#1141 Bill Pulte On Twitter, Elon Musk, Bot Farms & Bitcoin

Bill Pulte is an entrepreneur, investor, Founder of Twitter Philanthropy, & CEO of Pulte Capital. In this conversation, we discuss Bill’s recent controversy involving a $15B company and a bot farm, Elon Musk's Twitter and why Bill invested, the Bitcoin bear market, the housing market, and how bad will the U. S. economy could be in 2023. ======================= Exodus is the world’s leading browser, desktop, mobile, and hardware crypto wallet with support for over 230 cryptocurrencies. Founded in 2015 to empower people to control their wealth, Exodus has delivered a multichain Web3 Wallet – connecting you to Ethereum, Solana, and Algorand Web3 apps directly in your browser, with more networks on the way. Visit exodus.com/pomp today to download. ======================= LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp ======================= Arculus knows a thing or three about security. Your assets are accessible through 3-factor authentication and by using the Arculus Wallet App and Arculus Key Card. Your keys are generated and encrypted on the Arculus secure element, rated CC EAL6+. This means you – and only you - own your keys and therefore, your crypto. Keep your digital assets secure and safe from exchange freezes, bankruptcies, and hacks with Arculus. Save 20% through 12/10 with promo code POMP ======================= This episode is brought to you by Eight Sleep. The Eight Sleep Pod is a tech layer that fits onto your mattress like a fitted sheet. The Pod dynamically cools and heats each side of the bed, to maintain the optimal sleeping temperature for what your body needs. With the Pod, you can start sleeping as cool as 55°F or as hot as 110°F. The result: Clinical data shows that Eight Sleep users experience up to 34% more deep sleep. Go to eightsleep.com/pomp for exclusive holiday savings and ring in the most wonderful time of night. Eight Sleep currently ships within the USA, Canada, the UK, select countries in the EU, and Australia. ======================= OKX is the world's most powerful crypto exchange and is now the second largest in terms of volumes. It offers a comprehensive trading platform with over 730 spot trading pairs, 280 derivatives markets, and 1000 options markets. It processes 400,000 requests per second with 30 gigabyte per second data throughput and 99.95% uptime. For pro and institutional traders, they’ve just launched the OKX Liquid Marketplace, an on-demand liquidity network with multiple brokers where you can instantly trade spot, derivatives, and multi-leg structures at the price you want while bypassing the order book. They offer up to a 50% discount now. Go to OKX.com and try it now. ======================= Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Compass was founded with the goal of making it easy for everyone to mine bitcoin. Visit https://compassmining.io/ to start mining bitcoin today! =======================

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

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Bill Pulte is an entrepreneur, an investor, and the creator of Twitter philanthropy. He serves as the current CEO of Pulte Capital and was a former director of Pulte Group. In this conversation, we talk about a $15 billion annual revenue company that had a COO who created a bot farm and was attacking them, stealing identities and all kinds of chaos. We also discuss Bitcoin, Elon, and the purchase of Twitter, why Bill invested in that deal, what he thinks about the housing market, the Fed, and the US economy. I always enjoy talking to Bill and I hope that you guys enjoy this episode. Once you get done listening, jump on Twitter and let us know what you think, what you liked,

• 0:46Anthony Pompliano?

  what you didn't like, what you agree with and what you disagree with. We always appreciate the feedback and it helps us get better. Here is my conversation with Mr. Bill Pulte. This episode is brought to you by Exodus. Accessing Web3 across multiple networks just got a hell of a lot easier. Exodus is one of the most popular crypto wallets for mobile and desktop, and they just added Chrome and Brave web browsers to the lineup. The new Exodus Web3 Wallet is a multi-chain browser extension that lets you safely navigate Web3 and DeFi apps on Ethereum, Solana, and Algorand from one wallet. Manage Mint and Sell NFTs on multiple networks in one wallet. You can swap Solana and ETH tokens natively right within the extension. And if you ever hit a snag, world-class customer service is available 24/7.

• 1:29Anthony Pompliano?

  More of your favorite chains are on the way, so run, don't walk. Over to exodus.com/pomp to download the Exodus Web3 Wallet right now. Again, exodus.com/pomp. Go check them out today. This episode is brought to you by LMAX Digital, the number one institutional crypto exchange. They offer clients the deepest pool of liquidity and they have 100% uptime track record through all the volatility spikes. LMAX Group's liquidity relationships and ultra-low latency technology means that LMAX Digital is the market-leading solution for institutions across crypto trading and custodial services. LMAX Digital, secure, liquid, and trusted. Go learn more at lmaxdigital.com/pomp. Again, That's LMAXdigital.com/pomp. This episode is brought to you by Arculus.

• 2:14Anthony Pompliano?

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• 2:58Anthony Pompliano?

  Go to Arculus and use promo code POMP today.

• 3:01Speaker 01

  Anthony Pompliano runs POMP Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of POMP Investments. You should not treat any opinion expressed by POMP or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 3:24Anthony Pompliano?

  All right, guys. Bang, bang. I've got Bill here. You and I have known each other for a long time now. There's a whole bunch of stuff we're going to talk about from Elon and Twitter, which is the deal you invested in, Bitcoin, the economy, the housing market, all that. But first, you've been in the news quite a bit lately. There is a $15 billion

• 3:41Speaker 02

  Not by choice, necessarily.

• 3:43Anthony Pompliano?

  Okay, there's a $15 billion publicly traded company of which your grandfather started called Pulte Homes.

• 3:48Speaker 02

  Sure.

• 3:49Anthony Pompliano?

  And one of the executives there was essentially running like a bot farm and coming after you?

• 3:54Speaker 02

  Allegedly, and we have obviously very good proof. We feel very confident in it. But basically, the number two in this Fortune 500 company was running these different identities to attack me, attack my dead grandfather, attack my family members. And in many cases, it was almost daily that this was going on. You know, I get a lot of stuff that said bad about me, just like you do on Twitter. Okay, I can handle a lot. But when you have, in this case, a guy taking a dead guy's Identity and repurposing it for these Twitter bots, for example, and then having these AI-generated photos. There's one girl, she looks like in her twenties or thirties. Another guy looks in his twenties or thirties, and then you got this dead guy, right? And they're all, you know, attacking and amplifying each other.

• 4:36Speaker 02

  And what's really interesting about it is that we saw a lot of non-public confidential information coming from these different accounts, these fictitious accounts. And so, you know, me being a former director of the company, you know, I was able to pick up on a little bit of, okay, you know, that's not information that's out there in the public domain. This is potentially a problem. And so I started to get smart with it and without getting into the forensics too much, we uncovered it. And like you said, it's become quite a big story in the last week or so.

• 5:06Anthony Pompliano?

  So this individual was doing this and as you started to uncover it, like, did you think that, oh, there's a bot farm? Or was it more of a, that account's weird, let me go check that account out? And then like you kind of uncovered the whole thing.

• 5:18Speaker 02

  Well, what was weird was that they were starting to interact with each other. So for instance, when I'm improvising, I'm not necessarily quoting a tweet here because I'm in litigation with the guy, I'm going after him personally for doing this. I'm not suing the company. But, you know, they would interact with each other. So some, one of the bots would say something and then the other bot would come in and say something back to give this impression of, you know, that they were talking to each other. And then they would like the tweets and retweet them and stuff like that. And again, you know, my concern is I care a lot about my grandfather, my family's former business, Pulte Homes. I care a lot about our name brand, a lot about the company being successful. And if you have a number two, this guy was the incoming COO of this Fortune 500 company,

• 6:02Speaker 02

  running this type of smear campaign. This is not somebody that you want running a $15 billion a year revenue company. I mean, how does somebody like this have time to do something like this? When they're responsible for so much across this Fortune 500 company, it just doesn't make sense.

• 6:20Anthony Pompliano?

  How common is this type of stuff inside of these big companies? I think a lot of people throughout the last couple of years have seen various large companies that are publicly traded that you think it's just Normal company, I put that in air quotes, right? But then you come to realize that either the individuals are doing crazy things or the company is doing crazy things. Like you've been in and around these companies. You were on the board of this specific company. How common is this type of stuff?

• 6:42Speaker 02

  Well, you know, always at the board level, you're always wondering, okay, what isn't management telling us, right? They're always telling you great things that they're doing, but what aren't they telling you? I think, you know, and I, I don't know what the board's thinking necessarily, but I, what I would speculate, whether it's this board or another board or a company board, is that when you see this kind of stuff, you start to say, okay, how did this guy have this much time to do this kind of stuff? On company time, allegedly, we have very good proof, and potentially on company devices and company equipment. I mean, this is a problem. And so, you know, it begs the question, okay, what is going on at some of these other Fortune 500 companies? How do we make sure that, you know, as we have pension funds, investors, people investing in these big companies?

• 7:26Speaker 02

  You know, it's one thing to invest in a crypto company, no offense. And, you know, you know that you're getting a risky deal. It's another thing to invest in a Fortune 500 company and have an executive be running something like this. And I think that's what's so shocking about this. Or like the COO recently, who I think it was Beyond Meat's guy, right? Who bit somebody's ear at a football game? I mean, it's just behavior that shouldn't be happening for a Fortune 500 executive.

• 7:50Anthony Pompliano?

  Why has the media been so interested in this? You've been on a bunch of different outlets and they seem to really have kind of latched on to this. What is it? Is it that it is a Fortune 500 company? Is it that it's an executive? Is it that it's your guys' family's company and your name's still on it? Even though I don't know if you guys own shares or not still. Like, why is the media so kind of enthralled with this specific story?

• 8:10Speaker 02

  Well, they first thought it was just wild accusations. They said Pulte, and I was even on CNBC and Scott Wapner saying, these are wild allegations, you know? And I understand he's a journalist, he's got to push back. But all those wild allegations, looks like they're pretty darn true. And, you know, Pulte Group went, I was on CNBC on Thursday at 4:30 or something. And by Friday morning, the gentleman was fired from Pulte Group. So there's something true here. We're going to get to the bottom of it. But I think that people just have a hard time. Time believing that somebody in this position could be doing this kind of stuff.

• 8:43Anthony Pompliano?

  Yeah, and it begs the question of Twitter more in general, right? I've seen studies where people have looked at negative content around a specific story. And it's like 80, 85% comes from a certain number of accounts, right? We've seen accusations of Twitter, like hate speech and all that stuff skyrocketing since Elon took over. Elon pushes back and says, no, actually, that's down. We've been able to to kind of mitigate those risks. How do you think of Twitter as a product itself in terms of the conversation? Where if this does happen, like, is that a prevalent thing on Twitter? Or is that just some person who ends up doing this in this one specific case? And it's not actually the norm on Twitter?

• 9:19Speaker 02

  Yeah, I don't think it's necessarily the norm. I mean, this was very calculated, very malicious, right? I get trolls all the time, all day, every day, right?

• 9:26Anthony Pompliano?

  That's same.

• 9:26Speaker 02

  If you're on Twitter, that's basically what you do for a living is you hear from people. But you very rarely see a well compensated Fortune 500 executive use that brain power to conceal his identity and discuss the company by which he is a senior executive of. I mean, this is very unheard of as far as I'm concerned. I mean, you know, when you go to sell stock or when you go to discuss stock, as far as I know, and obviously, we're getting into the all the legalities of this. But when you go to discuss a public security that you're affiliated with, and you're a senior executive with information that the public is not aware of, you cannot be using that position to, you know, put out information as long as you're not, you know, disclosing that to all investors and investor relations departments.

• 10:11Speaker 02

  I mean, that's why they have investor relations departments.

• 10:14Anthony Pompliano?

  And what was the type of non-public information? Obviously, don't say the the information, but like, what was it? Was it like revenue type metrics? Was it other things?

• 10:21Speaker 02

  Well, just some of the stuff that we've released so far is about employees and layoffs in particular. And and some of the information that only somebody who was kind of on the inside necessarily would know.

• 10:31Anthony Pompliano?

  And that tipped you guys off to some degree?

• 10:33Speaker 02

  It tipped me off as a former director of the company saying, OK, this is stuff that only somebody with access to board materials or to the CEO would know. And that raises another question, you know, how did this guy get this information? Right? Because, you know, he wouldn't necessarily have had access when I was on the board to certain information. So there's a lot to unpack here and we'll see. But, you know, I'm just glad that we at least put a stop to it temporarily at a minimum. I mean, this has been going on for years, we think.

• 11:02Anthony Pompliano?

  One of the weird things, or maybe unusual things, is that like your family started a business, the name Pulte is on the business, but you all aren't there operating the business. Is that like a weird thing? Do you think that many families deal with that when they start companies and end up either bringing them public and they no longer operate them? How do you kind of balance that in your head that like your family's name is on something, but you guys aren't actually making the decisions?

• 11:23Speaker 02

  Well, my grandfather started at age 18. He was a carpenter and he built it into something that was way more successful than he ever thought. And I think the reason he went public was he wanted to incentivize the employees to build something amazing. So I think from an early age, kind of the DNA of the company was maybe more, and it's hard to believe this these days, but I think they do exist, especially for a depression era boy like my grandfather, where they're very selfless. And so, you know, they were very much like, hey, let's get everybody rich who's helping us get rich. Let's have everybody do it that way. So, you know, it's never really been about, oh, just it's Pulte on the door and everything, but we do feel a commitment to make sure that, you know, we stand behind it. One of the things that he allegedly did was he was attacking people for not being able

• 12:04Speaker 02

  to qualify for a Pulte home, not not being able to purchase a Pulte home necessarily. And that's also what we want to make sure that, you know, executives aren't making fun of people for their financial status.

• 12:16Anthony Pompliano?

  Yeah. We mentioned Twitter earlier. You were an investor in the take private of Twitter.

• 12:21Speaker 02

  Yes.

• 12:22Anthony Pompliano?

  With Elon kind of leading the way, but he raised money privately. How can you explain to people kind of the private fundraising process, or at least your experience in it in terms of the $44 billion price point, obviously was this big number. And I think there's still a lot of people who think like Elon pulled $44 billion, like he just withdrew it from his bank account one day and like sent it somewhere. Talk a little bit just as like how that type of deal comes together.

• 12:44Speaker 02

  Well, it was really interesting because I've invested in a lot of different funds and stuff, and usually you're waiting for the fun and you're waiting for these different things. And what was kind of cool about it was in real time, you were watching him, and obviously I didn't have any information about this, but you know, from the news reports, you were reading about how you were selling stock to basically fund the purchase. And so it was almost like, okay, you're kind of, you know, riding alongside or behind Elon, so to speak, as he's going to do this. And so it was very, very much backseat, but my my general investment thesis was that You know, and I've been exposed to a lot of entrepreneurs, whether it's my grandfather or other people, and I've been able to learn from a lot of these type of people, as I know you have. And, you know, Elon is just the world's greatest entrepreneur, as far as I'm concerned. And so, you know, I'm not necessarily sure what he's going to do with Twitter, but I certainly

• 13:28Speaker 02

  would have been, wouldn't bet against him. And so I put, you know, several million dollars into the deal and we'll see what happens.

• 13:33Anthony Pompliano?

  It's fascinating to hear your thought process, because I think a lot of people would assume that investors are going and they're looking through all the documents and the financials and all this stuff. And sometimes like, that's not even provided to the level of detail that an individual would believe it to be. But also, we saw a number of well-known investors, like Marc Andreessen, some of the texts came out where he basically had said, hey, we're in for, I think it was $250 million or something. We don't need to do any diligence. Like, we're just in. And

• 13:57Speaker 02

  That was kind of the theme of the whole deal, which was fascinating.

• 14:00Anthony Pompliano?

  But that like, leads me to believe that most investors are just saying, this guy was at least integral, if not the driver of SpaceX and Tesla and Boring Company, Neuralink, like all these other companies that appear to be working. I bet that he can figure Twitter out.

• 14:14Speaker 02

  Yeah.

• 14:14Anthony Pompliano?

  I'm gonna bet on him, more so than I'm gonna bet on this specific financial state of the deal, or anything like that.

• 14:19Speaker 02

  And he had such confidence with it, right? He knew the platform, right? We were power users of it. Most of your audience is power users of it. So, here he is, a guy going in to acquire a company, he knows it very well, back and forth, right? He's a brilliant engineer, he's a brilliant software engineer as well. He's gonna figure it out, and I think he will.

• 14:37Anthony Pompliano?

  So

• 14:38Speaker 02

  What do you think? I think this thing that they're doing with the tweets, by the way, where they're gonna put the view count on the tweets, I think that is gonna be explosive. Because I don't think people understand how far a lot of these tweets go, even, you know, it doesn't matter whether you have 10 followers, 100 followers, or 3 million followers. You know, these tweets get seen by a lot of people. And I think, once you start to see how many people are seeing these tweets, the thing is just gonna even spread more like a virus.

• 15:00Anthony Pompliano?

  You and I both, uh, because we've talked about in the past, have done hundreds of millions of impressions per month on that platform. And there's almost no other platform in the world where you can do that on a consistent basis.

• 15:11Speaker 02

  Right.

• 15:12Anthony Pompliano?

  It is, in my opinion, the most powerful social media platform, uh, when used correctly, which I think, you know, you and I both have figured out to some degree. What else do you think he should do? So he has the view count public, so people We can see, hey, here's how much reach these tweets are getting. Are there other things that stick out in your mind?

• 15:25Speaker 02

  He's got to figure out how to monetize it. You know, I've been one of the early people who give away cash on Twitter. It was kind of a thing that was once upon a time like, what is this? What is this all about? Now it's like the hot thing to do. And so if he can figure out how to tap into this, you know, strike while the iron's hot on this money thing on Twitter. And I'm not necessarily saying it has to be philanthropy, but I know obviously he has a background and David Sacks has a background in PayPal and these things. But if they can figure out how to make this a commerce site and really a, what is it? A WeChat, so to speak, this thing could be otherworldly in terms of powerful. I mean, this could be the most powerful app in, in my opinion, in human history.

• 16:03Anthony Pompliano?

  Yeah, what's fascinating to me is that it already serves the purpose that LinkedIn was supposed to serve. Like, I don't check LinkedIn for messages or like networking or any of that type of stuff. But if somebody DMs me on Twitter, for the most part, I see it, right? And then if I want to reach out to someone, maybe I'm weird, but I go to Twitter first. I don't go to Instagram. I don't go to LinkedIn. I don't go to Facebook. I don't look for their email. I was like, go to Twitter. Am I following them? Are they following me? Can I DM them?

• 16:27Speaker 02

  And But that's also the industry that you're in, right?

• 16:29Anthony Pompliano?

  Correct. Absolutely.

• 16:30Speaker 02

  Like, I'm in the construction industry, for example, and you wouldn't necessarily go find a foreman or something like that on there.

• 16:36Anthony Pompliano?

  For sure, but I think that he understands the tech industry and the finance industries on Twitter. And so like, if you're in those industries, it works.

• 16:44Speaker 02

  And media.

• 16:45Anthony Pompliano?

  Yeah, and media. And so that's like a networking thing. But what you're really talking about is if he can then cross over and also make it a payments thing now, rather than me go to dinner with a friend and I Venmo or I PayPal or I do any of these other things, I just go on Twitter and I'm able to just pay someone. That's pretty damn powerful because if you can get payments on there, plus you have the communication and you've got the networking, you start to rival every single other app to your point.

• 17:08Speaker 02

  Genius. And not only that, but you know, again, because we're Twitter philanthropy, think about it from this standpoint. We go out there every day. We raise money for people who are dying of cancer, who need groceries, who need medicine, who need all these kinds of things. And, you know, it's called direct giving, so it's not this traditional philanthropy, which can be great, where you give $30 million to build some building. Okay, this is direct giving. This is acute right to the Right to the issue, whether it's groceries or what have you. Let's say you see people on Twitter, for example, and you see somebody who's dying of cancer. By the way, this happens every day. Okay, I see it every day.

• 17:43Speaker 02

  And you want to help that person. You could click a button, boom, send them cash. Now, right now, you have to go to their profile and then you have to choose between Bitcoin and USD. So, you know, if Elon can figure out how to crack that code, I actually think that it can do tremendous wonders. This is going to sound like a little bit of a crazy idea, but it can do tremendous wonders in ways that the government and social security and Medicaid won't be able to do. And it'll get the money quicker, faster, directly to people.

• 18:10Anthony Pompliano?

  I've always thought, and not my idea, just one of a hundred of a time, the velocity leads to productivity, right? So if you can get velocity of money, if you can get velocity of output, if you can get velocity of communication, you get output. What you're really talking about here is if you can get velocity or reduced friction in the movement of money back and forth, people will not only use it for traditional like peer-to-peer type payments or reimbursing each other or whatever, but they'll find these new use cases, which I think one you pioneered was this Twitter philanthropy. And there's probably plenty others that someone out there in the world will either figure out, they'll pioneer, they'll champion. And all Elon has to do is just reduce the friction of being able to allow people to pay each other and then just let the internet magic go to work.

• 18:49Speaker 02

  Correct. And I don't know if you saw what he did, but he renamed it from super followers to subscribers. That was genius. Just because super follower sounds just very tacky, in my opinion. And now that he has subscribers, he can compete with Substack, he can be more like YouTube. So we'll see. It is a little concerning that he wants to step down as CEO. I think it's just because he's fatigued, but again, I don't know anything there, but that would be disappointing.

• 19:15Anthony Pompliano?

  Would you be disappointed?

• 19:16Speaker 02

  It would, yeah. Yeah. I mean, I think that he's going to make it work no matter what. I think he's always going to be, you know, actually the CEO, but you know, nobody can replace his genius.

• 19:25Anthony Pompliano?

  Yeah. What about the Twitter files, like in this whole like dump of data and information and ideas? Like there's the information and then also how he's publicizing it. Like he went to independent journalists and said like, hey, I'm going to give it to you rather than give it to one of the big media companies. What did you think about that?

• 19:39Speaker 02

  I thought it was excellent. And in fact, I just started Pulte Files this Last week to expose these different bots. You know, using dead people's identities to attack me and my family and stuff like that. And so I'm leaking this stuff out, you know, slowly but surely. And it's called the Pulte files. So I was very impressed with the Twitter files and we should be doing more of that. Right. At one point you had WikiLeaks and you know, now it's the Twitter files and the more transparency, the better.

• 20:04Anthony Pompliano?

  Yeah. And then what about the actual information itself where there was social media companies working with the government? The government was providing information. Like, how do you think about, is it, there should be no communication between the platforms and the government? There should be a lot. There should be somewhere in between. Like, how do you just think about as a society, like, what should be acceptable and what shouldn't be?

• 20:23Speaker 02

  I think it's a big problem and I think Jack Dorsey was trying to figure it out in terms of being decentralized. I think that's why we love Bitcoin, right? Is because it's not controlled by any one person. So that's why I really want Elon to stay selfishly as the CEO is because I think he has the brain power to solve how we get Twitter to be decentralized. To where really unless it's something where you're breaking the law or whatever, you know, somebody who just wakes up on the wrong side of the bed one morning can't shut you off of Twitter.

• 20:48Anthony Pompliano?

  Yeah.

• 20:49Speaker 02

  I mean, that should be, Twitter should almost be a human right in some extent, to some extent, in my opinion.

• 20:53Anthony Pompliano?

  Why do you think it should be a human right?

• 20:55Speaker 02

  Because I think that, you know, everybody has the right to free speech, in my opinion. And again, you know, as long as you're not actually causing harm or doing some form of illegality. You know, you know, and again, scams and these type of things should all be taken off there. But, you know, I think that people need to express themselves and when you don't express themselves, then what happens is you get things like January 6th, or you get other different things where people get bottled up and then they, they're going to find a way to, you know, do what they're going to do one way. So you might as well have it in the open.

• 21:26Anthony Pompliano?

  Yeah.

• 21:27Speaker 02

  I think sunlight is the best disinfectant.

• 21:29Anthony Pompliano?

  Yeah, I agree with that. You mentioned Bitcoin. The last time we talked, I think, was towards the beginning of 2022. And you rightfully said, hey, I think Bitcoin's going to crash. You were smart enough not to put an exact price target or a timeline on it, but you were like, sometime this year, I think there would be like a correction. Talk a little bit now in hindsight, after having said that, kind of this year and how it's transpired, how much of it fit within what you thought was going to happen? Versus you got the intended outcome, but maybe some of the details were different.

• 21:59Speaker 02

  Good question. So you know, in the economy, obviously, the way that I look at it anyway, is that housing and transportation can often be leading indicators of the economy. And so what I was seeing when I was here with you last, earlier this year, was I was seeing some of the deterioration in housing, right? Because it's a leading indicator. And so then what you saw also, from my perspective, was you saw deterioration in lumber pricing. And so you started to see some of these commodities that had gotten so big, so fast, you know, in terms of price. And so I said, it's only a matter of time before, you know, the drain in liquidity, coupled with this commodity disinflation, affects Bitcoin. And so that's why I had said that.

• 22:35Anthony Pompliano?

  What are your thoughts about Bitcoin now? Prices have gone down 75%. I think you're still holding Bitcoin. You like Bitcoin. Is that all true?

• 22:42Speaker 02

  Yes, and I'm going to wait to be buying a little bit more. I think that it's still a little too expensive, given the liquidity dynamic. I think we're going to have continued liquidity problems in the market, in my opinion, first quarter of next year.

• 22:54Anthony Pompliano?

  And is that all being driven by the Fed just tightening financial conditions, keep raising interest rates and selling off assets?

• 23:00Speaker 02

  You know, again, you're talking to a housing guy, so I have kind of a unique perspective from an interest rate standpoint. We say in housing that interest rates are the mother's milk of housing. And so when you cut off the mother's milk of housing, in my opinion, that also goes downstream into the economy. And so I think that these interest rates, the effects of these interest rates, has not really been felt. It's been felt in housing, but I don't think it's made itself to mainstream business.

• 23:25Anthony Pompliano?

  And as you think about those interest rates, we've seen all year long, they've continued to increase. We've seen the sell-off of asset prices. And they've stated, we want to destroy demand, we want to destroy demand. They've done a fantastic job on the investment appetite side. There is very little appetite for investment at the moment. On the other side, though, you have consumer spending, you have a household income, you have savings, like all these other metrics that seem to still be like fairly healthy. How do you balance destruction of investment assets and investment prices with what still seems to be a somewhat strong consumer?

• 23:57Speaker 02

  I think it's only a matter of time and I think, you know, we're in the HVAC business. That's where I spend a lot of my time, direct to the homeowner. And we are seeing people being really reticent, so to speak, to spend the big ticket items that they were doing a year or two ago. So I think it's going to be a lag effect and it's just a matter of time.

• 24:13Anthony Pompliano?

  Yeah, and that means that the Fed at some point will have to pivot and...

• 24:17Speaker 02

  I think they already have. I mean, they went down to 50 basis points and, you know, I think they'll continue to increase, but it could be potentially pretty tough.

• 24:26Anthony Pompliano?

  Four and a half percent now, what do you think they get to?

• 24:29Speaker 02

  Don't know, but I'll tell you this. I don't know, but I'll tell you this, these mortgage rates are not very good. I mean, these are not, these are not very good things for the housing market. And so I think it's going to be good for the housing market as a buyer, as a consumer. I think it's going to help a lot of people. But the zoning in our country has made it, in my opinion, to where in addition to people not being able to build enough because of the last recession, people don't want to build a lot of these big subdivisions anymore. And so I think that's also going to keep housing prices pretty high.

• 24:59Anthony Pompliano?

  When you evaluate the mortgage market, we've seen an explosion. I know people who are getting, you know, 2.2, 2.5% mortgages a year ago. Now, all of a sudden, they're looking at 5 or 6%. Is it literally just number goes up, demand goes down? Or is there more complexity to it?

• 25:17Speaker 02

  No, it's literally as simple as that. I mean, obviously you have the wage issue as well, but you have, you have basically, if you dumb it down, you have interest rates and you have wages. And wages have stayed pretty strong, whether that's through inflation or through, you know, the inertia in the economy. But you have this interest rate situation and it definitely, what it does is it initially affects traffic and then once you see it in traffic, you see it in orders. And then once you see it in orders, you start seeing it in cancellations of homes. And you've seen cancellations go from, you know, in some of these cases, 12, 13% of orders to 25% of orders. I mean, that's a huge increase. Yeah, in, in cancellations, people, you know, signing a purchase agreement and then canceling it later, that's not good. You know, a quarter of the homes being canceled.

• 26:01Anthony Pompliano?

  Yeah. When you see something like inflation coming down on a year-over-year basis, so now we're down around 7% or so, it was up almost 9%, is that something where you're just like, okay, if that number keeps coming down, then the Fed will kind of go sideways? They don't need to keep raising interest rates? Or do you start looking at the compounding effect, right? I think last year in November of 2021, year-over-year inflation was 6.8%. This year it's like 7.1, 7.2%. So now we're getting into a period where more than 6% inflation, compound annual growth rate, which is a really scary number for the average consumer, like, how do you start to incorporate that into your investment decisions or even your consumption decisions?

• 26:40Speaker 02

  Well, I think this is why you and I both love Bitcoin, right? And so much your audience loves Bitcoin is because we understand the power of compounding. So even though in rate of change terms, you're not going to have the increases that you saw this year in inflation, right? It's still going to remain elevated. And, you know, especially, again, I'm a housing guy. So, you know, if you keep these housing prices high for a long period of time, and, you know, you're essentially devaluing the dollar through every year compounded, right? These mortgages are also going to be devalued because they're based in US dollars, right? So I think you're absolutely correct that this is why Bitcoin is so attractive over the long haul. I just happen to think that it might have some more downside before it. I mean, it could potentially scream again, right? In just epic fashion.

• 27:24Anthony Pompliano?

  Yeah.

• 27:24Speaker 02

  I mean, it's pretty crazy. The whole use case that you laid out when everybody thought you were crazy a few years ago, has totally proven itself as far as I'm concerned.

• 27:32Anthony Pompliano?

  The two pieces to the argument, the store of value, there's lots of people who say, hey, if it's a store of value, then you also said it was going to be an inflation hedge. And they look at the price.

• 27:42Speaker 02

  It has been in many ways, though, compared to other things.

• 27:44Anthony Pompliano?

  So that's my argument, is Bitcoin has actually been the best inflation hedge, because if you go back to 2020, it was trading at $8,000. Before inflation crossed over 5%, it went from $8,000 all the way up to $64,000 in March of 2021. And so from that standpoint, assets and markets are forward-looking. It saw inflation as coming, people ran to an inflation hedge asset, and it increased in price. Now what's happening is as the Fed said, hey, we're going to tighten conditions, we're going to go ahead and destroy demand. And again, forward looking, all of the people who are holding is saying, oh, these inflation hedge assets aren't going to do nearly as well as they bring down inflation. They have liquidity issues in the economy. I'm going to sell this asset and I'm going to go into value stocks or other types of cash or whatever. That's to me exactly how an inflation hedge should be

• 28:27Anthony Pompliano?

  working is it goes up before the inflation hits and then it comes down when they go ahead and they destroy demand, right?

• 28:34Speaker 02

  Exactly. All right. Mic drop. I couldn't even say it better. Yeah.

• 28:39Anthony Pompliano?

  When you think of your portfolio today.

• 28:40Speaker 02

  And that's just math. I mean, anybody who takes issue with that, look at where Bitcoin was and look at where it's at now. I mean, it's crazy to think that you've had all this this increase in interest rates and it's still staying at what 15, $16,000?

• 28:53Anthony Pompliano?

  It's double where it was at the beginning of 2020.

• 28:56Speaker 02

  You know, I mean, pigs get fat, hogs get slaughtered. So anybody who's claiming, oh, well, you know, it went up really high. Well, you know, should it have really gone up that high? Was that part of the mania as well? I don't think that it has fundamentally something to do with Bitcoin.

• 29:08Anthony Pompliano?

  Yeah. And when you think of those fundamentals, everything still you think is intact in terms of like the argument for Bitcoin is just the price has the volatility to it.

• 29:15Speaker 02

  Yes, yes.

• 29:16Anthony Pompliano?

  All right. When you think of your portfolio today, given where we are in the economy, how are you allocating capital? Like, do you think of percentages to stocks or real estate or Bitcoin? Or how do you think about it?

• 29:25Speaker 02

  Yeah, I'm almost 100% in stocks and other than my Bitcoin allocation. And the way that I look at it is, is I also sell calls on my stock. So, you know, for people who aren't familiar with that, you know, you can have a broker, you can have somebody else, you know, effectively sell calls. And especially in a liquidity draining environment, there are opportunities where if you're smart, you can just, you know, let the time premium bleed off and then basically pocket the difference. So I've done fairly well with that strategy now. Now, when the economy is doing well and when there's plenty of liquidity, you can get your head ripped off selling calls. But so far, it's worked out pretty well for me. And then I'm investing in these other construction type businesses. When I say construction, it's really home services businesses. So heating and air conditioning and stuff like that, you know, air conditioning is kind of like oxygen. Everybody

• 30:10Speaker 02

  needs it. And so I'm pretty passionate about, you know, selling air conditioning and, you know, making sure that people have it. We have a big business in Phoenix, Arizona, for example, and people need air conditioning in Phoenix.

• 30:22Anthony Pompliano?

  What is the logic outside of just air conditioning? So home services in general, is it just, uh, these are businesses that are, are needed? And if you operate them well, they're profitable.

• 30:31Speaker 02

  Basically.

• 30:32Anthony Pompliano?

  Okay.

• 30:32Speaker 02

  Yeah.

• 30:32Anthony Pompliano?

  Uh, I've got a friend who I've talked about on the podcast.

• 30:34Speaker 02

  We like simple.

• 30:35Anthony Pompliano?

  Oh, simple is good. He started to buy up a lot of electrical companies, right? With electricians and his thesis was basically, hey, we're not producing nearly as many electricians as we used to. Trade school isn't as popular. People still need electrical work done. It's not going to be automated away. If I go and I buy up these companies who are usually family run and, you know, there, there's some sort of transition period between generations. At some point, I just have a monopoly, a pricing monopoly on markets. And so I can increase prices. I can do the things I need to do because I have the electricians and there aren't that many competitors. Is that true in other types of home services?

• 31:06Speaker 02

  Well, I wish I would have talked to your friend and I don't know, is he making money doing it or not?

• 31:10Anthony Pompliano?

  Uh, I believe so.

• 31:10Speaker 02

  Okay, good. So it depends, you know, what kind of, um, maybe he's looking for investors. Depends what kind of electrician work you're doing. One of the problems from my perspective with electrician and plumbing as a business is yes, it is very fragmented. Yes, it is very unsophisticated. Yes, it is very, uh, hands-on. So people have to do the work. So robots aren't going to be replacing it anytime soon. But the big difference from my perspective is that the ticket size, when you're going to sell these type of things, whether it's, you know, fixing somebody's electricity or whether you're fixing a toilet, you know, the average, uh, price per, per sale is pretty low. And so your ability to really generate gross profit dollars to cover your overhead every month and then shoot out a bunch of EBITDA, shoot out a bunch of earnings is pretty limited

• 31:53Speaker 02

  because you have that low order value with plumbing and with electricians. Compared to HVAC, for example, or even compared to like homes, for example, you know, if you sell one home, right? And you're selling it for a half million dollars a piece, there's a lot of gross profit dollars to go around. So you have to do, I guess what I'm saying is you have to do a lot of work to make a lot of money in electricians and plumbing. You can do it, it's just harder.

• 32:15Anthony Pompliano?

  Yeah. And with, uh, things like HVAC, like walk us through like a normal engagement with a customer. So you guys go in, like, what's an average order ticket size? And then how do you guys think about, uh, profit margins and things like that?

• 32:26Speaker 02

  Well, it's, it depends on the market like everything else, but generally speaking, let's say it's a $10,000. priced unit or an $8,000 priced unit. What you're trying to do is you're trying to go into the home and you're trying to fix the system that's there. And if you can't fix it, try to give options to say, look, you know, we can replace this coil, we can replace this condenser, we can do this, we can do that. And so you have kind of that service and replacement component to it. The thing that's kind of interesting from my perspective is that a lot of these new units are being able to be more durable over the long periods of time. And I think that's what, you know, consumers are going to be pretty happy about in the next 10 to 20 years. And I think this is even why Elon Musk, I don't know if you saw, he wants to get into air conditioning. Cause if he can build something that lasts for a really long time, you could clean up

• 33:11Speaker 02

  in the air conditioning space.

• 33:14Anthony Pompliano?

  This episode is brought to you by Eight Sleep. The holiday season is here, so give the never ending gift of deeper sleep. About two years ago, I started to sleep on the Eight Sleep and I sleep on it every single night. It quite literally changed my life. I get deeper and better sleep, but don't just listen to me. Clinical data shows that Eight Sleep users experience up to 34% more deep sleep. It is not a holiday miracle, even though it sounds like one. If better sleep is on your wish list, look no further than the new Pod 3. You can go to eightsleep.com/pomp for exclusive holiday savings and ring in the most wonderful time of the year. Eight Sleep currently ships with the US, Canada, the UK, and select countries in the EU and Australia. Go check them out, eightsleep.com/pomp today. This episode is brought to you by OKX.

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• 34:42Anthony Pompliano?

  And hosting with Compass, everyone can mine Bitcoin. You can do it at home or in one of their 23 hosting facilities around the world. All you need to do to start mining your own Bitcoin is go to compassmining.io today. Again, if you want to get into Bitcoin mining, go check out compassmining.io today. What are some of the other lessons that you think people should take away in terms of investing in these kind of down markets or building companies, right? So obviously, when you say things like air conditioning is oxygen, that's like a recession proof type business. I don't care what the economy is doing. There's some places like a Phoenix where in the summer, people want air conditioning. They need air conditioning and they're going to pay for it. Are there other things that you're either looking at or lessons you've taken from 08 or other market downturns that you think is important?

• 35:25Speaker 02

  Well, 08 was a big deal for me because my family's stock went from, you know, the family business that we founded went from $46 down to $3 a share. And so that's a way to humble somebody up really quick. And so I saw my dad and my grandfather stressed out significantly in 08. And I said, I never want to be up at night worried about putting food on the table for my kids because, you know, some cyclical industry blows up. And so while I'm still focused on housing and I was involved with Pulte Homes significantly, where I've made most of my money has been in these non-cyclical, absolutely critical services. And I would encourage people to do that, keep low debt and just cash flow, cash flow, cash flow. I mean, that's what it's all about.

• 36:09Speaker 02

  A lot of people get tied up in these different things and the sexy things and, you know, fast moving software and this kind of stuff. You got to make money, in my opinion, or at least I know I got to make money if I want to give it away on Twitter.

• 36:21Anthony Pompliano?

  And when you are looking at the growth of these companies, how much of it is growth by acquisition versus like organic growth where you can go hire more salespeople? You can go and get more business drummed up through, you know, various business development activities? Like, do you just try to buy up a bunch of companies and roll them up? Or is it more organic?

• 36:35Speaker 02

  Well, we buy into the companies or we buy the companies. But for the most part, the growth is coming from our know-how, having built, you know, Pulte Homes in my grandfather's case and him having transferred a lot of that knowledge to me, a lot of that institutional knowledge about how to build these companies. I've been able to then go about implementing. And in these different companies. And so our growth rates are anywhere from 100 to 300%. And some of these unsexy businesses like heating and air conditioning and stuff like that. And it doesn't take a rocket scientist to figure out if you have a business that's in air conditioning, growing at 100 to 200 to 300% per year, you can make a lot of money pretty quickly. And unfortunately or fortunately, I need to do that because I'm giving away so much money on Twitter.

• 37:16Anthony Pompliano?

  Yeah. How much of the growth gets tapped out in a market? Like let's say you're 300% year over year and you have for five years, right? Or whatever the numbers end up being, the growth rate naturally will slow as you get a bigger kind of denominator. But can you just tap out a market and then you have to make the decision like either go buy a company in another market? Or like this is the business that we're going to have because we just saturated this entire market?

• 37:37Speaker 02

  Good question. First, you want to go to markets where it's very hard to saturate, right? So we're in Phoenix, for example, we're in Atlanta, Georgia, we're in Los Angeles, right? So if we ever get to market saturation levels, we'll be very happy and we'll be able to give away a lot of money to a lot of different people. So yeah, it's kind of interesting. But we try to focus on getting the market right first and not being in the middle of nowhere where, you know, the dollars just don't make sense. And we're trying to make, you know, a lot of money doing this. As I said, so we can fundamentally transform the way that philanthropy is done on a direct giving approach. That's what we're trying to do with Twitter philanthropy.

• 38:15Anthony Pompliano?

  What about the labor market? You guys obviously employ a lot of people. Are you seeing any changes there over the last year?

• 38:20Speaker 02

  Yeah, you got to pay people enough. I always hear, and I love boomers, but I always hear boomers say, you know, these young people, they never want to work. But I always say, first of all, there's young people who want to work. It's just you got to pay them enough to want to work, you know? And that's one of the things we teach in our businesses is people often say to us, well, how do you get people to grow so fast in the trades, right? In the heating and air conditioning and plumbing and electrician? Because, you know, a lot of people don't want to do that type of work. Well, some of these guys are making 150, 200, 300, 400,000 dollars a year doing air conditioning. I mean, I know one guy who he was in a different business, kind of a traditional Fortune 500 type role. And he went in and he became an HVAC salesperson. Now, before you, you know, say something about that.

• 39:02Speaker 02

  You know, understand this guy's now making, you know, seven, eight hundred, nine hundred thousand dollars a year, right? Maybe over a million dollars this year he'll make, you know, by the time this year is closed out. So there is just tremendous opportunity where other people won't want to work. And, you know, it's not sexy. It's not, you know, podcasts. It's not Mr. Beast type stuff, right? Where you're making money. And I give you guys great credit for building it. It's this unsexy work, but we make good money doing it.

• 39:28Anthony Pompliano?

  Yeah. And when you talk about like paying people enough, I recently wrote about the minimum wage. And what's fascinating to me, federal minimum wage still $7.25, been that way since 2009. Obviously, some states have increased the state minimum wage. But what has always been interesting is that there are private or publicly traded companies that have set their corporate minimum wage at much higher rates. So you can go down the list. There's everything from Disney to Facebook to Aetna to JP Morgan Chase to Amazon, et cetera, that all have $15 or more as their minimum wage. That's their average starting salary or even higher. I think Amazon's at like 19 bucks now. And so when you start to look at some of this stuff, the paying them enough,

• 40:09Anthony Pompliano?

  you're essentially highlighting the fact that politicians at the national level say $7.25 is the minimum. But companies are saying, I can't get anyone to come work for $7.25. I need to pay 15, 16, 17, 18, $19 an hour just to get these people to show up.

• 40:22Speaker 02

  Well, ironically, a lot of that happens to do with what politicians have caused with inflation, right? People need to do that. So in a perverse way, they actually haven't helped as much as they've hurt by with this inflation and printing all this money and everything. And so, you know, people need that type of dollars to to live.

• 40:40Anthony Pompliano?

  This is why you and I get along is because that's exactly what I was writing about is that in Turkey, they have 85, I think it's 84 and a half percent annual inflation. So year over year, price change of goods and services in that country is 84%, which is insane, nearly impossible for the average family to survive and buy basic necessities. Just this week, we saw the Turkish politicians go ahead and vote and implement a 55% increase in the minimum wage. And so there's a lot of people who say, hey, inflation's high. There's people who are suffering. Let's increase the minimum wage. But one of the things that they don't understand is if you Increase minimum wage by 55%, you're essentially increasing the labor cost for corporations. If you increase labor costs, they're going to have to increase their prices to be able to remain profitable, which actually in some weird way means that they may be contributing to more inflation,

• 41:25Anthony Pompliano?

  rather than actually being able to just help the people. So it's like a good intended outcome for helping individual workers, but you may actually be exasperating the inflation problem by having the government intervene in the market. And so, you know, how do you all think about what's going on in the economy? But also like the decisions you make and the prices that you choose and all these things. You're probably not thinking about inflation as much as you're thinking about like, what are the cost of our goods? What are the cost of the inputs? What are the cost of labor? Like all that stuff to determine what you're actually selling this stuff for?

• 41:53Speaker 02

  I think the best way to do it is to go on a business by business level. So for example, we own 12 companies, as I said, in the air conditioning space. The advice I give to the guys there is like, hey, we need to figure out like, number one, how should we be pricing these jobs? Number two, can we make money doing it? Because if we can't make money doing it, we can't afford to pay these people these prices. And ultimately, we can't afford to keep the lights on. We can't afford to pay ourselves. You know, we got to get paid running these businesses and stuff. And so I literally look at for a living, you know, hundreds, now thousands, it's probably tens of thousands of companies for a living. That's literally what I do in this kind of space, in the home services space. And what I'm saying is that some of these guys shouldn't be in business.

• 42:34Speaker 02

  And that's not something that should be, you know, told to everybody. But a lot of people need to look at it, in my opinion, a lot of these businesses and say, hey, can we actually make a business work? Now, in those big markets like LA, Phoenix, those type of markets, it can handle a lot of competition. But some of these places, people are competing and they're just losing their you know what, because they're not priced properly and the market can't support their businesses. So it's kind of a sad thing to say, sad kind, sad thing to see. But, you know, if you can't afford to pay people, maybe you need to go to a different geography, or maybe you should be doing something else in business.

• 43:14Anthony Pompliano?

  If you had to go back to the beginning of your career with all the knowledge you have, and you're a young person today in this market, what would you do?

• 43:20Speaker 02

  Yeah, well, I'm still screwing up and learning, so that's good. And so I continue to do that. But yeah, that's just where I've made most of my mistakes is through running these different companies and seeing what pisses people off and then having them quit and then learning the hard way. So I just say embrace the mistakes and that's what I've tried to do. But finance is the language of business, in my opinion. And that comes from a housing guy, a tradesman type guy, who with nails and drywall and flooring and roofing and stuff like that. But you can do that stuff all day long, but if you don't understand finance, and I'm talking about literally knowing income statement, balance sheet, cash flow statement, I think that's what's going to make or break people in this next period of time is people who

• 44:04Speaker 02

  really have what I call in our companies, complete and accurate financials. And it's just unbelievable to me how many people are operating these companies that are doing 10, 20, 30, 50, 100 million worth of revenue and they don't have complete and accurate financials.

• 44:18Anthony Pompliano?

  What are the biggest mistakes you see that they make? Like, are they just ignorant mistakes or lack of focus?

• 44:23Speaker 02

  With the financials?

• 44:24Anthony Pompliano?

  Yeah, like when you're looking at a business and you see that they're not complete and accurate financials, what would you say are the two biggest things you see as mistakes?

• 44:31Speaker 02

  Well, the most thing is that, like, so say you're in the podcasting business, or let's say you're in, I don't know, the marketing business, or let's say you're even in the housing business, okay? You understand those trades very well, but I think what often happens is entrepreneurs don't want to look in and understand the basic financials, so the balance sheet, the income statement, the cash flow statement. And from my perspective, when you don't have the understanding of the trade and the finance at the same time, you're really setting yourself up to get screwed. And so from my perspective, that operator, I don't care how great of a mechanic they are, how great of a plumber they are, they need to understand how their financials are built and closed at the end of every month. And there's a high, high correlation between people who are worth 50, 100, 200 million

• 45:16Speaker 02

  dollars, and I'm telling you, damn near everyone I've met knows the trade side, meaning the individual specialty, as well as the finance side. I've yet to meet somebody who just knows about the trade side of things. Yeah, that would be probably the biggest thing.

• 45:32Anthony Pompliano?

  What are you hearing from banks? You talked to a lot of financial institutions as well. Are they doling out money to kind of professional investors and wealthy people and they're saying, "Hey, go in and start investing now. We think now's a good time to buy up assets that may be underpriced." Are they still waiting? What are those conversations?

• 45:46Speaker 02

  If you've proven to make money, banks will lend you money. But in this environment right now, everybody's tightening up. And if you're not a proven commodity, if you don't have, you know, if you're not a creditor who can pay back the money, they don't want anything to do with you from my perspective. And so I think that's also going to impact private valuations. It already has, right? But specifically in the leveraged buyout market and some of these profitable operating companies, I think you're going to start to see some multiple compression come down because financing isn't going to be as available. And that's just a math equation, but it's also, I think, a lot of these credit committees at these banks saying, "Hey, you know, yeah, we'll give money to Pulte because we know he'll pay it back. But, you know, maybe this person we might not."

• 46:26Anthony Pompliano?

  Yeah. Is that what they say to you? They're like, "Hey, you make money, we'll give you money?"

• 46:29Speaker 02

  Yes, basically.

• 46:30Anthony Pompliano?

  Yeah.

• 46:30Speaker 02

  Yeah. People don't like lending money and then losing money, it turns out.

• 46:34Anthony Pompliano?

  Shocking.

• 46:35Speaker 02

  I mean, it happens in these low interest rate environments where people convince themselves that they do, but that's just...

• 46:40Anthony Pompliano?

  I don't want you to tell any of your secrets, but when you go to raise money, whether it's debt or equity, do you like...

• 46:46Speaker 02

  I don't raise equity debt, thank God, anymore. So I raise debt just to, you know, get a little bit extra kick on the return.

• 46:53Anthony Pompliano?

  When you do that, do you just go back to the same partners? Or do you create like auction-type processes where there's a bidding war? Like, how do you actually go through it? And what I think would be interesting to people is most people who listen to this are probably in tech and venture capital and more used to the equity-type fundraising. But when you're looking at these debt-type deals and you're going to the banks, how exactly are you able to get kind of best terms?

• 47:12Speaker 02

  Well, from a debt perspective, what really matters is cash flow, net cash flow. How much money are you putting in the bank at the end of the day? Because debt holders, I wouldn't say that they're smarter than equity holders, but they're way more conservative. And so, you know, again, I'm a big fan because my family has gone from having a housing business that made a ton of money to losing billions of dollars a year, right? So, so we don't want to do that again. That was a big no-no. So I try to buy businesses. I don't care whether they're software, whether they're housing, that are making money. And maybe that limits the growth, but you know what? I'm not going to get screwed all the time and I'm not going to get lines of credit pulled and those kind of things. So... I forget where were we.

• 47:50Anthony Pompliano?

  How do you actually go and raise the debt financing?

• 47:53Speaker 02

  So when you go to raise the money, basically you say, look, okay, first of all, I only put things in front of banks that are bulletproof from a cash flow perspective because all it takes is one deal to blow up, in my opinion, and then banks do not view you as a high fidelity investor anymore. Now, you do have different private equity funds where they'll have deals blow up and stuff like that, but that also affects their track record. So I really try to focus on the cash flow, make sure it's recurring, make sure it's a stable business, and then and only then will I go and raise the debt.

• 48:24Anthony Pompliano?

  Yeah. And then how do you think about paying off the debt? Do you just pay whatever the minimum monthly payments are? Do you try to pay it off as fast as possible?

• 48:31Speaker 02

  We have a phrase at our companies, and it's not sophisticated, but it's one that we came up with, which is crush debt. So, for example...

• 48:40Anthony Pompliano?

  I know exactly what that means, which means it's a great phrase.

• 48:42Speaker 02

  Yeah, crush debt. And, you know, I talked a lot about net cash flow and buying these companies with net cash flow, but even more important than buying companies with net cash flow is crushing debt, because the net cash flow is the leading indicator to being able to crush debt. And if you start to see your debt balances go down, I'll give you an example, I'll give you a real life example. We just borrowed $10 million a few weeks ago to do a dividend recap, to take money out of a company that's doing very well. We decided not to sell the company because it was just making so much money, it's growing so fast, we poured our heart and soul into it, so we took a $10 million dividend out of the company. And what we've done is, we're not just focused on the earnings power of the business, but we're actively focused on paying down that 10 million. And I think we're already paid it down by like $2 million or something like that.

• 49:26Speaker 02

  So the net debt balance is down to like from 10 to 8 in a period of however many weeks. And my point being is, that to me is like the ultimate measure of, you know, being able to get wealth and liquidity, is being able to get rid of your debt.

• 49:39Anthony Pompliano?

  Talk how those work. So you've got a business that business is profitable. It's got cash in the bank. You guys want to take a dividend out. Why are you taking on debt? It's because you need to have some working capital to be able to operate the business?

• 49:48Speaker 02

  No, not at all. Entirely the opposite. It's we've done very well. We have cash flow. We can we can borrow debt. But the real reason we're doing it is because we believe that US dollars are depreciating in value. And so if we go and we buy, for example, if we go and we buy, or we go and we borrow debt, let's say we borrow the 10 million. And let's say I put the 10 million in SPY in the S and P 500. In my opinion, you'd be better off taking the US dollars, putting it in the S and P 500, using the cash flow, paying a little bit of interest expense. And on a, you know, weighted average cost of capital, I think that it's going to make tons of sense to be investing in the S and P 500 than than the US dollar, even with this interest expense.

• 50:33Anthony Pompliano?

  So, most people are familiar with the interest rate where they interact with it is on mortgages. That's probably the number one place. And maybe they've got some treasury exposure, or they've got some some interest on on longstanding debt as a variable rate or something. But for corporations like you're describing here, what is the difference between the interest rate that you would have paid last year, kind of during the mania, and the interest rate that you would pay now after the Fed has kind of increased interest rates so much?

• 50:55Speaker 02

  It's meaningful. But again, a good business can afford increased in interest rates, right? And I think that's one of the things that's very informative about this whole experience has been. And when I try to preach always is like, you know, look, my family's been through these cycles in these shitty businesses, excuse my language, where, you know, boom and bust, boom and bust. And you really want to build a business that can withstand anything. And so, yeah, that's what I focus on.

• 51:21Anthony Pompliano?

  Last thing I want to talk about is Twitter philanthropy. You are the pioneer. You're the creator of Twitter philanthropy. The first time I saw you giving away money, I was like, holy shit, you know, what is it? What is he doing? Right? Why is he doing this? And it seems like it's taken on a life of its own. Like, what is the update now at the end of 2022 for Twitter philanthropy?

• 51:37Speaker 02

  I mean, it's bigger than ever. It's more viral than ever. You know, I've always said Twitter philanthropy will never be successful as long as it's dependent on me and my money because I'm just one dude who's got money. So we need to get other people involved. In it and that's what we've done. We have this team Pulte Twitter account. I don't know if you've seen that, but we've got like three or 400,000 followers there between that and the Pulte family Twitter handle. And basically all day, every day, we're raising money. It's a beautiful thing. We're raising money for people who are dying of cancer, people who need these type of things. So I think the best is yet to come.

• 52:10Anthony Pompliano?

  Yeah. And the money, just so people are clear, when you guys say you're raising money, you're basically putting a spotlight on certain opportunities and then people are going and they're giving the money directly to these individuals. It's not like a traditional.

• 52:21Speaker 02

  I'm not touching that money in the sense as an individual, I'm not going in and then whatever. It's through this team Pulte, which is a 501(c)(3). It's got a board. And basically they pop up these different campaigns and then what I do is I use my 3.2 million teammates to help. We, you know, we come together and we try to help these individual causes. And thankfully it's gotten so big on these other accounts that we don't need to use my account all the time to do that. So we use that really to kind of build out the team and, and compound it. So.

• 52:53Anthony Pompliano?

  When you kind of zoom out to 2022, are there like two or three lessons that you take away from this year?

• 53:01Speaker 02

  Just don't buy any of the shit that doesn't make money.

• 53:05Anthony Pompliano?

  So the timeless investing principle is just find the things that are throwing off cash and buy those.

• 53:10Speaker 02

  Yeah. And, and it's not even that too. It's just also like, there's a lot of stuff that's producing cash right now. And it's like, okay, you know, is that stuff really going to be around in five or 10 years, you know? And I'm all, you know, I think oil is something that's needed, for example, but you know, before I invested a ton of money in that or invested even in some REITs, you know, which I know a lot about real estate and REITs. Is I would just be very careful what price you're paying, what market you're in, because you know, I don't think that it's, I don't, I don't think the cash flow is guaranteed, even if they're spitting it out right now.

• 53:46Anthony Pompliano?

  Yeah. It's, it's always a pleasure to talk to you. Where can we send people to find you on Twitter?

• 53:50Speaker 02

  At Pulte, at P U L T E. No bot farms, no multiple fake identities. Don't steal from dead people's identities. Start attacking me and my dead grandpa.

• 53:59Anthony Pompliano?

  You know, you're, you know, you're a Twitter detective now, like you're a Twitter philanthropist, but you should put in your Twitter bio, Twitter detective, if you're going to start cracking down on the bot farms. Elon should hire you to go and find the other bot farms.

• 54:11Speaker 02

  We'll see. Good to see you. Thanks for having me.

• 54:13Anthony Pompliano?

  All right. Thanks so much for coming. We'll do it again.

• 54:16Anthony Pompliano?

  Thanks so much for listening to today's episode. I really hope you enjoyed this one. Make sure you're subscribed on Apple, Spotify, or your favorite podcast player. And if you're looking to transition into a brand new job in the Bitcoin or crypto industry, we've got you covered. Head over to thecryptoacademy.io. My team and I have been working with the top HR teams in the industry to develop an intensive three-week training program with over 50 live events. We teach you exactly what you need to know to break into the industry, including live interview prep and resume review. Our students have been hired at over 75 of the world's best Bitcoin and crypto companies. Go to thecryptoacademy.io to learn more. Again, that's thecryptoacademy.io. If you enjoyed today's episode, make sure you share it with your friends and I'll see you all for the next episode.