David Pakman, Partner at Venrock: The Age of Automation

David Pakman is a Partner at Venrock, where he focuses on early-stage venture investing in consuming and enterprise tech companies with a recent focus on robotics, crypto, and consumer products. Formerly he was a Product Manager at Apple and was the co-creator of Apple’s Music Group. In this conversation, David and Anthony discuss his views on audio and voice, artificial intelligence, robotics, competition on the internet, how crypto can disrupt venture capital, and why he’s so interested in the idea of crypto collectibles. BLOCKFI-----BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. UNSTOPPABLE DOMAINS-----Make your crypto currency payments simple and build censorship resistant websites. Visit unstoppabledomains.com and purchase your blockchain domains today! ETORO-----This episode of Off the Chain is sponsored by eToro, the smartest crypto trading platform, and one of the largest in the world. Join 11 million other traders and create an account at etoro.com and build your crypto portfolio the smart way.

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

• 0:00Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off the Chain, simply the best podcast in crypto. Let's kick this thing off.

• 0:10Anthony Pompliano?

  David Pakman is currently a partner at Venrock, where he focuses on early-stage venture investing in consumer and enterprise tech companies with a recent focus on robotics, crypto, and consumer products. He also was the co-creator of Apple's Music Group and a product manager at Apple, along with starting and selling a number of technology companies. In this conversation, we discuss David's views on audio and voice, artificial intelligence, robotics, competition on the internet, why crypto can disrupt venture capital, and what is so interesting to David about the idea of crypto collectibles. I really enjoyed this conversation. But before we get into the episode, I want to talk about the three sponsors that made it possible. The first, BlockFi. If Bitcoin and other cryptocurrencies

• 0:55Anthony Pompliano?

  have any chance of ever becoming the next global reserve currency, we're going to need a lot of infrastructure and wealth management services built. This is exactly what BlockFi is doing. As many of you already know, I'm such a big fan of the company that I invested, alongside being a big user. Today, they offer three products. The first is giving US dollar loans against your crypto as collateral. The second is an interest-bearing account for your crypto deposits. And the third is allowing you to buy or trade cryptocurrencies. These three products are important in helping people do more with their Bitcoin, Ethereum, GUSD, etc. Don't want to sell your crypto but need US dollar liquidity? BlockFi can give you a loan. Or maybe you're a long-term holder like me, but want to earn some interest on your assets. Obviously, rates vary, but right now BlockFi is paying 6.2% APY on Bitcoin

• 1:39Anthony Pompliano?

  and 8.6% APY on GUSD deposits. Those are unheard of interest rates in the legacy fiat world. As if the products weren't enough, BlockFi also recently told their users that they're going to be launching a credit card in 2020 that pays rewards in Bitcoin rather than cash back or loyalty points. A Bitcoin rewards credit card not only sounds dope, but should help more people earn Bitcoin for their everyday purchases, too. BlockFi's been a longtime supporter of Off the Chain Podcast. I'm a huge fan and investor, so go to blockfi.com/pomp and check them out. Again, go to blockfi.com/pomp. There may even be some discounts and surprises when you head on over to blockfi.com/pomp. Now, the second sponsor is Unstoppable Domains. They've got a really cool name, obviously, but they also do great work.

• 2:22Anthony Pompliano?

  Many of you have probably heard about YouTube taking down crypto-related content, or Metamask getting removed from the Google Play Store. Well, the decentralized web is going to make that kind of censorship impossible. There's a lot of companies working on this, but Unstoppable Domains is one that I'm super excited about. They've created a way for anyone, even those without technical knowledge, to launch their own decentralized website. You can literally go to unstoppabledomains.com and use their .crypto domains to build a decentralized website. That website's then controlled by you and you alone. It is done the same way you control your Bitcoin with your private key. I got a website set up on decentralized storage, and now I'm the only one who can take it down. It allows me to host this podcast, a blog, or whatever else I want on the domain without worry of censorship.

• 3:04Anthony Pompliano?

  If that wasn't cool enough, I can even get paid Bitcoin directly to that domain as well. That's right, I've got pomp.crypto, and I can use it to get paid. It's a huge improvement from sending Bitcoin or anything else to wallets using hex addresses. So, right now, you can already go to Trust Wallet, Atomic Wallet, and Coinomi to type a .crypto domain into the send field and pay somebody. In order to onboard the next billion people, we can't be talking about hex addresses anymore. Bitcoin's just too hard with those addresses. Everyone uses domain names on the internet. It's a system that anyone understands already. So, head on over to unstoppabledomains.com, get your domain, and stop sending out long hex addresses every time you want someone to send you money. Again, that's unstoppabledomains.com.

• 3:47Anthony Pompliano?

  Unstoppabledomains.com. Now, the last sponsor is eToro. eToro's been a longtime sponsor as well. They originally started outside the United States, offering stocks, commodities, traditional currencies, and cryptocurrencies to users. Then, last year, they came to the US, and they started off by offering cryptocurrency trading. It's not just a crypto exchange, though. They pioneered two concepts, the first being social trading, the second being copy trading. Social trading is basically the layering of social networks with trading. So, you can go to any asset, let's say Bitcoin's page, and you can see the conversation around the asset. You can see people sharing information, graphs, charts. Opinions, etc. You can also trade right from that same page. So the social trading is

• 4:31Anthony Pompliano?

  is kind of a friendlier way to trade and access to more information. But let's say you also find somebody there who's been trading the asset. You can see their performance. You really like them. You think that they're smart and you wish that you could trade like they can. Well, you can now click on a copy trader button that will allow eToro to mirror your portfolio to that trader's portfolio. They buy an asset, you buy it. They sell it, you sell it. So it's literally just a mirroring your portfolio to theirs. So head on over to etoro.com and go check out Copy Trader and Social Trading. I think you'll really like it. Again, that's etoro.com. When you head over there, you can buy, sell, and trade cryptocurrencies. You can also use their social trading and copy trading features. Again, hit up etoro.com. Now, lastly,

• 5:15Anthony Pompliano?

  Off the Chain is not only a podcast. I really enjoy recording all the episodes, but I also write a daily letter to our investors. Most people would keep these letters confidential and private, but I allow anyone to subscribe to read the letters every morning. You could simply go to offthechain.substack.com and sign up today. Again, that's offthechain.substack.com and sign up today. All right, now let's get into this episode with David. It was a ton of fun to record, and I think you guys will really enjoy this one.

• 5:42Speaker 01

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

• 6:08Anthony Pompliano?

  All right, guys. Bang, bang. I've got David here. I am, I'm really excited about this because I think that you have probably the best understanding of other frontier technologies of anyone we brought in here. So we're gonna talk a lot about crypto, but we got other things to talk about as well. So thanks so much for coming to do this.

• 6:26Speaker 02

  Thanks for having me. It's like to be here.

• 6:28Anthony Pompliano?

  Let's go through your background. I feel like you as a venture capitalist, a lot of people know, especially younger people, but you had a whole life before investing.

• 6:36Speaker 02

  I did. I still feel like I'm a new investor.

• 6:40Anthony Pompliano?

  So let's start from the beginning. You actually were a trained engineer?

• 6:45Speaker 02

  Yeah, computer science engineer from Penn. Wrote a lot of code.

• 6:49Anthony Pompliano?

  And then how did you go from there to all of the music work that you did?

• 6:54Speaker 02

  Well, I was always a musician growing up.

• 6:56Anthony Pompliano?

  Okay.

• 6:57Speaker 02

  Played drums, still do. And was fortunate enough to be born at a time when the internet in the 90s was just becoming commercially adopted. And it was somewhat obvious that print and music, you know, audio were going to be the first two media types to be affected by, you know, digital distribution, right? So I, I started working for Apple during school and then afterwards I moved to Cupertino and worked for Apple. And I was in the system software product group. I was a product manager. And worked on a couple of different operating system versions and then saw this collision of, of sort of music and internet happening. And, um, you know, there was no need for, if you can send a song digitally over the internet, you don't need a CD anymore.

• 7:44Speaker 02

  And so it was somewhat obvious, I think, that was going to happen. And I proposed to Apple that given, I guess my view was, tech companies would be able to function as, uh, pieces of the music industry value chain. Maybe even replacing record labels who I viewed largely as, um, you know, unnecessary middlemen that took too much of the value. Still true today. Artists deserve more and we should try to get people, as many people out of the middle as possible and connect artists with fans. It felt like that's what the internet could do.

• 8:14Anthony Pompliano?

  Yeah.

• 8:15Speaker 02

  So I proposed to Apple that they start a group focused on exploiting new digital distribution technologies and trying to build a new music business.

• 8:24Anthony Pompliano?

  Yeah.

• 8:24Speaker 02

  The reason I thought Apple could do it was not only did we have the technology, but we were also, Macs had been adopted by most creative professionals in the world, still true today. Um, in almost every creative discipline, but especially in music, you know, every recording studio had a Mac back then. They still do today. Every artist had a Mac. So we had a certain level of credibility, I think, with artists that could talk to them about, hey, there's this new world coming. And Apple said, that's a pretty good, a pretty good idea. Why don't you lead that? So with a couple other people, I started the music group at Apple and we started to investigate different ways of ushering in a digital future.

• 9:03Anthony Pompliano?

  Yeah. What was it like when you first joined Apple? So pre the music group? You know, I think a lot of people, especially in technology, just there are, you know, fanboys and fangirls of this company and the founder, et cetera. But what was it like when you first got there?

• 9:19Speaker 02

  Well, I was a fanboy too. You know, I saw the Mac when it first came out and said, this is amazing. In fact, I used a Mac at Penn in engineering school doing all my coding. And I was the only engineering student who was using a Mac. Everyone else was using PCs and I had to find alternate versions of the tools that everyone was using. So it's pretty rare then. It's not anymore. And I love the products. I just believe that you could create complex technology products that were easy to use. That was Apple's mantra, make great products. So I wanted to work for them in the worst way. Someone at school I met was an Apple student rep.

• 9:58Speaker 02

  Apple hires, I think they still do today, like a person on every college campus and sort of deputizes them to be like a junior representative. They paid you back then in gear.

• 10:10Speaker 02

  So I was like, that's good enough for me. So I applied and I got that job and I got a laser printer. I was like the only kid on campus with a laser printer. That's what I got paid in. So I'd wanted to work for them. I started working for them in the summers, like had summer internships and then went to Cupertino for a summer and you know, I was in Kidney Candy Store. What was amazing about, and then I eventually got a full-time job there. As soon as I graduated, I moved out to Cupertino. What was amazing was just the quality of the people. I mean, it was kind of warped me in many ways because I was like, wow. Everyone is much smarter than I am and knows way more than I do and is, you know, determined. They're passionate. And I thought every place in the world would be like that.

• 10:50Speaker 02

  Every place is not like that, but it is one of the things that sets Apple apart and it was an incredible experience, learn from so many people.

• 10:56Anthony Pompliano?

  Yeah, it's interesting.

• 10:59Anthony Pompliano?

  Worked at Facebook for two years and similarly, I think that's the part that people don't understand unless you go spend a lot of time there or work there is the quality of the people. It's almost like that's what they're focused on hiring, right? Just the higher, higher quality people and like they'll surprise you at what they can actually produce. And it sounds like you ended up actually being one of those people with, I don't know if they had plans ever going to the music industry, right? But hey, we hired smart people. They come to us with this idea. Yeah, go do it. And then you go execute on it. Do you think that companies can be successful without hiring kind of the best people, right? I debate this all the time with founders who say, you know, we need to, we need to fill that role. And how long do you wait to find the right person versus you need somebody to execute on it today?

• 11:42Speaker 02

  Yeah, I think it's, um, it's tied to one other concept. You can't just try to hire the best people. I think you have to do two things. You gotta hire the best people and you need to empower them. And I think that there's sort of a set of managerial tactics that I would quantify as Silicon Valley best practices. It's how tech companies are built and you working at Facebook understood this pretty clearly. Apple and Netflix and Amazon and Google. The concept is you push decision-making down, right? You try to get teams small so that innovation is maximized and you empower them to experiment, iterate, propose things. You try not to centralize all decision-making. You try to decentralize it. You try to put all the innovation bottoms up.

• 12:25Speaker 02

  And what happens is you've got great people who are motivated and you sort of set them on a direction. You get great ideas as opposed to limiting the number of people who are allowed to make ideas, which is sort of the legacy way that companies were built. And it's proven to be massively disruptive to the way industries evolve. There are, you know, courses taught, there are consultants that try to teach, you know, half of the companies we're staring out the window here, looking at in New York City, how to behave differently this way. And so I think that's, you gotta hire great people, but you also have to empower them to go be creative and experiment. And I think sort of the core root of Silicon Valley is. Advantage is this, great people who are future oriented,

• 13:10Speaker 02

  who are motivated and incentivized to disrupt the past and make things better, are allowed to experiment until they do.

• 13:20Anthony Pompliano?

  Yeah, it's, it's really interesting to hear you say that because when you hear it, it's like, yes, that is absolutely what's going on there. Is that organizational structure or is that more cultural or is there?

• 13:32Speaker 02

  Yes, to both. Yeah, yeah. I mean, you have to build the org that way. You have to tell people that's what we want you to do. You have to demonstrate over time that that's the way products evolve. And, and then you build an institutional culture around it. But it's very common in tech companies. I'm using the term Silicon Valley broadly, right? We do that at New York companies, we do that in Austin. But tech companies have been, are being built this way and have been for 25 years. And it's, I think, proving to be just a leaner, more nimble, decentralized, diffuse, get the best out of people focus.

• 14:03Anthony Pompliano?

  Yeah, for sure. When you started the Apple Music Group, this is pre or post like Napster and kind of all of the decentralized file sharing.

• 14:11Speaker 02

  Yeah, so around that time, there was this thing called MP3s, right? And this is like, we're talking like-

• 14:19Anthony Pompliano?

  There's some young kid listening right now, what's an MP3?

• 14:21Speaker 02

  Yeah, yeah, yeah. Well, so this is like the mid 90s, like 95. And I think by 96 or 97, the number one search term on the internet was MP3.

• 14:33Anthony Pompliano?

  Really?

• 14:33Speaker 02

  It was higher than porn.

• 14:34Anthony Pompliano?

  Wow.

• 14:35Speaker 02

  And that's because that was the only way to get music digitally was to get, to get an MP3. And Napster came about around that exact time as a way to make it even more convenient to get MP3s. MP3 was just a, a file format for compressing music in high fidelity. It was a format that was not controlled by the traditional music business. It came out of a German standard setting body. And it, you didn't need a license to use it as a consumer. You needed a license to put it in a product. A lot of people license it, put it in their products. And it became easy to make MP3s from CDs and it became easy to play them back. And so that was what was happening in the, in the mid 90s. So it was just as Napster was emerging. That I was saying, this is, this is what's gonna happen.

• 15:19Anthony Pompliano?

  And, and this is, uh, any idea of an iPod coming down?

• 15:23Speaker 02

  Previous, many years, several years before iPod.

• 15:26Anthony Pompliano?

  Right, okay. Um, and so as you started to get into this, was it, hey, we know exactly what we wanna go do? Or was it just, there's Apple, kind of our ecosystem, our creativity innovation? And there's music, let's go figure it out. Like, like, how much was it a master plan?

• 15:40Speaker 02

  Did not know what we wanted to do, but we, I would say there were two main thrusts. One was, we had a set of technologies called QuickTime, which was really a suite of audio and video compression and transport standards. So that you could compress audio and video, send them over wires, like networks like the internet, and you could view them on a computer. And we wanted to promulgate those into a lot of different use cases. And entertainment is an obvious one for that. So how do we get QuickTime more adopted? Well, let's go to musicians who make songs and music videos, and start getting them to use QuickTime to distribute music. Uh, and second, I think it was clear that, um, MP3s were looking like, kind of a mess to manage.

• 16:22Speaker 02

  A whole, you start getting a whole lot of them, and you need tools to manage them. Um, and Apple's pretty good at end user software experiences. So maybe we need software to help people manage their libraries of MP3s. And then you eventually saw iTunes emerge, um, a tool for ripping CDs and storing your libraries. And this is all pre-streaming, so you had these very large collections of MP3s.

• 16:44Anthony Pompliano?

  Yeah, and the creatives' response to this, right? I, I think today, it's become much more popular to, uh, whether you're an athlete or a celebrity or a musician, to be a tech investor and, and kind of be entrepreneurial, et cetera. Back then, maybe like the hip-hop industry, et cetera, was entrepreneurial in terms of they wanted to start their own labels and things like that. But what was the reception when you started talking about more like hardcore technology, right? Like QuickTime and, and MP3s, et cetera? Was it a good reception? Or was there kind of a big learning curve and, and education work on your guys' end?

• 17:18Speaker 02

  Yeah, you'd be surprised that the forward-thinking people were the artists who almost always, if you think about it, are the ones who were adopting technology very early in the cycle. So in the eighties, you had all the artists adopt synthesizers long before, you know, traditional music did. And what did that do? It created a whole boom of, you know, sort of particular style of music or genres. Drum machines, same thing. Now, thinking back, you know, things like autotune and different algorithms used in music creation. So artists are very forward-thinking and love to try the new thing. Helps them get a different sound. The laggards were the record companies who are, who at this time and still today are largely run by lawyers, since music is really

• 18:02Speaker 02

  an intellectual property. And so lawyers are by their nature risk averse. And I'm very control-oriented. And so the record labels, the major labels, were complete laggards about it. Don't want to hear it, don't want to meet. We're not going to license any music in digital formats. We like the control that we have through CDs. We want to prolong this as long as possible.

• 18:26Anthony Pompliano?

  Is it like a fear of disruption?

• 18:27Speaker 02

  It's just like a control. It's just control. We want to control it all. And but the independent labels, indie labels, because by also their nature, need to experiment, they were willing to really experiment. And the first labels that were licensing music for use in digital download were all indies.

• 18:45Anthony Pompliano?

  Yeah, it's kind of the like, the innovation comes out of necessity, right?

• 18:48Speaker 02

  Totally, totally. And yeah, willingness to experiment.

• 18:52Anthony Pompliano?

  For sure. So you guys obviously started Apple Music Group. It's done amazing things that many people don't even realize kind of what you guys are responsible for. You eventually move on and I think you went to like a private equity firm and started to buy businesses, grow them, etc.

• 19:06Speaker 02

  Two things before that is, and this is a very typical path. When you go work at Apple or Facebook or Amazon, you might meet a whole bunch of amazing people and learn best practices, software development, organizational development, how do you hire people. But many times you might choose to take that to a startup. So most of my mentors, the folks who I admired and learned from, who are several years older than I was, that was their path. They were at Apple for a bunch of, for a while, then they left and went to startups. So I was like, oh, I'm going to do that. And so I left Apple and I went to startup. And this was in the mid 90s. I went to a company called N2K, which was one of the first. Digital music companies and it was trying to sell digital downloads online.

• 19:48Anthony Pompliano?

  Really?

• 19:49Speaker 02

  Yeah, and we had a CD store online, like we buy CDs, but then we were really pressing to try to sell digital downloads online very early. But the company went public and was pretty successful. It merged with its rival, CD Now, and we were an online music retailer. But we were also a record label and the idea was, boy, if we could sell enough music online, we could sign artists and then the artists could sell music directly to their fans. And that was, you know, probably 30 years too early, but the concept was a good one.

• 20:17Anthony Pompliano?

  It is funny that that was the idea because there's some people trying to do that now.

• 20:21Speaker 02

  Right now, exactly, yeah.

• 20:23Anthony Pompliano?

  Okay, so you do that and then how do you go from N2K to kind of the creation of this digital locker?

• 20:30Speaker 02

  Yeah, well, so the thing that was somewhat obvious was people have a lot of MP3s and they're storing them on their local hard drives. But the internet connects everything. So what happens when you leave your house and you get to work and you want to listen to some music? All your music's back home on your hard drive. Well, it doesn't make any sense, right? So let's move the music off your local hard drives to the cloud. And we started a service to do exactly that. It was called MyPlay. You could think of it as Dropbox for music. And one of the cool things was, once you uploaded your songs, you didn't have to download them again. You could stream them. Now, it was super choppy bandwidth at this point, so it wasn't the most reliable thing. And a lot of people had, you know, modems at home, which weren't high enough bandwidth.

• 21:15Speaker 02

  So it wasn't a great consumer experience, but you could see it being the beginning of where streaming music would become, certainly more convenient than, you know, carrying a hard drive around. And that company was called MyPlay and we got to about 8 million users and we sold that one to Bertelsman, who, you know, owns BMG Music.

• 21:33Anthony Pompliano?

  Yeah, it's funny because I remember being a young kid and everyone was running around with, you'd get in someone's car and basically the way you could tell if somebody was cool or not was what CDs they had in their CD case, right? And that was kind of the, rather than carry around the hard drive, you literally carried around a CD case. And, you know, God forbid you forgot it at home or you left it in your friend's car or whatever. You had no music, right? And so similar thing there. Got it, and so. As you're building that, I think there's a lot of comparisons, it sounds like, to where crypto is today. And we'll get into crypto stuff, but what was the thought process as you guys are building a service that you know it's not perfect, right? And kind of you're at the beginning of, hey, this is going to improve over time.

• 22:17Anthony Pompliano?

  There'll be better streaming, the technology that the consumer has will improve, et cetera. But somebody has to be those first steps down that path, right? Are you kind of aware of it at the time? Is there frustration of, man, we wish that we could technically solve this? Or do you understand, hey, we're early to this and, you know, it's just going to take some time to improve?

• 22:36Speaker 02

  It's a really interesting question, Anthony, because I was young then. And I feel, I feel, I feel like today, that those years, I was very certain of where the world was going to go. I was absolutely convinced that music would become streaming music, that all music would go digital, that, you know, CDs were doomed, that artists could take back some control, have direct relationships with their customers, at least know who their fans are, no idea who they were otherwise, and bandwidth would improve. Like, it was just so obvious to me that digital connection was so much better than waiting for a newspaper to arrive every morning, right?

• 23:18Speaker 02

  Or having to go put a CD in a truck, like, you know, we called it atoms to bits, right? That was so obvious to me. So I don't think we, we were probably more impatient, right? Like, why, come on, these damn phone companies are so slow at rolling out higher bandwidth connections, because it will enable such great experiences for consumers. So we had to compromise, like, we had to make websites that could load on slow connections. And we had to do some kind of cross sampling or down sampling for high fidelity tracks, so that they could stream over lower bandwidth connections. And you don't have to do that as much anymore. So I think we just tried to accommodate. We were certainly early.

• 24:00Speaker 02

  I think your point is, this is, you know, 1997, 1998, 1999. No one has broadband at their home yet, you know? We certainly didn't have wireless high bandwidth connections, so you couldn't do this to your phone yet. But we were right. We were early. That's all.

• 24:16Anthony Pompliano?

  Yeah, it's like the was the the ringtones was like a big deal.

• 24:21Speaker 02

  Totally.

• 24:21Anthony Pompliano?

  I think that's like some of the first digital music I remember interacting with. But but it's interesting because a good friend of mine constantly says that, you know, the best entrepreneurs are short term urgent, long term patient.

• 24:33Speaker 02

  Yeah.

• 24:33Anthony Pompliano?

  Right. And I think that it's kind of a perfect example of, I mean, still today, right, that there's still streaming improvements going on, etc. And we're talking, you know, 20 plus years later. So.

• 24:43Speaker 02

  Also, I think it's it's relevant to the crypto conversation we'll get to, I guess, soon because I think a lot of people in crypto are certainly certain that the world's going to be more decentralized and that trust in institutions will continue to erode. And so we need to digitize trust.

• 24:59Speaker 02

  But but none of us know exactly when that goes mainstream.

• 25:01Anthony Pompliano?

  Yeah.

• 25:01Speaker 02

  In the same way that, you know, digital music was certain to me, we just didn't know when it would tip and become mainstream.

• 25:06Anthony Pompliano?

  Got it. When did you want to become an investor? Like, what was the jump from building companies? You obviously had success kind of being innovative and entrepreneurial inside of Apple. Then a number of companies yourself. Like, what was the?

• 25:19Speaker 02

  Yeah, going back to Apple, a lot of my mentors, you know, stayed at Apple five or 10 years, left there, did a startup or two or three and then became VCs. Like, that was the path. And I was like, well, that seems pretty cool. I like the idea of helping entrepreneurs once you've been a good one. And I like the idea of learning about more than one area. So the real moment for me was after spending 15 years as a digital music entrepreneur. I did N2K, CD Now, I did My Play, and I teamed up with some guys and bought eMusic and ran that for five years. It was like, you know, there's got to be more to life than digital music, right? And mobile was starting to emerge and social was starting to emerge. And I said, I want to get smarter about these other

• 26:04Speaker 02

  markets. And by the way, they feel like they're much bigger, like there's way more opportunity there. I want to play in the where the big fish are, swim with the whatever. I want to fish where the big fish are. And and that was really the motivation for maybe trying to become a VC. And I was fortunate enough to find a firm that was looking for somebody like me.

• 26:24Anthony Pompliano?

  Got it. Did you know what else you wanted to look at? Or was it just outside of digital music, there's a whole bunch of other areas? I want to go help entrepreneurs in those areas. I'll figure it out when I get there.

• 26:34Speaker 02

  I've sort of been long internet since 1995, right? Like, it was like, this is gonna, this just changes absolutely everything. Like, it literally takes the value proposition, or sorry, the value chain of every industry and throws it up in the air and it's all going to resettle totally differently. And we're still, I don't know what percentage we are into that, but think about the conversations you have with fintech entrepreneurs who are like reorganizing the insurance sector, right? Or reorgan, the way homes are bought and sold, or the way appraisals are done. Like, we're, we're so far into just reorganizing everything, thanks to the internet and software, that I just knew that we have an infinite amount of opportunity.

• 27:16Speaker 02

  And I, I didn't have a specific agenda, but for me, the big one was mobile was happening at the time. It was like, this is, smartphone's gonna change everything. Once again, we're gonna reorient a lot of pieces, everything has to be rebuilt from mobile.

• 27:27Anthony Pompliano?

  Yeah, and it's crazy too, because it's still happening, right? I mean, I see companies all the time getting started, then I'm like, wow, that's a really good idea, can't believe that the internet hasn't touched that corner of the world yet. And, you know, good bet for you to be long internet since 95, but, you know, 25 years later, still, still happening.

• 27:43Speaker 02

  Yeah, and I think what you're, as an entrepreneur, you usually wanna ride a wave, right? Because rising tide lifts all boats and you get credit for something that's pushing you along. I remember like, I mean, one of the ways that YouTube got big was they did an embed code that's sitting on top of MySpace. MySpace was big and that helped make YouTube go. And so there's countless examples of like companies, you know, Zynga, that rode the Facebook wave. You're always looking for, for a wave, and mobile was a wave, social was a wave. There's a question, it's not, I don't think we know enough yet, is AI a wave? And is crypto a wave, right? And, and when, when you have waves that are really big, you might argue cloud was a

• 28:27Speaker 02

  wave too, right? Reorganize the entire sort of infrastructure stack and corporate software, enterprise software. If crypto is going to be a wave, then a whole lot of things are going to get reoriented as well. And that's, I think, what many of us, why many of us are poking around there.

• 28:42Anthony Pompliano?

  Yeah. So some of the things outside of crypto that you're focused on right at Venroc is kind of audio and voice, AI, especially like software development, robotics, et cetera. Maybe let's go through each one of those before we get to the crypto stuff. What's the kind of belief or your view today of like audio and voice, right? Why is that so important? And kind of why are you spending time there?

• 29:03Speaker 02

  Yeah, well, I'm spending a little bit less time there.

• 29:05Anthony Pompliano?

  Okay, interesting.

• 29:06Speaker 02

  Like, I think that when you started to see these devices proliferate.

• 29:11Anthony Pompliano?

  And it's like the home devices?

• 29:13Speaker 02

  Yeah, let's call it Siri as a software device, right? And, you know, the Echoes and Alexa as a hardware device. The question many of us asked right away was, so is this a new platform? Will you see audio apps like you saw apps on mobile? And will we have a, you know, Cambrian explosion of lots of new products that are built for voice? And, you know, we didn't know the answer at the time, but over time, it started to become clear that actually this feels a little bit more like an and not an or. Like, you're adding voice to apps like a feature, but it doesn't replace the last mechanism for interaction. So I think the place that voice has been most impactful is in podcasting, where very

• 29:56Speaker 02

  low cost to produce content. And, look, it's, in many cases, podcasting is better than radio, right? And it's way more variety, you lots of convenient targeting. Here's a cool way to think about it. I read a Pew Research report on why Netflix is popular. So I surveyed 10s of thousands of people and said, why do you like Netflix? Number one, two and three answers are, one, it doesn't have commercials. Two, I can watch whatever I want to watch when I want to watch. And three, I can binge watch it.

• 30:28Anthony Pompliano?

  Oh, interesting.

• 30:30Speaker 02

  Number four was, I like the shows. So the first three reasons why Netflix is popular is because it's better than TV.

• 30:36Anthony Pompliano?

  Yeah, the format.

• 30:37Speaker 02

  Yeah, it just, exactly. The format corrects the annoying things of television, of linear television.

• 30:44Speaker 02

  So first thing you learn about that is if you are trying to compete with Netflix, like your legacy guys, don't do things like we're dropping an episode once a week. Like, that's not why people are going to Netflix. They're going, one of the reasons they're going to Netflix is because they can binge. So don't try to exercise control like you did in the legacy world. But, by the way, not everyone's doing that.

• 31:05Anthony Pompliano?

  Yeah.

• 31:06Speaker 02

  So then you-

• 31:08Anthony Pompliano?

  And certainly, but basically what they're doing there, it sounds like, is the legacy guys realize, hey, there's disruption happening, and rather than fully commit-

• 31:17Speaker 02

  Yeah, we'll go like well-

• 31:18Anthony Pompliano?

  -burn the boats.

• 31:19Speaker 02

  Yeah.

• 31:19Anthony Pompliano?

  Instead, what you do is you almost, okay, we're gonna go do this, but we're still gonna do it in a way where we're fighting the headwind of the consumer trend or the consumer behavior.

• 31:26Speaker 02

  Yeah, and you know what? It doesn't work because the, what I think most legacy media companies still don't fully get is the consumer's in control. The consumer has infinite choice and just votes with their eyeballs and they go somewhere else, right? So if you make it high friction, or you are substandard experience compared to the competitors, you just lose their attention, right? So Netflix wins on the attention, right?

• 31:48Anthony Pompliano?

  Yeah, the thing that is really interesting to me about the, I'll call it kind of the video platform wars, if you will, or whatever you want to call it, is it used to be a thing where the studio created content, that content was pretty much, they were programming for you, literally called it programming. The platforms, either they actually own that platform, or they had a very significant say because they were the ones providing the content and a lot of competition. Now, what you're seeing is there was these aggregation platforms like Prime or Netflix, they've then used that data and they realize it's all about the quality content. Well, let's just cut out these studios and we'll go sink billions of dollars of our own capital into actually creating originals. And I gotta say, like, it's pretty high-quality stuff, right?

• 32:31Speaker 02

  Of course. Look, it's, they have the data. They know what the customer wants. Why don't we inform ourselves what customers want and then go pay people to make that? You know what?

• 32:42Speaker 02

  One thing I've said before is that guys who deliver entertainment over the internet can buy programming, just like people who deliver entertainment over coaxial cable and cable television. Right? I mean, it's, they're all just buying content from creators. The creators are the show writers, or showrunners, and the actors, the directors, the editors, those are the creators. And they had, the studios had a basically monopoly on buying from them because no one else was buying from them. But now, all the internet companies are buying from them, and they can do the same thing. Their money's just as good, but they can at least inform themselves with data what's gonna work. So, to get back to audio, I think if you think about podcasts, they're kinda better than

• 33:25Speaker 02

  radio. Why? On demand, no commercials, or at least more tolerant amount of interruptive ads, or no interruptive ads at all, maybe a sponsor read. It's a little bit more like public radio that way. But I can listen when I want, and I can binge watch, right? And so, I feel like podcasting, one of the reasons for its success is it's catering to the consumer, just a better product than radio, and that's one of the reasons for it's working.

• 33:54Anthony Pompliano?

  It's funny because like, content we know, higher quality content normally wins, right? If the consumer likes it, they'll figure out, they'll jump through hurdles to go get that quality content.

• 34:02Speaker 02

  I push, I'm not so sure that's always true.

• 34:04Anthony Pompliano?

  Okay, why?

• 34:04Speaker 02

  Depends what you need, mean by quality. A lot of times, convenience can trump quality, but I think we're using quality differently. I'll just give you one example. Music listened to through earbuds?

• 34:14Anthony Pompliano?

  Yes.

• 34:15Speaker 02

  In a MP3 format, is lower fidelity than like something coming off a CD, but I don't think what's what you meant by quality, right?

• 34:22Anthony Pompliano?

  If I like, if I like, yeah, if I like one band over another, I will go and find that band, even if it's harder for me to listen, etc. Right? So, agreed, the, the content in terms of, I like it versus I don't, but that also brings up quality of the format, right? And so, if you think of, one of the things, I mean, from a personal experience, we do an ad read at the beginning of each episode after the introduction. Advertisers want you to do them during the episode, and there's people who do it. I personally hate when I listen to something and it gets broken up by ads, so I just refuse to do it. And I always joke that like, you actually probably can make more money by doing it, but who are you optimizing for, right? Who's kind of the customer? And I think that a lot of these platforms have figured that out.

• 35:07Speaker 02

  Yeah, so I think in voice, my view is the,

• 35:11Speaker 02

  The biggest beneficiary, other than the platforms themselves, like Google and Amazon, is audio programming, right? And because it's effectively going after radio.

• 35:22Anthony Pompliano?

  Yeah. AI. So you are pretty bullish, it sounds like, and have some very specific views there. Maybe just generally, like, how do you think of artificial intelligence and where we are? And then maybe we can get into something like the software development.

• 35:34Speaker 02

  Yeah. Well, there's just no doubt that it is a significant change to the way we build software and the capabilities that software can achieve, made possible by processing very large sets of data and having computers make some decisions that are, and when their computers are better at making decisions than humans are. So I think we've been looking at two main applications of that that are interesting from a venture perspective. One is, well, businesses, enterprises, make a lot of decisions every day. Should I hire this person? Should I promote this person? Where should my sales team spend their time today? Who should they call? What should I put on my website? What should I put in

• 36:16Speaker 02

  my email? And how should I merchandise my products? Where should I sell them? How should I price them? On and on. How much inventory should I make? How many different styles should I make? These are questions that businesses have been asking and answering for, you know, scores of years. But it turns out that humans are pretty bad at making almost all of those decisions. Given enough data and tuned algorithms, computers can make better decisions than the humans can. So you're really going after human decision making in enterprises and trying to improve it using data. And that thrust is an investment area of ours. It's, you know, some people call it smart software or AI for the enterprise. We're just, you

• 37:01Speaker 02

  know, software that improves decision making in enterprises on a lot of different dimensions.

• 37:06Anthony Pompliano?

  Now, to me, that is, it's less revolutionary. It's more of an evolution because, you know, I don't know, 20, 30 years ago, there were people who just made decisions, you know, I always think of like the madman, you know, what do I put on the website? Let me lick my finger stick in the air and, you know. I think this is the logo, right? Or this is the motto. Over time, the people who have been the most disruptive or innovative said, well, let's look at the data, right? Who clicked on the most on that button, that type of stuff. But it's still a human analyzing the data. What you're really talking about is why don't we give the data to somebody who's even better than?

• 37:36Speaker 02

  Yeah, just put the computer in there and take the human out. Yep. So that's happening. I agree with you. You can, you can draw it the way you just drew it and it looks evolutionary and it kind of is like it's just putting more faith in the algorithms, if you will. But, but what is different is the process by which you gather data, label it, train the computers and then tune the algorithms is kind of a break from a more traditional way that software was built. And it requires a bunch of, let's call it artisanal expertise today to do really well. And there's you know, tens of thousands of people, maybe a hundred thousand people in the world who know how to do it really well. And probably 80% of them work for Apple, Facebook, Google and Amazon.

• 38:20Speaker 02

  Some at Netflix and, you know, a couple more tech companies, right? Microsoft, LinkedIn, but very quickly you realize that over the last seven or eight years, the tech giants have tried to monopolize the talent on this, which just means that they're both advancing the state of the art and applying it in more ways and better than a lot of other legacy companies can. So it's created a bit of an unfair advantage. And that I think is what opens the opportunity to sell AI-enabled products to enterprises who, who can't hire the same talent and, and use their own data to improve.

• 38:54Anthony Pompliano?

  For sure. How, how much of what you guys are seeing in this space is what I'll call like the value being placed on the decision-making itself versus more like testing frameworks in that data gathering, right? The example I always think back is when I joined Facebook, I was running a team that was focused on growth for Facebook pages. And one of the things that just blew my mind was they had built custom software internally where you could basically feed a bunch of variables into it. It would show all the different variable combinations to traffic and kick out, you know, a couple of days later, hey, this is the best combination. That would have taken, you know, Ten humans in a room, five days to just come up with all the different combinations, let alone run it.

• 39:35Anthony Pompliano?

  And so to me, that was less like the computer was making the decision, if you will. But it was more of using that testing framework and being able to actually in a pretty scientific and methodical way, get an answer. So less AI, but more like testing frameworks.

• 39:51Speaker 02

  Yeah. So I think maybe the question you're asking is that are there investment opportunities around tools? And the stack used to build AI applications? And I think there are. The place that we've been skeptical, so, so yes, you need to gather large sets of data. You need to clean the data. You need to label the data. You need to build models. You need to tune the models. Sometimes the models should maybe be tuned like every day. So you need auto tuning models and you need to make the models run on low power and sit at the edge in many cases. This is another specialty. Have small footprint, optimize models. So all of these are things that a bunch of humans are good at

• 40:33Speaker 02

  and a bunch of tools are being built to scale. And there are some investment opportunities there. The one place we've been sort of skeptical is AI as a service.

• 40:44Anthony Pompliano?

  Okay, explain.

• 40:45Speaker 02

  Okay. So like, hi, I'm a website with a bunch of really smart AI people who work here and you are, we're staring out at MetLife, an insurance company, and you want to upload. We have a service where you can upload all of your data. Let's say you can upload all of your claims and, and all of your customer information and we'll build a model and it'll run and it'll come back and tell you which one of your customers are likely to file claims in the next year.

• 41:08Anthony Pompliano?

  Got it. Outsourcing the models.

• 41:10Speaker 02

  As a service. We're a little skeptical that you can genericize AI that way. That it turns out that most AI problems require a lot of customization on their solution to, to make it perform really well. And so it's hard to be a generic platform.

• 41:24Anthony Pompliano?

  Is that a, and this is a little bit in the weeds, but is that a problem where the contributor of the data, you've got a lot of worries about, did they collect it correctly, clean it, label it, et cetera? And so kind of the inputs to the algorithm could be bad, therefore you get a bad output? Or is it just really hard to customize the actual algorithm to the problem?

• 41:42Speaker 02

  I think it's more the latter. Yeah. It's, I mean, it's not rocket science to figure out how to clean and label data, although not everyone's good at it.

• 41:48Anthony Pompliano?

  You're giving a lot of people credit.

• 41:49Speaker 02

  Yeah, sure. Yeah. But, but I think the bigger issue is, do you have the sort of artisanal knowledge to know which combination of models and algorithms and machine learning approaches will produce the best outcome?

• 42:03Anthony Pompliano?

  Got it. And so maybe talk a little bit about AI and kind of software development. We were talking before we started recording, and I think that was a really interesting view of how software development might materially change as AI becomes more mature.

• 42:16Speaker 02

  Yeah. So right now, I think from a consumer standpoint, AI is being used as a feature in a lot of software. So I mean, obviously your voice assistant is using a lot of AI to understand what words you're saying and then understand the meaning of those words. Google Photos and Apple Photos are using a bunch of intelligent, a bunch of computer models, AI models to do facial recognition and find where your dog is in every picture. There's no human doing all that. And those are features that we're getting very used to today. So you could think of those really as being traditional software applications with an AI model sitting in the middle. But if taken to an extreme, there are software

• 42:59Speaker 02

  developers, when they make software, make a lot of choices. Like what, we were talking earlier, what items should I put in the menu? And what order should those items be in? Well, a long time ago, figured out, well, shouldn't the data tell us what order the items should be? And I remember an example way back, like 1999 or something, HP.

• 43:23Speaker 02

  announced, we looked at our website logs and the number one reason people were coming to the HP website was to download the drivers for their printer. So we put that button on the homepage and everyone's like, oh my gosh, that's so smart. Now a consumer can get right to it.

• 43:40Anthony Pompliano?

  Let me go look at my web logs.

• 43:41Speaker 02

  Exactly. Let me look at my logs. So then a bunch of tools started coming out to analyze your logs, but it still was like tools analyze logs, human reads logs, human programmer changes website. Then we went into this era of personalization, right? In the nineties where it's like, well, wait a second, why don't we just write a little algorithm that says, look through logs, find five most popular things for this person and build the menu that way. So that's what we have today. The, well, we have more than that today, but most websites are personalizing the experience somehow, putting merchandising products on the homepage that are right for you.

• 44:14Anthony Pompliano?

  Yes. Simple things are you're in the United States or somewhere else, show an English website for something else, right?

• 44:19Speaker 02

  Yeah.

• 44:19Anthony Pompliano?

  More complex is hey, we have your purchase history.

• 44:21Speaker 02

  Yeah.

• 44:22Anthony Pompliano?

  We know you like sushi, so let's show you the food delivery for sushi.

• 44:25Speaker 02

  Yeah. But suppose you took everyone's data who comes to your website and every version of the website you've tried and you threw that all into a model and you and you gave the computer a whole lot of other information like the time of day and the weather in the area where the customer is coming from. And the computer looked for correlations that when you, when it's cold out and you live in Duluth, Minnesota, and you have this purchase history and you come here, I should show you this parka. And while that's personalization, it's, it may be building the rule itself rather than a human deciding on what the rule should be. And that's machine learning. So we're at that era now where in software

• 45:08Speaker 02

  development, it may be best to remove the actual algorithms that a human wrote and instead let the computer build the model, let the computer build the algorithm to decide what should be shown or how to build, what features should be shown to the customer. And if you, if that happens, if that really is true, then software development changes because it, your software looks like really just like one AI model talking to another. Another AMI, I'll talk to another AMI. And there's not a lot of tools to handle that. A couple of companies that are doing that. So I think maybe software development itself could be implicated on a broad scale because of this change.

• 45:43Anthony Pompliano?

  Yeah. And as you think through that, it's almost to an extent, you're telling the computer, hey, we don't really know exactly all the questions you should ask, right? So ask what you think you should ask to get to these answers. And so it brings two questions. One is now you're really reliant on the human telling the machine what to optimize for, right? So are you optimizing for purchases, right? You know, one of my favorite examples is take a media company. They want to optimize for as much time onsite as possible. That means you're reading a lot of articles and, you know, looking at their ads, they make more money. Well, Google actually optimizes for the exact opposite thing, right? It's how do I get you on the search page and you click the first result and get off the page? And so humans have to understand what they're optimizing for. The second thing it brings into question is like the downside of AI, right?

• 46:27Anthony Pompliano?

  Or kind of the fear, I'll call it, not even the downside, where what if the machines, you know, go off a cliff and they start writing all these algorithms? And, you know, the Facebook example, I think is the best one where everyone's like, oh, they were talking to each other. Maybe, right? Kind of how do you, how do you think about, you know, humans telling the machines what to optimize for and making sure you get that right? And then also, how do you kind of prevent the doomsday scenario that is probably overhyped a little bit?

• 46:51Speaker 02

  I like that you asked the question because Facebook and Twitter already are using AI-created algorithms to decide which tweet or which post to show you. And it's really good because you ever catch yourself just sitting there mindlessly scrolling? And that's exactly what it's built to do. That's the KPI, that's the objective function is to keep you on as long as possible, right? Engagement and time spent. And it's working.

• 47:17Anthony Pompliano?

  They're very good at it.

• 47:18Speaker 02

  They're really good at it. And I think as a result of that, we're starting to wake up to that. A lot of people are saying, wait a second, they're manipulating me, right? Or I don't want to be mindlessly scrolling and I'm having a hard time stopping. And that's because like they know the psychology of the dopamine hit you get from seeing yourself mentioned or someone liking you. So it's all built, it's all, it is manipulating us. It's just, you know, it's going to our base behaviors and keeping us on their website longer. And then some people are starting to wake up and say, I don't think, I don't think that's good. So what are we going to do about that? You're going even, so that's today, like that is happening today. You're going farther is like, can, can the software start to do bad things to us that its masters didn't ask it to do?

• 47:58Speaker 02

  We start to get into a philosophical conversation here, but the the distance from where we are now to like computers deciding to behave badly versus them doing exactly what they were asked to do. But it's, you know, some unintentional consequences. I'm, you know, we're just nowhere near a general intelligence, artificial general intelligence. And I'm of the mind, I'm a computer scientist, but I'm not a data scientist. I didn't study AI in school. But I'm still of the mind that, you know, the smartest people in the room tell me that we're just nowhere near that. Right. And when you see how long it takes to get some of these algorithms tuned to just do very basic things, you realize that they're not smart in the, you know, they're not intelligent in the human sense.

• 48:42Anthony Pompliano?

  I always go back to this idea of it seems like a lot, and you're much more educated on this than I am. But from an elementary view, it's like, look, the machines are just doing what the humans would do if we could. Right. Which is basically taking a bunch of information, processing.

• 48:56Speaker 02

  Make better decisions.

• 48:57Anthony Pompliano?

  Make a decision.

• 48:58Speaker 02

  Yeah.

• 48:59Anthony Pompliano?

  What they're not doing is overlaying that with the one thing that humans are better at than machines, which is the human intuition and kind of all of the the general intelligence, etc. What that leads me to is I've had this idea for a long time that let's just, you know, kind of admit the machines are continuing to get better and better and better. And eventually, humans will trust those machines and software over other humans. Right. But if you flip that back to what we're talking about with the audio side, it's almost as if all of a sudden the creativity, that general intelligence will become more valuable in the future because the repetitive type tasks and decision making, etc., the machines will kind of have a monopoly on that. Well, what can the machines not do? Right. And so whether that's content creation. I've recently met a guy who he's rolling up ad agencies.

• 49:44Anthony Pompliano?

  And his whole idea is, look, there's everyone focused on how do you get more people to click on the Facebook ad? But there's still this niche of, well, you need somebody to come up with the ad campaign. Right. And so his whole idea is that creativity will become more valuable over time, etc. Do you buy into that? Or do you think that the machines can eventually evolve from just the repetitive tasks to they literally will create content and things like that that are just optimized for what we want to see?

• 50:06Speaker 02

  Today, I think when we look at the. Application of machine learning towards creative things like visual storytelling or writing text, right? Or even music creation, because there have been a lot of applications, people trying that stuff. They, um, most of the stuff is interesting, but derivative. Because no surprise, you feed it a lot of Mozart, it, you know, spits out something that sounds strikingly like Mozart. That's amazing in and of itself. But, um, when you think of like, will artistry be subsumed by computers? I think two things, two reasons why it probably won't be for a very long time. One is, I think when you look back at the great artists, and I use that term super broadly, in all forms, in all media.

• 50:49Speaker 02

  They were initially doing something that was a significant break from the past and may even be heresy. Right? Like, this is, this is, what is this? Like, I don't understand this. This is terrible. It doesn't sound anything like what other people are doing. It doesn't look anything like what other people are doing.

• 51:05Speaker 02

  And yet, it's that, um, that, that break that is the demonstration of their genius. It's their, it's a, it's original thought, right? It's something new. And that's what can be the indicator that something great is happening. And it takes time for the rest of us to catch up and say, wait a second, that is really great. And even though it's different, that's one of the reasons it makes it so great. So number one is, I don't, I don't know that we're going to be able to just tweak the algorithms and say, yeah, I fed you all the Mozart, but now do something completely original. The second is, I think we, as humans, like to understand the humanity behind the creator. What story led them to do this?

• 51:48Speaker 02

  And we can make up a story about a computer that did something, or pretend it wasn't a computer. But boy, I think we like to attach, what is the Billie Eilish backstory about why, you know, and boy, and now I really appreciate her music even more, right? So. And we're fascinated by that, and that's never gone away. So I guess I'm skeptical that like all the great moments in arts broadly will now be done by computers. However, there's a lot of fields where, let's just call it derivative art won't be, humans won't need to do anymore. So like production music, background music, what music do you put on the bed of a commercial? Or, boy, you know, that's, that can, that will be able to be created by computer. It already is.

• 52:29Speaker 02

  Animation, like I drew all the main characters and the cell, the main cells. Now fill it all in. Computer really good at that stuff. So I think there, it does impact human creativity, but not in the dramatic way like, okay, we're never going to have another great author again. There'll be no more Hemingways.

• 52:45Anthony Pompliano?

  Yeah, absolutely. So we talked a lot about kind of automation in the software world. What about in the hardware world around like robotics and stuff? I know you guys have spent a lot of time there. What's kind of going on there? What are you guys excited about?

• 52:57Speaker 02

  What's interesting is the macros. So we've basically at full employment in this country, and we have rising labor costs, you know, hopefully getting to $15 an hour everywhere, but then it doesn't stop there. It keeps going up. And so we have people who employ humans who need a bunch of different jobs done that at $15 an hour or more start to become economically not possible to do, right? You hear about farm labor, the labor costs going up such that you, they can't, a farmer can't afford to produce food for us profitably. You hear a lot about

• 53:35Speaker 02

  like warehouse type jobs, you know, highly repetitive, low skill labor, where if the, if labor costs keep going up, we won't be able to profitably produce different goods. And that's why they've, those goods have been moving overseas to be produced. So one answer to that is automation. And the thing I want to stress in, we've looked pretty closely at these, many of these markets, usually it's not, it's almost never displacing human labor. The humans are going, doing something else that's slightly less repetitive, something

• 54:08Anthony Pompliano?

  Okay, interesting.

• 54:09Speaker 02

  Right? That because the higher wage jobs are for jobs that humans are good at, and that, that computers and robots aren't that good at. We have a company called Simbi Robotics.

• 54:21Anthony Pompliano?

  Simbi?

• 54:22Speaker 02

  Yeah, Simbi, S I M B E. Um, the problem they solve is like literally half a trillion dollars every year is lost to you going into a store and the item not being on the shelf.

• 54:36Anthony Pompliano?

  Okay.

• 54:37Speaker 02

  Five hundred billion dollar problem.

• 54:38Anthony Pompliano?

  Wow.

• 54:39Speaker 02

  The items often in the store, it's just not on the shelf. It's in the back somewhere where it's coming in a few hours, but it's not there. Um, and another half a trillion dollars is lost to an item being mispriced or not being displayed properly. So.

• 54:55Anthony Pompliano?

  Can we chalk all that up to human error?

• 54:56Speaker 02

  Yeah, it's, it's humans either, either not being good at that or just being like perennially bored at it. Like who wants to walk up and down store shelves every couple of hours and see what's missing from the shelves, right? Or what's not displayed correctly. Humans hate that job. And that job is often unfilled in many groceries and retail stores because of that. No one wants to do the job. High turnover. So this robot does that, drives up and down store aisles, finds all the things that are out, does it a couple of times a day, sends a text message to the store manager, you're out of mayo on aisle three, position seven. Or the items in, you know, aisle four, it's position seven are not displayed according to the planogram.

• 55:34Anthony Pompliano?

  So it doesn't actually quote unquote fix the problem. It just identifies the problem. Maybe in the future it could fix whatever, but right now it's just an interface between, I'll do a job that the humans don't want to do. I'm really accurate at it. I basically can then alert the humans and the humans will come fix the problem.

• 55:49Speaker 02

  Yep. I don't get tired. I do it all day long. I don't complain. Yeah. I'll do it at nighttime too. It's a automated counting machine, right?

• 55:56Anthony Pompliano?

  And that's do like computer vision or?

• 55:58Speaker 02

  Yeah, it's computer vision. It's got a lot of sensors on it. Obviously it's got to know how to drive around, can't hit people, can't run over kids, you know, shouldn't bang into carts, got to avoid spills. Got to be able to function in the dark, like a lot, a lot of stuff. And so it's a pretty sophisticated robot, uh, but it does really well. And it really solves this problem brilliantly.

• 56:14Anthony Pompliano?

  Yeah.

• 56:14Speaker 02

  Um, and what's happening is retailers are not firing the labor who used to do that. The labor doesn't want to do that job. They go do something more useful, like interact with customers. To your point, what humans are good at.

• 56:23Anthony Pompliano?

  Yeah. And, and so take that system, for example, uh, if I'm a grocer, I want to use this. Do I have to like retrofit my entire store with sensors on the ceilings and all this kind of stuff? Or is it just?

• 56:34Speaker 02

  That's what's cool about this company. Actually, it's part of the investment thesis is you literally plug it in. It's got a little self charging pad. You got to set up a little area in the corner of the store. And it's got to integrate with your inventory management system. So it knows, it can tell you like this skew is missing. But it drives up and down for a day or two, orients itself, builds a map, and then you tell it how often you want it to run and it works. So it's meant to to solve the problem without you needing to retrofit at all.

• 57:01Anthony Pompliano?

  Yeah.

• 57:02Speaker 02

  It kind of operates in the environment the way humans did.

• 57:04Anthony Pompliano?

  Yeah, it's pretty interesting. What's your thoughts on on these like Amazon Go stores and what I'll call kind of the the ultimate culmination of a lot of the different things we're talking about here where it's software, computer vision, robotics, etc. How do you see that kind of plan?

• 57:18Speaker 02

  Yeah, so that eliminates the cashier experience. And the first time you went into an Apple store and like you didn't have to go stand in line for a cashier, you were like, well, that's a better experience, right? This is even better than that, right? Because you don't have to find the person in the store, you just leave. So I think that's a great, you know, going back to the Netflix example, that is a better version of retailing than legacy retailing. So yeah, we're going to do more of that. But that requires a really major retrofit and a big expense. So this solves an interesting set of problems without requiring like you got to build a store very differently. So I think, for instance, I think Simbi would be adopted, is being adopted way more quickly than let's rebuild the store to be cashierless. Although that's happening too, I think just much more slowly.

• 58:02Anthony Pompliano?

  Yeah.

• 58:03Speaker 02

  So broadly, I think we're looking at a lot of robotic solutions that do the jobs that humans don't want to do or aren't very good at. So you can lower the cost of production and humans can be deployed to do better things.

• 58:15Anthony Pompliano?

  I um, I forget the exact stats, so no one tweeted me and told me I got it wrong, but it was something like maybe 200 years ago or something. It was like 80% of people were farmers, right? You know, it was some long period of time ago. A majority of humans worked on a farm and it's because we need food to live, etc. As quote-unquote automation or technology got incorporated, so literally just a tractor or things like that, those humans didn't all of a sudden, you know, die off because of starvation or not having a living, they went and did other things like you're saying. And so this happens kind of, you know, periodically in these technology shifts. And it's interesting to see, I think, it's happening to more white collar employees than

• 58:59Anthony Pompliano?

  probably previously, but it's also still happening in, you know, a grocery store or elsewhere. And I actually believe that the white collar populations are not expecting it, whereas I think, you know, you talk to a truck driver, talk to these people, like, they know this stuff's coming, and so they're kind of quote-unquote prepared. The white collar folks, I don't think are nearly as prepared.

• 59:19Speaker 02

  Yeah, so I think broadly, we agree with your point of view that something like, you know, thirty to forty-five percent of all jobs are automatable.

• 59:27Anthony Pompliano?

  Oh, thirty to forty-five percent.

• 59:29Speaker 02

  Yeah, it's a pretty big number of today's jobs.

• 59:31Anthony Pompliano?

  Yeah.

• 59:31Speaker 02

  Some are blue collar and some are white collar. And over the course of twenty or thirty years. And so, doesn't mean that it will all be automated over that course of time, but the job function itself was likely can be automated. Again, I think that history shows us that doesn't throw a lot of people into unemployment. It makes systems more productive and lets humans move on to higher order tasks. So I am confident that over the long term, it's a good thing. It can create a bunch of economic disruption during the transitions, which can be pretty painful. And I think we're destined to experience some of that. Some political candidates recognize that, they're talking about it a lot, and some ignore it, but it is a potentially societal issue.

• 1:00:16Speaker 02

  But it is inevitable because the march of technology is largely unstoppable. I mean, look, here's a good example that most people read in the New York Times over the weekend about this company Clearview AI, which is doing something with facial recognition that has been possible for a number of years, but Google, Amazon, Facebook chose not to do.

• 1:00:34Anthony Pompliano?

  For those that don't know, essentially, in an overgeneralized manner, if there's a photo of an individual, whether whoever has it, they can send Put it into this system and this system will then go match it to photos all over the internet and come back with here's all of the data associated with these photos. So you can find people's names, their locations, you know, information that actually when I read the article, I was kind of like, well, duh, most of you people put that information on the internet anyways. The computers just being able to find it better. But obviously, you know, if you look at it from like a law enforcement standpoint, the fear mongering scenario is I take a picture of somebody on the sidewalk and next thing I know, I know where they live, right? And I don't like that system because that feels more like a surveillance state.

• 1:01:18Speaker 02

  Yeah, or a government that doesn't like people who are peacefully protesting outside, can take pictures of everyone, find out exactly who they were and have the IRS audit them, right? Without you realizing that it all happened. I mean, there are a bunch of scary scenarios that happen. My point in bringing it up was a lot of people possessed the technology to do this for a number of years and chose not to until one entrepreneur came along and chose to do it. And so that's my point about like, when it becomes possible, it will happen.

• 1:01:44Anthony Pompliano?

  Yeah. Do you think it's bad, not necessarily that specific scenario, but just, do you think it's bad when some companies have the technology, they choose not to pursue something for whether it's ethical reasons, just not good for their business, their opportunity costs, whatever, and then somebody comes along and does it? Or do you think of it, it's less good or bad? And it's just kind of, that's how technology progresses?

• 1:02:06Speaker 02

  I view the march of technology as inexorable. And you know, it's like cloning, right? Like, of course China was going to do that, right?

• 1:02:13Anthony Pompliano?

  So somebody was.

• 1:02:15Speaker 02

  Yeah, right. So someone will do it. Whatever technology is possible, someone will do it. So that leaves you with two choices. You can legislate, this is where governments come in, and you set a hard and fast rules about what society will accept and what it won't. Or you try a more delicate approach in getting. Responsible companies to self-police, right? And there are examples of that work. Both of those approaches working and there are examples of both of those approaches failing. This is a debate that society should have. I think most of the, you're hearing this now. I mean, like CEO of Google just said last week, like we, we are seeking legislation from the government on AI.

• 1:02:57Speaker 02

  That is basically him saying the government and society should decide what are the limits of AI, because we don't want to be the arbiter. We will adhere to the laws, but the government should set the laws.

• 1:03:07Anthony Pompliano?

  Yeah. It's, um, this is happening in a lot of different aspects of intersection of kind of society and technology, right? Censorship, I think, is the easiest one. I actually don't have a view because I haven't spent enough time thinking about it. But one of the most interesting debates that seems to be kind of percolating now with the US presidential election coming up is should platforms have a say in what political ads are run and are not run? So everything from accuracy to just should we have political ads? Should we not? And it seems like each platform is kind of taking a different approach. And, um, you know, given the, in light of 2016 and kind of all the accusations from every nation state in the world at each other, uh, you just get into this weird world of like, uh, one, who do you trust, right?

• 1:03:52Anthony Pompliano?

  In terms of the information. And then two, like, who should be making those decisions? And I, look, there's 330 million people in the United States. I don't think you're going to come up with an answer that everyone agrees on, right?

• 1:04:01Speaker 02

  And so this is going to take us to crypto because really.

• 1:04:04Anthony Pompliano?

  Ah, you see my lead in.

• 1:04:06Speaker 02

  Yeah. I mean, this is the root of why a lot of people are excited about crypto is that what happened in the arc that we just discussed from 1995 until, you know, 2019, um, we, the internet enabled incredible things. Everything went digital. Every bit can move around the world. We've wired it, the world went on three and a half billion people. We're going to get the rest of them on the internet as well. Everyone's connected. It lowered the cost of publishing, freedom of expression, not in all countries, but in many. It democratized access to a lot of information and it did two other things that are the sort of unintended consequences, or at least consequences that maybe not everyone foresaw.

• 1:04:46Speaker 02

  One, it allowed for manipulation because if the cost of producing information is really inexpensive and access is free, then you can put out non-information, disinformation, right? And people are doing that and guess what? That's working. And two, I think what we didn't really foresee is that the new platforms would combine data with access and the data would become centralized and powerful. And so now we democratized access with the internet. What crypto, I think, hopes for, or many of us think about as Web 3, is can we democratize data? So no one can have a monopoly on your data.

• 1:05:28Anthony Pompliano?

  And so you sit inside of, you know, one of kind of the most respected venture capital firms in America, right? And you guys are investing in all kinds of different industries. Maybe we just talked about, why pay attention to crypto, right? Is it a thing where, hey, we see opportunities to make money and our job is to take LP's capital and go make money? Is it this is gonna touch everything and so we gotta pay attention to it? Is it personal interest? Like, when you guys first start to look at it, I don't think there was a lot of venture capital firms that were like, you know, I'm starting a venture capital firm focused on crypto. I think it's naturally been this progression. It's like, what drew you guys into it?

• 1:06:08Speaker 02

  Well, for real, we are followers. We are looking for where is the future going, irrespective of what we decide to do. And we want to be on that path. And what we're looking for are waves that are not just small changes in the future, but big ones that can... Disrupt legacy industries and reorder value chains and be vectors themselves for progress. So we've seen a lot of those. In my life, I've seen a bunch of them, right?

• 1:06:45Speaker 02

  I saw sort of personal computers. I saw internet. I saw mobile, social and cloud. And now we might be on the cusp of seeing another AI, not clear if that's going to be a wave or really a sort of evolution.

• 1:07:02Anthony Pompliano?

  Like augmentation.

• 1:07:03Speaker 02

  Right. It's definitely something. And there's good debates on both sides and crypto, right? Decentralization.

• 1:07:09Anthony Pompliano?

  Do you have more confidence in AI being a wave or crypto? Or do you not look at it as like a comparative?

• 1:07:15Speaker 02

  I don't know. I never sort of stacked one against the other. I'm investing in both. What I say, I don't know. I don't know. Like, I mean, really, my human brain is not capable of predicting. And so I'm looking for a signal. In AI, I think we are seeing very strong signal that it makes highly more performant software.

• 1:07:33Anthony Pompliano?

  It works.

• 1:07:33Speaker 02

  Better than humans. It works. And so it's going to be applied everywhere. Does that reorder markets is an unknown question. And we're watching a couple indicators to see if that's true or not. Or is it just everyone gets good at that, just like everyone got good at cloud?

• 1:07:46Anthony Pompliano?

  Yeah.

• 1:07:49Speaker 02

  With crypto, I feel like it is such a departure, both soft, from a software architecture perspective, the way you build things and from a philosophical perspective. And the last time we saw as big a philosophical change as sort of web three was really open source. And there's sort of this Fred Wilson calls it internet-ness, right? There's, there was this almost culture among the people, really, not almost. There was a culture among early pioneers of distributed networks of, of the ARPANET and the internet that information should be more democratized and we should remove

• 1:08:31Speaker 02

  gatekeepers and everyone should have the power to publish and then, and software should be not controlled and behind walls. It should be open source and intellectual property should be more distributed. And that was the ethos of the internet, right? It's kind of one of the things that led to Wikipedia. These are amazing attributes of the millions of people who worked on rebuilding the entire tech stack for the internet. There's a question now, is crypto that? And certainly, if you talk to many, if not most, of the early developers working on crypto-related projects across the whole gamut of crypto, there is an ethos there, right? Of we do not trust middlemen, we do not trust banks, we do not trust governments, we may not even trust the media anymore.

• 1:09:16Speaker 02

  And we need to find software systems that enable people to communicate where you can trust that there is no more middleman, so we can trust the communication is authentic, and we'd like to exchange money or value or de-transactions without an untrustworthy middleman as well. And we want to build that architecture in a way so that your data is your property, and you can revoke it at any time, and it can't be amassed by a single party anymore. And there's an ethos there, and that's a very powerful ethos. If it sticks, like, I mean, I think there are somewhere between tens of thousands and hundreds of thousands of software developers working in crypto right now, it changes. Many of them have some piece of this ethos, if not all of it, and that's going to drive

• 1:10:00Speaker 02

  major change if it holds. So we're watching that closely, and that could be a wave, and that would be a very big wave.

• 1:10:05Anthony Pompliano?

  Yeah, so this brings up a question that I think a lot about. I do not have the answer, because I don't even know if there is an answer, but it's this balance between society believing something and the technology being available to make it reality, right? And what I mean by that is, it's pretty well documented in these Pew surveys, etc., of the degradation of trust in-

• 1:10:29Speaker 02

  Trust in institutions.

• 1:10:30Anthony Pompliano?

  Institutions and centralized authorities, right? So you see this in the media, government, kind of a lot of things you just named. And that's not a, hey, in the last two years, that's happened, right? I mean, this has been happening for a very, very long period of time. And to me, that overlaps very interestingly-

• 1:10:45Speaker 02

  Invidually, yeah.

• 1:10:46Anthony Pompliano?

  -to the internet, right? Of just, you know- I used to believe everything that I saw on television because that's the only source of information I had. Now all of a sudden I got this other guy who's, you know, my favorite video probably ever on this is, have you ever seen The Weatherman? And he's standing and it's like a, it's a clip of a weather guy and he's standing in a parking lot and it's raining hard and he's standing and it looks like the winds about to blow him over, right? He's struggling to stand there. And in the background, there's these two young kids in shorts and a t-shirt.

• 1:11:19Speaker 02

  Just walking by.

• 1:11:19Anthony Pompliano?

  And they're just walking like they're walking to their car after they ate lunch, right? And again, I get it, right? You know, it, some people would argue that television is entertainment, right? It's not just news, whatever. But it's a perfect example of like, come on, right? And so over time, this has happened. But could we ever do anything about it? Right? Yes, I trust this less and less, but it's still the best source, right? It's still the only thing that I really have. I think the internet kind of started to expose some of that. But now really what we're seeing is software engineers who say, wait a minute, I can use all of these technologies that are available to me. I can build something that can actually give us a different solution. Some argue it's better, some argue it's worse, some, you know, pros, cons, whatever. But is that now just happening because there's

• 1:12:01Anthony Pompliano?

  technology point in time that makes it possible? Or is it that societal like shift in ethos where people say, no, no, no, this is really big problem. Let's go focus on solving it?

• 1:12:11Speaker 02

  I think it's the latter, but.

• 1:12:13Anthony Pompliano?

  Okay, it's more the society component.

• 1:12:15Speaker 02

  If you just ask the developers working on decentralized technology, why are you doing this? And the answer usually corresponds with the decline in trust of institutions and middlemen. Many people who are really excited about crypto come from Eastern European states with highly distrust, you know, untrustworthy governments and media, state-run media, surveillance states where people disappear. And when you grew up even some of your life in, which I did not, but if you, if you did, you could appreciate how your perspective and your motivation to want to build technologies that make it really hard for people to surveil you.

• 1:12:57Speaker 02

  To people disappear you, to have your data and know who you are and where you are. You could see why that might be something you want to spend your time on, right? And you believe the world might be better with some of those things. And it's no surprise that encryption is the basis for all this stuff. So I think that's a pretty powerful force. And I think your observation that Bitcoin effectively coincides, its rise coincides directly with the Pew and other data that shows a decline over 10 or 20 years in trust in institutions is not a historical accident.

• 1:13:32Anthony Pompliano?

  Yeah, let's talk about Bitcoin and then let's talk about crypto and the impact of that. So Bitcoin specifically, the way I think about it is it was the first real application of a lot of these technologies. It's got this kind of immaculate conception story, right? And it's had this incredible rise in US dollar price. How do you guys think about it in terms of an investment opportunity, given that you've got a venture fund? Do you guys do anything there? And then also, how do you think in more macro, just this is a piece of technology that could have a big impact on the world, but is that likely? Do you put some kind of handicap on it, et cetera?

• 1:14:08Speaker 02

  I think a few thoughts. One, with Bitcoin in particular, I appreciate many things about it, but two things in particular is one, they solved a hard technology problem. A lot of computer scientists will tell you, you know, we had Merkel trees and it wasn't a major innovation. But whether you call it major or minor, it has been around for a decade and has been unhacked successfully. And it solves the problem of, you know, single transaction, no double spend, and distributing trust on a transaction network. There's a bunch of improvements that can be made to it for scalability.

• 1:14:52Speaker 02

  The way Ethereum looked at that and said, well, hang on.

• 1:14:58Speaker 02

  We can do more than just manage a ledger. We could actually execute code. We'll call them smart contracts, but they really can have logic to them. And we can do that decentralized and you can be sure that it's secure. That really blew us away. That was the moment when I read the Ethereum white paper. I was like, wait a second. This is, this is not just like some currency for evading, you know, for, for drug dealers. Like this is, this is really significant. And, and so that's informed my view of how my little brain thinks a lot about crypto. There, there are use cases related to transactions, whether that's store of value or, you know, money.

• 1:15:37Speaker 02

  And then there are, then there's an entirely different opportunity around rebuilding the web stack where applications and data are decentralized, which is, as I said, sort of a fundamental shift to the way we architect apps. And I really think it's important to talk about them separately because in my mind I have to separate them. Because I think they're very different investment thesis, theses around.

• 1:15:59Anthony Pompliano?

  I agree with you. Yeah. On the currency money side, uh, do you guys do anything there? Or are you more focused on the, the ladder of kind of the computing platform and, and the decentralizing the web?

• 1:16:12Speaker 02

  Yeah. So, well, personally, um, I've been, you know, buying cryptocurrencies for a while, also mining them. I, I mined Bitcoin very early on, just as an experiment, when you could still do that. I mined crypto for two years. Uh, sorry, I mined Ethereum for two years and a couple other coins as well. I've got a lot of spare GPU if anyone wants to use them. I've been training neural networks with them.

• 1:16:35Speaker 02

  And, and so I did that really just to, to learn and, you know, personally, uh, you know, I've, I've been an investor. We chose to do early on was to just try to get smarter. So we weren't smart enough here. There were other investors and entrepreneurs who are way smarter than we were, who saw the opportunity earlier than we did. So we looked for partner. And what we found was this great group in Brooklyn called Coin Fund, um, who manage, uh, really a venture fund. There's a combination of cryptocurrency that largely is usually is illiquid at first. So they're, they get involved very early in projects. They do protocol design and digital economy design. And, um, and those currencies eventually become liquid.

• 1:17:19Speaker 02

  And also equity investments, but they're sort of an early warning indicator for us that really help us sort through the thousands of crypto projects in a lot of different dimensions. And so we invested in them and they're our partner. They've been very helpful. Partnerships have been very successful and they now have multiple funds. Some are liquid only and some are non liquid. So I think we participate in that way. That's one way. And separately, we have made investments ourselves as a fund in both in companies that denominate their value in tokens and companies that denominate in equity.

• 1:17:57Anthony Pompliano?

  Oh, interesting.

• 1:17:57Speaker 02

  So we are comfortable doing both.

• 1:17:59Anthony Pompliano?

  And so when you think through the value of the equity versus the tokens, kind of the value accrual, how have you guys thought about this? Because I think this is probably the biggest question I get from the institutional world of institutional investors realize something's happening. Too many smart people looking at it, working on it. I gotta do something. They understand equity, right? I make it an investment. It's gonna go public. It's gonna get acquired, whatever. There's also this token accrual model where it kind of looks like equity, but sometimes it's not. Sometimes it is, right? It just looks a little different. Do you guys separate those? Or do you look at it as there's companies and products being built and we'll do both and we frankly don't care which one is which?

• 1:18:42Speaker 02

  Yeah, I think I kind of think of three, actually. You've got equity. You have security token. You have utility token.

• 1:18:48Anthony Pompliano?

  Yep, okay.

• 1:18:49Speaker 02

  And the reason it's important to separate that is the security token is really trying to be a proxy for equity ownership, right? It may have a different set of rights, but and it's either equity in a company or equity in a piece of property, right? A physical asset. So there's a whole category of people in crypto focusing on, you know, fractional ownership of real estate or art or sneakers or, you know, where you're taking a physical real world asset and you're trying to fractionalize its ownership into a liquid market that otherwise wasn't liquid. We are fortunate that our LPs allow us to take a broad view. We are used to having more than just ownership in our companies, but having some rights that protect our ownership.

• 1:19:30Speaker 02

  And you often don't get much of that if you're doing a security token as a proxy for equity ownership. So we tend to be, I would say, even in the crypto projects, you know, the world really swung after 2017 and beginning 2018, a lot of projects went back to raising venture capital in the more traditional model. So the overwhelming majority of our crypto holdings, if you will, are equity. Often when we're buying a token, there's an equity right associated with it, or it's a combination. So we're pretty flexible, but I just think that's where the market is right now.

• 1:19:59Anthony Pompliano?

  Yeah, absolutely. You did an interview with my fiance.

• 1:20:04Speaker 02

  She's a much better interviewer than you are.

• 1:20:06Anthony Pompliano?

  Absolutely. She gives me a hard time and critiques me all the time. She says I'm too nice to people.

• 1:20:11Speaker 02

  You are. She's tough.

• 1:20:14Anthony Pompliano?

  And one of the things that you said in that interview that I found really fascinating, she asked you about kind of crypto replacing VC or competing with it. And I think this was more kind of the token investing, anyone in the world can participate. And you actually took the view of like, we should encourage this, this is a good thing. Maybe talk a little bit about like how you view something that I think most venture capitalists would say, wait a minute, I like our business, right? We're pretty good at this and we can make money. Why be so kind of bullish on the crypto investing that's been going on?

• 1:20:44Speaker 02

  Well, I don't like gatekeepers. I just think they're endowed with an inauthentic authority, right? That somebody put them in this position through a set of fortunate circumstances and they are making their best, but usually arbitrary decisions about whether allocating capital or deciding who should be seen in an art gallery or, you know, who should, what songs should be played on the radio or, you know, whatever. I don't, what books go on store shelves? I just don't like that. I just think it's sort of fundamentally unfair. So we should try to get rid of gatekeepers, right? And let consumers decide what they want to listen to, watch, et cetera. Give them a lot of choice. There are, so VCs are gatekeepers, right? We allocate capital.

• 1:21:27Speaker 02

  To the extent that you can get more funding sources for entrepreneurs, if we can get more entrepreneurs to have more at bats at trying their next great thing, I think that's great. That'd be good. That's good for all of us. It's entrepreneurship drives, economic growth, wealth creation makes jobs. It's probably the most important engine of our economy. You want more entrepreneurs and why should VCs be a gating factor for having more? So I'd like there to be alternate mechanisms for funding Kickstarter and things like that. Some have worked, some haven't. I think it will take a long time to perfect. So I'm, I'd like to see that. The, to the question of like, does it replace VCs? I'm skeptical of.

• 1:22:02Anthony Pompliano?

  Okay.

• 1:22:03Speaker 02

  And as I think, I think they can coexist. Because I think that if you look, VC as a function has actually withstood a lot of different change. It's been around for a long time. I mean, the Lawrence Rockefeller started doing this type of investing in the 30s. And then Venrock, you know, more formally in the 60s. And it hasn't changed all that much, right? So there must be something about, even in the face of a lot of technology and market change, humans still seem to be decent at, at being an allocator of selective capital and then helping build those companies. So I don't think we go away. I will steal a little bit of Mark Andreessen's answer to this question where he, where he's been asked this before. And he sort of says, the nature of companies seems to be changing a little bit, right?

• 1:22:48Speaker 02

  We've got on one extreme, like DAOs, right? And, and another extreme, you know, just remote work or different ways of building enterprises. If that changes a lot, if they're token based and not equity based, you might have to have a real change in the way capital allocation is done. And maybe VC has to change a lot. But if companies are still mostly kind of what they are today, then it might not change.

• 1:23:10Anthony Pompliano?

  Yeah. I mean, that's logical, right? Of just companies have been the same way for, you know, tens of years. And so capital sources doesn't change. This brings up the question, I guess, of kind of competition in the internet. And I found online that you many years ago did a, testified around this idea of

• 1:23:30Anthony Pompliano?

  Competition in the internet and I think that every so often this kind of resurfaces. Everyone wants to debate kind of monopolies, not monopolies and centralization of data, all this kind of stuff. But competition in venture capital has pretty much stayed the same. Now we're seeing competition with the like average investor, right? If I can just set up a website, accept funds from anyone in the world, that's pretty competitive with venture capital. How do you think about the internet empowering competition? And like, how does that intersect with some of the things we're seeing in crypto?

• 1:23:59Speaker 02

  The argument that the internet giants have made around this is that our competitors are one click away. Right? So it's very easy to change.

• 1:24:07Anthony Pompliano?

  That might be the best way I've heard their argument summed up.

• 1:24:09Speaker 02

  That's what they say. The truth is that data, right, is the monopolistic fuel that empowers the sustained market dominance of a lot of the internet giants. Personally, I love the products of a lot of the internet giants. So it's kind of hard to hate them. Whereas like,

• 1:24:28Speaker 02

  you hate your telecom company because like the service sucks, right? Or you hate the airline because they treat you like you're cattle. It's sort of still hard to hate Google, even though they're so dominant, because that website is awesome. The search engine's great. The email's awesome. Thank you for YouTube. So I think we as consumers are lulled into our joy in using the products. But there still is some market dysfunction that's happening because of their large

• 1:25:00Speaker 02

  exclusive access to our data. And so I think that leads us to crypto. And one of the areas of crypto that I've been fascinated by is can we build not just a decentralized compute architecture, but a decentralized data architecture? So just in a small first step, we were talking earlier about the Facebook and Twitter algorithms and how their machine learning algorithms are deciding what we see. Well, suppose we could all take our data, which is like our tweets and the things that we've read and favorited and who we're following. And we can take that wherever we want to whomever's algorithms we like the most. Or reversed, Twitter could say, we'll just be the place where all the data is living, but anyone can plug a different algorithm in. So if you don't like the tweet

• 1:25:44Speaker 02

  stream we're showing you, let's use some other people's stuff who might not be so inclined to allow politically manipulatable speech to appear in your feed, right? Twitter seems to be, or Facebook seems to really like putting that in your feed. And Twitter is not so sure how they feel about it, which is sort of typical of everything about Twitter. So I think the, you as a consumer may choose different algorithms, right? Different feeds. And you can't do that today. So there's a couple of different ways to re-strike the dominance of the internet platforms. But the biggest way that starts is if you have a sort of revocability of your data and you can take it elsewhere. And that is made possible by decentralized architectures. And this is

• 1:26:29Speaker 02

  what excites me so much about the decentralized web. We invested in a company called Three Box.

• 1:26:35Anthony Pompliano?

  Okay.

• 1:26:36Speaker 02

  So if you try to write a decentralized application, a DAP, two things have to be really true for that to be decentralized. One is the compute, the code itself is run on a network of computers, not on like your server sitting in AWS. Alright, so it could run on Ethereum or any other different layer one smart contract platform. And two, the data that is exhaust comes off from your use of it. Photos you upload, posts you write, things that you like, your profile.

• 1:27:07Anthony Pompliano?

  All the things that Facebook, Twitter, etc. would capture.

• 1:27:09Speaker 02

  Yep, everything that they capture, or Google when I search for something and click on a link. All that data really can't be stored on the server of the application company that made the app. It has to be stored decentralized throughout a web, a decentralized web, and it needs to be revocable at any time. You need to say, I'm taking my data back. You can't have it anymore. I don't trust you anymore. I don't like you anymore. The decentralized compute piece is being worked on by a lot of layer one smart contract platforms. The data part, which is in many ways even more critical, is really a hard problem to solve as a developer. So Three Box says, we got you.

• 1:27:48Speaker 02

  You just write to our API and we run a decentralized data network and your data gets stored in IPFS on an orbit database and with our schema. And we even will do an identity layer on top of it and it's all permissioned and you can be sure that you're essentially compliant with a decentralized architecture. That to me is really exciting because that enables the decentralization of the mainstream platform.

• 1:28:16Anthony Pompliano?

  So a couple of questions about this. One, the name Three Box, is that because the data gets stored in three boxes or more type mentality? Or is that a?

• 1:28:24Speaker 02

  I think the three is more on web three.

• 1:28:26Anthony Pompliano?

  Got it.

• 1:28:27Speaker 02

  And because the data gets stored in, you know, it could be an infinite number of places.

• 1:28:33Anthony Pompliano?

  Got it. And then in terms of if you have an application on my user, I access your application, you're using Three Box, or you can't see kind of all the data, you're not capturing it, what controls do they have over my data?

• 1:28:47Speaker 02

  Yeah, so first of all, the data is fully encrypted, so no one can see it. But people have, you've awarded permission to an application to be able to use it.

• 1:28:58Anthony Pompliano?

  Got it.

• 1:28:59Speaker 02

  And you can revoke that permission. So Three Box cannot see your data. They do know which applications you have allowed to use it and they will help manage the revoking of that permission. But they're really a They're a friendly agent. They're really just an agent for you. It really is. They operate a network of computers. Well, they're not even their computers. It's like anyone can put a node on a network, just like you can spin up an Ethereum node yourself. Anyone could spin up a three-box node and be a participant in the network. And so they're really a protocol designated. They've really created a protocol and a schema and a bunch of software around that, that in itself is open sourced, which is sort of the ethos of Web3.

• 1:29:41Anthony Pompliano?

  Yeah. This brings up an interesting point. I'm really interested in kind of the increase in efficiency of hardware and software. My family comes out of the data center business, right? And so that business is notorious for, they got a lot of hardware sitting around that's not being used. And they've got a sales force out trying to sell it, you know, whatever. All of a sudden, you get these, whether it's decentralized file storage, right, three-box, whatever it is, you start to build these marketplaces of, well, what's my incentive to have my sales force go sell this hardware space or software? What can I make from that? Or there's persistent demand through one of these decentralized services. If I just go ahead and point it that way, then there's revenue opportunities. And to

• 1:30:25Anthony Pompliano?

  me, it feels like old school versus new school a little bit, right? And the companies that can build those platforms or protocols that facilitate the decentralized component, it just feels like a really big opportunity that a lot of the legacy players don't see coming.

• 1:30:40Speaker 02

  Yeah, I think one of the things you're scratching at there is that many of these decentralized protocols have an economic reward for participating, right? So we call that mining in one parlance, but other people have some different words for it. But it really means like contributing your resources to a network, whether they are compute resources or storage resources. There should be economic motivation for you to do that. Otherwise, why would you do it? You have some material costs, not just the capex you bought the computer or hard drive with, but the power it takes to run it, right? And maybe the space you're paying to put it in. And so the reward for running it has to be greater than those costs. And I think there are some data centers who have

• 1:31:22Speaker 02

  A bunch of spare hardware that have have low power costs who can do quite well just adding their machinery to nodes. But there are a bunch that are in New Jersey where you pay, you know, I don't know, 16 cents kilowatt hour and their profit's going to be much lower. Than the five cent, you know, maybe in upstate New York or so there is some regionalization and other environmental dependencies to make to see whether it's a good business. I think what you're scratching at is if these networks work, people may be able to take. You know, underutilized resources and throw them into the network and that is the efficiency of it is that we are, well, you know, the data center business. When virtualization came out, it's like, well, we bought a bunch of hardware, but we have this tiny little website running on the blade server.

• 1:32:07Speaker 02

  It's using 5% of the load. Why are we doing that? Let's slice it into 20 more websites and we'll share the load, right? And so virtualization was an efficiency play. I think decentralization is too.

• 1:32:18Anthony Pompliano?

  Got it. One other theme that you guys are investing alongside is crypto collectibles and kind of NFTs, digital collectibles. Maybe talk a little bit about what's the excitement there and kind of what have you guys done in that space so far?

• 1:32:30Speaker 02

  Yeah. What excites me in this space is again, it wasn't me who thought of it, you know, like, like all of us. In 2017, I saw CryptoKitties come out and watched it explode and break Ethereum in that month. And, and that kind of got me thinking.

• 1:32:48Speaker 02

  What, you know, I collected baseball cards as a kid. I saw my kids, you know, play with Pokemon cards. They were just as big, if not bigger than baseball cards. I started looking into the size of collecting. And it's a massive market, like humans do it. Humans, not all, but many humans collect something, art, shoes, wine, baseball cards, antiques.

• 1:33:11Speaker 02

  There's, and then I started reading up on the psychology of, of collecting. Why do humans collect? And there's the psychologists who have documented like seven different reasons why we do it. And it's like a thing humans do. So it's really big. Well, I like to see pre-existing behavior as a, a proof point for why something can succeed. So collecting is big. What we don't really do is do is collect anything. digitally yet. There's some evidence we do like in-game items, but those are centralized. So and they have

• 1:33:39Anthony Pompliano?

  Fortnite.

• 1:33:40Speaker 02

  Fortnite, yeah, Cape or something, but we can't, it's very hard to sell that. It's so collecting, and one of the reasons why we collect is like for investment reasons, we want to hold it and then profit from it later. You can't really sell the for your Fortnite account. You kind of can, but you have to do it on eBay and you lose your whole account. So you can't really sell the items. Most of the most valuable items in games are not liquid. You can't trade them outside the game. But what CryptoKitties with Dapper Labs demonstrated is you could build a crypto collectible. You could build a digital collectible that has provenance, you know, who owned it, has authentication, it is real, can have scarcity. There is only one. And it can be traded decentralized on exchanges everywhere. So wow, I could buy a piece of a digital item or digital art.

• 1:34:21Speaker 02

  I know that I own it. The company who built it could go out of business. It still functions because the code is totally decentralized, running on an open network. And I can sell it later if it increases in value. That to me feels like they could unlock very large digital collectible market. It hasn't happened, it hasn't crossed over in the mainstream, but that's the thesis for our investment in Dapper Labs. And they are trying to take what they built around CryptoKitties and now do that with the NBA. They've announced a big partnership with the NBA. They're going to have a game come this year that allows for moments to be collected. And those are, there can be rare ones and not rare ones and you will know which ones you own and you can use them in games themselves and the way you use Pokemon cards in games.

• 1:35:04Speaker 02

  And hopefully they'll go up in value. And so that's a pretty interesting experiment I'm excited about. There's one other area that I'm not doing much in, but I'm watching, which is the fractional is fractionalized ownership of physical collectibles. Like, would you take a great painting and slice it into a thousand tokens? And you could sell the tokens and those tokens are liquid, or we're staring out at a giant piece of real estate. It's not really a collectible, but there are people who would argue that we should fractionalize real estate and other large asset ownership and have them trade on exchanges. So it's a little bit less about collecting, but it is about fractionalized ownership, which also made possible by crypto. So this is really big if it happens and we're watching it.

• 1:35:44Anthony Pompliano?

  So my last question before we get into the rapid fire to wrap up is, is it happening? Right? Kind of, I like your way of talking about AI, crypto, etc. Like, we're looking for these waves, right? There's early data points that say, hey, something interesting is happening. A lot of smart people, a lot of capital going into this. How do you evaluate for those that ask like, hey, is this real? Is this happening? Is it a wave? Like, what's your answer there?

• 1:36:09Speaker 02

  Yeah, so I recently changed my mind a little bit on this.

• 1:36:12Anthony Pompliano?

  Oh, interesting.

• 1:36:13Speaker 02

  I was of the mind saying, yeah, the, I need to see a killer app be built by decentralized app developers. I'm looking for that moment in the way that there was a killer iPhone app that proved that mobile was a thing. And then it, then it'll convince me. Because this trading stuff is speculation. And I've been convinced that that is the wrong way to look at it by Tom Lee from Fundstrat, who he says, I'm going to get the numbers wrong because I haven't looked at it in a couple of weeks. But I believe he says, I'm going to, I may have them reversed.

• 1:36:53Speaker 02

  But for every barrel of oil that is used in, consumed in transportation, so like burned, right? It's traded 16 times for every one time that it's bought.

• 1:37:05Anthony Pompliano?

  Interesting.

• 1:37:06Speaker 02

  And for every dollar, US dollar, that is used in a transaction, it's traded 30 times.

• 1:37:13Anthony Pompliano?

  Wow.

• 1:37:13Speaker 02

  Now, I may have them reversed. I think the numbers are 16 and 30. I'm sorry, Tom, if I'm getting it wrong, but I am giving you full credit.

• 1:37:18Anthony Pompliano?

  But the whole idea is there's a lot more financial transactions.

• 1:37:22Speaker 02

  Speculation is the superset. It is the killer app, actually. And it precedes demonstration of other applications. So now I don't believe that in order for crypto to be big, there needs to be mainstream, non-speculation use cases. I think they may come. But I think that speculation is a killer app. And what's nice about that is that is the behavior that's happening right now. Right. And in in big numbers, right? I mean, it's very small compared to other asset classes, but millions of people, right? Hundreds of thousands to millions, depending on the chain. So I think that is reoriented a little. And the investors who are smarter than I was, who bet on, let's call it,

• 1:38:06Speaker 02

  trading infrastructure, custody, wallets, all the things you need to enable speculation are going to do just fine. And not every one of the companies will succeed, but that infrastructure has to exist. If what that means is, you know, 16 to 30x the volume will be in speculation than is in transactions or other uses, then it was a really smart bet of theirs. So I think the answer is it is here. The question is, how much bigger does it get? And what other use cases emerge and where do you invest? And so there, I'm trying to be a realist. I'm like, show me the money, right? Or just show me evidence. The evidence I see is developer demand, which is what led to the three box investment. You know, they've had more than 20 or 30,000 download and installs of their three box.

• 1:38:52Anthony Pompliano?

  That's really big.

• 1:38:53Speaker 02

  It's really big, right? Might even be higher than that right now. You know, the hundreds a week, sometimes hundreds a day, if it's around ETH Berlin or ETH Denver. And they are clearly dominating this use case. So that's an early warning indicator that there are devs who are building apps, dApps, and need to solve decentralized data. So that's those are the type of indicators we're looking for.

• 1:39:13Anthony Pompliano?

  Got it. Rapid fire questions. What uh, what's the most important company in all of crypto in your opinion?

• 1:39:23Speaker 02

  Most important or?

• 1:39:26Speaker 02

  I mean, I just admire Coinbase. They're just run so well. They're solving a real customer problem. They do it elegantly. They're very user centric. I'm not of the crypto mind that you could never have someone manage your keys centralized, although I appreciate why you may not want to. But I think they're really a company to watch. Just their execution is awesome.

• 1:39:46Anthony Pompliano?

  So exchanges are by far the most popular answer to that question. And I don't yet know. What to make of when that popular answer changes, right? If people start saying something other than exchanges, does that mean the way people are interacting with the assets is changing? Is it some, you know, signal something in the market or whatever? But I've been asking that question for almost two years now.

• 1:40:06Speaker 02

  Everyone says buy an answer.

• 1:40:07Anthony Pompliano?

  Yeah, it's just exchanges. And so it's, it'll be interesting when it changes. I think it'll tell us something.

• 1:40:13Speaker 02

  Yeah, call me the day that happens.

• 1:40:15Anthony Pompliano?

  Absolutely. What's the one law or regulation that you would change or improve kind of related to crypto? If you could?

• 1:40:23Speaker 02

  Yeah, there's a lot, but the one I would change right away is that companies who follow the sort of Reg D approach to, to effectively listing a coin should be allowed to have them trade on exchanges in the U.S. And that's not possible yet.

• 1:40:39Anthony Pompliano?

  So basically just keep the Reg D rules, but change what happens if you follow those rules?

• 1:40:43Speaker 02

  At very least, you should, if you went Reg D, you should be rewarded by your token being able to be liquid and they're not letting that happen in the U.S. But I would change so many other things about the way the SEC's approached this.

• 1:40:56Anthony Pompliano?

  For sure. What do you think your most controversial thought in crypto is? So something that you believe is true, but most people will disagree with you on?

• 1:41:03Speaker 02

  Well, what's, I think actually still, if you look broadly at tech, being pro crypto is controversial, right?

• 1:41:10Anthony Pompliano?

  Oh, that's fair.

• 1:41:10Speaker 02

  Right? Like believing that this really is something big is non-consensus today.

• 1:41:15Anthony Pompliano?

  Yeah. It almost feels like pre, like second half 17, a lot of people were just like, I don't know what this thing is, whatever. Then second half 17, all of a sudden people were like, wait a minute, like, did I miss it, right? Or am I making a mistake? And then it was like, they all got suckered, right? And the price crashes and now everyone's like, oh, that thing's written off again.

• 1:41:36Speaker 02

  Yeah. So I think the hard question to answer, right? So an LP asked me, what is the advantage of building a DAP?

• 1:41:46Anthony Pompliano?

  What was your answer?

• 1:41:47Speaker 02

  Well, so like, because in 1995, if you said, well, what's the advantage of doing things on the web? Like, why, it's like, let me count the ways, man. I mean, like, you get it instantly and there's no middleman and right, low cost of publishing and like, oh, but, you know, no trucks, better the environment, like, I, it was too many answers. Why should you use a DAP? Because it's slower and, and it's super, super clunky. And the thing you got to do with your mo, with the, with the wallet is terrible, right? Yeah, like, hmm, not good answers. So, but the, the answer is a developer friendly answer today, right? It's because you can trust the platform. They won't revoke it later. But that's not a, that won't work. That doesn't answer the pew question of why are you using a DAP?

• 1:42:29Anthony Pompliano?

  And, yeah, but I'll push back on that, right? Like, you still had dial up internet, right? So like, hey, the newspaper gets delivered to my door or like, I can take up my phone line and dial up to the internet to read the news. Like, there's some comparisons. I don't know if it's quite as clear, but, but I think there were still some user experience stuff that, that wasn't as good.

• 1:42:47Speaker 02

  Yeah, so, so in the answer of, um, why will you tolerate the inconveniences? There still has to be a, a good thing you're getting out of it. And, um, I think with crypto collectibles is like, well, I have a digital good that is going up in value or may not, but I can play, use it in games and I'm trading it and collecting it. So, so there's a real answer, like, for why did you tolerate the MetaMask brain deadness? To buy your crypto kitty? And I think, you know, Dapper wants to make sure there is no brain deadness when you buy your MBA moments. So I think we'll have a good answer then. But, you know, why would you, you wouldn't build a word processor today, right? Decentralized and the, the consumer would not walk away from that experience and say, well, that's better than using Word or Google Docs.

• 1:43:30Speaker 02

  Right, it's not, it's slower and, and the benefit wouldn't be clear. But when you can say, Google doesn't have my data. That's what, that was my benefit. Like, I now I don't have to worry about my photos leaking to someone else because they're encrypted and decentralized. I think that will be a user benefit.

• 1:43:48Anthony Pompliano?

  Yeah, makes sense. What's the most important book you've ever read?

• 1:43:54Speaker 02

  There's so many.

• 1:43:59Speaker 02

  Probably Sapiens really helped me think longer term.

• 1:44:06Speaker 02

  That there's somewhat of an inevitable arc. Enlightenment Now by Pinker. Made me get a little bit less depressed that, you know, that the arc of justice bends, you know, the arc of history bends towards justice and that like, things are getting better if you look over long term.

• 1:44:28Speaker 02

  In the last year, I've just switched from reading, I'm basically only reading textbooks, science textbooks. I'm just, I'm just so annoyed by the fact that I can't trust any source anymore because I'm being manipulated by everything, that I'm just going to science textbooks. I've been reading about electromagnetic, you know, RF. Actually, the problem we were talking about earlier about why does, uh, do we get bad cell coverage here on the 54th floor?

• 1:44:50Anthony Pompliano?

  Yep.

• 1:44:50Speaker 02

  I've been reading about that.

• 1:44:51Anthony Pompliano?

  Really?

• 1:44:52Speaker 02

  Yeah.

• 1:44:52Anthony Pompliano?

  What, uh, what's the main takeaway? Like, like, as you consume what I'll call more dense scientific content?

• 1:44:59Speaker 02

  Yeah, non-disputable information.

• 1:45:02Anthony Pompliano?

  Well, it depends on what's the, in, uh, what is it, uh, in Texas, there was a

• 1:45:06Speaker 02

  Yeah, I'm not reading any Texas textbooks, no.

• 1:45:10Anthony Pompliano?

  No, but, uh, is it because you want to learn about that one specific subject?

• 1:45:14Speaker 02

  Yes, but, and it's just fact. It's pleasant to read fact and know that there's no dispute about it and like, I'm learning and it's, I'm getting smarter about something and I don't have to worry about, it's the opinion of someone.

• 1:45:24Anthony Pompliano?

  For sure. Uh, I wrap up by letting you ask me a question, but first we talk about aliens and given you're, uh, you're bent on, uh, the scientific textbooks, uh, you think they're real? You believe?

• 1:45:37Speaker 02

  There's no proof of extraterrestrial life thus far.

• 1:45:40Anthony Pompliano?

  So agreed, but.

• 1:45:41Speaker 02

  Oh, do I think that will change?

• 1:45:42Anthony Pompliano?

  Yes.

• 1:45:45Speaker 02

  Well, I'm not sure where I am on the Fermi paradox, but by the numbers, you know, the number of, um, places where life could exist feels like there should be life out there.

• 1:45:55Anthony Pompliano?

  Yeah.

• 1:45:56Speaker 02

  But caveated with the Fermi paradox.

• 1:45:57Anthony Pompliano?

  So here's the, the two things, uh, that blow my mind, right? So, um, I recently watched, uh, an explained series on Netflix. They have about, uh, basically intelligent life outside of Earth, right?

• 1:46:10Speaker 02

  Yeah.

• 1:46:11Anthony Pompliano?

  Uh, they don't use the term aliens, which I think was intentional to make it more, uh, you know, legitimate.

• 1:46:18Anthony Pompliano?

  They claim that there's for every one grain of sand on earth, there are 10,000 planets

• 1:46:24Speaker 02

  Yeah.

• 1:46:24Anthony Pompliano?

  out there, right? And just like to even try to, you know, we really said like 10,000 planets, incredible. The second thing is, I think a lot about the comparison between space and the ocean, right? And, and there's some accounts that I've found on Instagram and Twitter and stuff where they basically show things in the ocean that you, when you look at, you can't see, right? You just don't know what they are, right? You've never seen this before. And it just reminds me like, we know so little about our own oceans, let alone what's out there in space. And so it comes down to like this mathematical probability. But to me, the part that I think has shocked me as I've asked this question so many times is everyone looks up, they look out, right? They want to know what's out there. How many people

• 1:47:07Anthony Pompliano?

  are actually interested in the ocean? How many people are interested in what's going on in here in earth? And there's not that many people.

• 1:47:13Speaker 02

  And we, but we don't, we discover like 20 new species a year just by going down in the ocean?

• 1:47:19Anthony Pompliano?

  Yeah, crazy. There's a guy. So my, one of the podcast episodes I want to record is there's a Brazilian billionaire who he's built the, it's a one man submarine, basically, right? So kind of a capsule that is built to go to the depths of the ocean. And he has visited now, I think it's two or three of the ocean's deepest points. So he's Indian Ocean, whatever. And you see him, he's in this little thing, right? And, you know, rich guy. So he got all the things he could be doing. But it's fascinating because he's the first person to do it. Right? And you're like, look, like ocean's right there, right? And, and to see people kind of just now exploring is cool. And my question for him is going to be, why are you in there?

• 1:48:03Speaker 02

  Yeah.

• 1:48:04Anthony Pompliano?

  Right? You know, it's kind of like, hey, there's a lot of people, like, could you just not find anyone else? Or are you actually that personally interested? But we'll see.

• 1:48:11Speaker 02

  Okay, I get to ask you a question?

• 1:48:12Anthony Pompliano?

  You got it.

• 1:48:12Speaker 02

  You've done 220 of these?

• 1:48:14Anthony Pompliano?

  Something like that, yeah.

• 1:48:16Speaker 02

  220, 221, something like that.

• 1:48:20Speaker 02

  What is the one thing you've heard that was the most controversial at the time to you? You were like, there's no way that's true. That's proven to be right.

• 1:48:28Anthony Pompliano?

  Well, that's proven to be right. All right, before I answer that, I just got a funny one for you. So I don't know if you know Josh Brown from Ritz Holt Wealth Management. It's a basically wealth management, like financial advisor. He came in here. He was maybe one of the first 50 interviews and he was very early when I started asking the alien question. And he said to me without a blinking, he said, I believe that ghosts are more real than aliens. And I remember thinking like, that's blasphemy.

• 1:48:54Speaker 02

  Right, yeah.

• 1:48:56Anthony Pompliano?

  But that always sticks out in my mind. I would say the thing that somebody has said that I didn't agree with that ended up being true.

• 1:49:10Anthony Pompliano?

  This is recency bias, but we had a guy, Mark Schneider come in who a nuclear engineer. And one of the things that he really explained was a lot of the causes for the, you know, Chernobyl, Fukushima, et cetera. How much of it was human error, right? Compared to more like technology or just the actual nuclear. So kind of as I looked at that, that was pretty eye opening. And then another thing that I think has been pretty interesting is, it's not so much that it was controversial when he said it, but Jim O'Shaughnessy, when he came in, he spent a lot of time talking about just like, look, I don't know, but that's how I look at every market, right?

• 1:49:53Anthony Pompliano?

  I'm a quant, so like, I don't know the instant stocks, I don't know the instant Bitcoin, I don't know any of this stuff. And he's really like spent a lot of time both publicly and helping me see like, humans are really, really biased, right? And like, we think we're so smart and we know nothing. And it was backed up, I read two books, you've probably read them, Super Forecasters, and then Algorithms to Live By, I think is the name of the book. And both of them, they hit on similar things, right? It's just like, we know nothing, right? And I think when you take that perspective at a lot of this, all of a sudden you turn into more like curious, I want to receive the information rather than like, I know how the world's going to move and let me go invest.

• 1:50:35Speaker 02

  As Bloomberg says, in God we trust, but everyone else bring data.

• 1:50:40Anthony Pompliano?

  I've never heard that. That's pretty good. All right, listen, where can people find you on the internet?

• 1:50:45Speaker 02

  Yeah.

• 1:50:45Anthony Pompliano?

  Venrock?

• 1:50:46Speaker 02

  Follow me on Twitter at Pakman, P A K M A N. DM me, talk to me. Also, find me on the Venrock website. Reach out anytime. Let me know if you're working on something great.

• 1:50:55Anthony Pompliano?

  Awesome. I really appreciate you coming to do this.

• 1:50:58Speaker 02

  Great honor to be here.

• 1:50:58Anthony Pompliano?

  This is probably one of the more fun conversations I've had.

• 1:51:01Speaker 02

  Hey, that's good. I'm gonna tell Pauline you said that.

• 1:51:04Anthony Pompliano?

  She will, she'll think you're lying. I appreciate it very much.

• 1:51:09Speaker 02

  Yeah, thanks for having me here. I appreciate it.

• 1:51:11Anthony Pompliano?

  Hey, everyone. Pop here. If you liked this episode of Off the Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts, please do us a favor and rate, review, and subscribe. To review, simply go to the Off the Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening and see you next time on Off the Chain.