#963 Yat Siu On Why Digital Property Rights Are So Important

Yat Siu is the Chairman Of Animoca Brands, one of the largest investors in the Crypto Industry. In this conversation we discuss Animoca Brands' decision to pivot and focus on the Crypto Industry. We also talk about NFTs, Web3, Blockchain games, and how the Metaverse will provide digital property rights to millions of people. ======================= Choice is a new self-directed IRA product that I'm really excited about. If you are listening to this, you are likely part of the 7.1 million bitcoin owners who have retirement accounts with dollars in them, but not bitcoin. I was in that situation too. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it too. Absolute game changer. https://www.retirewithchoice.com/pomp ======================= Imagine coinmarketcap - decentralized. 3X in valuation is 15 billion dollars from the current price. Cryptotoday.com starts at zero, at fair launch on 7th of March. No VC. No pre-sale. Team tokens locked. For the people, by the people. For decentralized crypto. Visit http://cryptotoday.com and read the whitepaper for the details. ======================= The Pod Pro Cover by Eight Sleep is the most advanced solution on the market for thermoregulation. It pairs dynamic cooling and heating with biometric tracking. Go to https://www.eightsleep.com/Pomp to check out the Pod Pro Cover and save $150 at checkout. Eight Sleep currently ships within the USA, Canada, and the UK. =======================

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. Yatsu is the chairman of Anamoka Brands. They are one of the largest investors in the crypto industry. In this conversation, we talk about everything from blockchain games, the markets, the NFTs, Metaverse, and much, much more. I really enjoyed this conversation with Yat, and I hope that you guys enjoy it as well. Before we get into this episode, though, I first want to talk about our sponsors. This episode is brought to you by BlockFi. BlockFi provides financial advice for crypto investors. Those products include the BlockFi Wallet, a US dollar loan collateralized by your crypto, and a no-fee trading product. BlockFi also released the world's first crypto rewards credit card.

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• 1:23Anthony Pompliano?

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• 2:04Anthony Pompliano?

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• 2:49Anthony Pompliano?

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• 3:29Anthony Pompliano?

  decentralized token information site. You can read the white paper at cryptotoday.com. Again, go to cryptotoday.com to learn more. All right, let's get into this episode. I hope you guys enjoy this one.

• 3:40Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are surely 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

• 4:01Anthony Pompliano?

  For informational purposes only. I'm super excited about our next guest. We've got Yatsu from Animoca Brands. They have become one of the largest investors in all of crypto. And so I think that we're going to have a lot of stuff to talk about. But Yat, how are you doing?

• 4:17Speaker 02

  Great. Thank you for having me. It's a great pleasure to be here.

• 4:19Anthony Pompliano?

  Absolutely. I am, I'm super, super excited to talk to you. Let's maybe start with the Animoca Brands was not a crypto company to get started. And at some point, you guys decided, hey, maybe we should go kind of into this digital economy. Talk to me a little bit about what you guys were doing before, and then why were you so excited about going into the digital world? And be quickly became one of the larger investors in the industry.

• 4:42Speaker 02

  So Animoca Brands, really its origin and still to an extent is today is as a gaming company, particularly mobile gaming and video gaming. That was the background. The predecessor of Animoca Brands, which is Animoca itself, started in 2011. So we've been really around the block making basically video games and dealing with some virtual items and so forth. And while I had encountered, obviously, you know, Bitcoin and Ethereum, because of the very financial nature of it. And it wasn't something that we found immediately appealing or, you know, had great understanding. But we got involved very early with Cryptokitties, actually, back in 2017 through a studio acquisition, which ultimately led us to have a sort of early shareholding in what would become Dapper Labs and became the publishers of Cryptokitties.

• 5:27Speaker 02

  And that was sort of, you know, one of the earliest beginnings of non-fungible tokens. And that really sort of got us into the space in a big way because it was a way in which people could store their digital identities, we felt, in a permanent manner, something that people in the video game industry often dreamed of to sort of own, really truly own their digital assets. And also a way to store digital culture in a more permanent fashion. So that actually sort of is when we basically swallowed the red pill and went all in. And since then have, you know, back in 2018, if you may recall, you know, obviously crypto wasn't doing so well. And, and, but we had just entered the space and we decided that in order to help seed and grow the ecosystem outside of building our own blockchain-related games, was to sort of, you know,

• 6:11Speaker 02

  Basically invest in the earliest players in all things NFTs. And so we invested early in companies like, you know, um, sort of Sky Mavis, the creators of X Infinity, OpenSea, Wax, Decentraland, you know, brought in what ultimately a company called Pixel that ultimately would become the Sandbox into Animoca Brands as well and and many, many other companies that we have sort of helped grow and of course invest in as well.

• 6:36Anthony Pompliano?

  So when you think about um kind of your journey into this, obviously having that gaming background and a gaming focus, there's many people who say, hey, it's very clear to see that connection between NFTs and metaverse and a lot of these digital economies. When you look at those two things, where are the overlaps? Is it just their digital worlds and so that's kind of where you guys already had some muscle memory and and interest and experience? Or are there other things that you find that are kind of common between what you guys were doing before and what you're doing now?

• 7:03Speaker 02

  So there's so many things that are in common, even if it isn't obvious for people in the gaming space. The first one is when it comes to digital ownership, gamers already actually have a sense of ownership in the assets that they or the goods per se, because they're not technically assets inside normal games. And you know, goods that they have, right? So if someone owns a skin or owns a weapon inside their favorite game, they think they own it, right? They don't have a relationship of it as one of rental, which is kind of how it really is actually constructed from the Terms of Service. The other thing is that the players within the space also think that they own it and the person who has it, you know, is it's their ownership, right? So in some sense, it is almost a natural right in the way that they interact with it. It's an expectation.

• 7:49Speaker 02

  And the other thing, of course, is the feeling and the emotions people have when they lose their items or when something happens to them inside a game. It's a similar sense of sort of, you know, positive and negative emotions. There's outrage when it's stolen, right? There's disappointment, you know, all these things that you feel in the physical world. The other thing that is also very similar really is community. I mean, you know, it's kind of cliche almost blockchain. It's all about community, you know, all that stuff. But, you know, what were some of the earliest very interactive communities? They are in the gaming world and the online games are all about community. People coming together, people sort of, sort of, you know, banding together, you know, working on things together, solving puzzles together, creating friendships together.

• 8:30Speaker 02

  And creating, you know, all these things already existed in its earliest forms and perhaps the most intense form, if you will, because of the whole visual experiences as well. So I would say that, you know, these are just some examples of how, you know, virtual societies really and virtual communities have formed together to create a value construct and to create a culture. Inside these games. And then you sort of zoom out a little and say, well, in fact, what are layer one, layer twos? What are sort of, you know, blockchain environments? They are areas where cultures are being developed. They are communities that sort of band together. And value is being created as well from these communities.

• 9:05Anthony Pompliano?

  So when you start to think about, um, let's say some of these things that you've invested in, how much of the investment is based on the idea? How much of it's based on the technology? And then how much of it is still based on kind of the founders or the people? And what, and the reason why I think that that's interesting is if you were to go talk to kind of traditional early stage venture capitalists, they would say it's people, it's people, it's people. Um, and then it's market. How big is the market? How important is the market? You know, why now? All that type of stuff. Is it the same evaluation framework, uh, kind of in this digital space? Or are there different kind of order of operations or importance and prioritization that you put on the various elements of underwriting a deal?

• 9:40Speaker 02

  So when we first entered in this space, and just to be really clear, we're not a venture capitalist in a typical sense, right? We don't have a fund. So everything we invest out of is out of our balance sheet. So we don't have sort of the typical sort of, uh, sort of VC LP structure. We're an operating company. And I think this sort of maybe changes the lens of how we look at investing. So I can certainly understand that if you're a VC, you need to look at the outcome. You might have a, you know, seven year horizon. So you need to look at the exit. So timing matters perhaps a lot more for a company like that. Because a VC has to think about the right timing. If they sort of are a little bit too early, those extra few years and where nothing happens. It may become quite deadly for, for the returns of the fund, for instance, right?

• 10:23Speaker 02

  But for us as an operating company, which I also think is really the model that I think more companies are going to sort of do. Not just in our space, but in general where they have to. Invest, you know, for, for, you know, relationships, for innovation and for ideas, which is really sort of where we came from. We wanted to help seed the NFT ecosystem because we wanted to build in that space, but we couldn't do everything ourselves. It was impossible to, if you're building in an open ecosystem, then, you know, you can't sort of try to control everything. That's not possible. So how do we help make it grow? We have to invest. And so we created, sort of ma- made these ecosystem checks, you know, and invested in companies like OpenSea and Wax and Decentraland. And yes, of course, it was people, but really the people in and of itself comes from their sort of mission and purpose and the belief of what was going to happen.

• 11:09Speaker 02

  You have to sort of remember that in 2018, generally speaking, most people were running away from, you know, fungible tokens already because the market was so poor at the time, you know, Bitcoin was like hovering around $3,000. I think ETH at one point went below 100, you know, like really sort of, you know, dark, dark days. Uh, and then here we are talking about a non-fungible, less tradable, less liquid version of of a sort of kind of cryptographic token. And everyone was like, what are you talking to me about? So the, so the investing here had nothing to do about sort of the classic elements of timing, for instance, you know, when do you time it? Is the market right? You know, one could easily argue that in 2018 and 2019, the market wasn't right. This wasn't about that. This was about making a market. This was about helping create

• 11:53Speaker 02

  and form a kind of future that we thought could be possible. Uh, it was, it was sort of a different lens. And so the founders who were already building in that period of time were similar in their belief, right? It was, you know, sort of a band of, you know, really just a few hundred of us, if you think about it, who sort of had a real strong passion in doing this because it wasn't for the money, because there wasn't any money to be made in 2018 and 2019, certainly in that space. Uh, but you know, technology is one where you want to know that they have the capacity to build it. But certainly with early technologies like this, it's, it's not the, it's not the be all end all because things will evolve. So, so I think really it's more in our case, where we look, we look at the people, but in this case also at the ethos and the mindset of the people,

• 12:38Speaker 02

  you know, in terms of really trying to create sort of digital property rights as a reality and a belief that sort of open systems like this is the most important thing here that We're trying to build in an open metaverse.

• 12:48Anthony Pompliano?

  And when you start to think about some of these products, teams and kind of opportunities, is there anything related to geography? Like, is most of this in Asia? Do you see most of it in the Western world? How do you think about geography as part of the investments?

• 13:01Speaker 02

  One of the fascinating things about this opportunity here is that it's really opened up opportunities from an investing in a global perspective. It used to be that, you know, VCs would, and we were, we had the same problem when we were looking to raise money. In fact, Anybody with Brands had quite a bit of difficulty raising money from traditional VCs. In fact, we didn't raise any money from traditional VCs in the earliest formations of our business, because, you know, we were actually based in Hong Kong. And, and, and for the, the classic rule of thumb was, well, if I can't see you or travel to you or, you know, visit you on a regular basis, then, you know, that doesn't make sense for us to invest, right? Which is sort of, you know, the rule of thumb back then. Today, that's, you know, partially because of COVID, that's all thrown out the window.

• 13:44Speaker 02

  And the opportunity, of course, has been that people are now able to invest, regardless of whether you're VC in Europe or in US, in companies that exist in Vietnam or in the Philippines or, you know, in Indonesia, for instance. And these were typically places that would have been ignored in the past, which means that you can now tap into a global talent pool in a much more sort of available manner than before. So, you know, talent is generally quite global, but, you know, capital itself hasn't been quite as global. In fact, cap, you know, people used to move to Silicon Valley so that they can tap into the Silicon Valley money. That is no longer, no longer true, which, which, which is, I think, actually for the better, because it also means that it becomes more competitive as well in terms of opportunities and deals.

• 14:29Speaker 02

  And actually, there's more opportunity for the companies that exist in places like Vietnam, which today has become an incredible sort of crypto hotspot, particularly when it comes to blockchain gaming or even in the Philippines, right? Which were typically great sort of test beds for innovation, but very, very rarely would they ever attract. International venture capital.

• 14:48Anthony Pompliano?

  When you start to think about kind of the types of companies, there's this huge focus now on metaverse. And obviously, Facebook changed their entire company name to Meta. And I've seen people debate, what is the metaverse? How do you describe that? How do you define it? Is it a place? Is it a point in time? Is it a thing? Like, what the hell is the metaverse?

• 15:09Speaker 02

  So the way that we think of the metaverse is a place in which we actually own our digital assets and which we can actually have true digital property rights. Now, let me just sort of drop, sort of go back a little bit here in the sense that I think that in the last thirty to forty years, we have been prepared for this moment. In a sense that we have been trained to be sort of, you know, virtual beings, as it were. You know, with the earliest days of, you know, pre-internet services like CompuServe, we had these small fledgling communities, which is actually my first online experience was on CompuServe. And then eventually with the beginning of the early forms of internet, you know, and then eventually to Mosaic and then Netscape browsers. And then, of course, you had AOL and all that stuff.

• 15:51Speaker 02

  You know, as time went on, we went from sort of small digital virtual sort of existences to where we are today, where there's, you know, close to five billion people online, for instance, that have really become digital dependents who do everything online right now. I mean, if you think about sort of what is the first thing you do in the morning? What do you do most of the day? How do you end your day? Likely, you're probably doing something on a digital device, which means that you're already connected in a kind of pre-metaverse experience, right? And so now, however, the problem with what people are trying to define the metaverse from our perspective is to say, oh, isn't the metaverse just a more immersive version of the way we're already sort of tapping into the digital worlds today? We would generally disagree with that.

• 16:34Speaker 02

  It's not VR and AR from our perspective or any sort of tools. These are ways in which you can experience the metaverse, but that is not the metaverse itself. The way we define the metaverse is one where there's true digital property rights in which you can have a stake and an ownership in. It matters more when you actually own a piece of that. And, you know, because of blockchain, you can actually now truly own, you know, your virtual. Estate, as it were. And you know, the metaverse becomes real to us because it has real economic benefits. It has real sort of uh real effects in our actual life as opposed to playing a game, which is entertainment. It's fun. So do we liken the example of, you know, those type of environments where, you know, that could be very fun, kind of like going to Disneyland. It's like a tourist experience. It's nice, but we don't own a piece of that.

• 17:19Speaker 02

  And therefore it has no impact and that's not the metaverse. But the metaverse is the place where it has an actual meaning to us. And that is, it can only happen when we actually have ownership in it.

• 17:29Anthony Pompliano?

  So when you think about kind of owning those assets, uh how much of this is like brand new, kind of, I'll call crypto native assets, right? Things that never existed before and they're created in uh the digital world and the state of digital world versus there will be a lot of value created by taking things that already existed in the analog world and bringing them into the digital world? Is it a either or thing? Is it a both? Like, how do you think about uh crypto native versus maybe like analog uh driven type assets?

• 17:56Speaker 02

  So while I think analog type assets are obviously necessary because we are still physical beings, we still have to eat and sleep, you know, and exist in the physical world. I, I think most of the value, at least in the beginning, is going to come from the sort of what we describe as metaverse first type of IP, right? Uh and part of this has to do with the origin of the sort of the root of the provenance, sort of the genesis, the birth of that, right? So if I took, for instance, you know, a picture of the Mona Lisa or I perfectly replicated it through a literographic copy, it may still have value, but it is still a copy of the original and everyone knows that. And in fact, that copy may serve to make the original more famous and more valuable, but in and of itself will not replace it because that wasn't its original birth.

• 18:41Speaker 02

  And we see the same of that in in the digital world, right? If it's something that was born, you know, on chain, right? And you know its genesis and its background, you know who created it, then that has, you know, more originality and more value in and of itself. The other thing, of course, is that when you start to sort of combine the analog world, you always have the challenge of the oracle because someone has to say, has to verify that. And that's kind of where the big challenge is around. Do we actually know that to be true? For instance, you know, people are looking at sort of as example, people have been looking at solving wine on the blockchain. That's fascinating and interesting, but you still need someone, you know, sort of in between to verify that that actual wine is true. Right? And if the oracle is broken, then the entire thing doesn't work, right? Whereas everything on chain functions really well.

• 19:25Speaker 02

  The other thing I will add is that I would, I would say that today our digital existence is already way more important for many of us, if not for most of us, um, uh, than, than the physical one. And by that, I mean that, you know, we rely on our digital existence to make friends, to conduct business, to really live our life, right? We might meet them physically, but we connect over them over digitally. We may have, you know, we, we might sort of create our business opportunities virtually, uh, and eventually meet them in real life. But it, it used to be that, you know, the virtual sort of the digital existence was an add-on to a physical life. I would almost argue that it's now the reverse, right? If you're not digital, right? If you don't have the ability to browse the web, right?

• 20:05Speaker 02

  If you can't, if you, if you're not on the app store, for instance, then actually, you know, you may be irrelevant in some ways, and you have less rights and less capabilities. So being in a virtual world is perhaps more important to you already. And so in that sense, then what does it mean for the value of analog versus digital sort of assets? Well, if that's true, then digital assets and digital existence and digital property should be more valuable, or at least as valuable, because you're already dependent on them and now you need to own a piece of that. I mean, imagine if the platforms we're using today in web two were actually decentralized and we could actually have a piece of it. But wouldn't that be more valuable than actually sort of perhaps, you know, where we are staying physically, which is of course a place of comfort and, and, and a value as well.

• 20:51Speaker 02

  Because that's how we sort of might make money. That's how we do perform our jobs.

• 20:56Anthony Pompliano?

  When you start to see, uh, some of the young people that are coming into the market, how important are they? Like the young people seem to have a kind of a naivety to them where they don't know what doesn't work. They, they understand the, um, kind of future is bright. And, uh, it seems like when I talk to many of these people, uh, they're excited. They are driving much of the innovation. And they have a lot more conviction, obviously, in the digital world. But they also have more courage, it seems like, to try just what may seem like insane ideas at first. And so what's your experience with kind of maybe tried and true experienced entrepreneurs or operators versus maybe young people who lack the experience, but have plenty of other kind of wild ideas or courage and conviction to make up for it?

• 21:41Speaker 02

  Well, I don't know that they're necessarily mutually exclusive. I mean, I'm a child of the 70s, so by that definition, I should be disqualified from from being perhaps active in the space that is predominantly driven by young people. I mean, I would say that that is certainly true. But part of the reason why I think it is sort of so true is because the metaverse in particular is really their playground. It is the field that they know best, right? And in fact, we see this often with new technologies and new approaches. I think my particular generation might have been described as the MTV generation, for instance, right? Like, we grew up with MTV. I don't know if anyone here knows what that is anymore, right? And experiencing that kind of media format

• 22:26Speaker 02

  before people started going into sort of eventually the internet and video games and all that kind of stuff. So I think youth has always been an adopter of new technologies because partially it's what they're driving it because it's what they want. And the businesses then orientate themselves towards solving problems for this new sort of demographic that is emerging, that has new demands, and that is more fluent. So many of us, slightly older people or much older people, are effectively digital immigrants, if you will, and some immigrate better than others. But our children, really, and maybe the generation before, are true digital natives. This is absolutely natural to them. They're very comfortable with this. I look at my children, for instance.

• 23:12Speaker 02

  They don't want something physical for Christmas. They want virtual items in their favorite games. That's where they see value because that's where their friends are. They play with them over there and they want to show what they're wearing and what Assets they have in the virtual world because the physical world isn't as important to them. Because you know, that's not where their friends are. That's not where they're spending time, for instance, right? So, so, so that's one thing. But in terms of the boldness and the courage, there is certainly something around where one could say that, you know, to some degree, you're, you know, or to all degrees, you know, your past experiences certainly shape you. And there's a little bit of sort of the risk aspect, right? If you're, if you're older, you've seen more things, you know, you may be a little bit more jaded. And so I think broadly speaking, you might take a little bit less risk.

• 23:57Speaker 02

  Um, you know, some call this wisdom, right? But you know, if you take no risks at all, then that might not be wise either. Right? So, but I think that's more of a mindset than anything, right? So I don't know that it is as much generational. And there's plenty of very, very strong entrepreneurs that are also older, uh, who, who have been very successful because they have a mindset that is willing to sort of learn. And it's also willing to engage and understand about that space. I don't know that it's necessarily that much more different, right?

• 24:26Anthony Pompliano?

  I, I agree. And, and I think that another big piece of, um, uh, this whole thing is, there's a market backdrop that seems to not be so hot right now. Prices are falling left and right. Uh, there's carnage everywhere. Everyone is scared. There's fear, uncertainty, chaos, et cetera. One, what are you seeing from kind of, uh, your portfolio and, and the, uh, the companies and products you guys have invested in? And how are they holding up? And then also two is, are you guys changing anything or does this, uh, kind of evolve your, your strategy or your thinking? Uh, as we look over the next, you know, three to five years?

• 25:00Speaker 02

  So from our perspective, you know, when markets are sort of troubled as they are right now, actually this is, you know, an opportunity, you could say, uh, in, in, in many other ways. I mean, if you think about where we started as a business, which was really in 2017 or particularly 2018, you know, uh, carnage was everywhere as well, right? Except it was, I would say, sort of even darker relatively. Speaking at least for the crypto industry. Just because of the fact that prices were lower, there was absolutely no capital around. That was wanting to sort of go into the space. And which is very different today, right? Even though there is carnage, there is capital, there is interest to support the right projects. Right? As with everything, there might be sort of a shakeout between companies that maybe

• 25:45Speaker 02

  you know ought not to have been supported because maybe they didn't have much substance to it. That always happens in any kind of in any kind of wave. And these shakeouts aren't unnatural. I think right now we have a circumstance of many things happening, including of course, you know, the stablecoin attacks and other things that are helping to sort of destabilize the markets, as it were. And maybe the impact feels a little larger because the market has grown and therefore more people are involved. And you know, what I would generally also always say is that because it is such a new space, people need to sort of always enter with a certain degree of caution and a certain degree of awareness about that space, right? And I think this is one of the things where I think we as a society

• 26:30Speaker 02

  have really done broadly, this is not crypto related, but just broadly done a disservice. Which is that we haven't taught our children, for instance, who then when they grow up, don't have a strong understanding about, you know, what is risk management? You know, how do you invest? What is money? What is economics? Because we don't teach that at school, right? And so many of them actually get taken advantage of because they don't understand any of that. Many of us learn about that, you know, when they go to college or later in life, much, much later in life. But you know, if our children, you know, have the capacity to learn algebra at primary school, then they certainly have the capacity to learn about economics and how the real world works. You know, I grew up in Austria, in Vienna, and generally speaking,

• 27:14Speaker 02

  you know, from a societal standpoint, nobody there really wanted to talk about money because it was kind of a little bit rude to talk about money. You know, it's not something, you know, we shouldn't be pursuing it for money's sake, you know. But then when you later on grow up, you realize the whole world basically operates on economic principles. And here we know nothing about it, right? So I think, I think, you know, part of the job here is to get people more ready and aware of that space, which I think crypto plays an important part on, such that we are more financially prepared for really anything that. Comes away crypto included.

• 27:46Anthony Pompliano?

  Yeah. And then when you start to see kind of the, the market price drawdown, you start to see some of these changes that you're describing. I'm assuming that you all have the ability to access capital, whether it's something on your balance sheet, whether it's from revenue, from various products, et cetera. How do you think about seizing opportunities? So if there's opportunity that, that is there, is this something where you kind of have in your head as a team? Okay. When we see this milestone occur, we'll start to deploy capital aggressively. Is it something where it kind of is a day by day, you're just reevaluating the market? Like, talk me through a little bit of the mindset as the prices draw down, like how you guys think about when to go on offense?

• 28:26Speaker 02

  So the important thing for us is that we're not a sort of VC sort of, or a hedge fund, right? So we don't seek to enter markets specifically for sort of immediate profit or gain, because that's not the way we operate. We're an operating company, right? So rather we think of, you know, this is an opportunity for us to build positions so that we can invest deeper into it. Right? So for instance, if, if, you know, if, if, let's say, for instance, if the price of Axie and SLP, you know, basically drops substantially, then we would think of as an opportunity to maybe accumulate more positions. Although we have already pretty big positions in that to sort of then support, you know, guilds to basically breed more axes, for instance, right?

• 29:06Speaker 02

  We think of it in terms of, we think of tokens in, in a sort of productivity framework rather than in a sort of trading framework. Right? If we're looking to invest very heavily into a new L1 or L2, and we might want to build up a position there, you know, that, that just because we think we're going to build in it. Then that's an opportunity for us to sort of accumulate in those positions as well, right? You know, whether, you know, whether this is something like Matic or Flow, for instance, you know, and again, we have pretty decent positions in them, but it makes sense for us. Because as the business grows, we may have more need for the token long-term, for instance, right? So, so that's how, that's how we, we look at that. Now, the evaluation is very much sort of reactive in terms of day by day for the time being, because that's, I think, what the market demands. This is not a, oh, let's, you know, we're not automated, right?

• 29:51Speaker 02

  It's not like, oh, well, this, if this trigger happens and do this, this. Many factors that, you know, you have to put together that at this moment, I think no algorithm can can truly compute because frankly, there's a lot of sort of assumptions that have to come into play as well. I mean, if you think about what happened basically with with, you know, with with Terra, right, this was, you know, somewhat unexpected and the market sort of went from sort of already some weakness to sort of, you know, so, you know, basically a level of panic, right? And and if we had basically just gone through a sort of formulaic approach, we wouldn't be able to sort of, you know, analyze and and and take stock as to some of the new circumstances. And also take a look at things that like, what what's going, what does that mean for other stable coins? For instance,

• 30:32Speaker 02

  how do we sort of hedge ourselves here in terms of risks as well? If we had more exposure, for instance, in maybe certain tokens that maybe perhaps we shouldn't have, right? So so this has to be a constant sort of a a constant sort of feedback loop that's required. I don't know that there's really a smart way to do that in a circumstance as we are in right now. And for the various portfolios that are out there, you know, our role also is to support them, right? Because if we invested in them, then, you know, we have high hopes in them. And so often, you know, although I I'm glad to say that, you know, we we haven't yet come to a situation where people are like, oh, my goodness, you know, we're running out of cash and we can't raise any money. That hasn't been the case so far yet, right? But we do come to assist companies,

• 31:16Speaker 02

  you know, when we think, you know, both either for signaling or basically just for plain support. I think the most recent example, although it was unrelated to market circumstances, is what happened with, you know, Axie Infinity and the the Ronin hack. Right? I mean, you know, we basically were one of the main contributors together with Binance and many others to basically support them, even though they probably had the balance, they had the balance sheet and had the capital capacity to actually solve it. But it was just one, a signaling and two, just the bolstering of their balance sheet so that it could weather the storm, you know, uh, better. And and that's sort of, you know, how we see ourselves playing an important role because we're here really to play the long, long game. Right? I I see this very much as like the internet, sort of, you know, thirty years ago.

• 31:59Speaker 02

  So so it doesn't make sense for us sort of to trade our way out of any of this, right? We we wouldn't know what to do with, you know, like an excess of fiat per se. Um, and but we have sufficient, of course, to sort of, you know, invest. And supportive of our companies.

• 32:12Anthony Pompliano?

  When you think about that long term, walk me through what that vision is. Like, what are we building? What does the the the finish line, if you will, or the the 10 year vision? What does that look like?

• 32:24Speaker 02

  The North Star for animal brands is to deliver to digital property rights. And what that really means is, you know, both in a legal and in a practical sense, the recognition that data is a property that is generated from us as people. It also means that from a a sort of, you know, we we think of hu of data almost as as a human right and one that ought to be protected in that manner. Right now, the legal construct of data is actually a contractual one. It is not a sort of natural one per se, right? So it doesn't enjoy the same rights, which is the reason why when we as sort of users spend time on platforms like Facebook, for instance, you know, can be abused in the sense that the data is taken from us or, you know, creating a powerful network effect.

• 33:07Speaker 02

  And, you know, basically, they make all the value from our data and, you know, we get nothing for it. You know, that would be in a classical sense. If you actually looked at it from the normal labor perspective, you know, our time on Facebook, for instance, is like work. Or if we play one of these free games that we think we're enjoying because it's a free game, we're actually providing to the network effect. We make the game better, more fun and more enjoyable to play. When we're in Facebook, we give them our data and our time and attention, which makes Facebook, you know, more valuable. The other way to look at that is we're working for Facebook or we're working for, you know, I don't know, Fortnite, for instance. And every day, because we're spending hours and hours of time on it, we're basically giving

• 33:50Speaker 02

  valuable insights and valuable data to them through our actual labor. You know, if you actually accept that to be true, then that's the equivalent of maybe slave labor, right? And so we're actually living in a kind of digital serfdom. We're being digital colonized and we work for these digital kingdoms, who, by the way, as we labor our way inside Facebook or Instagram or Fortnite or whatever title that we're playing with, can easily deplatform us anytime they don't like us, even if we have added a lot of value to them, because we have no rights, we have no property rights, we have absolutely no say in the matter. So the the North Star and the mission is to build this open metaverse where people have digital ownership, because we think that, you know, data ownership and the derivatives of data as a property can

• 34:35Speaker 02

  Solve many of the inequities in the world. You know, people talk about the future, you know, with, you know, machine learning and AI taking over all the sort of classic labor jobs. And we all know that the existing classic labor jobs are not going to be sort of the way that we can sort of create sort of, you know, sort of a productive sort of value for for most of humanity. But the one thing that we do have as people is sort of our time and attention on our creative capacity. And that comes from our data. And that data ought to be valued. Now imagine if all of us stop using Facebook, what's the value of Facebook? Not much at all, right? So why shouldn't, for instance, Facebook be paying us for our time? And that means that if you look at sort of the value we all generate. If we get paid for that time, then wouldn't that solve many of the sort of income problems we have?

• 35:20Speaker 02

  And an ability to sort of sort of solve some of the problems that we see today with with the the inequity. Because of the fact that we're literally being farmed for free, you know, all basically, basically every every single day. So in the future, that means we're going to be digitally existing in a manner where we own our property rights. We have the ability to earn income from our time in any of these platforms. You know, the earliest forms of this we can see in blockchain is already that people describe as be the play to earn or play and earn, for instance, you know, blockchain gaming. But you know, you know, this is already happening in things like field farming or other activities that we're doing in the DeFi space. So all of these things are already adding value in a very sort of virtual context.

• 36:03Speaker 02

  And we think that the whole world is going to go there. So we think of this as the the future of work. And hopefully we'll then rebalance basically the sort of, I guess, power and equity balance that currently is very unbalanced in the world right now.

• 36:18Anthony Pompliano?

  So when you start to think about this, the vision is so inspiring, right? And and this idea of like where we're going. If you had to pick one thing that is the biggest challenge, friction point or obstacle, what's the one thing and how do we solve it?

• 36:33Speaker 02

  Well, I think the biggest risk I see at the moment is really the sort of the the giant web two platforms for the time being. And the giant web two platforms, the reason why they are a challenge is not because they don't necessarily. Sort of see the the way that the world can go to assisted their business model is is, you know, is incompatible with this because they make money from our data and our time. And so actually, the way this works is that you have to decentralize and you have to open up the frameworks. Right. It is only through decentralized ownership that you can actually then have innovation built on top of things. You know, one way to think of the sort of the construct of this is that, you know, all societies that have strong property rights in the physical world

• 37:16Speaker 02

  have very strong GDPs typically and good economic output. Whereas all countries that have low to no property rights have, you know, very low, low productivity. And part of the big reasons, when you think about it logically, is that without ownership, you can't invest without ownership. You can't construct innovation on top of things. The fact that I can own a house for, you know, with the certainty that the house can be there, you know, with that ownership intact because of a strong government, for instance, is the reason why a bank can give you a mortgage for twenty or thirty years, which basically introduces capital efficiencies into the market that wouldn't otherwise exist. Right. If we're all renting or we never own anything, then that service can never exist.

• 37:57Speaker 02

  Right. The fact that we can own, you know, physical cars in a decentralized fashion across millions and millions of people in the world is the reason why Uber is possible, why Lyft is possible, why you can have car wash companies, why you can have separate mechanical, mechanical people who are sort of servicing your cars and people who create baby seats. You know, the industry around the ownership of cars is far, far greater than the sale of the car itself. Right. So so that's what's necessary to create these frameworks with these property rights. But the problem is, just like feudal kingdoms of past, you know, the feudal kingdoms today are the web two platforms who have all the power, who own our data, who are basically farming us for that. And, you know, if that happens,

• 38:39Speaker 02

  they have to completely change. And we saw in history what happens when feudal kingdoms have to suddenly sort of, you know, basically adopt, you know, democratic systems and a capitalist framework where they have to share power. Most of any, most of any of them actually rarely willingly give up. That power, so they're going to persist. And so one of the reasons that we invest so aggressively across the board is that our goal is to create so much weight in the open metaverse, in open sort of systems and and open assets, particularly with NFTs, that it no longer becomes possible, right, for them to sort of build a replacement. I mean, you know, if you're, you know, a big game company, arguably, that already has a hundred million users, you know, you could build your own blockchain, for instance, or quasi blockchain, you could build your own data infrastructure

• 39:24Speaker 02

  and say, hey, you know, these assets do belong to you under our Terms of Service, for instance, and eventually create sort of a more dystopian type future, which has no accountability and which basically they call all the shots, for instance, because they basically become a kind of, you know, tyrant, even if it's a sort of benevolent one, they still call all the shots. We need to try and stop that. Now, the if the economic size of the open market is so large, it becomes like how, you know, free trade operates. You could, you know, you can't really run a sort of a country in the modern world today without joining sort of the WTO and being part of a global trade organization. If you don't, then you become like North Korea, right, which isn't very great, right? So so the benefits of joining the open systems comes from the fact

• 40:09Speaker 02

  that we can all globally participate, which we think then connects everyone together and creates more transparency and better markets and better frameworks.

• 40:15Anthony Pompliano?

  I love it. I literally could talk to you for hours. I feel like you guys have such clarity in terms of where the North Star is, what you're building and kind of what you guys are funding in the strategy. So it's it's pretty refreshing to to talk to you. I have one last question for you, which is, as markets fall, people all freak out, and I talked to many fund managers, and they're all telling me, I'm getting no sleep. And then I go and I talk to founders and they're telling me I'm getting no sleep. And then I go and I talk to people who own businesses and they're like, I'm getting no sleep. One of our sponsors is Eight Sleep, and their whole job is to help people sleep better. What's your sleep schedule look right now and how are you holding up?

• 40:56Speaker 02

  Up in terms of the market conditions. That's uh, that's great. So first of all, um, I would say that, you know, the, I generally don't sleep that much just because of the fact that I'm just really excited about what we're building. I, you know, I have a lot of empathy for people who are going through the struggles that they are right now. Um, you know, I, you know, not just because of the fact that we obviously, uh, you know, we're struggling certainly sort of many years ago, but also because it's, it's, it's pretty cool circumstances in terms of what's happening in the market right now. But, you know, one of the powerful things about the space that I tell people is, you know, we're still early. And while it's volatile, you know, whatever you think you may have lost, you can rebuild.

• 41:37Speaker 02

  You know, you know, just if you just look at the, you know, if you, if you believe as we do, that the metaverse is web three is the next logical iteration of the internet, which it basically will encompass every person in the world that is online and beyond that, right? Which today is, you know, close to five billion people. And yet really think about the DeFi space and people who are playing blockchain games and basically interacting with DeFi wallets. It's just in the tens of millions, really, if you think about it. Then, you know, you still have a really, really sort of white space of growth that is there. So you may feel like you've lost everything and that's tragic, but you're not at the end of the road. In fact, many of the stories actually of people who have emerged from these environments, um, of sort of, you know,

• 42:20Speaker 02

  difficult circumstance come out far, far stronger, right? And, and you know, not just because they have wisdom, but also because they're participating in a market that uh, is, is going to continually grow. So I'm, you know, am I, you know, am I losing sleep over the markets? Actually, I'm not losing too much sleep over the markets because as a business, we're not heavily affected and we're here to support people. So there, if they, if they need our support as a portfolio, we're here to sort of, we're here for them. But, but, you know, I'm losing sleep over the fact that we're continually building, right? But continually sort of trying to sort of make the space work. And of course, um, you know, with, what was happening in the market, we have to be responsive, right? But that we do as a team, that's not just something that, you know, I do. Every one of us feel sort of shoulders that burden together. Awesome. I uh,

• 43:07Anthony Pompliano?

  I'm cheering for you guys. I love what you're doing. Thank you so much. The, the audience also loves it as well. They're already like, hey, bring him back, bring him back. So we will have to coordinate that for sure. But yeah, thank you so much for taking the time to do this. Best of luck as, as the world unfolds and we'll, we'll talk soon, my friend. Thank you. It was an honor. All right. See you later. Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you subscribed on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition to get a new job in the Bitcoin or crypto industry, we've got you covered. Head over to pompscryptocourse.com. We've developed a curriculum with the top teams across the industry. It's a three-week intensive training program with over 50 events packed into that three-week time period.

• 43:52Anthony Pompliano?

  Go to pompscryptocourse.com to learn more and I'll meet you guys for the next episode.