#682 Building A Multi-Billion Dollar Business w/ Peter Smith

Peter Smith is a Co-Founder and CEO at Blockchain. In this conversation, we discuss Blockchain, building a multi-billion dollar business, hiring the best talent, treasury management, bitcoin, ethereum, and private investing. ======================= If you haven’t started building your crypto portfolio on Okcoin, there’s no better time. They’re one of the fastest growing global exchanges around and they have some promotions happening right now to help even more people be part of the future of finance. If you have an account already, you can split $100 in BTC with a friend when you invite them to sign up for Okcoin if they buy $100 of crypto in the first month. The more friends who sign up and buy, the more BTC you get. And I always recommend dollar-cost averaging as a way for investors to have more control over their average price when building their portfolio. Now you can automate dollar-cost averaging with completely fee-free daily, weekly, or monthly recurring buys on Okcoin until November 1. That’s no fees at all on your purchases until the holidays. Get started on the web or on their new super easy-to-use app at okcoin.com/pomp ======================= Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Compass was founded with the goal of making it easy for everyone to mine bitcoin. Visit compassmining.io to start mining bitcoin today! ======================= AG1 by Athletic Greens, the category-leading superfood product, brings comprehensive and convenient daily nutrition to everybody. Keeping up with the research, knowing what to do, and taking a bunch of pills and capsules is hard on the stomach and hard to keep up with. To help each of us be at our best, they simplify the path to better nutrition by giving you the one thing with all the best things. ONE scoop of AG1 contains 75 vitamins, minerals and whole food-sourced ingredients, including a multivitamin, multimineral, probiotic, greens superfood blend and more in one convenient daily serving. The special blend of high-quality, bioavailable ingredients in a scoop of AG1 work together to fill the nutritional gaps in your diet, support energy and focus, aid with gut health and digestion, and support a healthy immune system, - effectively replacing multiple products or pills with one healthy, delicious drink. To make it easy, Athletic Greens is going to give you an immune supporting FREE 1 year supply of Vitamin D AND 5 free travel packs with your first purchase if you visit athleticgreens.com/pomp today. Again, simply visit athleticgreens.com/pomp to take control of your health and give AG1 a try.

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

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Peter Smith is a co-founder and CEO at Blockchain. In this conversation, we discussed Blockchain, the business, building a multi-billion dollar business, hiring the best talent, treasury management, Bitcoin, Ethereum, and the private investing that they do. I really enjoyed this conversation with Peter, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is OKCoin. If you haven't started building your crypto portfolio on OKCoin, there's no better time. They're one of the fastest growing global exchanges around, and they have some promotions happening right now to help even more people be part of the future of finance. If you have

• 0:45Anthony Pompliano?

  an account already, you can split $100 in Bitcoin with a friend when you invite them to sign up for OKCoin if they buy $100 of crypto in the first month. The more friends who sign up and buy, the more Bitcoin you get. And I always recommend dollar-cost averaging as a way for investors to have more control over their average price when building their portfolio. Now you can have automatic dollar-cost averaging with completely fee-free daily, weekly, or monthly recurring buys on OKCoin until November 1. That's right, no fees at all on all of your recurring purchases until the holidays. Get started on the web or on their new, super easy-to-use app, okcoin.com/pomp. Again, okcoin.com/pomp. If you want to do recurring buys, they'll help you do it, and they won't charge you any fees until

• 1:30Anthony Pompliano?

  November 1. So go check out okcoin.com/pomp. Next up is Compass Mining. Compass Mining is the world's largest marketplace for mining hardware and hosting. With Compass, everyone can mine Bitcoin. Their team makes it easy to start mining wherever you want, at home or in one of their 23 hosting facilities around the world. Through the Compass Marketplace, retail miners can access mining hardware with similar prices and purchase plans as the world's largest mining companies. Compass miners own their machines, they choose whatever mining pool they want, and they mine directly to their own wallet. Miners who don't want to host their machines can order Asics directly to their doorstep. Simple and low-cost hosting agreements coupled with best-in-class customer service.

• 2:13Anthony Pompliano?

  So the reasons why Compass is the simplest and most popular way to mine Bitcoin. Start mining your own Bitcoin by visiting compassmining.io today. Again, compassmining.io today. Go check it out. Awesome, awesome mining business. Compassmining.io today. Last but not least is Athletic Greens. AG1 by Athletic Greens, the category-leading superfood product, brings comprehensive and convenient daily nutrition to everybody. Keeping up with the research, knowing what to do, and taking a bunch of pills and capsules is hard on the stomach and hard to keep up with. To help each of us be at our best, Athletic Greens simplifies the path to better nutrition by giving you the one thing with all the best things.

• 2:57Anthony Pompliano?

  All you do is you take one scoop of AG1, and it contains 75 vitamins, minerals, and whole-food sourced ingredients, including a multivitamin, multimineral, a probiotic, green superfood blend, and more in one convenient daily serving. The special blend of high-quality bioavailable ingredients in a scoop of AG1 work together to fill the nutritional gaps in your diet, support energy and focus, aid with gut health and digestion, and support a healthy immune system, effectively replacing multiple products or pills with one healthy delicious drink. To make it easy, Athletic Greens is going to give you an immune-supporting free one-year supply of vitamin D and a five-free travel pack with your first purchase

• 3:40Anthony Pompliano?

  if you visit athleticgreens.com/pomp today. Again, simply visit athleticgreens.com/pomp to take control of your health and give AG1 a try. Athleticgreens.com/pomp. Go check them out. All right, let's get into this episode with Peter. I hope you guys enjoy this one.

• 3:57Speaker 01

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

• 4:20Anthony Pompliano?

  Peter, how are you? Let's just start first with, you were one of the earliest people in Bitcoin and blockchain industry. Talk to us a little bit about how you discovered Bitcoin and what really caught your attention to join the industry.

• 4:32Speaker 02

  Yeah, so I found out about it on mailing list. Completely thought it was like crazy and not gonna work. I'd done a big project in graduate school to look at like all the attempts to create digital money. All failures and I was like, okay, here's another failure. You know, a couple of years later, I checked back in on it. There's all these people around the world working on it. I thought a crazy number of people, I think it was like a couple thousand people on Bitcoin Doc at the time. And I decided to, uh, you know, buy my first coins, which I did in a OTC trade, which back then meant posting a message on Bitcoin Talk and then sending a random stranger PayPal, which is coincidentally how you lose your PayPal account.

• 5:13Speaker 02

  But for me, what was powerful about Bitcoin at the time is still what's powerful about cryptocurrency, which is the idea of building a borderless financial system that really is meant for the internet and for the internet economy. And it is sort of beyond the reach of any one government or person. So it's still regulated, just like the internet's still regulated on some level. But it's really cross-national and brings the whole world together into one financial market and one financial system on a level playing field. And that felt like one of the biggest ideas that we would be part of in my lifetime. And I wanted to be part of that and started building crypto products. And, you know, that was many years ago and still building crypto products every day.

• 5:58Anthony Pompliano?

  So one of the aspects of this is people have no clue how big this thing is, right? You started, I think blockchain.com, uh, in 2011, if I, uh, understand correctly. And the numbers that I've seen publicly are that about one-third of transactions that occur in Bitcoin take place on blockchain.com. Uh, you've created about 76 million crypto wallets and you've got about 35 million verified users in more than 200 countries. Uh, one, how accurate are those numbers? And then two, where is all of that growth coming from? Like, why are people coming to you all, uh, to, to go ahead and join?

• 6:34Speaker 02

  Yeah, so the numbers are completely accurate. You can verify some of those on the Bitcoin blockchain, and they would be insanely expensive to fake. And so they're definitely real. I think the most interesting thing about that transaction count is that when we raised our Series A seven years ago, we were about 14% of all transactions. So it's roughly doubled in that time period. And I actually expected it to go down in that time period. At the time I predicted it would go down. The other really interesting headline stat about the business is that the consumer product, so not institutional volume or exchange volume, but just the consumer product has now transacted over a trillion in volume, which is crazy when you think about it. Like, a trillion in volume for a consumer payment product,

• 7:19Speaker 02

  consumer financial product is astronomical. Why do people choose us? I think it's about trust. It's about the brand and the name. We have an incredible funnel for people wanting to show up to this space. People show up and they find our site. But we're also trusted. And when you have as many users as we do, people usually recommend a wallet to their friends. Crypto is a very social phenomenon. And it's like a law of large numbers. If you started out with blockchain, you're probably going to recommend someone else to blockchain, and so on and so forth. The other interesting thing about our business is mostly outside the US. So about 80% of our business is outside the United States.

• 8:03Speaker 02

  So we're really large in Europe, Latin America, Eastern Europe, a few other key geographies, growing super rapidly in Africa right now. But we're very different from Coinbase, for example, which is very US dominant. We're really there for the rest of the world.

• 8:21Anthony Pompliano?

  When you think of the institutional side of the business versus the retail side of the business, it's very obvious that you're getting tons and tons of activity in user acquisition. How much of it's institutional versus retail? And then what's driving those two different cohorts?

• 8:36Speaker 02

  So our business is about 50% retail today by revenue and about 50% institutional by revenue. What's driving the institutions is two things. One, there's been the rise of crypto institutions. What I mean by crypto institution is a firm that is native to crypto. So not a client, but Polychain would be a crypto native institution. There's also driving the market is institutions from TradFi coming into crypto. So our last financing was led by Bailey Gifford, which is one of the world's largest asset managers. You have the Bailey Giffords of the world coming into crypto now. And so the two things are driving it. One, the natural capital velocity cycle in crypto, which is creating these multi-billion dollar crypto institutions.

• 9:18Speaker 02

  On the other side, you know, huge asset managers that are coming into the institutional side of crypto. On the consumer side of crypto, a lot of it is driven by retail investing and then retail financial services. And it just really depends on which country you're talking about. So in Africa, they're using crypto to invest, but they're also using it very transactionally. Same is true for Latin America. You know, in the U.S., where we're seeing a lot of really strong growth right now, it's really about investing. It's not about transacting, and you're hoping to see that shift over time.

• 9:49Anthony Pompliano?

  Talk to me about building the organization itself. Obviously, you guys have seen immense growth from a user perspective. You recently moved your headquarters to Miami, is my understanding, which is awesome. Appreciate that. But where are you finding talent? How do people actually get a job at blockchain.com? And what are the types of roles that you're seeing people kind of transition from the legacy world into this new world?

• 10:08Speaker 02

  So our U.S. headquarters is in Miami now, and we're really excited about that. I'm also moving to Miami, should have a beer sometime, but the weather's great. But, you know, our global headquarters is still in London, which is where I'm sitting today. And the team is expanding really rapidly. So on one hand, it's a really small team, only about 250 people. We've always had the idea that, you know, you want to hire really high impact hires and as few of them as possible, rather than trying to build a really huge team. But that said, you know, in the last year, we've hired 100 people. We'll probably hire 100 people over the next year. What we're looking for in people is, you know, talent in whatever their domain is. You know, we're about half engineers.

• 10:54Speaker 02

  But at the same time, we want to look for people with intellectual curiosity to learn new things because crypto is always changing. And then on top of that, we want people who are really passionate about crypto. You know, in the early years of hiring team members, sometimes we hire someone who's just like a brilliant engineer or a brilliant DevOps person. That's great. But if they don't really believe in crypto and the mission of crypto, it's really hard for them to be effective over time because it's hard to work in crypto. There's a lot of volatility. There's a lot of traffic surge. It's a very high security, high stakes environment. If you don't believe in the underlying market, it's really hard to make it work long term in the industry.

• 11:37Anthony Pompliano?

  Talk to us about regulation. Obviously, we've seen immense conversation there. Everyone from Jerome Powell to Janet Yellen, Gary Gensler, et cetera, all being asked, are they going to ban it? What do they think? How do we think that the rules should evolve? We see politicians constantly battling back and forth. We should put more regulation in place. We should put less regulation in place. Then we have the market participants also with their opinions. Like, how do you see the regulatory environment today and how's that going to evolve over time?

• 12:00Speaker 02

  Look, it's complex. And I think it depends on what part of the world you're talking about. So, you know, in the EU, the process has been very administrative, pretty predictable. You know, our primary regulator is the Financial Conduct Authority in the UK. Engaging with them is very different from engaging with US regulators. I'm much more optimistic about, you know, the regulatory regime in Europe, in the UK, you know, in Singapore. The US has become a political issue. So it's now become an issue where you have political parties staking out territory. And it's become a voting issue. Like increasingly, people are going to vote for politicians based on their stance in crypto. And when an issue

• 12:40Speaker 02

  becomes a political issue, it's hard to predict. And so I think it's going to be a very volatile couple of years in terms of crypto regulation in the United States. I think it's kind of on the industry to do a better job of educating lawmakers, but more importantly, educating voters about why crypto and why innovation matters to the United States. Because ultimately, that's who we have to go to. Like, the US is a democracy. It is ruled by the voters at the end of the day. And we need to make our case to the American people about why our industry matters, why it counts, and you know, why it's more important than just the headlines they read about, you know, Shiba or Doge or whatever else.

• 13:24Anthony Pompliano?

  When you start to think about the various products you've already built, are there things where you're like, hey, this is a market opportunity? We've definitely got to go build something there or some sort of a feature or service that you really guys are focused on over the next, you know, 12 to 18 months?

• 13:38Speaker 02

  Yeah. So the fun thing about blockchain is that at this point, we're kind of like a crypto holding company and we build all this stuff all the time. Right? So like, you know, people are like, why are you still working? And I'm like, well, because I'm having the time of my life. I have this incredible platform and we have talent, we have liquidity, we have capital and we have infrastructure and we can just go out and build like all kinds of new shit all the time. Right? So a lot of our biggest businesses today are businesses that we've built in the last three years. And we've built so many things of blockchain over the, over the years that have not worked out and we could talk about all those failures too. But what we're seeing in the market today is the need to make it easier to use multiple chains at the same time. If I own Bitcoin, but I have Bitcoin sitting on four different chains or layer twos or

• 14:23Speaker 02

  whatever, like, how do I manage that? How do I get the Bitcoins to the right place? How do I do that in a seamless way? Like, how do I support multiple chains in a way that isn't completely, you know, mind numbing to the user? And that is a big product problem. That's kind of on the consumer side, right? On the institutional side, I think it really comes down to stability, infrastructure and tooling and really building that out in a robust way that institutions can be happy with. And I think that, you know, even though we started building that business three years ago, we've probably got years to go before we're in the place that we really want to be in terms of being the best partner to institutions.

• 15:08Anthony Pompliano?

  I've got two of my brothers here with me. What questions do you guys have for Peter?

• 15:10Speaker 03

  Hey, Peter, thanks for doing this. I guess my question would be around like, you've obviously built an extremely impressive business, you know, in Europe and the US and et cetera. But like, what keeps you up at night, right? Like, what are you worried about long-term?

• 15:25Speaker 02

  I worry about regulation a lot.

• 15:27Speaker 03

  Yeah.

• 15:27Speaker 02

  I think for us, like, we're big, right? We throw off an insane amount of revenue every year, profits. You know, we can hire lobbyists, lawyers, fund, you know, political facts, whatever we have to do, right? If they come up with a license, we can apply for it and we can comply with it. If they tell us to KYC every crypto user, we have the infrastructure to do it.

• 15:52Speaker 02

  We wouldn't have been able to do all that when we first started this business seven, eight years ago, right? And I worry a lot about building the future and building a huge market and ecosystem. Because today, we're tiny, right? Like, we've achieved a lot in the last eight years, but the whole ecosystem is tiny today. How are we going to do that if you can't start a business and you can't innovate? Right? And look, Coinbase, blockchain.com, the other big players, we should be regulated to some extent. And we are regulated. You know, we have, at blockchain.com, we have like 60 regulators that we're dealing with. But if you're a little startup, like, you should be able to build, you should be able to innovate. You should be able to do that without needing like a $30 million a year legal and compliance budget.

• 16:36Speaker 02

  And so I worry about that a lot. Because without those new companies, without those new protocols, without those new tokens and projects and experiments, what is our industry? You know, how do we grow it over the next five to 10 years?

• 16:47Speaker 03

  Yeah, and I guess on the back of that, like, over the last five or 10 years since you started blockchain.com, how has your investment in legal compliance, lobbyist in Washington, like, how has that trended over time and how has that grown?

• 17:00Speaker 02

  It's grown a lot.

• 17:03Speaker 02

  I'm not sure I even want to run the number about the growth rate of that budget.

• 17:08Speaker 02

  It's certainly not gotten cheaper at any point.

• 17:12Speaker 02

  I think the second thing I worry about a lot, though, is risk management. There's a lot of companies in our space that have gotten to pretty big size without going through a downside yet, like without going through a down cycle, which means that their risk management is largely untested. And because we're so active in the market as an investor, you know, as a credit provider, as a liquidity provider, we see a lot. And I can tell you that risk management and risk systems are not where they should be for some of the firms in our space. And that keeps me up at night because there's no one to bail anyone out in crypto, right?

• 17:50Speaker 02

  That's the beautiful thing about it. But the, you know, natural market economics of blowups are not fun for the other people in the market. And I do worry about risk controls at a lot of the firms in the space.

• 18:06Anthony Pompliano?

  Gotcha. John, what questions you got? Yeah, Peter, thank you for doing this. Very nice to meet you. So I am curious, you are the co-founder and CEO of blockchain.com. Can you talk about how the hell you build a company like this and then where you guys are going from here?

• 18:19Speaker 02

  Uh, well, I did it with a lot of people, a lot of help. Um, it's not, you know, building a company like this is not a solo sport. It's a big team sport and I've had to grow a lot as a person. Um, you know, I was very young when I started this journey and I'm still super young. I'm only 32. It required a lot of personal growth, a lot of rethinking the way I did things, a lot of me, I mean, like, I had to admit that I didn't know how to do things a lot, right? To get better at them. But I think the number one thing that I tell entrepreneurs, like when I invest in them and they're like asking for whatever advice, just make steady progress, inch forward day by day, preserve as much optionality as you can,

• 19:02Speaker 02

  find the things that you love doing in the business that make it fun for you so that you don't lose the joy and the passion. And then hire really great people that you love working with. Like you should want to love working with your team because it's your team. If you're the CEO and founder of a business and you don't love the team you're working with, the only person you can blame is yourself. Because you have the power to change that, right? So, love the team you're working with. And if you can do that, and you can just keep going forward and don't get discouraged and don't pivot, you can get somewhere. And, you know, get lucky.

• 19:38Speaker 03

  Definitely.

• 19:39Anthony Pompliano?

  Peter, talk to us about the market itself. We're sitting around, you know, $54,000 or so Bitcoin price, $55,000. How do you see the rest of this year playing out in terms of Bitcoin?

• 19:49Speaker 02

  I honestly think we're gonna see your hat happen. Like...

• 19:53Anthony Pompliano?

  That's it? Only 100K?

• 19:55Speaker 02

  Only 100K. No, I think that Q4 is gonna be strong. Like, we're settled in for a crazy Q4. You know, I'm really excited about what's going on in Ethereum. I think that if you asked me two years ago if I thought ETH was going to went out as kind of the dominant smart contract platform, or if one of the ETH 2.0s would happen, I would have told you I didn't really know. I think that we've seen scaling is going to happen on ETH. Because of that, you know, I'm really bullish on ETH right now and super excited about all the innovation that's happening there on Layer 2 and on ETH 2.0. And that's really cool because you're gonna be able to build apps. Like, there's gonna be crypto app stores. Like, we will be able to put an app store in our wallet where any developer could launch

• 20:39Speaker 02

  a financial services app built on top DeFi into our app store. Like, how cool will that be? And I think we're like, a year away from that being a reality.

• 20:48Anthony Pompliano?

  How do you think about personal allocation or like portfolio construction, right? You're in the space, obviously you've got like outsized exposure to the equity of a infrastructure-type business. Do you think about Bitcoin and ETH as like the main components? Do you think about the long tail? Like, just walk through like the framework you use in terms of allocating to the space.

• 21:09Speaker 02

  Yeah, someone asked me once like, how much of my net worth I had in crypto? And I said it was like, at least over 100% by the time.

• 21:18Speaker 02

  Yeah, you know, I'm like the crazy person that like sold all my equities right before COVID and bought more Ethereum, not my private stock, my like public equities portfolio. So maybe I'm not the right person to talk to about like safe and responsible portfolio.

• 21:31Anthony Pompliano?

  No, we want, what's the crazy portfolio allocation? Yeah. By the way, you are talking to three guys that are basically the same thing. So you have, you have a company here.

• 21:41Speaker 02

  Yeah, so in the crypto space, I think about constructing my portfolio in a way that minimizes regret. You know, I have a solid position in Bitcoin. I have a solid position in whatever I think is going to be the market leader and market standard three, four years from now, which for a long time was Bitcoin. And for me now personally is Ethereum. And then I have, you know, about 25% of my portfolio in what you could call venture crypto investments, whether those are companies or those are, you know, new protocols or venture funds. You know, I'm a GP and an LP and our venture fund here at blockchain.com, which has done really well. I'm a LP and a couple of other early stage crypto funds.

• 22:26Speaker 02

  And then I've done, you know, so investing in early stage protocols outside of that as well. And I think about that being like 25% of my portfolio with 75% of my crypto portfolio away from blockchain.com stock being, you know, large cap coins.

• 22:42Anthony Pompliano?

  Got it. And then when you start to think about allocating capital internally, so blockchain.com, huge business, and somebody comes to you with an idea, how do you think about like almost trying to like disrupt yourself or allocate to R and D? Are there certain decisions or trade offs or frameworks that you're using there?

• 22:58Speaker 02

  Yes. And we, you know, we run a, you know, a number that is measured in billions. And so it's a lot. I spent a lot of time studying CIOs and studying how Jeff Bezos allocated capital. Because in some ways, Amazon is like a holding company for the internet, infrastructure, capital, people, and they just kept building adjacent businesses, right? And I think what I learned from that study was, one, you need to have a framework that makes it quantitative and not qualitative. It needs to be about the opportunity. So it needs to be about the opportunity in the market size in front of you. And so when we are looking at an opportunity internally to like build a new business or

• 23:41Speaker 02

  do R and D, we're going to look at how big is the opportunity? How much capital does it take us to get to the first step? The first step being like where we can get customer feedback. So time, people capital, financial capital to get to the first market test where we know if this is going to work or not. And then, once it's working, we can put capital, you know, once customers have it, they're using it, there's some product feedback. Then we can attack it with capital and people because we can size it correctly. But it's really about like sizing these bets. And then, you know, inside of our business, we're actually, you know, putting principal capital work, you know, lending,

• 24:24Speaker 02

  you know, our whole prime brokerage, liquidity provision, venture investments. I'm really looking at return on capital and return on equity. And so what's driving those decisions is both immediate return on capital and return on equity. And then what I think the best way to allocate capital is to achieve long-term return on capital and return on equity.

• 24:45Anthony Pompliano?

  How do you think about cutting an investment? So let's say you allocate capital somewhere, you've got, you know, this grand vision of what's going to happen. Do you evaluate at any point like, all right, if we don't hit these metrics by a certain date? Or if we hit these obstacles, we're going to go ahead and pull the plug on this project or this like R and D effort?

• 25:02Speaker 02

  It's one of the things we're best at, actually, is what I call killing the bad trade. And it's advice that I give people all the time. When you make an investment or, you know, a trade and you had a thesis and it's not working, if you can't explain why it's not working and what's going to change, no matter what it costs you, you need to cut it. You need to end it. And you need to separate yourself from the emotional pain of that. One way of doing that is like celebrating mistakes. So like a blockchain, we celebrate mistakes each year. We have like mistake day where everyone, well, I share my biggest mistake of the year and invite other people to share their biggest mistake of the year and share what they learned. And we celebrate those mistakes and we celebrate those learnings because the only

• 25:47Speaker 02

  way to be aggressive and try out new ideas and iterate and, you know, take a moonshot is to know when to like shut the rocket down. And you have to be super disciplined and cold and almost unemotional about it.

• 25:59Anthony Pompliano?

  When you start to understand this kind of capital allocation strategy, do you do it also not only with the products internally, but also when you're evaluating like these early-stage protocols or early-stage investments that you're making, whether it's off the balance sheet personally, whatever, is there some sort of way that you evaluate like follow-on investment decisions by the same criteria?

• 26:19Speaker 02

  Absolutely. It's like, tell me, you know, I'm always asking like, tell me your roadmap. Tell me how you're going to execute against it. How do we know if we're on track or we're not on track? You know, so if you tell me, hey, Peter, like, we're going to build a protocol for, you know, tipping on Twitch, and you launch a protocol for tipping on Twitch and it doesn't go anywhere, then like, we either need to understand why it didn't go anywhere and what, how we're going to fix it and be very confident in that, which is like underwriting a new investment, or we need to like write it off or sell it. But like, you have to be in like a quantitative, like evidence-based framework.

• 26:58Anthony Pompliano?

  John, it's really interesting when you start to think about kind of the allocation of capital across this and then also at the same time, building a business, right? Like, you're building a business, plus you're also thinking from an investment standpoint, a lot of the same activity. Yeah, it is. It makes you kind of like double down on, on the investment and the industry in general, but it's growing at such a fast pace. It's, it's exactly what you kind of want to be doing.

• 27:21Speaker 02

  Yeah. As a business in crypto, how you allocate your capital really matters to the long-term success of the business.

• 27:27Anthony Pompliano?

  Absolutely. And also what you do with your balance sheet, if you hold it in cryptocurrencies, if you hold it in fiat, and there's so many different ways that people utilize it. We were talking to the guy the other day about how he took a single percentage of his fiat balance sheet that was hundreds of millions of dollars and actually put it into Bitcoin or into stable coins. Yeah. Peter, like, what has been your guy's strategy and how has that evolved over time when it comes to your balance sheet, if it has changed, I guess?

• 27:52Speaker 02

  Yeah, because our, because our like movements are large, we don't usually like talk about specifically what we do. But one kind of cool thing that I can tell you is that we keep all of our retained earnings in crypto or crypto investments. So, you know, every dollar that we make from the crypto industry. In the crypto ecosystem, providing services to clients, we're going to put back into the crypto industry.

• 28:14Anthony Pompliano?

  When you think about whatever the allocation is with the strategy, do you have periodic reviews of it? Or do you simply say, hey, like, this is what we're going to do for like the year? Like, how do you think about that?

• 28:25Speaker 02

  Every, every week, sometimes more than once a week.

• 28:29Anthony Pompliano?

  So you, so it's, and the reason why I'm asking is in some crazy way, like, I think there was a fidelity study done a while ago. The best investors were the people who forgot their password or died, right? It was just like, they just didn't touch it and it just, over a long period of time, it compounded. There's other people who are really good at kind of tactically moving around allocations and stuff like that. And so with the balance sheet, whether it's your personal balance sheet or with a company's balance sheet, you can take, you know, kind of a couple of different strategies. So you guys really are evaluating on a, on a pretty periodic basis. Is that because the market changes so rapidly? Or is there some other reason why you're doing it so, so often?

• 29:03Speaker 02

  Well, a couple of things. When we're investing in the venture side, we're long-term holders. We're going to sit on that for, in some cases, many years now. But we also run a business that has working capital, the prime brokerage, right? Like a merchant bank for crypto. And we need to efficiently allocate capital between business lines. So the lending desk may need a lot more capital this week, next week, maybe it doesn't, right? And it's not, it doesn't, you know, change dramatically week over week, but we still need to like step back, look at our business each week and say, okay, where are the returns on capital? What does each business unit need? And how do we allocate the capital between them efficiently?

• 29:39Anthony Pompliano?

  Yeah, it's fascinating when you start to kind of put frameworks around this and understand, hey, here's how we're going to allocate. Here's how we're going to evaluate whether it's working or not, we're willing to cut things and then reallocate. So pretty cool. What, what's your pitch? Before we let you go, what's your pitch in terms of folks who are looking at blockchain.com, all the various products and services? Why should they come and use that stuff with you guys?

• 30:00Speaker 02

  At the end of the day, I think the best reason to use us is that we really, really care about our customers. We're like here to build whatever you need to be part of the crypto financial system and to do what you want in the crypto financial system. So more than probably any other business in the space. We're willing to build bespoke solutions. We're willing to start with you when you're really small and grow with you when you're really big. Like, we've had customers start with a thousand dollars of Bitcoin and, you know, become ultra-high-net-worth institutional customers over the last five, six years. Like, we're here for you. We, at the end of the day, are a really customer-client-driven business. It's the extent that I'm still talking to customers every day.

• 30:43Anthony Pompliano?

  It is absolutely fascinating to see just how much you care and kind of how involved you still are, which is a kudos to you. Where can we send people to find you on the internet or find blockchain.com products?

• 30:56Speaker 02

  Well, you can go to blockchain.com. It's a little-known URL. But, you know, look, I'm on the internet. I'm OneMorePeter, all words, on Twitter, so you can find me there. Trying to not find any of the scammers that are pretending to be me all the time. And then, you know, look, if you ever have an issue or an idea that I can be helpful with, you can send me an email. It's just [email protected].

• 31:21Anthony Pompliano?

  Now, the last question I'm going to ask you is, what if you had to guess right now, do you think blockchain.com, the actual URL, if you posted it for sale today, what do you think it would go for?

• 31:31Speaker 02

  I don't know, 20, 30 million?

• 31:33Anthony Pompliano?

  Oh, I think that's low.

• 31:34Speaker 02

  Maybe more.

• 31:35Anthony Pompliano?

  I mean, there's somebody out there who created a fake coin that's got a bunch of coins they'd trade you, and then be 50, 100 million, I think. Voice.com went for 30 mil.

• 31:46Speaker 02

  I could probably sell blockchain.com to, like, one of the new Layer 2, like, one of the new ETH 2.0 guys for, like, a couple hundred million, right?

• 31:54Anthony Pompliano?

  Easy.

• 31:55Speaker 02

  Easy, like...

• 31:56Anthony Pompliano?

  If you've got 10 billion dollars of Monopoly money, what's 100 mil between friends?

• 32:03Speaker 02

  And then it's like, but then, you know, what do you do with, like, 300 million of, you know, random ETH 2.0 coins?

• 32:09Anthony Pompliano?

  You sell as much of it as you can as fast as possible and hope you get 50 million now.

• 32:16Anthony Pompliano?

  Right? Isn't that what they do? I don't know.

• 32:19Speaker 02

  I think so. I think so. That is what you do.

• 32:23Anthony Pompliano?

  Awesome, man. Listen, thank you so much for coming on. I'm excited you're moving to Miami. We'll definitely have to hang out when you get here. Anyone who wants to learn more about blockchain, go to blockchain.com, follow Peter on Twitter, and we appreciate you doing this, man.

• 32:35Speaker 02

  Thanks, gentlemen.

• 32:36Anthony Pompliano?

  All right. We'll talk soon, buddy.