple and some other folks as well. But to be clear, Solana never sold Sol tokens to American public.

• 37:38Speaker 02

  But you guys bought it as an international entity then?

• 37:41Speaker 03

  Correct. All of our funds are Cayman entities.

• 37:44Speaker 02

  Got it. And then where your LP sit is irrelevant. It's the entity that it's the fund entity that's actually buying it, not the underlying LPs that matter.

• 37:52Speaker 03

  Uh, correct.

• 37:53Speaker 02

  Makes sense.

• 37:54Logan Bartlett?

  So obviously Solana was a huge hit in Fund One. How big was the maybe just take us order of magnitude, like the liquid side of what you guys run and then the different funds and what their progression was?

• 38:08Speaker 03

  Yeah, our liquid fund today is a few billion. Venture Fund One was 17 million and is one of the better performing venture funds out there.

• 38:17Logan Bartlett?

  I would imagine with with Sol at whatever 20 cents or 15 cents and yeah, I imagine you guys have done pretty well from that vintage. What vintage is that? I want to make sure hopefully we don't compete against that vintage.

• 38:27Speaker 03

  July 2018.

• 38:29Logan Bartlett?

  Yeah. Okay, good. I think I think I skipped that vintage.

• 38:32Speaker 03

  And then Venture Fund Two was raised in November of 2020. It was a $100 million fund. It is fully deployed at this point. And has a big pile of soul in it as well, also pretty low entry. Um, among a lot of other cool things too. Uh, and then we are currently deploying out of venture fund three, which we raised in this past January, but we announced a few weeks ago. Um, the different three is a $430 million fund.

• 38:58Speaker 03

  So three venture funds and then one liquid fund, a few billion in liquid fund, then obviously about 600 million or so across the 550 across the venture funds.

• 39:08Logan Bartlett?

  And what, um, so basically what got you excited originally as you were, uh, I mean, you mentioned Ethereum, which, uh, you know, I think Solana has a lot of parallels too, I guess, but maybe talk through like what you saw going on that got you interested in all this stuff to the extent that you were, you know, initially willing to spend a lot of your time on the internet, uh, and then ultimately dedicating the initial part of your career and now ultimately, you know, a huge part of your career to it.

• 39:41Speaker 03

  So, uh, after my last startup kind of wound down in December of 2015, um, had to figure out something new to my life. Um, I, one thing I, I knew about myself was that I'm not really good at coming up with new ideas, but I'm very good at taking an idea in front of me and critiquing it. Um, and iterating on it. And so I, uh, made a, a pact to myself of just like, hey, I just need to get 5,000 ideas in front of me and just like go through just a ton of, a ton of ideas. So I went to Angel List, um, and I committed to go, you know, back, I don't know if they still have this now, but, but back in 2016, they had categories. It was like blockchain, fintech, you know, ed tech, biotech, med tech, whatever, right? All the various categories. Um, and I committed that every single day I would go through 100 startups in each category.

• 40:24Speaker 03

  Um, and like, look at them and just like, see what I thought, see what kind of inspiration it provided. Um, some of the startups I spent 20 seconds on, some of them I'd spend an hour and a half on. And I don't know, like the fifth or the sixth day I did this, I picked blockchain.

• 40:40Speaker 03

  And I went through those and like of the hundred startups I went through that day. Seven of them were like, or six of them were building on Ethereum. And I never heard of Ethereum. The first day, actually, I did that of the first of that was, um, I did fintech. Obviously, a lot of people were using Stripe in their stack. So I remember like, obviously Stripe was a well-known company even in early 2016. I said, okay, I need to know what the Stripe thing actually does. So I went and pulled up the docs and started fiddling around with it. And I was quite unimpressed. All I could do was take a credit card payment. And I was like, well, this like, why is this company the most hyped up company in Silicon Valley? I just found it to be strange.

• 41:12Logan Bartlett?

  Wait, let me jump in and defend our portfolio company here. I just, just let the record show, I'm not letting you say unimpressed with Stripe. I think you get kicked out of Redpoint for that, but I'll let you go on.

• 41:24Speaker 03

  Uh, I, at the time I wasn't, I didn't spend much time trying to answer the question of why it is impressive. I just, that was my immediate reaction in March 2016.

• 41:33Speaker 03

  And, uh, and, and so, but I fiddled around with the API. And then about, you know, four, five, six, seven days later, sort of fiddling around with Ethereum. And although I couldn't express it in words at that time, um, it dawned on me the, the difference between permissioned and permissionless finance. And I understood anything I can logically conceive, I can write in a fairly simple language and move around arbitrary units of value. And I could not do that with Stripe. And that was very clear. And I obviously did not know how to interact with interactive brokers or Robinhood or whatever, you know, other parts of the financial markets for other types of assets.

• 42:11Speaker 03

  And, and when that kind of light bulb turned on, like that was my aha moment, that this crypto thing is very interesting. From there, then started to go down the rabbit hole of Ethereum and then Bitcoin and all the Austrian economics and all the macro stuff around Bitcoin and, and all, which is a whole bunch of weird, kind of silly things, actually. Um, and then obviously zero knowledge and then all the early applications of Ethereum and yada, yada, yada. But that, that's kind of how I first got into the space was, was when the light bulb really turned on and I understood permissionless versus permissioned finance. That was really the key, the key thing.

• 42:43Logan Bartlett?

  Can you like, uh, expand on that a little bit? You know, I think we have a range of people of sophistication that, that will follow that. But in your mind, in your words, like, why, why do you think that is a fundamental thing that's interesting?

• 42:56Speaker 03

  Financial markets are.

• 42:59Speaker 03

  The, the, I mean, like, like, the general history of the internet is like, take things that people want to do and then lower the friction to do them and then people do more of them. And this is true across like basically every vector of the internet that is interesting.

• 43:13Speaker 03

  And like the area, the vector that is the most untouched arguably is like financing, like education too and healthcare kind of sort of, but like finance is certainly a big one. And like the process of like, doing anything around money is very challenging. Money transmitter business licenses and all those things, if you wanted to trade equities, I mean, like the notion of getting plugged into night. Like I today run a multi-billion dollar hedge fund and I have absolutely no idea how to get plugged into NIZI. Like, like it is, it is so inaccessible.

• 43:43Speaker 03

  Despite the sophistication and, and you know, assets we have. And making collapsing the entire finance stack to be extremely accessible, extremely open. And where anyone can just define logic on how to move assets around.

• 43:59Speaker 03

  And like by doing that, you enable the introduction of financial markets into all kinds of places where they could previously not exist.

• 44:07Speaker 03

  So like social tokens and AMMs and all those kinds of things are some of the kind of core, cool building blocks there. And we're just starting to see the implications of that. But the other fairly obvious one is just like access, like if you want to buy Apple stock, if you want to buy $200 of Apple stock and you live in Argentina, like you actually cannot do that. Because US financial markets are not available to Argentinians who want to put $200 to work. If you want to put $2 million to work in Argentina, like you can figure out a way to do it, but you can't do it with $200. And like that kind of basic open access is a fairly important primitive for the world.

• 44:41Speaker 03

  And

• 44:42Speaker 02

  Do you know like, in that, like, what other South American countries can you not buy US equities in?

• 44:51Speaker 03

  Oh, basically, if you don't live in the United States or Western Europe, you cannot buy small dollars of US equities. I'm not picking on Argentina specifically, but this is true for like between five and six billion people of eight billion people.

• 45:01Speaker 02

  And so I can't have an account, like a brokerage account in Brazil and purchase Apple stock?

• 45:09Speaker 03

  Not, not at the hundred dollar level. No. At the some dollar threshold level, you get, you know, the VIP access or whatever, but at the like lowest tiers, like no.

• 45:19Speaker 03

  Access to US capital, access to US capital markets is a very permissioned thing.

• 45:24Logan Bartlett?

  And is that a KYC thing that it's not cost effective to like get to know who these customers are?

• 45:29Speaker 03

  Yeah, so it's a function of of costs, right? So you have like NISE, okay, you've got whatever, what's it called? What's the custodian that has all DCC? Then you've got NISE, then you have the banks and the brokerages. And then you have the Robinhood, then you have the international ones, you have the AQR's and you have like, there's like, there's like 14 layers of intermediaries between Brazilian guy who wants to put $200 into whatever, Apple stock and actual Apple stock. And every one of those people is taking a fee, some of which are percentage denominated, some of which are fixed dollar denominated. And so like, there's just some minimum dollar threshold, like before it even economically makes sense to do so.

• 46:05Speaker 03

  And so there's, that's a big part of it. And then obviously, there's lots of political problems as well. Again, I don't know about Brazil specifically, but like lots of governments try and prevent capital controls and those kinds of things and like prevent asset ownership and such. And so having permissionless global financial rails, which anyone can access and use, is like a fundamentally important provision in finance.

• 46:27Speaker 03

  The more you learn about how financial markets actually work, the more you realize like how much they don't, like if you were to re-derive them from first principles, like how clearly the re-derivation for first principles differs from actual reality in 2022.

• 46:39Speaker 02

  Well, I mean, aside from the minimum dollar amount, pretty much anybody in a modern third world country, and I know that's like an odd thing to say, but like pretty much anywhere in South America, you can own US equities, European equities. You can try, I understand maybe at $100, you might not be able to, but for the rest of the population, you absolutely can, right?

• 47:03Speaker 03

  I mean, the whole breakthrough of Robinhood was like enabling, right, like people under $1,000 to like do cool stuff.

• 47:09Speaker 02

  Well, breakthrough in Robinhood was allowing for free trading because they sold your payment for order flow to places like Citadel and others. So I'm not saying that's a bad thing, by the way. It was about cost reduction on.

• 47:20Speaker 03

  Pivoff is good, but the cost for, but the customer base of Robinhood is people who like have an average of under $1,000, right? Like, or the median or whatever. The point is, is the long tail is important and interesting.

• 47:34Speaker 03

  Yeah, I don't know how you can like look at the internet and be like, oh, we enabled access to information for everybody. So you don't have to go to an encyclopedia or a library and then like look at financial markets and say the same thing.

• 47:43Speaker 02

  No, I just think that people say, you know, it's hard for folks in other countries to get access to certain financial products. And then actually, when you pale back the details, it's just not true. That actually, in most major countries where people have savings, obviously, there's plenty of countries where people don't have savings. But in the places where they do, like getting access to buy equities, European, local, US equities, is pretty readily available. I mean, you can do it through, you know, one of the new modern banks, like a new bank or anything like that, right? Like, there are ways to do this. I understand at the absolute tail end, for people who can only invest a few hundred bucks, there are some onboarding shovels, because there's a lot of regulation and rules for the people who are providing access into those financial ecosystems to

• 48:28Speaker 02

  comply with. And they struggle to make money on the hundred dollar customers. So, in a sense, like, there's a reason why it's hard for that, because there are layers of rules and regulations to, for folks to comply with, and that costs money to do it. And so the question then becomes like, well, how does crypto remove those costs? Because you're still buying a US equity at the end of the day. There's still some fundamental, like, market you have to participate in. Those costs don't go away.

• 48:56Speaker 03

  Though they do explicitly. I mean, crypto takes the entire value stack of DTCC, banks, brokers, exchanges, margining engines, international, whatever, whatever, wires, that entire stack of 10 to 15 entities, and collapses it to the gas cost you pay on blockchain, which in the case of Solana is measured in the fraction of a penny.

• 49:15Speaker 02

  Only for buying, for buying a digital asset, sure.

• 49:20Speaker 03

  But, no, I mean, like, if you can represent a US equity on a blockchain, you can take that entire value stack I just represented, and for any amount of money, conduct a transaction for a fraction of a penny, and have all of the trust guarantees all the way through.

• 49:35Speaker 02

  So, but the company that you're buying that digital asset from still has to own the underlying equity, right? There's a centralized entity that's saying, this coin represents, you know, one tenth of a share of Apple. There's still a company that has to comply with all those rules. It has an underlying cost structure they have to deal with. So those costs aren't gone. They're eaten by that middleman company that's providing this pseudo-equity coin that says this thing is worth the same as an Apple.

• 50:02Speaker 02

  You know, single stock or some, you know, a fractional stock, right? It's just shifted.

• 50:07Speaker 03

  I mean, my, my, my point is, is in the correct instantiation of financial markets, the entire current value stack goes away because it is unnecessary. And you collapse the entire thing to a gas cost transaction on Solana. The DTCC is not providing value, like they are a leech on the system. The NIZI is also a leech on the system. Like they're all, they're so bloated in their cost structures. And if you can actually reimagine the entire system from first principles, what you get to is it's just a gas cost and that's it.

• 50:33Speaker 02

  Well, right, but at the end of the day, like to participate in the financial markets, there's a reason there are these like layers of rules, regulations, because people used to be bad actors and they would steal your money. And now there's like a whole bunch of compliance issues that you have to deal with. And if you go and you say, okay, we're going to use this like third party company who's going to represent some share in some company in crypto land. And then you're going to buy it. You're not actually buying the underlying equity, to be clear, right? Like you're buying a digital representation of that underlying equity and then trusting this third party company that does have to then comply with all of those rules. My point is that at the end of the day, somebody is still paying all the fees

• 51:15Speaker 02

  to buy the underlying equity because you can't actually buy the equity in crypto. It doesn't work. You're buying a representation of it. And then there's another company you're trusting to actually deliver who has all those costs.

• 51:25Speaker 03

  Yeah, yeah, yeah, we're talking past each other. What I'm saying is reimagine the system from the ground up from first principles. If you do that, the entire value stack of the 15 inch mediaries between Guy in Brazil and Apple stock and the DTCC collapses to a gas cost on the blockchain.

• 51:41Speaker 02

  So that guy in Brazil decides he wants to buy 100 shares of Apple stock through some theoretical new digital crypto exchange. And then instead of typing in 150, he types in 150,000.

• 51:54Speaker 03

  Huh?

• 51:54Speaker 02

  Right? Like he makes a mistake.

• 51:56Speaker 03

  Okay.

• 51:58Speaker 03

  So like, I mean, he doesn't have the money to fill those shares.

• 52:01Speaker 02

  What if he does have the money, he just made a mistake?

• 52:03Speaker 03

  Okay, then you probably want to sell and undo it.

• 52:05Speaker 02

  Right, so, but now you've actually got to unwind your transaction that you probably just spent, what, in gas fees, like?

• 52:14Speaker 03

  A fraction of a penny?

• 52:15Speaker 02

  Hundreds of, hundreds of thousands, no, there's no way it's a fraction of a penny, because you have to have like all the underlying intermediaries.

• 52:20Speaker 03

  What, what, what do you mean? This is just not true. What, what do you mean? Like, a blockchain costs a fraction of a penny, and transactions clear every 400 milliseconds.

• 52:29Speaker 02

  To buy an unregulated representation of a regulated equity. Sure, yeah, of course, it costs nothing to buy an unregulated piece of this, but like, once you get into the actual underlying equity, there's all your cost structure. Like, the point is, you have to interact with the financial system. Right? At the end of the day, you still have to interact with the financial system. So this idea that like your gas fee is low, sure, absolutely, maybe the initial gas fee is low, but somebody else is dealing with all the underlying regulatory and compliance issues. If you're saying you think the world should be in totally unregulated stock market with no intermediaries, that's a whole different conversation. I, I guess that's what you're saying? It should be an unregulated market with no intermediaries?

• 53:06Speaker 03

  I'm not saying there can't be no regulation. I'm saying the number of intermediaries between the DTCC and the exchange and the banks and the brokers, and then the international wire fees, and then the international brokers. That is unnecessary. You need some basic notion of KYC to make sure there's not terrorist financing involved in money laundering. Beyond that, there's no actual value being provided in the rest of the stack. The rest of the stack is just, is just, uh, what's the word? Uh, cruffed, like, you know, accumulated over 60 years of a regulated market evolving. The only value you're actually providing is KYC to prevent terrorist financing.

• 53:42Speaker 02

  I, I mean, I, it's just so hard to unpack that because there's like just so many, there's so many problem statements with that sentence. I understand that sometimes the middlemen can feel like unnecessary bureaucracy, but the reality is like, for you as an individual to participate in these financial markets and to be safe and to be protected and to know that you're not getting scammed, like, there are layers of intermediaries to help protect you from, from those scams. Now, keep in mind, like, purchasing US equities as a... Any citizen of the United States and then even internationally, it's really not that expensive. Right? As you mentioned yourself, even Robin Hood is taking the cost down to $0, right? So it's not like there's some underlying fee structure that consumers are hit with to buy Apple stock.

• 54:26Speaker 02

  You can literally go into Robin Hood and buy stock today for free. You can go to Schwab with a minimum balance, you can buy stock for free. So like, where are all these hidden costs that you think is, is, exists? I'm, I'm just like, the facts would say otherwise, no?

• 54:39Speaker 03

  No, I mean, we're not talking about Americans. We're talking about people who have a max balance of $100 or $200 who live in countries that are far away.

• 54:47Speaker 02

  So the, the market opportunity for extremely small dollar, third world country investors to purchase US equities is what crypto enables?

• 54:59Speaker 03

  It is a thing crypto enables. And also keep in mind, we're talking about several billion people. Like, I, I don't think you're appreciating, this is between, I don't know, 10 on the low end and 50% on the high end of the global population.

• 55:10Speaker 02

  But what I would say is that actually a lot of these people do have access to financial markets. Like if you go country by country, they do actually have access to many of these markets, especially with the new banks. So like, everybody says they don't, and then you ask country by country, and it turns out like the vast majority of people actually do. And then the issue with the people who don't have access tends to be that they actually just don't have enough money. They just don't have enough money to invest. Like, that's the issue. It's not because that they can't get access to it, it's because they don't have $100 to invest in stocks because they need the $100 to live, right? It's a, it's a savings issue, it's not a technology issue. You can get access to all of these markets in most, not all, but in most countries where there are like any sort of modern banking system.

• 55:52Speaker 02

  You can do it in Brazil, you can do it in Mexico, you can do it pretty much in any country in Europe. You can do it in Canada, you can do it in the US. There are even most places in modern banking systems in Africa, you can now get access to this as long as you have enough money. I agree with you. The reason people don't participate in these markets is typically because they don't have the money to do it.

• 56:09Speaker 03

  Yeah, I mean, look, people get started with $5, they get started with $100, they get started with $1,000. Like, but you're admitting here that like large swaths of the population, on the order of hundreds of millions or billions of people across Southeast Asia, Africa, LatAm, whatever, like, don't have access. Like, they need to get started somewhere.

• 56:24Speaker 02

  Yeah, I'm saying the underlying issue is not technology. It's, it's actually the fact that they don't have the income for it. The issue is not like a technical issue. It's a unfortunate feature of inequality in society, has nothing to do with underlying technology. It's like, If you don't have the money to save to invest and you live paycheck to paycheck, you can't invest. It has nothing to do with like, I can't get access to this because it's too, you know, complicated or expensive or whatnot. It's a lack of savings. I mean, we can do the math and we can argue about the actual like what that population size looks like and what the actual investable dollars of their savings look like and all this, but I would argue it's a fairly tiny market and, and actually getting, in a sense,

• 57:07Speaker 02

  beaten up and chipped at by the neo-banks that are now picking up more and more consumers in all of these countries as they get these digital first banks. Like it's already happening, right? It's coming from the banking system through the new, the neo-banks. You've seen this in Brazil, you're seeing this in, in Mexico, you're seeing it in Colombia. Uh, you know, there's like a massive adoption of neo-banks and you're going to continue to see this across, across the globe. So I kind of look at it as like this tiny market that's shrinking and shrinking and shrinking. I understand this is just one use case, but this use case to me adds up from a dollar's perspective to be reasonably small and extremely hard to make money in. Extremely hard to make money, even if it exists. Like if you're gonna make money as a middleman provider, you have to charge somebody something, right?

• 57:51Speaker 03

  Yeah, I'm not arguing about how much money I make from this. I'm arguing about the importances unlocking financial markets for a few hundred million or a billion people.

• 57:59Speaker 02

  Yeah, but you can't unlock it unless you have a for-profit company that can provide that service.

• 58:03Speaker 03

  That's just not true. The whole point of crypto is the entire cost of providing financial market services effectively collapses to zero. You go on serum, I mean, market makers charge their spread, but like there's just no other cost. And then the gas fees, which is a fraction of the penny.

• 58:17Speaker 02

  For a digital asset, I totally agree with you. For a pure digital asset where you can prove ownership of that digital asset, sure.

• 58:22Speaker 03

  Well, this is my entire point to begin with is that the entire premise of the exact current stack on which assets are represented is broken because you're saying this is only true for digital assets. But like, at the end of the day, a stock certificate on DTCC and a share of Sol and Solon blockchain are for all practical purposes, the same thing. Now there's, I realize mechanical and legal differences because of the last hundred years of history, but like you're representing a share of a thing and like you want to be able to trade it. Like that's the core premise.

• 58:47Speaker 02

  Yes. I guess my, my point is that there's a reason why, as you said, like hundred years of regulatory and kind of consumer protection issues as well as like compliance issues from the company side. There's, you know, reasons why you can't just.

• 59:01Speaker 03

  My, my point is, is that, that, that if you were to reimagine it from the ground up today. Without 100 years of luggage, you would not derive what we currently have because we currently have does not make sense. Having, having pieces of paper in the DTCC is crazy. Having NIZI not have margining is fucking crazy. Having a web of brokers and banks hook into this whole thing who have to net it against each other and have Robinhood have to post collateral because the price of GameStop moved too much in a day is absolutely nonsensical. Like, there are so many parts of this whole system. The fact that it's only nine to five is crazy. Like, you just, you actually look at the actual mechanics of how these markets work, both commodity markets, which are largely unregulated, and equities markets, which are obviously much more regulated.

• 59:44Speaker 03

  Like, and they're just like, completely don't make sense. If you look at FTX and Binance through the last 24 months and you look at CME and LSE and whatever else, like, the crypto markets, ignore three arrows blowing up and those kinds of things, which were just unsecured credit issues. Like, Binance and FTX function way better than NIZI and LSE and everything else. London, whatever, Mercantile Exchange, whatever it's called, CME.

• 1:00:08Speaker 03

  Because they're actually derived from first principles to be structured as correct financial markets.

• 1:00:12Speaker 02

  No, they are fully collateralized purchasing of an underlying crypto asset. Like, yes, if I hand you the money immediately for the underlying asset, you're not going to blow up, right? Because there's no credit risk being taken. I totally agree. And that just limits the opportunity to things that you can transfer money immediately for without any, you don't want to offer credit to anybody, right? You need to provide the individual dollar to go and grab that thing right away. And all that does is shrink the market for potential buyers to be significantly smaller. That means everybody's got to come up with the cash to buy everything all the time, right away. Like, the history of financial markets and the reason why financial markets are so interesting as like a market expander is because we can issue credit. Like, credit is a feature, right?

• 1:00:57Speaker 02

  Credit is something that is really interesting to financial markets because it allows you to take a dollar of savings and turn it into $10 of lending and that grows the opportunity for that dollar to continue. This is like, you know, the basics of, of banking, right? Like, my savings become somebody else's borrowing and all of a sudden I can take my dollar of savings and turn it into multiple dollars of lending. Because there's an intermediary taking on that credit risk. And that intermediary is ultimately growing the economy by doing the lending and taking on that credit risk. That's like, you know, finance in a nutshell, if you will, not the whole thing, but pieces of it. And I agree with you. In, in crypto, if I have to put up the dollar to get the thing and that dollar has to be there right away. Perfect in the sense, right? There's no credit risk inherently because there's no credit. But without credit, what's the point of the financial system?

• 1:01:40Speaker 02

  It's just dollar for dollar trading of assets. Like, sure, that exists, but that's going to shrink the system completely. When you do it from first principles, you would never design it in that way because you can't introduce credit. The minute you start to introduce credit, to your point, you get these blowups, right? Because you get third parties who are ultimately taking on borrowing and lending risk, and every once in a while, they blow up.

• 1:02:00Speaker 03

  I mean, like, but you can have, those two things are not mutually exclusive. You can have the core exchange be running in the swan, and then you can have banks extend credit on top of that, which is what, how a lot of it works today. But like, literally in the case of London, whatever London Mercantile Exchange and lithium or iron or nickel, whatever, whatever the idea thing was a few, a few months ago, they literally unwound the trades. Like, that is, that is theft. That is the definition of theft. Like, you unwind the trades.

• 1:02:27Speaker 02

  I mean...

• 1:02:28Speaker 03

  Like, that is just not okay.

• 1:02:30Speaker 02

  There are, there are gates in place. We can talk about like the pros and cons of being able to unwind trades. Like, I, I understand in a perfect conceptual system, you know, you never have to unwind anything because nobody ever blows up. Nobody ever makes a mistake, but that's just not how reality plays out. Like, you know, the immediate instant liquidation of everybody if there is like a price spike, I, I continue to argue is not a feature of a financial system. It is a bug. Like, the ability to normally unwind a system where you've got like, liquidity dries up and you have credit spread all over the place and you have to figure out like who actually has the money. Ninety-nine out of a hundred times, it is better to have that version of the system

• 1:03:13Speaker 02

  because you can get like an organized deleveraging event. Yes, there are, there are situations, and I'm not familiar with every individual one, but there definitely have been situations where you've seen... Trades unwound and it feels like the insiders have won. I, I think that's a very fair statement. And like you look at those and you're like, this is kind of bullshit. Like I can't believe.

• 1:03:33Logan Bartlett?

  And I think the example Kyle's talking about was one of those things now we did.

• 1:03:38Speaker 02

  Yeah.

• 1:03:39Logan Bartlett?

  It was a, it was a mess, but uh, yes.

• 1:03:42Speaker 02

  It's, it's hard to argue with like, yes, every once in a while, the ability to reverse a trade gets abused by the massive insiders. And there's like some unfair outcomes that do happen. And that's a trade you make for the 99 other times where actually that like deleveraging event in a normal orderly fashion is a really good thing. Cause you don't see these like giant immediate blowups and then people lose all their money.

• 1:04:05Speaker 02

  I, I, I think this idea of like,

• 1:04:09Speaker 02

  the fact that in crypto, I can like hand you a dollar and you give me the thing is actually like a severely limiting factor for most financial markets. Because in most financial markets, you actually do want to extend credit because without credit, businesses that own illiquid assets, people don't have the money right away. People are about to get paid. They are unable or unable to participate in the financial ecosystem because they don't have the cash. This is what, this is the credit system, what brokers do. This is what banks do. I, I mean, it's funny because I do a lot of these conversations and I realize sometimes maybe this is the case. There's like, I view something as a feature that the other person views as a bug and we kind of like religiously disagree. That might be the case, the case here.

• 1:04:49Speaker 02

  But I do think it's important to acknowledge the benefits of having these middlemen and brokers and kind of like credit issuing entities.

• 1:04:55Logan Bartlett?

  Can, can we shift gears a little bit to, I mean, I feel like trading and all of this stuff, we could probably uh, talk about this for a long time. I uh, Kyle, I guess one of the other things that would be interesting to talk about, just because it was uh, topical. I guess we're recording this on a Tuesday and uh, this past week, um, uh, weekend Mario, who I would consider a buddy, wrote a, a long piece about uh, helium, which my, I think you've been an investor for a while here and that's a uh, it's an interesting use case that's often pointed to as a um,

• 1:05:35Logan Bartlett?

  As like a new financial enabling system to allow something that wouldn't happen otherwise to to occur that has real world uh offline benefits. So maybe can you just can you just describe what helium is and how you got involved in it and what you see as the utility here?

• 1:05:57Speaker 03

  Yeah, um helium is a new business model for deploying and managing wireless networks. It also at the same time conveniently provides a way to reduce about 99% of the physical costs of building and deploying a wireless network and also very cool intellectually represents a novel form of capital formation.

• 1:06:17Speaker 02

  Only because I'm not familiar with it, how does it actually work? Like who signs up? What do they pay? What do they get? How do they make money? What's the I've read about the basics, but I honestly, I don't actually know the details.

• 1:06:27Speaker 03

  Yeah. So the basic premise of helium is you want to build a wireless network instead of like looking at a map of the city, figuring out who owns the land and the places you want to put the towers, calling the landowners, going and building towers, running much back hall, you know, doing that whole that whole shindig. What if you could just go to people who have houses or own small businesses? And what if they can just buy a hotspot, yay big, put it in the window, uh, and then that thing has an antenna on the back, it creates radio coverage and then any device walking around nearby can access those radio, radio waves and pay per byte of data. Like that is, that is the core thing. V1 of the helium network, uh, which has about a million hotspots, maybe 900,000 hotspots, um, is focused not

• 1:07:09Speaker 03

  on cellular that your phone will use, but focused on IOT radio waves. Um, so these are very long distance, very low data rates. Um, and then they are in the process of rolling out helium V2, uh, which will support 5G cellular. Um, and that, that network will be something your phone will roam on to, um, when Verizon and AT&T and T-Mobile are enabled to provide sufficient coverage.

• 1:07:31Logan Bartlett?

  And so today, the just shy of a million hotspots, like where, where, where does that exist? What are the types of things? You mentioned IOT, but can you give some examples of where in the country this is? How it's being enabled? Who's, yeah, who are the people that are putting up these hotspots?

• 1:07:48Speaker 03

  Yeah, so the great thing is the answer is like a bunch of random people, which, which is the optimal answer to the question. It started off with crypto nerds and IOT nerds, as you probably would expect. And as the, the marketing and the brand profile and PR and such has grown, it's just become profit-seeking individuals. When you, the Hila network first launched in August of 2019, a hotspot costs $500. I believe today, the lowest end hotspots are like 50 bucks or maybe a hundred bucks, somewhere in that range. So at this point, fairly cheap. And you put it in your window and then it starts printing tokens at some rate. The rate is a function of how well you're positioned relative to other hotspots. And then how many total hotspots are there?

• 1:08:30Speaker 03

  The rate of total HNT emissions per unit of time is fixed. So let's just say it's 100 tokens per day or whatever, 1,000 tokens per day. And then there's some algorithm that determines how those get split up among, among the various hotspots. But you plug in the thing, it starts printing tokens.

• 1:08:44Logan Bartlett?

  And so, so just to say this back to you, so the hotspots originally were about 500 bucks. Now they're down to 150, or sorry, now they're down to 50 or 100 ish. And I will put that, I'm, I'm sitting in the Lower East Side of Manhattan and I'll put that in my window. And what, what is connecting to it? And then how am I getting access to this? You said there's a finite number of tokens that get issued on a given day. And so that's being split up among me and, and whoever else is enabling the system based on usage. Is that right?

• 1:09:17Speaker 03

  So the Hila hotspot itself has an Ethernet port. You just plug it into your Ethernet port in your house. I mean, that, and then electricity port. And then there's a Bluetooth app, there's an app in the app store. You set it up on using your phone, it takes like five minutes. And then you just let it sit there and you're done and you don't have to think anymore. Um, in terms of, of, of the token mechanics, I touched on this in my first statement when I said it's a novel form of capital formation.

• 1:09:40Logan Bartlett?

  Yeah.

• 1:09:40Speaker 03

  So what, what's so interesting about a wireless network in particular is a wireless network that has, let's say, five total hotspots or even 100 total hotspots. Actually has a value of zero. It's not a value of point oh one. The value is actually zero because no one on the demand side would bother to even sign up and deal with a network. That has such a small amount of coverage. So you have some minimum threshold of coverage. I'm just going to say it's 500,000 hotspots. Whatever. There's some number, right? At which the value goes from not zero to something greater than zero.

• 1:10:11Speaker 03

  And so this represents very interesting risk reward mechanics for hotspot adopters. The first 100 people to buy hotspots are taking on the most financial risk because at that moment in time, there's the least probability. That you will actually achieve critical threshold of 500,000 hotspots. If there are 499,000 hotspots, like the risk you're going to hit 500,000 is very low. And so those people are always taking less financial risk, right? And, and buying and putting up those hotspots.

• 1:10:34Logan Bartlett?

  Because the network, because the probability of this actually being a network that someone will sign up for is much higher, right? I'm not the first person to be, do it. I'm the, I'm close to being the one that fulfills the network's utility.

• 1:10:46Speaker 03

  Correct. Exactly. So, um, this is the beauty of, of risk and reward in the system and the way the system specifically. Does this is you issue a fixed amount of H and T per unit of time. So I don't know, I'll just say it's a thousand tokens per day, whatever the number is, doesn't really matter. Uh, are going out, the first hundred people, like if you go to the first hotspot on the first day, you're getting all a thousand tokens. And then there's two hotspots and the second day each token is 500. Obviously you can do some math here and so on and so forth. Right? But the beauty of this is that if you believe in the network and if you take the most financial risk, you receive the most upside. Um, and to do this in a completely distributed way, and in which there's very little, if any, human influence, and the whole thing is determined by an algorithm that's, that's in public and open source and available for anyone to observe.

• 1:11:29Speaker 03

  And critique, like that has never been done before. Um, and to do this to actually incentivize the production of a network that it provides real economic value and real utility in the physical world. Is like a, a first order breakthrough in capital formation. Like, and that's why we're so excited about this thing.

• 1:11:44Speaker 02

  And if I have to, if I want to use the network as a demand side, I have to obviously buy the token as like my. Currency, if you will, like in order to use the network based on whatever bandwidth I need. That bandwidth is represented by some amount of token, basically.

• 1:12:03Speaker 03

  Uh, mechanically, that is correct, but it is abstracted where you can do this with a credit card.

• 1:12:07Speaker 02

  Right, right, right, right. So effectively, like I swipe a credit card, I'm essentially buying some.

• 1:12:12Speaker 03

  You're buying data credits is the technical term, and then each data credit represents one kilobyte, or whatever, whatever the data unit is, at which point you as a customer can spend that on any hotspot anywhere in the world.

• 1:12:22Speaker 02

  I can spend it on any hotspot, and then the underlying token holder makes money via the...

• 1:12:31Speaker 02

  This is the part I wasn't sure. Do I make money because the value of my token goes up? Or do I make money because I get cash for my token as like a piece of the revenue?

• 1:12:42Speaker 03

  Uh, mechanically, the way the system works is people who are converting dollars to use the networks, so to swipe a credit card, those people are providing buy pressure on the token. So then the system is emitting tokens to the hotspot owners. So you are now getting the dollars, right, from those people via flowing through the market, through the market.

• 1:13:01Speaker 02

  So right, so I...

• 1:13:02Speaker 03

  It's not a direct mechanism, but it is, it is still flowing through.

• 1:13:05Speaker 02

  Well, I'm just trying to think, so like if I spent 500 bucks on a, whatever, on a hotspot, now it's 50 bucks, which is great. Uh, at some point, I want to get money back for that, obviously, it's because it's an investment.

• 1:13:17Speaker 03

  You need to, you need to sell the HNT.

• 1:13:19Speaker 02

  You have to sell the HNT. Okay, so it's not a rev share, it's actually, uh, I want to sell. Do I sell the HNT like in real time based on demand, or do I, like, how does that actually?

• 1:13:31Speaker 03

  You can do it on whatever frequency you want. You could set up a bot that does it every 24 hours, or, you know, you could do it every month, like, you can, that's totally your choice.

• 1:13:40Speaker 03

  But the term rev share is confusing here. The rev share is actually 100%, to be clear. It's just that, like, mechanically, it's not the guy pays you, mechanically, it's the guy's buying the tokens and burning those tokens, and then you are emitting, like, minting new tokens. But like that, those rates will offset in a way such that you can get dollars out at the same rate that they're coming in.

• 1:13:59Speaker 02

  Right, so it comes down to basically like how much demand is there for the underlying bandwidth versus the number of... How many participants did you say there were now?

• 1:14:07Speaker 03

  Uh, there are about 900,000 hotspots. It's unclear how many humans that represents, or how many businesses. There are a number of businesses that, you know, are known to have deployed thousands of hotspots.

• 1:14:17Speaker 03

  But, you know, a upper bound of 900,000 humans.

• 1:14:21Speaker 02

  That's 900,000 humans times...

• 1:14:24Speaker 02

  What did we say? That's probably on average like 200 bucks ish per thing?

• 1:14:30Speaker 03

  Something like that.

• 1:14:31Speaker 02

  So nine million?

• 1:14:33Speaker 03

  Yeah.

• 1:14:33Speaker 02

  What is that like a?

• 1:14:34Speaker 03

  Eighteen million dollars?

• 1:14:36Speaker 02

  Hundred and almost, I think it's a hundred and eighty million, no?

• 1:14:41Logan Bartlett?

  Yeah, 200 million.

• 1:14:43Speaker 02

  Yeah, it's at 200 million. So you have 200 million coming in, plus the company has, the company's got to make money too, right? How does the company make money?

• 1:14:53Speaker 03

  Uh, Nova Labs is no longer producing hotspots. There's obviously some margin for the companies that are producing hotspots. But like Nova Labs doesn't really care about hotspot margins. Nova Labs is intent is for hotspots to be as cheap as possible.

• 1:15:06Logan Bartlett?

  I'm sorry, just to be clear, Nova Labs is the parent company behind Helium, right?

• 1:15:10Speaker 03

  Parent, parent is definitely the wrong term. Nova Labs is the company that founded the helium network. And they continue, they are building the 5G stuff and other things around it. And they are interfacing with telecoms and interfacing with companies like Lime and Salesforce and other people who use the network. Um, but they are, the helium network is the network. It is not owned by anybody. It is collectively owned and operated by 900,000 hotspot owners.

• 1:15:31Logan Bartlett?

  Got it. Okay. Yep.

• 1:15:33Speaker 02

  But they have to make that, because you said they don't make their money on the hardware. So they make it on where?

• 1:15:37Speaker 03

  Uh, Nova Labs obviously has a big pile of HNT. So Nova Labs is more or less is just that. They are, have ideas of how to add some SaaS revenue lines on around that, around the network. Um, and to be a major, you know, uh, service provider for the network for people who want to do stuff around it. But today, the primary reason to own equity in Nova Labs is to be long HNT.

• 1:15:57Speaker 02

  To just hold the coin and then you can, so the, the primary mechanism is the coin. Got it. Makes sense. Yeah. I mean, it's just something like an interesting math problem, right? Cause like, obviously you don't need crypto to make the underlying infrastructure. Like you could do it without it, obviously, right? You could just accept credit cards and?

• 1:16:13Speaker 03

  That is actually false. So Verizon and AT&T have attempted and failed to produce a usable IoT network for over a decade. The same is true in, uh, Europe and Asia and elsewhere. And the reason, a handful of reasons. Uh, but the most important, which is just the actual cost of deploying the network is too expensive. The beautiful thing about helium is not only does it represent a cool form of capital formation, it also physically takes out cost out of the system. Verizon and AT&T, I mean, they, whatever, they rent from American Tower, but American Tower has to have these costs, all these costs are being passed on. You are paying guys to own vans and drive around and they have hard hats, they have to climb towers and they have to run over to back hall, they have to do all that shit, have to pay rent, right? All that stuff. In helium, all of those costs actually collapse to zero. The only actual physical source of cost in the system is the cost of the hardware itself.

• 1:16:58Speaker 03

  But there's actually no other hard cost at all.

• 1:17:00Speaker 02

  Yeah, no, so we've spent, well, people, I guess, the community or whatever has spent, which we just did the math, something like $200 million or so on the hardware. So like Verizon could spend $200 million subsidizing hardware, right? They could say, I'm gonna send you this device and that every time somebody uses it, I'm gonna rev share the meter or whatever with you. And like $200 million for Verizon is what, like?

• 1:17:28Speaker 03

  Good luck.

• 1:17:29Speaker 02

  It's a $200 billion, or $200 billion public company that spends like a few billion in capex every year. So I don't think it's that you can't do it in the old way, like you definitely can do it.

• 1:17:39Speaker 03

  But, but, but it actually will not happen. Verizon and AT&T and Vodafone will, will never do this.

• 1:17:43Speaker 02

  Yeah, and I'm wondering if the reason why they won't do it is because they can't make money doing it.

• 1:17:47Speaker 03

  I mean, it's.

• 1:17:48Speaker 02

  Like, maybe that's, maybe that's the reason. Maybe it's not because like the technology doesn't exist, because obviously the hardware exists and the idea of like tracking bandwidth users exists and they've got like an underlying customer base that clearly wants like IoT bandwidth. I would say Verizon probably has some of the largest customers in the area. Maybe the reason it doesn't exist is because it's just not a good business model.

• 1:18:07Speaker 03

  Uh, I mean, demand has been lacking in IoT world historically is a function of there wasn't enough supply of contiguous good coverage. The other thing to keep in mind here is the helium network is distributed across, the helium network is by far the world's largest wireless network, like larger than anything in China, anything in the United States, anything in Russia, substantially in terms of population coverage and mileage coverage. So comparing what Verizon can set for $200 million in the United States to what helium has achieved globally is, you know, it's pretty substantial apples and oranges difference.

• 1:18:36Speaker 03

  You can never cover something like a couple billion people in terms of like sheer zip code coverage and population. So it's pretty substantial. And to do that for $200 million, like it's laughable for Verizon. Verizon is never going to even dream of doing that.

• 1:18:50Speaker 02

  Don't you want density, though? Like, isn't the point of a wireless network ultimately about like having coverage in all areas and a like, like the dish? I understand like breadth of it, but actually breadth is not exactly what you're looking for, right? You're looking for like density in a specific area.

• 1:19:05Speaker 03

  Correct. There are going to be some areas that are better, some areas that are worse. The same is true as AT&T and Verizon today. The beautiful part of this model, though, is that if there is demand to use the service in an area and there's for whatever reason no supply, the way the algorithm is tuned is it will start if a supply shows up, that will start getting excess rewards for some short period of time to compensate people to find the holes in the network and fix them. Again, the beautiful thing about this market is that this is a, because of how the algorithm works, you just have a hyper-localized market. And like AT&T and Verizon are like the least granular markets you can imagine. You have like four companies that compete over the whole country, which is kind of silly. Here, you actually can compete on a per-square-mile basis, basically.

• 1:19:41Speaker 02

  Yeah, I mean, I don't know enough about like the wireless infrastructure. I could tell you that those are very big for-profit companies with very large customer bases who want IoT bandwidth. I have to think at some point, they sat down and said like, "All right, let's look at like our biggest markets where we see IoT demand." Yeah, I don't know, major cities. Like, what's the cost of us deploying a piece of hardware to our existing customers that allows, you know, other people to hop on and I can pay for the hardware and rent the network? And we just did a little bit of the math. I bet you if it's a concentrated one, it's probably less than $100 million if you wanted to pick like a single geography. I don't know, pick New York, pick Boston, something like that to test it. I just have this hunch that the reason they're not doing it is because the

• 1:20:23Speaker 02

  demand, like the margin on it isn't big enough relative to the actual cost to deploy. But I guess we will find out to see like, does the demand for this ultimately went out? I think the critique of it is always like the market size, not the technology. I think the technology is very cool. It is very cool technology, right? That you can like hand someone a piece of hardware, plug it in and have them like load themselves into this network where there is no central authority. It's like very cool. I think I worry about the size of it. I'd be curious how. I don't know, I guess how they would think about like, where does the demand come from? And the size of that demand and the profitability of it?

• 1:21:00Speaker 03

  Yeah, so it is a classic case of supply and demand chicken and egg problem. Today Verizon and AT&T, they don't really let you onboard a device onto their respective networks for less than $10 per year. The goal of helium networks is to have devices pay $1 per year. So you're talking about 90% cost reduction. So yeah, it is not profitable for them because their cost structures do not enable them to offer $1 per year service. But like, that is the goal.

• 1:21:21Speaker 02

  Right, but in order for the network to be sustainable, the people who are investing their time in the hardware obviously have to make their money back at some point, right? So.

• 1:21:28Speaker 03

  Correct, we need, we need there to be hundreds of billions of, of smart devices, right? Like, the idea is we should have a sensor on every X, X, X square miles. There should be Y number of sensors around, weather, temperature and fire and traffics and garbage. I mean, what, like, pick your smart sensor of choice, right? But there should just be sensors for everything, everywhere. And if you actually do that math, like, you could get to many, many billions very quickly.

• 1:21:50Speaker 02

  Right, and this network has to be cheaper and just as accessible and just as fast and all that, so you slowly incrementally win, win the business over.

• 1:21:56Speaker 03

  Yeah, that makes sense. Correct.

• 1:21:58Logan Bartlett?

  Hey Kyle, what question, just to, just to back up to something you said earlier on the distinction between Nova Labs and the helium network? So Nova Labs were, they, they, they help start and they're facilitating different aspects around the helium network. And you invested, MultiCoins an investor in Nova Labs, is that right?

• 1:22:22Speaker 03

  We own a very small amount of equity in Nova Labs, but the vast majority of our exposure is via H&T tokens.

• 1:22:27Logan Bartlett?

  Got it, okay. With, with Nova Labs re, it looks like they raised $250 million since whenever they got going, uh, in equity for the company. What did that actually go to? Like, what are people investing in there?

• 1:22:46Speaker 03

  So I'm not as privy to the more recent financing rounds that happened after the network launched, uh, because we did not participate in those. But we, we were, we led the last financing round before the network launched. Network launched August 1st, 2019, we invested in May of 2019.

• 1:23:03Speaker 03

  And then the way we receive our H and T tokens is there's in the helium network was called the founders reward. So every block, let's say every block that goes by the 100 tokens are minted. I think 35 of those tokens go to the founders reward. And so we bought some fraction of the founders reward. Nova Labs has some fraction of the founders reward. Other investors have some fraction of the founders reward, whatever. And then the other 65% go to the network as a whole. That percentage then decreases over time. So it started at 35% and has a terminal number of, I think, 5% if I recall correctly. And this is all pre-programmed in and all open source and in all the public helium docs. But the kind of idea here is we are, we are literally minting new H and T tokens every minute.

• 1:23:48Logan Bartlett?

  So just to understand, so when Tiger led in January of this year, a $200 million round at a $1.3 billion valuation in this, that's they're getting access to the monetary mechanism for Nova Labs itself is basically a, I don't know if you'll probably dispute the term tax, but it's some incentive on top of the existing ecosystem for having done the work to set this up and all the different mechanisms. And then that number goes down over time as the network scales?

• 1:24:27Speaker 03

  That is correct. By buying equity in Nova Labs, Tiger bought some amount of H and I think they bought some H and T off of Nova Labs' balance sheet directly. And they also bought equity in Nova Labs. And Nova Labs has some plans on providing value-added services on top of the network. So things like taking your credit card and swiping it and having it all work magically, that the network cannot do that itself. So companies like Nova Labs will, will do stuff like that.

• 1:24:53Logan Bartlett?

  You kind of get this like interesting, I mean, the financing mechanisms are.

• 1:24:59Speaker 02

  Compelling, if you will, as an investor, right? Because you basically have an opportunity, if you so choose, and I am extremely impressed and kind of commend you guys for being long-term holders and the fact you've never sold any of this stuff, because that probably puts you at like the top 1% of conviction actually out there. But for a lot of the folks where traditionally in a startup, if you finance like a large equity round, your ability to actually get any money out of that financing, it requires like some future M&A event or IPO, it's like totally illiquid. Basically, you take on that long-term risk. Here, some of that long-term risk is like somewhat mitigated by the opportunity to

• 1:25:43Speaker 02

  have some of your holdings in these coins, and if you so choose, and obviously you guys aren't doing this, but like if you so choose, you can essentially sell some of your equity early. It's almost like being able to access private markets for a private company stock in a slightly different mechanism, right? Like you get some liquidity for your initial, at least as an investor, that's how I think about it, it's like a risk reduction mechanism. Is that, is that fair to say?

• 1:26:10Speaker 03

  Yeah, I mean, this, this is a, a, a separate and very long sort of discussion about like the nature of, of laws around capital formation and issuing securities and financial control, um, what's it called? Whatever, financial protection and the implications on liquidity and financial markets and what that means for tech startups and innovation in the economy. Like, there's a whole bunch of unrelated issues here. Uh, I, I have some fairly pointed opinions on all of them. But yes, you are correct, like this clearly reduces risk of early-stage venture financing. Very, in a very obvious and direct way.

• 1:26:49Speaker 02

  I know people think I have like a super strong opinion about this, but like I'm, I actually would admit that I'm like particularly conflicted because on one hand, You know, you can dress it up as ah, you've got sophisticated investors who are taking advantage of unsophisticated investors in like a speculative nature and that's not right, or what I don't know. There's like some, obviously there's some objections there. On the other hand, there are these very odd rules that, you know, in terms of like accredited investor status and minimum income that you have to have to be able to participate in this ecosystem in the first place. And it's kind of like, is big brother government

• 1:27:32Speaker 02

  helping or hurting? And I think that's a very reasonable debate, right? Like, a normal person who owns, you know, one of these helium devices is unlikely to qualify in the United States to legally buy helium equity in a private financing round. But here, they can participate by buying access to the token and like, should we just allow adults to be adults? And like invest in things that they want to invest in and lose money and make money in the way that we want them to? And like, this is just another way of letting them do that. Like, I think that's actually an interesting compelling argument and I can see both sides to it.

• 1:28:09Speaker 03

  Yeah, so a few comments there. One, what's particularly interesting about the helium network is not only is it like a you're raising money from the public, but more importantly, you are actually building physical infrastructure. And the public is building the physical infrastructure. So it's not just financial capital that's being formed, it's also functional utility capital in the in the physical world.

• 1:28:30Speaker 02

  Oh, it's like useful money. Totally agree. It's like being spent on actual stuff. Yeah.

• 1:28:34Speaker 03

  Right, right, right. On actual stuff, which is super cool. It happens to be tied to this also novel form of capital formation. Second comment that the order kind of directly addresses what you're saying is

• 1:28:49Speaker 03

  basically all of the major securities laws that matter were written either in the Great Depression or in the wake of the Great Depression. And there were obviously because of the Great Depression, lots of people were trying to scam other people to get money to live and survive and stuff. Obviously, there will always be scammers in the world. You can't really change that. But by far, the most important thing that has changed between the 30s and now is the internet and the access to information and the access to financial literacy. And I think that should actually reshape how we as a society think about what risks are acceptable for normal people to take. I would actually argue it's probably good for most 18 to 25 year olds to get scammed and lose the substantial majority of their life savings. Like, I actually think society would be better off in the long run if that happened to most 18

• 1:29:34Speaker 03

  to 25 year olds, because they will teach them a lesson about risk and about trust and due diligence that like they are never going to forget.

• 1:29:43Speaker 02

  It's hard to disagree. I mean, it's a very libertarian take, obviously, of like, people are adults and let them make their own decisions.

• 1:29:50Speaker 02

  Yeah, there's a really nice life lesson of getting screwed over early in life and realizing, like, maybe I should, like, triple check this before I put a bunch of money into it. I totally agree.

• 1:29:59Speaker 03

  Yeah, I think society as a whole would be, I think that would cause people to make much wiser decisions around all kinds of other facets of their life if they experience that with an app where the absolute dollars are quite small.

• 1:30:10Speaker 02

  Yeah, one of the biggest critiques I think crypto investors and operators have of the US system that I actually do agree with is that we have a lot of these consumer protections. And I want to use it broadly, but very specifically, like accredited investor and qualified purchaser standards, right, which is basically like an income and asset requirement that you have to have to be able to invest in private company stock. You have to have made something, I don't remember it offhand, but I think it's like something like at a minimum $250,000 a year for a few years or have something like, what, a million dollars in underlying assets, like non-house, whatever. It's like a reasonably big number. And if you don't have that income or assets, you basically can't participate

• 1:30:55Speaker 02

  in private equity financings of C corps.

• 1:31:00Speaker 02

  It's a little crazy.

• 1:31:01Speaker 03

  Correct. I would actually argue the problem is worse than that. It's not only the credit and venture rules, as you're alluding to. It's also the fact that the assets are structurally illiquid for such a long period of time. Like, one thing is, hey, your income is $400,000 a year. Well, like, a lot of people who make $400,000 a year are unwilling to part with $50,000 if they have, if they believe there's no chance they'll get it back for a minimum of three years. Or longer.

• 1:31:28Speaker 03

  And if you can actually reduce time to liquidity, you open access to financial markets. But because it's just a function of risk tolerance and risk preference.

• 1:31:38Speaker 03

  Now, I realize that introduces its own new problems, and I don't dispute that, like, that comes like insider information and other kinds of problems become a thing. But like, again, I think society is probably better off in the long run if people can be adults and if people can go in and out of stuff as they see fit. Telling people you cannot invest in things that you believe in? Like, because they're just illiquid and inaccessible? Like, if the founders genuinely believe the product or service or the community or whatever is better off by enabling people to become economic owners in it on some free market? Like, we as a society should generally optimize for that to be a thing.

• 1:32:13Speaker 02

  I don't think it's the liquidity piece of it. Like, I think there's this, I think there's a lot of really sound arguments about why liquidity in private companies, especially growth-stage private companies, is actually a bad thing for the company? Because you have massive variability in the price. It moves up and down. People don't, it's hard for the employee base. It's hard to recruit. It's hard to retain. You're constantly resetting your stock options. It creates somewhat of like an operating nightmare for founders of these companies. Like, there's a reason why they're staying public, sorry, private for a fairly long time by choice. Like, if you ask any seasoned founder or operator, they would tell you, like,

• 1:32:57Speaker 02

  I will go public when I believe my stock price will remain reasonably stable over time because my employee happiness trends almost exclusively to the stock price. I've talked to like enough public market founders where you ask like, how does your employee feedback look? And they go, well, what does the stock price look like? Because it literally attaches itself to the stock price. And there's some real downside I got in this stupid shouting match with Sam Bleson about liquidity. And he's like, you know, very religious. It's a feature. It's a feature. It's always better. I'm like, that is just like not true if you're a founder operator and it will hamstring quite a few companies from growing. So I don't buy the like liquidity is necessarily a good thing for the company. I agree that

• 1:33:39Speaker 02

  the protectionist rules that we have in place that stem from, you know, some really bad actors where information was not nearly as readily available, probably are outdated and should be revised. And, you know, we should allow people who to take a little bit more risk on their own dollars and get access to, you know, interesting startups. And this is one kind of somewhat clever way of doing it for kind of a niche, a niche use case. The liquidity one, I think, is a whole separate, separate challenge, but they tend to get related. I don't think the liquidity argument holds in my book. I do agree that the big brother nature of this, or like the protectionist nature of like, the government is here to

• 1:34:23Speaker 02

  protect them from making really bad mistakes. That one, that doesn't always sit right with me. I think people should be allowed to make dumb mistakes on their own.

• 1:34:31Speaker 03

  Yeah, I mean, one thing, by enabling the public at large to become economic, you know, shared economic interest and your outcome, that is a very powerful thing to unlock.

• 1:34:42Speaker 02

  We are watching this happen live, right? By the way, to be really clear, like, we are watching the lack of rules have two very different outcomes, right? We have the helium outcome where you've got this like, Infrastructure build out because consumers are taking on risk now much smaller dollar risk, $50, $200, $500 risk. They're buying hardware, they're plugging it in, they're effectively investing, they're just doing it in this like slightly different way of fairly small dollar amounts. And you get to see this like infrastructure build out because there are no rules, right? They're allowed to do it. And that's like one end of the spectrum. And then you do have the other end of the spectrum, which are like the scams and the Ponzi schemes and the blowups and like both are happening at the same time. We're like watching the lack

• 1:35:23Speaker 02

  of regulation play out. And it's kind of fascinating to see what happens there because this is, this is the lawless version of finance that we had a while ago. And there's probably some balance between these two that is where it should end up. It should not be like completely open for anybody to start a crypto project and raise money and allow consumers to buy it. At the same time, yeah, $250,000 a year in income for a few years is probably a little too high of a minimum for like the average American. I think that's a little crazy.

• 1:35:53Speaker 03

  Yeah. And then there's also the question of, well, what about non-Americans, right? Like, can you enable random guys and pick your country of choice to get excited and participate? And to do so at much dollars, much smaller dollar scales.

• 1:36:05Speaker 02

  Yeah.

• 1:36:06Logan Bartlett?

  Well, this is good stuff. I, I, I know we only have, we only blocked this amount of time. Kyle, thanks for, uh, thanks for doing this and going through all of this stuff. It's, uh, yeah, a lot of interesting stuff going on and we appreciate you sort of answering our, our, our questions throughout here.

• 1:36:23Speaker 02

  Wait, can I ask, I have to ask the my, cause we, we done the Bitcoin stuff. And so I always want to get, I always like to ask the Bitcoin people their impression of like the more crypto oriented business models and then the crypto people, the Bitcoin question. Where, where, where do you, where do you net out? You kind of alluded to it earlier. Uh, the whole like Austrian economic thing, but I'm curious your stance.

• 1:36:46Speaker 03

  I think Bitcoin is absolute nonsense.

• 1:36:48Speaker 02

  I knew we would get a strong opinion. That's what I was hoping for. I,

• 1:36:52Logan Bartlett?

  Can you elaborate? Just, we need this, we need, we need some hot clip right now for the Bitcoin maxies out there.

• 1:36:59Speaker 03

  I mean, I literally, this clip went viral like a week ago from Harry Stubings podcast, in which I said, quote, Bitcoin is nonsense. So, um, Uh, I've just rehashing what I said like a week or two ago.

• 1:37:10Logan Bartlett?

  That's fine. Yeah, we, we just, we need our own virality. We can play that.

• 1:37:14Speaker 02

  Our, our overlap of his thousands of users is like two guys in their basement listening to this.

• 1:37:19Logan Bartlett?

  Yeah, exactly. Yeah. Only 15 people listen to this. So, yeah.

• 1:37:23Speaker 03

  Right. So, um, the, the quick of it is that Bitcoin is supposed to be an inflation hedge. Um, Bitcoin is explicitly a non-productive asset.

• 1:37:34Speaker 03

  If you are genuinely trying to hedge inflation, you can, there's a whole array of assets you can buy that are productive assets. That even if their P ratios go to a thousand or even to a million, they still have a yield greater than zero.

• 1:37:47Speaker 03

  And Bitcoin's yield will always be negative, at least until the year 2140, because like there's still Bitcoin being printed. Um, and Bitcoin has no pretend semblance of ever having a positive yield because it doesn't do that.

• 1:38:01Speaker 03

  I would, my therefore contentions is there, there is no point in having non-productive assets. Commodities obviously have some sort of functional utility value or whatever. It's fine, but like,

• 1:38:11Speaker 03

  there is no bar that like, I, I have derived that you actually justify is holding a non-productive asset. When like, if you want to avoid inflation, the right assets to buy are like Amazon or like Walmart or like tips or whatever. There's a, there's a 500 things you can choose from.

• 1:38:25Speaker 02

  Something within income stream, basically.

• 1:38:27Speaker 03

  Something with an income stream and something that is like clearly inflation resistant and you can just buy a basket of those things. Um, to hedge out any specific due to credit risks. But arguing that like, we need gold, but the rock in the ground, or in this case, the digital version of the rock in the ground.

• 1:38:41Speaker 03

  Is like clearly the incorrect answer. Um, when you can have something that's productive instead.

• 1:38:46Speaker 02

  Totally agree. The only, like, the only bull case I've heard, and we had this combo with Pom at one point. It's not even like a good bull case. It's just like a logical bull case. Good, meaning like fundamentally agree with it. It's more of a time in, in history was, well, other people perceive it to be a good investment. And so like, there's a time for when you should own it because other people perceive it, uh, to be worth holding. And like, there's this, it's like a trading view of it, basically, but I couldn't agree more. Like in a long-term hold, like it's totally unproductive asset. It has no income stream whatsoever. It never will. Now it begs the question, why do people own gold? And obviously gold has like this big history and, you know,

• 1:39:31Speaker 02

  I would also would, would not own gold myself, but, uh, Very, very, very aligned on that front. Logan holds it because he doesn't want to look like an idiot, so.

• 1:39:41Logan Bartlett?

  Well, I, I'm gonna look like an idiot either way. I, I just want to have some hedge, no matter what, that I can say I'm right. Broken Clock is right twice a day. Right. That's right. Uh, Kyle, thanks for doing this. Thanks for coming on. All right, guys. Take care. Good talk.

• 1:40:01Logan Bartlett?

  So that'll do it for the 29th episode of Cartoon Avatars. Thank you to Kyle for coming on. Uh, thanks to Zach as usual. Thanks to Rashad for coming out from behind the scenes. Uh, next week, uh, we have another good guest coming on to talk about things not related to crypto, uh, in entirety. Uh, a really high-profile founder, um, in a conversation Zach and I had with, uh, with him, and so trust you'll enjoy that conversation next week. Thanks everyone for listening. Have a good weekend.