Crypto, Web3, and DeFi — with Mike Novogratz

Mike Novogratz, the founder and CEO of Galaxy Digital, an investment firm focused on cryptocurrencies, blockchain technology, and digital assets, joins Scott to give us a macro view of the crypto space. He tells us about the various use cases of Bitcoin, Ethereum, and NFTs as well as how to think about investing in them. Follow Mike on Twitter, @novogratz. Scott opens with his thoughts on conglomerates and offers a prediction for 2022. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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

• 0:01Scott Galloway?

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• 0:49Speaker 01

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• 1:17Scott Galloway?

  Episode 117, The Atomic Number of Tennis Scene. What is the number one dating site in the South? 23andMe. Too much? Go, go, go!

• 1:37Scott Galloway?

  Welcome to the 117th episode of the Prob G Pod. In today's episode, we speak with Mike Novogratz, the founder and CEO of Galaxy Digital, an investment firm focused on cryptocurrencies, blockchain technology, and digital assets. We actually had Michael's sister on the program. So I think it's the first brother and sister. It's very exciting. That's one of those homes, like one of those crazy overachieving homes. They've done really well. I remember we had Jaclyn Novogratz on the pod, and literally at the end of the pod, I don't know if we got this on tape, she said, Could you use a hug? I've never been offered a hug over a podcast. And one had struck me that this is a very like, I don't know. I think she generally meant it. She's a very decent woman.

• 2:20Scott Galloway?

  And also the fact that she could sense what like a chocolate fucking mess I am over a podcast kind of frightened me or rattled me. But anyways, her brother's off making billions in crypto and we'll speak to him. We'll also discuss the who, what and why of the metaverse with Michael. All right, let's bust into what's happening. What's in the news? A few notable breakups in the business world have reporters saying breaking up is hard to do. They're so funny, aren't they? The turn of phrase, those crazy media reporters. We're going to explain why breaking up companies can actually be a good thing. As you probably know by now, GE, General Electric, wants the most valuable company in the world. And Johnson & Johnson, also one of the most valuable companies in the world,

• 3:03Scott Galloway?

  are splitting up their lines of business or they're breaking into lines of business to become individual firms. Japanese conglomerate Toshiba also announced it will split into three different businesses in 2024. I always thought Toshiba is kind of an unusual brand. It's not as aspirational as Sony, but it has some of that like kind of Toshiba or kind of Japanese manufacturing excellence. I'm super excited. I wanted to go to Tokyo for the holidays. I did an interview with the Nikkei. Let's talk about Scott. Let's talk about Scott. Well, okay, okay, if you twist my arm. So I did an interview with the Nikkei today talking about the metaverse. I think Tokyo, I don't want to say is the most underrated city in the world, but people talk about London and New York, New York and London. And occasionally they throw on Paris or Beijing and Shanghai.

• 3:47Scott Galloway?

  I think Tokyo and Japan are just fantastic places. And I'm sure they're great places to live. I don't know, I've never lived there, but they're fantastic places to visit. I always thought that the tagline for Alexis, the relentless pursuit of perfection, is evident the moment you get off the airplane in Narita. It's just this culture is so fascinated with perfection and art and the gardens and. Just love Japanese culture. I love the food. I just find everything, it's just such an impressive people and nation. Anyways, can't go to Tokyo. I'm gonna be in Thailand at some camp with elephants and I'm sure there'll be a documentary similar to Blackfish showing what an awful ugly American I am taking my kids to ride elephants somewhere in Thailand. Does that sound a bit touristy?

• 4:29Scott Galloway?

  Does that sound like I'm really leaning into my privilege? Well, I am. Why? Because I can. Anyways, I don't know how I got there about Tokyo. Back, back to Toshiba. That's how we got here. Anyways, Toshiba's also breaking up into three different businesses in 2024. So what's happening here? Markets are obviously cyclical and that applies to corporate strategy. In traditional industries, we are in a period where focus is seen as a virtue. Companies should do one thing and they should do it really well. That hasn't always been the case. There's a point of view that putting different lines of businesses together under one corporate umbrella can be a good thing. Who is it a good thing for, I think is the question. At the extreme, when a single corporation unites several unrelated businesses

• 5:11Scott Galloway?

  under one roof, we get, wait for it, a conglomerate. You can generally recognize a conglomerate if you have no idea what a company does. Hello, General Electric. And that is, there's a difference between the conglomeration of, or the acquisition of assets that sort of makes sense and provide immediate synergy. I think if Google acquired Android, you can see how that might make sense. You can absolutely see how them acquiring Waze makes sense. When ITT has a fertilizer division called OM Scott and they also own the company that makes peanut butter, or when Clorox owns charcoal and then also owns Kingsford and also owns Hidden Valley Ranch Dressing and also owns, I'm trying to think what else they own that made no sense.

• 5:54Scott Galloway?

  Or when Sara Lee owns Coach, or when Campbell's Soup owns Godiva, you could say, well, there's synergy around distribution. Maybe, maybe. But when a conglomerate sort of begins bringing on businesses where there isn't obvious synergy, they'll bullshit the market and say, we have synergies around HQ. And essentially, the reason they conglomerate is the CEO is typically run by a guy in his 50s or 60s who, to be a CEO, you have to be a bit of a narcissist. And that is, you have to love the fame, you have to love the affirmation you get from being a baller professionally, because you pretty much have to sacrifice almost everything personally. And there's this cartoon of the guy or the gal who has everything. I've worked with and know a lot of CEOs.

• 6:37Scott Galloway?

  It comes at a huge sacrifice, obviously enormous compensation. But it comes at a real strain. As a CEO, your inbox is never empty. So they like to make more and more money and be, sit on top of bigger and bigger thrones overseeing more and more of the seven realms. And so acquiring companies makes you feel big, makes you feel like a baller, makes you feel strong like bull. And also it smoothes out earnings, diversification of different business units. The health unit doesn't do well, but your financial services unit does better. And also it creates so much complexity that what you find is organizations are able to kind of fudge or the numbers become more malleable, as in the case of Jack Welch, who's gone from being the best CEO in history to someone who basically set up Jeffrey Immelt for extraordinary failure and was kind of cooking the books.

• 7:22Scott Galloway?

  And I realize that's a harsh statement to say about someone who's no longer around to defend himself, but it's increasingly looked like that the managed earnings at General Electric, the result of the most valuable company in the world, were more than just managed, they were cooked. And here's the thing, investors don't need CEOs to diversify for them. If I want to buy a health tech company, I can do so on my own. If I want to buy a jet engine company, I can do so on my own. I don't need them to diversify for me. In some, the conglomerate strategy doesn't make any sense. You want a digital, if you're looking for a digital OS that has a bunch of different components, it might make sense.

• 8:04Scott Galloway?

  And if you're constructing a digital corpus such that you can make a super app and one interface, that makes sense. So it might make sense for Tencent to have social, to have gaming, to have e-commerce, to have transportation, all under one roof, to have payments, because they can present it in one OS, one interface, and their synergy around data. And they end up, these super app companies across the world, whether it's Joe in India or Alibaba in China, they have some of the greatest revenues per employee. There's real synergy there. But a company buying an unrelated business just to smooth out earnings or to bulk up, when I was on the board of the New York Times, and I constantly bring that up because I think it makes me feel more relevant, and I'm desperate for your affirmation.

• 8:50Scott Galloway?

  Anyways, we owned amongst, in addition to owning a newspaper called The New York Times, we owned all these regional newspapers. There's probably synergy there. You'd like to think there's synergy there, whether it's buying print, whether it's having training around editorial, whatever it might be. You can make an argument. We also decided to buy the seventh tallest building in America, and that is we financed and built our own headquarters. So at one point, that building was worth about a billion dollars, and the whole company was worth about 1.7. So we were no longer a newspaper company or a media company. We were a REIT. We owned 17% of the Boston Red Sox. My favorite was the CEO of Sasek. It gave us exclusive access to proprietary content, sports content. I'm like, no, it doesn't. We don't cover the Red Sox better than anybody else. As a matter

• 9:33Scott Galloway?

  of fact, The New York Times did a shitty job of covering sports purposely. I would love, one of the great moments for me professionally was when I went on the board of The New York Times, they invited me to something called the Page One meeting. And basically all the, I guess it's the lead editors for every section go around and kind of pitch their story to be the lead above the fold on the cover of The New York Times, which arguably is some of the most influential real estate in the world. And everyone would go around and say, well, Hillary's in Africa. Someone else would say, well, the Fed is thinking about, you know, cutting interest rates. And then the sports guy would pitch his idea, and everyone would just roll their eyes. The New York Times just had absolutely no, no patience for the Joey Bag of Donuts running, running the sports section, which

• 10:18Scott Galloway?

  was kind of, cracked me up. Anyways, Boston Red Sox made absolutely no fucking sense for us to own 17% of that. We also owned about.com, which again, made no sense. That was such that the CEO and the chairman could get on an earnings call and say that 17% of our revenues were now coming from digital. They were basically using about.com as an accessory to digitize an analog outfit. There was no synergy there. We weren't learning anything. We all of a sudden decided we were venture capitalists and ultimately ended up. Spinning the thing after Googled it a panda and overnight our revenues were down forty to sixty percent. I think we ended up selling it for less than than we bought it. Who wanted to sell it when it was worth a billion dollars? First name D, last name A W G. Anyway, anyway,

• 11:01Scott Galloway?

  these conglomerates don't make any sense because what happens when you end up with this mishmash, this Frankenstein company that obviously has no obvious synergy is that the marketplace punishes you. And what they do is they say, okay, maybe that building is worth a billion dollars, maybe a bout is worth a billion dollars. But what we're going to do, what we're going to do is we're going to find the shittiest business in your portfolio, i.e. the newspaper business that isn't growing, and we're going to assign that multiple to the entire business. So what you end up with, and this is why J and J and General Electric are splitting up, the disposition of assets or the spinning of assets, when your multiple reflects the worst business, what you end up with is you end up with an accretive move. And that is, the G's healthcare unit is a great business.

• 11:44Scott Galloway?

  G's aerospace and jet engine or jet aviation business is a great business. But what General Electric is trading at now is basically the multiple assigned to a conglomerate that no one can fucking understand, which is not a great multiple. The same with J and J. J and J's healthcare group is an amazing business and has played a seminal role in the fight against the novel coronavirus. That will trade at a greater multiple likely than their consumer business. But typically in a conglomerate, again, there's no obvious synergies. They take the multiple on the worst business and assign that to the whole business. So breaking up makes a lot of sense in these conglomerates. The other side of this coin, what we're about to see in 2022, and this is one of my big predictions for 2022, is we're about to see

• 12:26Scott Galloway?

  the mother of all M and A, specifically around super app. And that is, they have some super apps across the world, but we really don't have a leader in the largest economy. There's no obvious super app, I would argue, in the U.S. You could say, well, is iOS, is that a super app? But there's no interface that takes us to payments, social, e-commerce, and media that kind of does it all, similar to what Tencent sort of does and a few others around the world are attempting to do. I believe you're going to see Jack Dorsey purposely find God and start cleaning up his user base and kicking off a bunch of accounts which will suppress revenues. I think they will throw up in their next earnings. The stock will go below forty bucks and he will reunite.

• 13:11Scott Galloway?

  The sister wives here, specifically Square, in Twitter such that he doesn't have, he can have one office to go to all day. And that will be sort of a mini Tencent that will emerge and get the marketplace excited. I think it's likely you're going to see one of these fintech companies start acquiring media or maybe even e-commerce because they have such deep pockets right now. But we are going to see, or you are going to hear the term "super app" a lot in 2022. So in sum, there is a deconglomeration of spends with companies that make no sense, where the whole has become less than the sum of its parts, so it's accretive to spend these things. For example, remember who used to own PayPal? eBay. And guess what?

• 13:52Scott Galloway?

  PayPal is now worth $250 billion and eBay is worth a lot less. So spends can be great for shareholders. They take a lot of discipline and they take a CEO shareholder focused as opposed to being ego focused. But we're about to see things go the other way. We are going to see these financial services companies and these fintech companies with exceptionally fully valued, i.e. overvalued, stock go shopping because they can monetize. Pinterest is a great product. It's a shitty business. And anyone who's been on that platform recently looks at it and goes, okay, they polluted this thing with a bunch of ads on flooring and things that are just not very elegant. And they don't get a lot of money for it, whereas those half a billion monthly active

• 14:32Scott Galloway?

  users can probably be better monetized across a vertical e-commerce offering or payments platform, whether that's PayPal or maybe Shopify. I don't know. We'll see. So the old guys, the old guys, the old conglomerates breaking up. But Leviathans, on the other hand, specifically fintech in the race for super app, you're about to see some very, very odd weddings between the Starks and the, I don't know, the Prince of Doran, I'm getting my names wrong. You get where I'm going. You get where I'm going. But you're going to see the mother of all conglomerations across 2022's Business Story of the Year, and that is the race for super app.

• 15:15Scott Galloway?

  Stay with us. We'll be right back for our conversation with Mike Novogratz.

• 15:22Scott Galloway?

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• 16:25Scott Galloway?

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• 17:42Scott Galloway?

  Welcome back. Here's our conversation with Mike Novogratz, the founder and CEO of Galaxy Digital.

• 17:50Scott Galloway?

  Mike, where does this podcast find you?

• 17:51Speaker 02

  I am in our new office, 300 Bessie, down in a Wall Street-like area, right on the water.

• 18:00Scott Galloway?

  So let's get into your domain expertise here. Give us, you were sort of in this before it was cool. You were sort of in crypto. What was, your background is in financial services and Goldman. You're successful and you decided to kind of go all in on this crazy thing called crypto. Give us your general macro view or the elevator speech on why you're so excited and decided to invest your own, you know, finite human capital in the space.

• 18:27Speaker 02

  Yeah. So when I first invested in crypto, it was, it was an asset trade, you know? It was an idea and I figured, cool speculative idea that was going to go higher. I then either smartly or foolishly talked about it in public and the next day I was on the cover of the FT. Fortress's Novogratz says, you know, Bitcoin's going to 1,000. And ever since then, I've been asked constantly to either talk on TV or do lectures or podcasts. And that forced me to try to understand really what was happening, just so I wouldn't look like a fool. And the more I dug in, the more I was impressed. I was impressed with the people I met.

• 19:12Speaker 02

  They were purpose driven and mission driven. It wasn't all about the money, as the press often said. It was about rebuilding the financial infrastructure of the world in a transparent, more egalitarian and more fair way. It was literally an F U to the system from millennials and Gen Z who said, "We don't like what you guys have done with the world. We don't trust governments, so there's a libertarian streak. We don't trust the rent takers who keep kind of winning even when they should be losing." We think about it, it came after the financial crisis, right? None of the big banks really suffered. They got bailed out and that pissed a lot of people off. And so crypto at its core was a little man's revolution and I got charged by that spirit.

• 20:00Speaker 02

  I had this unofficial role of spokesperson of trying to take this idea of crypto and make it understandable to institutions and bring them into the tent. And I also had a role to play, or in my company had a role to play of trying to give some guidance, counsel to these new exciting businesses that at times were naive, thinking we're going to live with that outside of the structure of any government. And so I started Galaxy with this idea that we would play those two roles.

• 20:31Scott Galloway?

  And so does, is Galaxy essentially a hedge fund investing in different parts across the crypto universe? Or are you investing in companies?

• 20:38Speaker 02

  No, Galaxy is a merchant bank. We use our own capital to invest. We've made over 150 investments in the ecosystem, from security to exchanges, to coins, to protocols. But we also have an asset management business, sales and trading, or, you know, a client sales and trading business, a mining business, an investment banking business. And so the idea is use our own capital, understand the space, and then take those lessons and bring them to the different client bases.

• 21:09Scott Galloway?

  And who's your role model? Are you trying to be the Goldman of crypto and fintech? Like, what's, what's, what's your vision?

• 21:15Speaker 02

  It started out with this idea of Goldman or even Drexel. You think about what, what Mike Milken did, he really credentialized, you know, high-yield financing junk bonds and made it a thing. And so we kind of thought, how can we be helping the credentializing process? I set it up at Goldman because I had worked there. I just love the culture of bringing in bright, young, human capital and sending them, trying to kind of create a culture of excellence. But now we've bought BitGo, which is the second largest custodian in the world, and the biggest provider of wallet services. And so the idea is to understand that this isn't a Wall Street or a tech thing, it's a hybrid. And we're trying to be this marriage between, you know, Wall Street and tech.

• 21:59Scott Galloway?

  Can you attempt to break down the different, loosely speaking, can you bucket the different types of asset classes or investment types in which you're most bullish or bearish on?

• 22:10Speaker 02

  Sure. So I'll start with kind of three big buckets, and then I'll take the second bucket and break that along. So there's Bitcoin, right? Which is the best brand in the space. If you think about it, Bitcoin might be the best brand created in the last hundred years. It's owned by over 200 million people. It's 13 years old. It's worth a trillion, too. The technology isn't what gives it its value, right? Technology's pretty cool, right? Satoshi's white paper created the first digital signature that could counterfeit. Like, that's my simple macro guy's view of what the genius was. And that created scarcity, digital scarcity. And so originally Bitcoin was going to be digital money, but it quickly became a digital

• 22:55Speaker 02

  store of value, or digital gold. And so it's being adopted by more and more people as a place to store value. So I think that's its own lane. The more exciting lane in lots of ways is what we call Web 3, the Internet of Value Exchange. And so that's Ethereum and the Ethereum look-alikes. So that could be Solana, or Terra Luna, or Avalanche, lots of them. And that lane is trying to be the base layer of trust. Think about a global decentralized supercomputer that processes and authenticates data. That's it.

• 23:37Speaker 02

  So we're building a shared supercomputer that can share this giant Microsoft Excel spreadsheet amongst lots of people. So one guy doesn't control the spreadsheet. On top of that is where the magic happens. And so now I can use this blockchain technology and take it to finance. There's a whole, you know, bracket called DeFi, decentralized finance. So I can create a driverless insurance company, or a driverless exchange, or a driverless fixed income market. When I say driverless, this is code. It's open source code that the contract's all priced in, the activity's all coded into the, and it lives on a blockchain.

• 24:20Speaker 02

  And so now me and you can exchange in a peer-to-peer fashion equities, or tokens, or whatever we want on these exchanges.

• 24:30Speaker 02

  That in the long run, it's going to revolutionize finance and it's going to because it's a better product. It settles atomically, which means there's no settlement risk. It's composable, which means I can build on top of what you built. That's allowed this explosion of innovation to happen. I think about this all the time. You had the iPhone, pretty cool, but it was the GPS on the iPhone that gave us Uber and DoorDash and all the other delivery apps.

• 25:00Scott Galloway?

  The apps, yeah.

• 25:01Speaker 02

  Yeah. And so think of Ethereum and the other base level trust as the iPhones. And on top of it, you have all this being built. And then you have, you know, what the NFT space did, it really credentialized this idea that we can move out of the crypto sandbox. Cause DeFi was mostly crypto to crypto. It was like this giant crypto experiment. When we started with NFTs, it was like, wait a minute, I can change the way people celebrate basketball, memorabilia, or art, or branding. And soon enough, you're, you'll have NFTs for your healthcare records.

• 25:42Speaker 02

  And so that triggered in people's mind, the idea that this second bucket wasn't an asset play like Bitcoin, but it was indeed a tech play. It was this new generation internet and investors around the world said, I can't miss the internet. And so we've seen a ton of money pour in, but more importantly than money, we've seen a ton of human capital pour in. If you looked at my analyst class or my summer analyst class that I hired at Galaxy, it's breathtaking, the talent.

• 26:14Scott Galloway?

  Yeah.

• 26:15Speaker 02

  And we could have hired it three years ago. And so now you've got the best engineers moving into this field. And usually in my 30 odd years of investing, you follow the smart young kids, you do pretty well.

• 26:27Scott Galloway?

  Yeah, agreed. So I want to put forward a few theses and you, you know, confirm or push back on them. So I look at the notion of having smart contracts. So getting a mortgage is an inefficient process. And when you have humans involved, you have certain biases and you take out that friction, you take out that bias and you just make the process less friction, more money for the original creator, lower cost, lower friction for the end users. I get that. When I hear that argument, I then go to. To me, that all sounds like a bearish argument for Coinbase. Doesn't Coinbase, isn't Coinbase AOL? Doesn't eventually it go away if we're really talking about decentralization of these platforms?

• 27:04Speaker 02

  Well, yeah. So what I think about this a lot, but I tell my, my own team, hey, we're gonna have to eat our own arm to grow a new one.

• 27:14Speaker 02

  These transitions don't happen overnight. And so the early adapters, they're gonna trade

• 27:23Speaker 02

  on chain. They're not gonna, they're not gonna give Galaxy their, their money to put in a Bitcoin fund. They're just gonna own their own Bitcoin and they'll probably own it on their own treasure or, or, or they'll custody it somewhere. But a lot of guys will do their own custody. But pulling in pension funds and institutions, it takes a lot of time. And so just like some people still use dial-up phones, I think in 10 years, you'll still have a big asset management business where, where other people are paying you to take their risk in this new technology. Coinbase's broadest model is retail, you know, and they're, and they're, they're making 2% to 4% on retail trades.

• 28:05Speaker 02

  Everything about me thinks that is gonna shrink, shrink, shrink. Over time. What Coinbase has going for them, and they did a brilliant job. They've got an amazing brand. They are the brand in the space. And because they've now got an evaluation and raised tons of money, they're hiring a full-service staff of great people. And so, you know, they've got a big chance to, like, they came out with the NFT platform much faster than anyone else. It wasn't like they were the only one who thought about it. Right? We're fighting them all the time as they're moving into the institutional world.

• 28:44Speaker 02

  Right? We compete in, in custody, we compete in trading, we'll compete in lending, in venture. And so they're the 600-pound gorilla in our space.

• 28:55Scott Galloway?

  So a lot of this, and I know I sound like a boomer, but I look at a lot of these assets and I just kind of shake my head in disbelief. But having said that, I also want to participate because what you said that really resonates is when you have this amount of human capital going into any sector, there's just going to be some enduring concepts in companies. There's just too many bright people working in this sector. There's not going to be something that comes out of this, just like the internet or junk bonds or what have you. Say you have a hundred dollars and you have, you can go into kind of the, I don't want to call it the safer stuff, but you called Bitcoin the greatest brand or one of the greatest brands in recent history. I like, I like the way you think about that. There's Ethereum, the kind of second level protocols, there's NFTs, there's the companies. Where do you think there's asymmetric opportunities to the upside right now? How would you manage

• 29:38Scott Galloway?

  your portfolio of investment in this space?

• 29:41Speaker 02

  So broadly, I would say put a third in Bitcoin, a third in Ethereum, and then a third in a collection of venture bets. And most people don't have access to venture bets. I use our stock, Galaxy stock is a good proxy for that other space. If you really want to dig in deep, you know, you can do your research on Twitter and, and you know, there's a bunch of coins that come and go, that get excited and run up. But that's a full-time job where people on the inside have a huge advantage. You know, one of the things that actually intrigues me is we've had this concept of the democratization of finance, that everybody should be an investor. And as a guy that's spent 35 years learning

• 30:26Speaker 02

  how to be an investor, I don't think that's a good idea. In the same way, I wanted you to come to me to, you know, drill your teeth or, you know, I want to go to a, I want to go to a real doctor when I'm sick. It takes a lot of painful learning and work and education to become a great investor. And so there are some great investors that are learning on the internet. There's great education online, but a whole part of this new generation, you know, the YOLO crowd.

• 31:00Speaker 02

  Assume this is easy to make a lot of money, I'm quitting to be a full-time crypto guy. And I'm like, be very careful. Like, you know, you better have gone to some university of risk. You know, it doesn't mean necessarily like some training in this process of how to think about risk. And so I do think we're going to see a gigantic washout at one point of this idea that it's easy to be an investor. It just takes a big commitment beyond those first two.

• 31:30Scott Galloway?

  Well, it takes stomach of steel, right? I mean, this stuff is, this, this is not for the faint-hearted.

• 31:35Speaker 02

  Well, that's what people don't understand. The volatility of crypto is roughly 100%. And so that's 15x trading currencies.

• 31:48Speaker 02

  And the volatility of these smaller coins can be 200%. And so that's, you know, 10 to 20x equities, depending on which equity you're looking at. It's crazy that people trade this with leverage. It's literally the definition of insanity.

• 32:02Scott Galloway?

  Yeah, agreed. The, the one thing you didn't mention, and I'll put forward another thesis and you tell me where I've got this wrong. People talk about Bitcoin and Ethereum and as a stores of value or payment mechanism, however you want to think about this as, as being enduring. And there's a lot of cynicism around NFTs and I think everything goes to instinct. And I look at NFTs and I think they're no less or more crazy than buying a reprint or a signed 145th copy of a Picasso. And that people like to signal scarcity. It makes them feel like ballers, it makes them more attractive to mates and that these NFTs might be interoperable across different metaverses. I wonder if NFTs will be more enduring than some of the other assets. What are your thoughts on NFTs?

• 32:43Speaker 02

  Oh, I think the NFT space is just getting started.

• 32:48Speaker 02

  It's just getting started for a couple of reasons. Why, A, it's brand new, so people are feeling it out, right? A lot of the NFTs people buy today won't, won't have value in the future, but some will have a lot of value. But the architecture is going to change the way we think of things. And so right now, if you bought a really cool NFT, let's say it's a piece of digital memorabilia or it's a piece of art. It's a piece of generative art. You can show it to me on your phone or maybe have a cool TV screen to display it. But in a few years, I'm going to hit a button on my glasses and they're going to switch to AR. And you might be wearing a cool NFT jersey or a piece of jewelry that was created by an artist of 101 or 110. It might float right above your shoulder.

• 33:34Speaker 02

  And so as we move into this metaverse, we call the metaverse, the idea that you can have digital identity, uh, authentic digital identity is going to be worth a fortune.

• 33:49Speaker 02

  We're going to go to, you know, nightclubs where it's, where it's seventies night and everyone's going to have to wear digital, digital seventies gear and some might be like really expensive done by Gucci and some will be, you know, H and M. In the same way, uh, I talked to one of the, the people that run one of the biggest dating sites and he was like, dude, in five years and three years, instead of how, how tall is the guy, let me see his NFT collection. Right? It's going to be a signal.

• 34:19Scott Galloway?

  Yeah.

• 34:19Speaker 02

  And you're seeing that already.

• 34:21Scott Galloway?

  I just want to go back to Pangy or Lotus from the aughts. I don't want to go back to the eighties. So I'm actually, I, I believe the metaverse is another giant head fake in technology. You sound more bullish on it. You think that we are all going to spend more time in a quote unquote metaverse and that NFTs are going to be the ultimate signal like a Ferrari or, or what have you.

• 34:41Speaker 02

  Well, you know, it's interesting. When I met these two young kids and I had them come out to Jackson Hole and we were debating. And I was like, yeah, we're going to visit the metaverse like we visited in amusement park. And they're like, dude, you're such a boomer. Uh, we already live in the metaverse. And so a 20 year old's view who grew up with a phone already thinks they're in the metaverse. Uh, if you look at about a time they spent video game.

• 35:06Scott Galloway?

  Fortnite. Yeah.

• 35:07Speaker 02

  Yeah. You know, this, this is their, this is their life. And I like to kid around. I identify as Gen Z. It's hard to identify as Gen Z. I, I admire that generation. I like try and understand it. And the new gen, they call gen glass. You know, from age two, they've been tapping on glass.

• 35:24Scott Galloway?

  And so a massive investment in human financial capital that will, it's just hard to believe it won't result in enduring concepts, technologies, firms, equities, or investment opportunities. Who's on the wrong side of that trade? Like, is it, who gets hurt the most? Is it the Goldman's that don't pivot fast enough? Is it traditional banks? Is it insurance companies? Who is ground zero for the disruption from the massive investment in fintech and crypto?

• 35:51Speaker 02

  I think the banks will be able to move fast enough. These banks have 100 years, 50 years, you know, 30 years of legacy financial infrastructure that both regulatory infrastructure, not technological infrastructure.

• 36:06Scott Galloway?

  That's the definition of technical debt, right?

• 36:08Speaker 02

  I just don't think they'll be able to shake it. When you're competing against a piece of code, right? And so it's not that they're going to go away, right? What places like Goldman Sachs or Morgan Stanley have done really well for years is giving people great financial advice, giving companies financial advice, giving individuals financial advice. I think there's still a role for giving great financial advice. Like I said, I don't think everyone should be their own portfolio manager. But the monopoly on the infrastructure of trading and insuring and pricing that risk is going to get stolen from them. And that's going to get decentralized.

• 36:51Speaker 02

  And so you should be scared if you're the New York Stock Exchange, you should be scared if you're any exchange. There's just no way they'll be able to keep up with decentralized exchanges.

• 37:03Scott Galloway?

  We'll be right back.

• 37:07Scott Galloway?

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• 38:15Speaker 01

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• 38:45Scott Galloway?

  So you're involved at NYU Langone, you're involved with your alma mater, Princeton. Tell me if this idea has legs and if and how I'm thinking about this correctly or incorrectly. NFTs, to a certain extent, are trying to monetize a new form of scarcity and signaling. What if Princeton issued a coin and said, "Anyone who owns this coin, as long as they meet minimum standards, can take classes that add up to some sort of accreditation, is involved, can have lifelong learning, can be part of the Princeton community." And they issued 100,000 coins. So what if NYU Langone said, anyone who owns a coin, we're going to do away with all insurance. We're going to do away with all admin, which are huge points of friction in the healthcare industrial complex. And anyone who owns a coin for their whole family gets cradle to grave healthcare.

• 39:30Scott Galloway?

  I imagine as someone who has kids, that I might gift that coin to my family to know, okay, they're all set in terms of healthcare. Do you think there's opportunity for a coining of what I'll call aspirational luxury, where they can pull forward, sort of like a Bowie bonds on steroids, where they try and monetize the scarcity? And you said Bitcoin's the best brand in recent history. I think Princeton and NYU Langone are amazing brands. Do you think there's opportunity there?

• 39:55Speaker 02

  So Princeton wrestled with this a lot, not within the coin side, but like you have this very elite brand. And should you put classes online? And should you make it more accessible? Or does that dilute the brand? And so I think that's still a question. But I think your idea is a great one. And, you know, in a world that's growing, where these universities have a stated commitment and they are trying to be more egalitarian, it's something that they all should consider, right? If you look at public education, or higher education, not public education, it's falling off. We have 4,400 colleges in America. That's an insane amount. When you get below number 200,

• 40:38Speaker 02

  the quality starts slipping pretty fast. I think you're going to see more people learning online, more people learning in different ways. And so having these tokenized credentializations is an amazing idea.

• 40:50Scott Galloway?

  Well, regulation, everyone complains, or all the banks complained about regulation in 2008. Fast forward 13 years later, they're making more money than they've ever made. Isn't regulation going to be a good thing as long as it's thoughtful for this space? Isn't it needed?

• 41:02Speaker 02

  100%. So the caveat is long as it's thoughtful. There's a lot of crap that goes on in our space. And

• 41:13Speaker 02

  I don't want that to sully when I started this conversation with the core of the space are really purpose driven and principle driven people that are trying to rebuild the system in a way that they think is more fair. And so I would hate that the shysters around the edges and the crap that happens around the edges, you know, sidetracks what I think is a real revolution. And so you do regulators need to protect the little guy. That's their job, but they gotta be very careful because they've done a shitty job of it. And so I keep telling the crypto community, they need to self regulate. If you're one of these groups that launch a token and you own a bunch of them, you should report when you're going to sell your own tokens,

• 41:58Speaker 02

  right? If I sold Galaxy shares and didn't tell anybody, I'd go to jail. But I could be the the head of token ABC and quietly sell all my shares like Charlie Lee did when he was the founder of Litecoin. And then he went on CNBC after it sold them. I said, oh, I don't own any. And of course, the thing collapsed. And he's like, you know, that guy should go to jail or at least get beaten up.

• 42:23Scott Galloway?

  All right. Yeah, I've always thought the SEC is there to protect management, not investors. But if so, we have a lot of our listenership tends to skew younger. And I think a lot of people listen because they're looking not only for advice around how to invest their financial capital, but more than anything, how to invest their human capital. So sort of advice to your 25 year old self or advice to 24 year old who says, you know what? I buy into what Mike's saying. I think this is the future. How do I prepare for it? What courses, what classes, what companies? Ideally, do you want to start tracking or trying to throw your resume into? Help me help this younger generation. Give us a little bit of a playbook or best practices and say, I buy into this. How do I get involved? How do I prepare for this world?

• 43:05Speaker 02

  Well, so the great part is there's a huge amount of information on YouTube and Twitter.

• 43:12Speaker 02

  Right? And so you start following the thought leaders, the talik, Joe Lubin, you know, Brian Armstrong, Chris Dixon. And so there, there's really amazing stuff that's that's shared both publicly and day to day on Twitter, publicly on other forums.

• 43:31Speaker 02

  There's 25, 30 odd companies that are real in the space. At least, you know, the big venture companies hard to get into. But those are amazing places. That's a 16Z, Paradigm, Poly Chain.

• 43:47Scott Galloway?

  So few, so few jobs. That's kind of not realistic, right?

• 43:50Speaker 02

  Yeah, you're right. And so Coinbase, ourselves, any of the crypto companies just being part of. We, we, we're now 510 people. We think we'll be 800 by March. And so we're hiring quickly as a lot of our competitors are. But I think there is a self-education that's going on and there's a lot of resource on it. What's unique about this as well, it's global, right? We've never had global markets before, right? We've got US bond market, Japanese bond market. I guess gold was one of the few global commodities in oil. But now you've got Compound, which is a, a global interest rate market. You've got Uniswap, which is a global exchange.

• 44:35Speaker 02

  And so really, you know, but who's people's, well, I would tell 25 year old anyway, uh, to travel. Like, forget crypto for a second, like, go to Europe, go to Asia. Try to understand how these other cultures are fitting, because the world is, especially in the crypto universe, a very global one.

• 44:54Scott Galloway?

  So your market cap right now, I just looked this up, is about $3 billion. For the life of me, I can't figure out why Goldman or Morgan wouldn't buy you.

• 45:02Speaker 02

  That's, that, that's, it's actually $11 billion, but.

• 45:07Scott Galloway?

  Sorry.

• 45:07Speaker 02

  Yeah, you know, we have a, we have a two-share class thing. And so, uh, that's the.

• 45:13Scott Galloway?

  A difference.

• 45:14Speaker 02

  Yeah, that's the, that's the public float, the rest.

• 45:16Scott Galloway?

  Good for you, Mike. I'll have to say, good for you. Well done. 11 billion. So, yeah, in reading your background, the thing I was really drawn to, or the thing that, uh, obviously, you know, you have a very impressive background. But the thing that was really, I found most fascinating was that you were a helicopter pilot in the US Army.

• 45:34Speaker 02

  I was.

• 45:35Scott Galloway?

  What led you to that?

• 45:37Speaker 02

  You know, I grew up in an army family and back in 1983, 84, when I was in high school, I graduated in 83.

• 45:47Speaker 02

  Taking an RTC scholarship in my neighborhood was a viable way to finance your education. I wanted to got into Princeton and they didn't have athletic scholarships. Uh, and so I took an RTC scholarship and, and, uh, I decided if I was gonna be in the army, I'm gonna be a fighter pilot. Uh, you know, Tom, Tom Cruise and come out with Top Gun, it'd feel like a cool thing to do. Uh, and I listen, I look back on that, I loved my time. Now, I naively thought we'll never go to war again, right? There'd be glass nose and, and so I chopped out and went to the, uh, the National Guard.

• 46:23Speaker 02

  Reagan had put too many people in the army in the eighties. They said, anyone want to join the guard? And I was like, I'll join. Uh, and so I didn't serve that much time on active duty. Uh, and of course, right after I left, Saddam invaded Kuwait and all my friends from flight school went off to war. And I was flying a helicopter out of New Jersey looking for pot plants.

• 46:45Scott Galloway?

  Right, the drug war.

• 46:46Speaker 02

  Yeah.

• 46:47Scott Galloway?

  And who knew, who knew that 20 years later, you'd be growing them in your backyard?

• 46:50Speaker 02

  That's true.

• 46:51Scott Galloway?

  But what, what are some, what, what are the biggest misconceptions about serving? I mean, so many of us look back, uh, look from the outside on service. And I don't think we really understand it. Like, what do we not understand or get about serving? And especially being a helicopter pilot?

• 47:11Speaker 02

  So the first part is the army is one of the great integrators our country ever had, or the services are. Right? So you go to basic camp and you've got black kids from Mississippi and white guys from Oleen, Illinois, and, and people from all over the country. And, you know, when you're standing there in your skivvies, you know, your white underwear,

• 47:34Speaker 02

  and living in a barracks and waking up at 6:00 AM.

• 47:39Scott Galloway?

  It's a great leveler.

• 47:40Speaker 02

  It's a pretty great leveler. Uh, and you become buddies and you learn to appreciate other cultures. And so in some ways, this idea of universal service makes sense just for that. Right? Uh, we have such a balkanized world and that, that was the un-balkanizer. The second is, there's idea that...

• 48:00Speaker 02

  You're willing to debate, you know, like I, I, I thought I was a Republican when I went to flight school and real quickly realized I was the most liberal guy of the 700 people in flight school. And so I literally shifted parties to Democrat because I can't, if I'm a Republican, we're all screwed. But you're willing to debate issues, but when it comes down to it, you're, you're wearing the American flag on your chest. It, you know, when you talk to schools like Princeton, the biggest donors to Princeton are the athletes because they wear the colors on their chests. And if you take that metaphorically for the army, what should wear that flag on your chest? You raise your right hand and swear

• 48:39Speaker 02

  to defend the constitution. It creates a spirit of bipartisanship that doesn't exist, right? It's America first. I mean, Obama said it, we're not the red states or the blue states, but the United States. That, that's been lost. And I think quite frankly, if we had a lot more people that served, we would probably have a much more cohesive country.

• 49:00Scott Galloway?

  Mike Novogratz is the founder and CEO of Galaxy Digital, an investment firm focused on cryptocurrencies, blockchain technology and digital assets. He serves as the chairman of the Bail Project and has made criminal justice reform a focus of his family's foundation. He also serves as the chairman of Hudson River Park Friends and sits on the boards of NYU Lango Medical Center, the Princeton Varsity Club, Jazz Foundation of America. That's a rap in bars. I don't believe you're really into jazz. I think, I think that's just a cool rap. And Artist for Peace and Justice, he joins us from his office in Manhattan. Michael, thank you so much for your time and stay safe.

• 49:35Speaker 02

  Thanks for your time.

• 49:42Scott Galloway?

  Algebra of Happiness. I have a lot of friends who are struggling with their teenagers. And it's one thing to struggle with your teenager because he or she is drinking or not doing well in school. Those are what I'd call kind of, you know, DEFCON. Two, or I don't know if DEFCON goes up or down. I think it goes down to DEFCON one. Anyways, I don't know, and I don't want to know. But it's sort of a blinking yellow light, those things. The red light is when your kid is struggling with some sort of mental illness. And some of this is a function of proximity bias in that because I'm at an age where I now

• 50:21Scott Galloway?

  know a lot of parents whose kids are struggling with some form of mental illness or depression. There is this kind of convergence or this epidemic of mental illness because of the perfect storm of one. Concierge bulldozer parenting, and that is we as parents with more resources helicopter and use so many sanitary wipes on the kid's life that he or she doesn't develop their own immunities. They show up to college, they get their first C, they get their heartbroken. Mom and dad aren't there to clear out every obstacle and they literally freak out. And at NYU, I can tell you that it's sort of disturbing how much emphasis, and it's

• 51:03Scott Galloway?

  they're absolutely doing the right thing, has been placed on suicide prevention. Not because that's not the right thing to do, but the fact that we need to do that, that the number one source of fatalities now in college is not accidents. When I was at UCLA, I was president of something called the Interfraternity Council. So I was sort of king of the jarheads. And it was a 3,000 person strong special interest group. And it was just shocking how many kids hurt themselves or died in alcohol related accidents. I had a friend go to a party in Malibu and decided while he was fucked up, no shocker, we all spent the majority of our late nights on weekends fucked up, and take a jet ski out into the Pacific at 1 a.m.

• 51:47Scott Galloway?

  and he washed up eight days later. I had another friend roll off the roof of a fraternity and was, you know, lost his vision in one eye. I mean, it just, it was just everywhere, these alcohol related accidents. And now it's suicide that is the number one culprit of young people losing their lives in, in college. And then you have social media, which is, there's a direct correlation between escalating teen depression and when social went on mobile. And then you have the pandemic where if you're a senior in high school or a freshman in college, you got to think that the lack of socialization just compounds these. These effects. And I don't, I don't have what I'll call a silver bullet or some sort of majestic sentimental

• 52:32Scott Galloway?

  learning from this, other than to say that, you know, you have your world of work, you have your world of friends, you have your world of kids. Something comes off the track with one of your kids and everything shrinks to that kid. And it strikes me that it doesn't matter how successful you are, it really doesn't matter how influential you are. To a certain extent, it doesn't matter how, how many wonderful friends you have. If something goes wrong with one of your kids, kind of all of it becomes pretty meaningless pretty fast. And I'm wondering what it is we need to do, and my go-to is always, I always blame social media companies, but I think there's a lot that we need to rethink as a society around

• 53:14Scott Galloway?

  how we raise our children or what's involved. Should we be sending kids this early at the age of 17 to college? I was too young to go to college. I mean, fortunately, it's kind of a safe place to fuck up, or UCLA was, but I went to college when I was 17. I think the notion of what Mike talked about of some sort of national service where you let people marinate, develop connective tissues around the country. I do think we should educate social media. And this past weekend, we held a fundraiser for the Jedd Foundation, which works with universities to educate and assist young people around teen mental health issues and suicide prevention. And just some of the figures are just striking. But what is it about our society? What is about our businesses?

• 53:59Scott Galloway?

  What is it about parenting where we can do sort of an all hands on deck and figure out the legislation and the resources and the parenting advice to stop or to reverse this trend? Because this really is, Jonathan Haidt, my colleague at NYU, who is not prone to dramatic statements, said that the mental health crisis, or the emerging mental health crisis among teenagers is, is in fact, the worst mental health crisis he's seen in his lifetime. And this is from a social psychologist who kind of looks at every trend across every geography. And I think it's up to us as voters. I think it's up to us as people in small business. And I think it's also up to us as parents to say that we are just not going to tolerate

• 54:43Scott Galloway?

  an emergence in teen depression. If it emerges and increases, that means it can submerge and decrease. We need to hold firms accountable. For hardwiring and addictive techniques, we need to hold CEOs accountable. We need to hold ourselves accountable as parents. That not programming this software to operate in the environment it's going to have to operate in, and that is, it's probably okay if the kid fails every once in a while. It's okay. I mean, this is kind of weird. I yell at my kids and my, you know, people around me freak out. And so you're traumatizing them. And I'm like, well, get fucking used to it. They're going to get yelled a lot out there. Or maybe I'm just saying to, saying that to make myself feel better.

• 55:24Scott Galloway?

  We need to absolutely support organizations that are going after this issue because I'm telling my brothers and sisters who have small kids, there is nothing like your kid coming off the tracks as a teenager. It literally stops and pauses your life and there is no reason we should accept this. There is no reason we can't turn this back.

• 55:47Scott Galloway?

  Our producers are Caroline Shager and Drew Burrows. Claire Miller is our assistant producer. As a reminder, we answer your questions regarding business trends, big tech entrepreneurship, career pivots, and whatever else is on your mind on the pod every Monday. If you'd like to submit a question, please visit officehours.prophgmedia.com. Again, that's officehours.prophgmedia.com to submit a question. If you like what you heard, please follow, download, and subscribe. Thank you for listening to the Prof G Pod from the Vox Media Podcast Network. We will catch you next week on Monday and Thursday.

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