EP 20: Interview with Ramp’s Eric Glyman (+ explaining Cartoon Avatars’ origins) and a Crypto Debate with Mike Dudas and Zach Weinberg

(01:14) Introducing Zach Weinberg and Mike Dudas (06:06) Mike’s background (19:02) Exciting about crypto (24:18) Zach vs crypto (32:04) Inflation hedge (38:25) Does Zach own Crypto (41:00) Banking in foreign countries (53:59) Stablecoin vs wire transfer (59:00) KYC (1:03:57) Crypto insurance (1:09:24) Eric Glyman: Welcome (1:11:32) Eric Glyman: Background (1:16:57) Eric Glyman: Mandarin Debate video (1:20:28) Eric Glyman: Starting Paribus (1:24:51) Eric Glyman: Selling to Capital One (1:28:57) Eric Glyman: Fintech’s success (1:33:49) Eric Glyman: What is Ramp? (1:43:10) Eric Glyman: Learnings as a 2-time founder (1:48:13) Eric Glyman: Being purposeful (1:52:55) Eric Glyman: Delegating as a CEO (1:58:53) Eric Glyman: Building the inevitability of success (2:02:43) Eric Glyman: Thinking through your investor base (2:08:29) Eric Glyman: How do you determine your valuation? (2:13:15) Eric Glyman: Advice for executives (2:18:03) Eric Glyman: Craziest investor stories (2:20:40) Eric Glyman: The origin of Cartoon Avatars (2:21:54) Eric Glyman: Relationship between companies and media (2:28:58) Outro Links: Eric Glyman debate video - https://www.youtube.com/watch?v=CxB5bb8xEDg Mixed and edited: Justin Hrabovsky Produced: Andrew Nadeau and Rashad Assir Executive Producer: Josh Machiz Music: Griff Lawson 🎙 Listen to the show Apple Podcasts: https://podcasts.apple.com/us/podcast/cartoon-avatars/id1606770839 Spotify: https://open.spotify.com/show/5WqBqDb4br3LlyVrdqOYYb?si=00fe3494b43a4e4c Google Podcasts: https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5zaW1wbGVjYXN0LmNvbS9zb0hJZkhWbg Follow on Socials 📸 Instagram - https://instagram.com/cartoonavatars 🐦 Twitter - https://twitter.com/cartoonavatars 🎬 Clips on TikTok - https://www.tiktok.com/@cartoonavatars About the Show A Saturday morning podcast hosted by Logan Bartlett (Partner and Managing Director at Redpoint Ventures) covering the tech news with his friends and other people with industry expertise. Executive Producer: Rashad Assir Producer: Leah Clapper Mixing and editing: Justin Hrabovsky Check out Unsupervised Learning, Redpoint's AI Podcast: https://www.youtube.com/@UCUl-s_Vp-Kkk_XVyDylNwLA 🎥 Subscribe on YouTube: https://www.youtube.com/channel/UCugS0jD5IAdoqzjaNYzns7w?sub_confirmation=1 Follow on Socials 📸 Instagram - https://www.instagram.com/theloganbartlettshow 📱 X - https://twitter.com/loganbartshow 🎬 Clips on TikTok - https://www.tiktok.com/@theloganbartlettshow About the Show Logan Bartlett is a Software Investor at Redpoint Ventures - a Silicon Valley-based VC with $6B AUM and investments in Snowflake, DraftKings, Twilio, and Netflix. In each episode of The Logan Bartlett Show, we sit down with the people behind today’s most important startups and extract the tactics, lessons, and frameworks they’ve learned the hard way. Conversations span hiring to GTM, product, growth, fundraising and everything in between - collectively forming the ultimate playbook to make you a better CEO, investor or board member. Tap follow and enable notifications to stay ahead of the game.

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

• 0:00Logan Bartlett?

  Hey, so what you're going to hear on this episode is actually broken up into two parts, but instead of doing news at the beginning like we normally do and kind of go through the topics of the week, we're instead going to have a conversation back by popular demand. We're going to have a conversation between Zach Weinberg and Mike Dudas, and we'll let Mike give his own background, but really interesting conversation that dives into a bunch of different stuff about, we started with Bitcoin, we got a little bit into DeFi. It ran long, it was very interesting. Mike is clearly a bright guy who's very into all of this stuff. And so it was a really good, interesting conversation. I think we're going to need a part two because while we went long, we probably only covered about half

• 0:43Logan Bartlett?

  the stuff that we wanted to. And so if, if, if people enjoy it, we'll be back again for, for the second part, in which we'll probably go into, to NFTs and a bunch of coin-related use cases around crypto and all of that. And so that's what you're going to hear at the top. And then on the back half, you're going to hear a conversation that I had with Eric Lyman, founder, CEO of Ramp and a, an investment of mine as well. And so trust you'll enjoy both.

• 1:14Logan Bartlett?

  Welcome to the 20th episode of Cartoon Avatars. I'm your host, Logan Bartlett, and I am joined today by my regular recurring co-host, at least at this point, that we're, we're trying to, you know, continue to, to trick into coming on full time, Zach Weinberg, and also a special guest, Mike Dudas as well. How are we doing today, guys? Pretty good. Doing great. Thanks for having me. Really excited. Zach, thanks for sneaking this in. You are off to where? You probably don't need to give the very specific location, given how many people are probably mad at you after last week in the crypto world. So maybe, maybe just generalities. Where in the world are you headed?

• 1:50Speaker 01

  Ah, yeah, one of my best friends from college is getting married in a country in Europe, in a city in that country. So I'm flying there tonight.

• 1:59Logan Bartlett?

  Yeah, well, good. Mike, you were very generous in sneaking this in. I think we had like two windows of time that like worked. One was, and you were able to make one of them work. So I appreciate you doing this.

• 2:11Speaker 02

  Yeah. So hopefully my, you know, three hours of preparation will serve me well.

• 2:15Logan Bartlett?

  I think you've had a couple of years of preparation here.

• 2:18Speaker 02

  I've definitely spent some time thinking about the things we'll discuss.

• 2:20Logan Bartlett?

  And it's kind of what I thought. But I guess just to give a little bit of context here. So I've known Mike for a little while. He runs a venture firm with actually a guy in my building who's gotten to be friends as well, Serge. And so that was, I guess, one of the original connections, as well as you were a former co-founder of a Redpoint company, right? I guess you were a co-founder. You're a former executive at a Redpoint company. And so you've obviously been in the New York ecosystem for a long time. But after last week, which I assume that people are listening to this episode, they probably witnessed last week's episode, at least in part, in which Zach and Packy, I thought, you know, went

• 3:02Logan Bartlett?

  back and forth in a pretty civil manner. And Packy, you know, he said he had a brain fart and wasn't as crisp as I think he wished he was. And then it kind of spiraled and got taken out of context and ended up on Reddit. And yeah, my mentions are still going crazy from it. And so after that whole event, we figured we would at least keep the series. I don't want this to only be a web two, web three podcast going forward. But you know, when you got the, when you got the moment, you got to make it happen. So Mike was very generous in hopping on to kind of talk through some of this stuff.

• 3:36Speaker 02

  Yeah, super excited to be here. And I actually didn't have a chance to watch the entire episode. But yeah, I just figured, look, I've followed both of you for a long time. And as you mentioned, you have been casual acquaintances and friends. And yeah, Zach's somebody I've observed and is extremely bright. And I think

• 3:58Speaker 02

  Has some really good points about the state of Web 3, you know, the state of technology in general. So I'm excited to answer some of his questions, hear some of his assertions and you know, offer my best perspective on kind of where we are today and the future. But also happy to chat about non-Web 3 stuff as well.

• 4:17Logan Bartlett?

  Yeah, no, no, exactly. I hope we leave as civil as we're starting here. That's my, that's my real hope. But Mike, maybe, maybe.

• 4:24Speaker 01

  By the way, to be clear on that, like, first of all, Pacquiao is an unbelievable sport and like, just a super nice guy. And I do think the clip was like a little out of context, which I guess is like, what the internet does to you, which is take things out of context. But also like, I also want to be clear, like, I'm not like an anti crypto. I invest in crypto companies.

• 4:45Logan Bartlett?

  Oh, I actually think you're very, I actually think you're very reasonable about all this stuff. And like, you're, I don't know, you're, you're obviously very bright in all of this. And you're, I think you were civil in all of it. You just don't let, you have a willingness that I don't have of to continue to ask the question that doesn't let people off the hook until they appropriately answer the question. And I get uncomfortable and I will let people off the hook and just move on from the conversation, right? And I think you have such an intellectual purity and rigor and horsepower about this stuff that it makes for good debate and certainly good entertainment. But I thought you were very civil in the whole thing.

• 5:27Logan Bartlett?

  And so when the threads came out about like, you weren't attacking him or attack, you know, it wasn't an attack, right? That certainly was not the case.

• 5:35Speaker 01

  No, it's just, you know, there are bad people on the internet. I think we've learned this over the last 15 years who like say shitty things in an anonymous fashion. And you know, I, it's unfortunate and that says, but I don't know. I think Mike and I kind of agree on, on quite a bit of things. So.

• 5:53Logan Bartlett?

  Yeah, good. Well, so Mike, maybe give, we've introduced Zach before, but, and I did a little bit of a preamble there, but maybe give your, your story and, and yeah, I guess how you went down the quote unquote rabbit hole here.

• 6:06Speaker 02

  So, you know, it's been. The first, I'm 20 years into my career. I spent the first decade in media and entertainment. Started at Disney and then in 2007, I had grown up in the East Coast, moved back, started at a media and entertainment startup backed by Unisquare Ventures and Bank Capital. And then ended up at YouTube in 2009. So decade of media and entertainment and then switched. Google at that time was was nice enough to let folks like, you know, who were talented, switched to totally different things. So I jumped onto the Google Wallet team and became very interested in fintech. So I've lived the quote unquote web two journey and the fintech journey, spent three years in that team. Working on merchant adoption for Google Wallet and then joined the Braintree Venmo team as the only Braintree

• 6:51Speaker 02

  Braintree employee in New York. Worked very closely with the Venmo team while it was growing from 30,000 users a month to over a million. Venmo was acquired by PayPal. I saw early the power of social dynamics tied to money and that's definitely influenced, you know, what I'm doing today. Then I, and that is actually where I discovered Bitcoin for the first time. We were looking at Braintree at using Bitcoin for payment acceptance for Uber, Airbnb and some of our other customers.

• 7:21Logan Bartlett?

  And Mike, by the way, what year is this and Braintree, maybe tell people, we obviously know Braintree, but.

• 7:27Speaker 02

  Yeah, this is 2013 and Braintree is a, was a, is and was a Stripe-like company. Unfortunately, competing against probably the greatest financial technology company of the 21st century. And got outcompeted, was fold into PayPal and is basically why I think PayPal is still relevant today. Great technology, great team. And we were powering payments. We were a payment gateway like Stripe is for developers like Uber, Airbnb, Grubhub, StubHub and others. So the reason the Bitcoin story is interesting is I be, at the time, you know, wasn't broadly popular. Chamath was writing about it as like schmuck insurance, but I believed in it as a global payment network.

• 8:10Speaker 02

  It ultimately hasn't to date panned out as being that, you know, now the Bitcoin story is store value. But at the time, it was like 24/7, 365, global, low-cost payments. Unfortunately, the core currency was too volatile to support a global payment network. So nobody's really using Bitcoin for merchant payments today. Anyway, but that was my introduction. Bought some Bitcoin. I was fortunate. Price went up.

• 8:34Logan Bartlett?

  What was the price in when you originally got in?

• 8:37Speaker 02

  Yeah, so I bought at 110. So it's definitely the best investment of my life. And you know, I'm a holder. I'm a long-term Bitcoin believer as a store of value and maybe a few decades from now as a medium of exchange, but obviously needs to be a lot larger for that to happen. And I'd love to talk about that as well. It's an interesting use case that definitely still gets undercovered. And then I moved out of, sorry, I started my first company in 2014. Also a quote unquote web two company called Button and it's a mobile. We called it a mobile commerce company, but effectively it was mobile affiliate. So trying to connect publisher apps like Foursquare

• 9:17Speaker 02

  or other big rewards apps like Ibotta to merchants. So worked with all the big merchants and commerce companies of the last seven, eight years, Uber, booking.com, Airbnb, Expedia, Walmart, you name it. And did those sort of mobile connections. And then

• 9:36Logan Bartlett?

  and you're fortunate enough to have some of the best investors in the world involved.

• 9:41Speaker 02

  Yeah, red, red point was they led our A and Chris Moore, a wonderful human and really great team there. And so, look, like I've spent time building businesses and believe that like, again, we work with DoorDash, others that are, you know, I think really exciting web two businesses. So, you know, look,

• 10:03Speaker 02

  as we transition this conversation to talking about the future and web three, you know, the analogy I would draw is you know, web two is not going away. It's going to be the bulk of, you know, technology, economic activity for the foreseeable future. In the same way that fintech, you know, didn't obviate the need for banks. It was effectively something that operated in a you know, sort of complimentary way to banks. And again, we'll have time to get into that.

• 10:29Logan Bartlett?

  Totally. And Mike, yeah. So, so, so tell us, so you have Six Man Ventures and the block. Tell us those two.

• 10:37Speaker 02

  Yeah. So I've now been in crypto and it feels like 50 years, but what are we mid 2022? Jumped in full time at the beginning of 2018, right at the last peak of Bitcoin, Ethereum. So I actually missed the sort of genesis of Ethereum. I was just focused on other stuff at the time, you know, building a business. And what's interesting is, you know, when we talk about, you know, these web three applications and smart contracts.

• 11:06Speaker 02

  And Bitcoin isn't really programmable. So your smart contract development and and this notion of you read, write, own and you know, networks that are coordinated incentivized by tokens. You know, they're less than six years old that the infrastructure even exists for them to, you know, to be built. And frankly, we're only a couple of years old where you could actually build at any real scale or throughput. So, you know, I'll caveat everything with, hey, we're very, very early. So anyway, I got into space 2018. My whole thing is, you know, I believe in the need for censorship resistant, you know, always on, non-government, non-corporate

• 11:49Speaker 02

  controlled money and applications. I don't believe, I'm not one of those folks who believes, for example, in hyper Bitcoinization, who believes that, you know, user-owned networks are going to entirely replace every other set of applications and infrastructure and financial, you know, product that we use today. So I take it with an approach of it's very healthy to have these things as alternatives, more so than, you know, entire replacements for our existing systems. Anyway, so everything I've worked on has been, how do we get more people using Bitcoin and crypto? And I'm just going to say crypto from now on. Yeah, got it.

• 12:34Speaker 02

  Started the block. It's a, you know, one of the largest media information and data businesses in the crypto space, doing very well. Actually sold that last year and sold it to the team. I wanted it to be consumer facing when I founded it. We went into a bear market. It became institution focused. It wasn't perfect for me. Wonderful team running it. After that, again, in the spirit of getting people using crypto, like Zach, I want to actually see empirical use. And we're not at a place where I'm satisfied with that. I spent last year working at Paxos, which is a company that provides stablecoin as a service and crypto as a service infrastructure. So

• 13:17Speaker 02

  Paxos Powers PayPal Venmo New Bank Mercado Pago, a bunch of other massive companies crypto offerings. And it powers Binance's stablecoin, which is the third largest in the world, as well as its own stablecoin USDP and has a couple other big deals in the works. So.

• 13:35Logan Bartlett?

  Hey Mike, by the way, just one, one interesting thing and we'll go into all that, but you sold, I'm just interested in the, did the block raise outside capital? And what does selling it back to the team actually, actually mean?

• 13:47Speaker 02

  Yeah, great question. It was an atypical deal. It was one of those situations where I just found that I wasn't the right CEO founder to, to, you know, take that business on the 10 year journey, but it was a business where it had, you know, we created a team of 25 to 30 people at that point, who were good enough to create that durational business. So what they ended up doing, I won't get too into the specifics, but effectively raised debt to buy out investors. We had taken a little, a little over 3 million in venture money. They bought out me and the investors.

• 14:24Logan Bartlett?

  That's cool. So now it's, now it's totally owned by the team that's currently working on it.

• 14:28Speaker 02

  Exactly. There's no outside investment and candidly, I think that's wonderful and deeply necessary for the crypto space.

• 14:37Logan Bartlett?

  I think it's actually, I mean, I will say, I think that's great in general, right? Well, oftentimes I'll, I'll get entrepreneurs pitching me and I'm like, don't raise money, don't do it like own a hundred percent of this thing. I don't see how you can possibly get to a point that you'll return money for your investors as in terms of scale. So like grow a little slower, don't burn cash and build a great business, right? And we've talked about like lifestyle is a pejorative term, but like a lot, a ton of very, very successful entrepreneurs over the course of the last hundred years, and even before like financing really existed in earnest built. Lifestyle businesses into generational, generational, generational wealth. So I think that's great. That's super cool that they're doing that.

• 15:21Speaker 02

  Exactly. Look, I'd love to own a little bit, but can, you know, knowing that I was going to become a venture capitalist and looking at the competitive landscape where a number of the other publications are owned by some of the wealthiest and most powerful folks in the crypto space, you know, felt it was desperately necessary for the block to stay independent. So I then joined Paxos, worked there for a year. At the same time, me and Serge, who you mentioned, founded Six Man Ventures. Six Man Ventures, the focus was investing. Originally, it was, we were going to focus on creator economy and, you know, NFTs. And that morphed into Web3. The term wasn't as popular back then. Small operator fund. I was working at Paxos. Serge has a startup called Stay Tuned. And so we were

• 16:05Speaker 02

  investing 100K checks into as many great companies as we could find at the, you know, pre-seed and seed phase in crypto. And the idea there was we were looking for applications that we ourselves would use. So things like NFT marketplaces and wallets and things like that, as well as the infrastructure that would make those things, you know, possible for other folks to use. So fiat on off ramps, treasury management for DAOs and other crypto first businesses, et cetera. We had a lot of fun and we got into some wonderful companies. We can discuss some of those in this conversation, you know, including Stepin, including Magic Eden, you know, the largest NFT marketplace in Solana, EtherScan, Rainbow Wallet. And

• 16:49Speaker 02

  we raised a second fund that's a little approximately $140 million in size. We lead or co-lead pre-seed and seed rounds and then we'll do, you know, follow checks into series A rounds. So trying to invest early equity in tokens. And it's primarily, you know, we think tokens are The big innovation here for a number of reasons that we can discuss. So we like to invest in token-enabled businesses.

• 17:15Logan Bartlett?

  Yeah, well, congrats. And you guys just closed a fund. I know it's going well because Serge is moving out of my building. So I, I, I know that, that you guys are doing well and you just closed, what, a few weeks ago, kind of at a weird time you announced it, right? The market was like totally retrenching and you announced what? A hundred and, uh, what, how, how big was the fund that you guys just raised?

• 17:36Speaker 02

  Yeah. So the fund is over 140 million and we're just doing final, final close. So it was good timing and we're fortunate. You know, we've only invested about 20 million of it because it's been a bit of a rolling close. Uh, so we have more than a hundred million, you know, to invest at a time when we're very, very optimistic. We see, you know, incredible founders and we're seeing prices that are, we believe, you know, moving back to a sane place. They've been in an insane place over the last, you know, call it 18 months.

• 18:06Logan Bartlett?

  Yep. Got it. Okay, cool. And so you touched on a bunch of different stuff. Maybe, uh, maybe give us, uh, stitch together the narrative for, of what you believe about crypto. You, you said a bunch of different things along that journey of how you ended up here and what some of the core belief systems are. But, uh, maybe as we talk about, you know, I mean, there's Bitcoin maximalists, there's, uh, you know, people that are totally long Solana. There's people that are focused on the, you know, the Ethereum and Ethereum fork. There's NFTs, there's DeFi, there's all these different things, right?

• 18:40Logan Bartlett?

  Creator economy, web three, all of that. Maybe just stitch together like what you believe, uh, about all those things and, and the things that you feel maybe are, um, you know, grifter-ish or, or Ponzi-ish in some ways.

• 18:56Speaker 02

  Yeah. Well, why don't I just start with like the framework of what excites me about crypto broadly. Okay?

• 19:01Logan Bartlett?

  Perfect.

• 19:02Speaker 02

  So, you know, I believe in, you know, the notion, initially I believed, you know, seven, eight years ago, nine years ago now, in the notion of, you know, censorship resistant, you know, no middleman money, right? So non-state, non-corporate issued money, uh, Bitcoin being, you know, the canonical embodiment of that. And over time, that, as we saw, you know, Ethereum launch and, and smart contracts launch, more, you know, blockchains that allow for, you know, more scalability and throughput. Long way to go there, of course. That belief in, you know, sort of censorship resistant, no middleman money moved to that,

• 19:45Speaker 02

  but for applications that that people would use. So call them protocols or web three networks, right? And there are many examples that that you guys have discussed and debated of those. You know, some of the larger ones would be, you know, helium or live peer. Uh, yeah, there's a bunch of others and we'll, we'll get into them. The, uh, so, so basically I believe that those things are important, uh, played during gaming, obviously being another one. Uh, so censorship resistance, you know, always on, always available, immutable and transparent. So you can kind of like verify what is happening on chain. Um, distributed security is something

• 20:26Speaker 02

  that's really, you know, important to me. Uh, although it hasn't, you know, so basically distributed security, meaning a number of people basically securing a network and validating the transactions. So you don't have your one central point of, of hack potential. Of course, it's very easy to take the counter to that, which is today, we see a lot of hacks in DeFi, um, and we have not clearly perfected, uh, smart contract risk. And, you know, there are a number of exploits. So a lot of the things that I believe in, uh, have not been fully realized yet. Uh, I'll, I'll put that up front. Um, so anyway, immutable and transparency. And then I think this one's

• 21:08Speaker 02

  important and it gets more important over time, but composability. So things that are built can then be building blocks for things that are built in the future. Right? So, you know, you can basically, um, you know, build a stack that, uh, an example would be I do things on chain, on Ethereum, I, I buy things, I sell things, uh, in the future, and that's open. That information's available to, you know, anyone who's sophisticated enough to look on chain and pull it out. In the future, I might be eligible to for X, Y, or Z, or I may be marketed to for, you know, X, Y, or Z because of the things I've done before. So you basically have these building blocks

• 21:48Speaker 02

  that, um, people can build future services on top of what's been built. Um, another one that I like is that you actually finally have incentives for people to work on effectively open source software, uh, and, and the tokens act as incentives. Um, those are a couple of like high level things that I like. And then just to wrap up in terms of like money, I love the fact that, you know, there we're in a time and a place. So I think money is important to all of this. And people would say, and they'd be right, that to date, a significant portion of the use cases in crypto have been, you know, financial based, speculation based. I think that will change as, you know,

• 22:30Speaker 02

  companies that we're backing bring things to market that are, you know, more fun, more exciting. You want to spend your time, but they will have money involved in them. And I don't think you can have any discussion of crypto, you know, without money, without the fact that you have these tokens that represent, you know, ownership of assets that represent the ability, they're more than equity. You have the ability to have governance votes with a token, you know, to coordinate with others, to incentivize, they're liquid, you can transfer them, they can be staked to secure networks. And I think that's important. Final point, getting back to just crypto as money is, you know,

• 23:12Speaker 02

  the reason I worked on stable coins, for example, is you got one, the majority of the world's population lives in authoritarian regimes. I think it's important that those folks, where possible, have access to non-state money to, you know, all they need is a phone for that to happen. And we're getting to the point where with stable coins, we've moved beyond the sort of volatility problem that Bitcoin had. And you can now, you know, send money globally 24/7, 365, just to somebody who has a wallet. You still, by the way, today have the problem of, okay, I've received it in my wallet, you know, do I need to off ramp that into local fiat currency? Well, that's still difficult. My, it's possible, but difficult. My deep belief is that we'll have a native Web3

• 23:57Speaker 02

  economy over the next 10 to 15 years, though, that will make that money valuable, you know, within that native economy. And therefore, other people will be willing to exchange it to local fiat much more cheaply.

• 24:07Logan Bartlett?

  Got it. No, I think that's great. And I, I will, I know, I know, that's a great segue. Zach loves state-owned money and all of that. So Zach, I will let you chime in here.

• 24:18Speaker 01

  Yeah, I mean, so first of all, it was great. I, there's a lot of different, like, interesting use cases to go through. And I think one of the challenges classically with analyzing crypto is like, A lot of times, people describe crypto as the features that it has, right? It does these things, or it has these properties. But a little bit less of the like, utility for a person or a company. And so, part of the challenge in general with these things, I think, is just like breaking out the use cases. And as an example, right, like Bitcoin is its own thing. And I think like, generally speaking, Bitcoin should be talked about as its own like, topic, like just Bitcoin.

• 25:00Speaker 01

  I actually would really love to go back to Bitcoin at some point, because you mentioned you're a long-term holder as a store of value, and I have some like, questions on the math there. But first on just like, the state money.

• 25:13Speaker 02

  I think I'm a speculative store of value, long-term holder. So yeah, let's definitely discuss that.

• 25:17Speaker 01

  Yeah, well, what is speculation without like, some sort of, you know, future expected returns at some point? Do you want to talk about Bitcoin or the state money thing? Because I think they're both interesting.

• 25:26Speaker 02

  Let's do both. Why don't you guide? Yeah, no, I'm interested in hearing.

• 25:29Speaker 01

  Well, so just on the Bitcoin one. So you talked about, you know, your bull case on Bitcoin is essentially as a store of value. We'll talk, you know, maybe it becomes a payment thing, and we can talk about when and why. I don't think that's likely. But Bitcoin as a store of value is kind of like the bull case for holding it. Is this, just so I understand, is this like the digital gold theory, essentially?

• 25:52Speaker 02

  Essentially, yeah. It is effectively that no single, you know, that it's non, well, I mean, it is inflationary, but in a predictable way with a limited ultimate supply. And, you know, it's, it can't be changed. Like, it's basically the only money on earth, where you can predictably say that the policy, it hasn't since its genesis, and there have been wars trying to change it, and it hasn't. And that, you know, you can have pretty reasonable confidence, and it becomes more linny that the monetary policy won't change as it continues to grow.

• 26:34Speaker 02

  The key there, though, is that you have to have a continuous supply of people who believe in that, right? For there to be demand to buy it.

• 26:43Speaker 01

  Right, right. Well, it's just like supply and demand. So we're saying in a sense that like, the Bitcoin... Bold case from here is it replaces some percentage of the gold market cap, if you will, right, as like digital version of where people would store their money as an alternative to gold.

• 27:01Speaker 02

  I mean, I think there's a scenario where it exceeds it, that like every new person being born is probably not, you know, is a net new Bitcoin buyer versus a net new gold buyer. So over like a long-term horizon. But for that to happen, it probably needs to be more useful than something you just store in a cold wallet and don't ever use. People are trying to do that with like Lightning Network for payments. We're going to need more products that allow for the financialization of Bitcoin. Like today, I can't really use it very easily in a secure manner as, you know, collateral for loans and things like that.

• 27:41Speaker 02

  So, you know, I think those things have to happen for the Bitcoin bull case to continue to play out and they haven't yet.

• 27:47Speaker 01

  Yeah, I think it's fair to say that like Bitcoin as a utility, like I can use it and spend it, you know, proactively is probably, I mean, you said it best, right? That's still highly speculative. If we just do the, this is my like digital coin challenge with this, or sorry, digital gold challenge with this. So gold has been around as a global store of value culturally for what? 3,000 years, 2,000 years, something along those lines. So we have like history and wars and regime changes where gold has, you know, matured. So the gold market cap today, if you look up all the gold in the world essentially is about 10 trillion, give or take, right? Depending on the day. So it's about a $10 trillion market cap that has evolved over about 3,000 years

• 28:32Speaker 01

  as a store of value. And I agree, it's hard to buy gold, although actually most people don't actually hold the gold. They hold paper that represents the gold, but we can leave that aside for one second. So if we say like the bull case for Bitcoin is that it takes some percentage of the gold market because good luck trying to replace this store of value that's existed for 2,000 years like from before Jesus. So Bitcoin's current market cap is what something like 800 billion, a trillion, something along those lines?

• 29:01Speaker 02

  Yes, the store value bull case is only like a five, to your point, it's only a five to 10x from here. I do believe, unlike you, that there is a world in which gold, I'm sorry, which gold? Gold, definitely not, in which Bitcoin, because it's easier to transport, it's, you know, easier to divide, that it does become a medium of exchange, but it needs to move to a much larger scale and a significantly lower volatility for that to happen. I, like you, I mean, I'm not the biggest Bitcoin bull in the world. So in other words, I'm not somebody who says, hey, Bitcoin, like I read Michael Saylor, it goes to zero or it goes to a million. I'm not one of

• 29:42Speaker 02

  those folks, right? I would say the upside is, to your point, on a, on a expected value basis, probably, you know, fairly capped.

• 29:52Speaker 01

  Yeah, I think that's like, to me, if you, you know, the digital gold argument is always a challenge because if you say, all right, let's give this, the scenario, the upside that it's like half the global value, like it splits the market with gold, which is, you know, I mean, we're talking about something evolving over 30, 3,000 years versus like 10. So let's say over a 30-year window of time, Bitcoin incrementally takes over this digital gold use case because right now that's the only real use case for it, to your point.

• 30:22Speaker 02

  At, at scale, yeah, at the, that's why the bulk of people are holding it. I think a, a true like Bitcoin believer, and I'm, I'm kind of a tepid one, would say, well, again, it, it's kind of a chaos play, a schmuck insurance play, like when I originally bought, and it's to say that fiat currency just goes off a cliff and that people actually, that even the gold market, by the way, could grow beyond its current level and that Bitcoin could as well because fiat money, which is relatively new, you know, hundreds of years old at scale. Finally just fails an experiment. Again, that's an extreme case, but that's the one that you get from the

• 31:02Speaker 01

  If that happens, we have bigger challenges because there are people with guns without governments.

• 31:06Speaker 02

  Yeah. I do want to just close that though, real quick. So I would say most web three believers, I'm actually probably one of the few who feels like still Bitcoin is important to the success of web three because it's the cryptocurrency that most people reference. And I don't think it will have failed if it if it does increase by 10x if the market cap gets to, you know, eight to 10 trillion. And I'd love to see that and think it's important. And I think it's probable that it does. I do think it gets bigger than gold. I don't think many people who are entering the markets today have the memory that you just talked about, about like, you know, like Bitcoin's already at a trillion. I don't know how long it took

• 31:49Speaker 02

  gold in its first 10 years, you know, to get there. But I would I would just argue that I think like, I'm one of the few folks who think Bitcoin is important to web three success because it references people's opinion and perception of crypto overall.

• 32:04Speaker 01

  The challenge with that analysis in my head is like, the reason we think something should be a digital gold alternative, if you will, is because it's like an inflation hedge, right? Like, why do people own gold? It's because it's viewed as an inflation hedge. So the bull case of the use case for a person, like, why am I holding this in a non speculative manner, right? Because we're still in the speculative phase right now.

• 32:26Speaker 02

  Correct.

• 32:26Speaker 01

  But if we say, all right, over the next 30 years, let's just use 30 years as the example here, we're going to exit the speculative phase, we're going to enter the utility phase, and the utility on Bitcoin as digital gold is inflation hedge. Here's the challenge. It doesn't act as an inflation hedge today. So now we have to do this like logical leap that it will. And let's say it like incrementally starts to stabilize from even just a pricing standpoint, let alone inflation hedge, although it's like more correlated with the NASDAQ than it is anything else. Maybe it gets to like half the market cap, like 5 trillion and 5 trillion with gold, just to keep it simple. That's a 5X over 30 years and on an IRR basis in a bull case, that's like 6% IRR.

• 33:09Speaker 02

  So one, you know, it's returned more than that and it like, it's not an inflation hedge on a day-to-day basis. It certainly is a speculative hedge on any, you know, multi-year horizon, like the ones that-

• 33:23Speaker 01

  Those are two words that don't go together. Speculative and hedge are not the same thing, right? Like, it's a speculative asset that it might become a hedge. I think that's probably a reasonable take. But like, even if it does become a hedge, and we're talking about being the exact same market cap as gold globally, we're at a 6% ish, if you do the math, IRR over a 30-year window for that to replace gold. For a use case, by the way, which is inflation hedge, that doesn't actually work yet.

• 33:52Speaker 02

  So the issuance inflation does work and the price, you know, again, over any reasonable term, has, uh, you know, allowed somebody to preserve their, their wealth better than fiat currency. And I would say a reasonable term is like multiple years. And again, I'm not-

• 34:15Speaker 01

  Right, but an inflation hedge definitionally, from like a financial investment standpoint, goes up as inflation, right? Like you can kind of like stick your money into this thing as inflation is going up and it's not correlated with the stock market. And so if you look at like Bitcoin's correlation with traditional assets right now, it's like highly correlated with the NASDAQ and the S and P and kind of uncorrelated with gold.

• 34:40Speaker 02

  Okay, so I would say, I would probably back off the definition then and just say, I allocate a portion of my net worth to Bitcoin because I view it as like a long-term store of value, meaning it's, it's storing money. Yeah, so maybe inflation had just the wrong term, uh, according to that definition. But I wouldn't-

• 34:59Speaker 01

  Right.

• 34:59Speaker 02

  Say that in the gates, and I also, we're taking as given, you, you continue to make the assumption that the eight trillion number is a cap. And I would say that if you believe as I do that Bitcoin is a better gold, you don't because you're saying, hey, it has history. And I think that's less important than the other aspects of Bitcoin and that it's programmable, you know, it's, it's much easier to divide, it's portable. That those things are beneficial and that the market cap could actually be larger than gold. And you still have the option value on it potentially being a medium of exchange, which I know you're discounting. So I don't want to take that ceiling as a given.

• 35:39Speaker 01

  It's just kind of crazy to me that anyone would hold an asset where like it's bull case over a 30 year window, looks like single digit IRRs. And by the way, to get to that bull case.

• 35:51Speaker 02

  You're going back to the eight trillion number. So I'm saying I'm not.

• 35:53Speaker 01

  Fine, call it a 10 trillion, right?

• 35:55Logan Bartlett?

  I will say a funny anecdote in this though. Zach, I, I tend to come down where you are in all of this, but I do remember we were looking at, uh, we were looking at Uber and in, uh, at Battery way back when. And I remember the note so clearly, uh, saying that, you know, one billion, like Uber's raising at a billion, JetBlue's market cap is only 2.2 billion. And therefore, like, why does this even make sense? And so I tend to skew where you are, but I do think that anchoring point, I mean, we have seen whenever they show those charts of like how quickly things get on a social graph, like how long the telephone took, how long the whatever versus TikTok. We are seeing expansive growth to some cap. And to your point, that cap might,

• 36:37Logan Bartlett?

  we might hit the ceiling pretty soon on this when you remove all the speculation. But the speed at which it could get there, I don't want to discount that.

• 36:45Speaker 02

  Not only that, but like you actually have developers working on turning Bitcoin into a more useful form of money. I just don't know that you have that with, you don't have that with gold, right? I mean, you have people trying to find.

• 36:58Speaker 01

  Like what is, what is that Bitcoin payment use case? Right? So we've, we've got this asset that has a trillion dollars in value. It has a theoretical utility of an inflation hedge, but it doesn't actually work as an inflation hedge right now. So like, we're not there on the basic use case. It has this theoretical value of like, it's going to be used at a payment model, but it doesn't actually work as a payment model today. And then we have this theoretical use case of like, people are going to build cool stuff on top, but that actually doesn't exist today. So like the top three bull cases for, and this is just Bitcoin, to be very clear. I agree. There's totally other parts of the spectrum. And in that bull case, I'll even give you the $10 trillion one, right? Instead of five, it takes over gold. It goes to 10.

• 37:41Speaker 01

  On a 30-year basis, what's the IRR of a 10x fund? 9%, 8%? Like, this is a bad investment.

• 37:50Speaker 02

  I can ask some of my friends in DC that live those, live that map.

• 37:53Speaker 01

  Yeah, it's like, it's, it's kind of like not a great investment, given the bull case.

• 37:58Speaker 02

  I, I, I, full disclosure, I am not trading Bitcoin out of our fund, nor, uh, nor investing.

• 38:03Speaker 01

  No, and, and I actually think that's really important, by the way, which is that like most venture groups, you know, Bitcoin is more of like a personal holding as opposed to a venture investment. I, I, I think that's really, that's really clear. And that's why I like to separate it out because I do think like Bitcoin is, it's just like own separate, almost like cultural thing from the rest of what theoretically, you know, crypto can do because.

• 38:24Speaker 02

  Zach, do you own any Bitcoin?

• 38:26Speaker 01

  No.

• 38:27Speaker 02

  Okay, got it. Yeah.

• 38:28Speaker 01

  Not, not because I have anything against it. Like I too would be okay, I guess, holding on a bull case 9% IRR, but like I'd rather own like, I don't know, rental properties in the Southeast who have big people who actually pay rent for a physical asset. To me, that's like a better thing to own.

• 38:43Speaker 02

  Part of my concern is I, I, so that even if I got that 9% IRR, um, relative to the tax bill I'd have to pay if I, I sold out of Bitcoin right now.

• 38:53Logan Bartlett?

  This is so stupid, but my only reason I, I have Bitcoin is just like, it's, it's a lot, like a FOMO mitigation thing and it's not, it doesn't actually intellectually make sense, but like, let's say all these numbers we talk about are wrong and it ends up being 30, 50 trillion in all my, like all the kids that sold pot in high school that are just dumb and very long Bitcoin. Only all those kids are like billionaires. I that that's all it is is I just can't live in a world in which I don't get I don't get a little bit of that.

• 39:25Speaker 01

  Logan's take is like if math doesn't hold.

• 39:28Logan Bartlett?

  Yeah, that's right.

• 39:29Speaker 01

  Then this thing could work, right? But like, why? Let's forget the math part of this for a second.

• 39:33Speaker 02

  To Zach's point, if you if you had another year or two of it of Bitcoin, to your point being highly correlated with risk assets, I definitely would. Even in a bullish market, that would that would definitely be a concern.

• 39:47Logan Bartlett?

  My bull case, by the way, Zach.

• 39:48Speaker 01

  Yeah, that's my concern, by the way, as well.

• 39:51Logan Bartlett?

  Just to be clear is if if you're limiting Bitcoin to just this universe and just people living on this earth, right? And it just so happens to go multi-global across, you know, galaxies and stuff, I don't want to be missing out. That's my that's my bull case here.

• 40:08Speaker 01

  I love the alien bull thesis. No, I think Mike said it best, and this is the part that when I look at it from a risk return standpoint, you know, as with any sort of like pseudo risky asset here, you want to describe what's the upside bull case, what's the downside case? And I think the upside bull case where everything goes right on the store of value is kind of like mediocre at best. And then the downside case, which actually seems fairly likely, given it's the initial use case of like inflation hedges not really holding up, is pretty material, right? Because a huge percentage of the holders are speculative in nature. And so you could see like a real downside on it, which is part of why I don't hold it. Not because I don't think it like might work in some cases. It's not like I don't hate Bitcoin in any way.

• 40:49Speaker 01

  I just look at it as like a financial investment that relative to other things I can put my money into is probably not the right place. And that's just that's the logic in my head.

• 41:00Speaker 02

  Yeah, I mean, I think the one the one last counter that is there are pockets of the world again with supremely high inflation. Where, for example, it would be hard to, you know, that supremely high inflation is just one thing, right? Like inflation that's not US-based. So I do think we're taking a very US-centric view of this, but like, if I live in a country that's seeing like Turkey, what, like 75% annual inflation in other places? Uh, I don't know if that's the right number for Turkey. I might be mixing up what countries there's some, you know, countries.

• 41:29Speaker 01

  Turkey's like 70% in the last year.

• 41:32Speaker 02

  It can be easier to acquire Bitcoin, you know, than gold. I think the argument would be if that, you know, that could continue over time if we see more of these economies. So I

• 41:44Speaker 01

  Well, let's play, let's play that one out because that one I think is always interesting because it assumes that like people in Turkey actually hold any gold, which I really doubt they do.

• 41:50Speaker 02

  But they can hold Bitcoin. So yeah, I want to hear your thoughts on that.

• 41:54Speaker 01

  Yeah. So like, there's two things here. One is like, all right, I want to hold Bitcoin because it's like some potential local inflation hedge, right? And then the other one, and they're usually correlated because like, when you have runaway inflation, it's because you have an authoritarian regime, right? You have a regime that makes a bunch of really bad decisions because they have no checks and balances and that's exactly what's happening in Turkey.

• 42:16Speaker 02

  And I think that's what we said earlier, you know, that the, the number of people living under those types of regimes is increasing.

• 42:23Speaker 01

  Yes. Let's pick one, let's pick Iran, right? As like an interesting example, clearly authoritarian regime. There's no real voting, like the Ayatollah controls everything. The police can do what they'd like. So for me, I want to understand like, okay, how is this like global censorship resistant money? How does that actually play out? So I am who in Iran? Where I actually like use Bitcoin or some alternative as censorship resistant?

• 42:52Speaker 02

  Yeah, I'm not sure it's using it. I think it's uh, more about um, storing it. For currency that I might be receiving in remittances from relatives that I might be receiving from outside of the economy. My sense is in a lot of these countries, it's difficult for money that's already in the economy to be transferred, you know, and converted, you know, from that fiat currency into Bitcoin.

• 43:20Speaker 01

  Right. So we've basically shrunk the use case to exclusively money coming from outside the country because inside the authoritarian regime, which I agree with, by the way, getting it into that.

• 43:30Speaker 02

  So by the way, and this was going to be a transition to sort of web three, which is, you know, maybe to your point, Bitcoin's not the answer and it's things like stable coins. Like it feels actually like.

• 43:39Speaker 01

  Let's, let's do any coin. I don't, you know, to, you know, do this coin, Weinberg coin, whatever the coin is, it almost is irrelevant to me in a sense.

• 43:47Speaker 02

  Those sound like real shit coins to me, by the way. I, they sound terrible.

• 43:50Speaker 01

  Well, the Weinberg coin, the Weinberg coin is the shittiest of the shit coins and it doesn't work Friday to Saturday night either. Uh, but no, like, so, so I, I live in Iran. I'm like middle to lower middle class, probably, right? Where like I have to really work because if I'm in the upper middle class, I probably have ties to the regime. But so I'm in middle to lower middle class. First of all, I don't have any savings, right? Because most of the people in these countries, part of the reason they suffer is because they have no money and they have no savings. So this is exclusively for like a subset of relatives or friends or whomever who are sending me money. Now, here's the challenge for me, I think. I tend to live kind of like paycheck to paycheck inside of this country, right? That's part of why I need this money. The reason you see people in the United States send family members money is not so they

• 44:35Speaker 01

  can just hold it, it's so they can use it. Because most of these folks actually need the money. They need to buy groceries, they need to buy a house, they have to pay for gasoline, they have to pay for pretty much all of their like daily activities. But now you're saying, I'm going to send you this money in this alternative Weinberg coin. But I can't actually move it into local fiat or use it where I live because that transition doesn't, isn't possible for a variety of reasons, including the government being able to come in and just seize it.

• 45:05Speaker 02

  So with stablecoin, it is becoming easier to do that, though.

• 45:08Speaker 01

  So walk me through that. So I get a, I get a stablecoin payment from my friend in America.

• 45:14Speaker 02

  Yeah, it's 25 bucks. Yep. Dollar denominated stablecoin. Yep. And then, okay, there's brokers in many of these local economies.

• 45:23Speaker 01

  Uh, right.

• 45:24Speaker 02

  And they will convert for not a super cheap fee, right? But better than, you know, 70% depreciation in your, you know, monetary value over a year into dollars. Okay. Yeah. And I just basically through a QR code or something, I send it to, I send it to their phone and they give me the local currency.

• 45:45Speaker 01

  I get actual local currency.

• 45:46Speaker 02

  You get local currency.

• 45:48Speaker 01

  I can spend locally.

• 45:48Speaker 02

  And it's not cheap today. It's not efficient. It's underground and there are these underground markets. Um, it's not scaled.

• 45:57Speaker 01

  You just described Western Union, by the way. That is Western Union.

• 46:00Speaker 02

  No, no, no. It's peer-to-peer Western Union. It doesn't require the center centralized, like Western Union can't operate in these places. So the point is you have to accept.

• 46:09Speaker 01

  That's actually not true, by the way. Like Western Union does operate in plenty of places through third-party brokers. By the way, Western Union has a market cap of $7 billion.

• 46:18Speaker 02

  I know. Like dude, I partnered with them at the companies I've worked at. My, my point is that the markets move from Western Union, you know, getting a license and having, you know, specific pricing to an actual real market where there are people who can do this independently.

• 46:37Speaker 01

  So I, but I, but I keep going back to this, like, how does it actually work, right? Like I send it in a stablecoin. That I understand. And then there is a third-party broker who has to then transfer it from stablecoin to local fiat. Is that third-party broker legal in that country?

• 46:53Speaker 02

  Likely not.

• 46:55Speaker 01

  Likely not. Okay, so we've now only enabled this use case through an illegal third-party broker who can turn my stablecoin into local fiat.

• 47:04Speaker 02

  Yes, so by the way, to believe that cryptocurrency will succeed at scale, you have to believe that things that are illegal in certain places are not immoral and that some things that are illegal in certain places should and will, you know, exist. Like, that's just a fact.

• 47:23Speaker 01

  Yeah, no, I understand that, but at some point, what happens here from a user's perspective is I have this like illegal broker who sits between me and the stablecoin because theoretically, this is the only way to me to get money into this country. And by the way, we've now limited the entire market for this use case to like authoritarian regimes in third-world countries for people who do not have their own dollars. Like, this is a tiny, tiny market.

• 47:49Speaker 02

  For your example, I mean, you're through your, you know, eight questions that are diving deeper and deeper, you're limiting it to this specific thing, um, which is one use case.

• 47:57Speaker 01

  It's not let, yeah, where's the next one? Because now we're in, by the way, the worst part to me as

• 48:02Speaker 02

  The other is like, I could, as a resident of Mexico, which also has inflation, choose to use, you know, I invest in one of these, like a neo-bank type service that allows me to immediately convert my paycheck that's in pesos into USDC. Again, we had moved from Bitcoin to stablecoin now. We were on Bitcoin earlier. My point is like

• 48:22Speaker 01

  By the way, I can send money to someone in Mexico today without any sort of Bitcoin middleman coin via a wire.

• 48:31Speaker 02

  I'm talking about stablecoin that I could send to one more.

• 48:34Speaker 01

  Any stablecoin, so it doesn't fluctuate in value. I'm just assuming it doesn't fluctuate in value. If I want to send money to somebody in Mexico today, I can do that through my bank, through PayPal, through Venmo. I can also do it through TransferWise.

• 48:45Speaker 02

  You can't actually do it through all of those, and the fees are relatively high. And just because you can do something, doesn't mean that you can do it better using new technology. I mean, it'd be like saying, hey, just because I can call somebody on my landline phone, we shouldn't invite, invent, invent mobile phones. Like, the point is, technology does advance and improve. And I would argue that even if we haven't realized the full vision of all these technologies, that evaluating them versus mature existing use cases and saying, because I can do something under condition X, Y, and Z, we shouldn't, you know, try it. And you're not, you're not saying this, but you're basically saying, because I can do something,

• 49:27Speaker 02

  the thing do this that you're describing, you know, isn't, shouldn't exist.

• 49:31Speaker 01

  So let's, let's carve out the like crazy authoritarian regime, because I agree, like tiny use case, and it's just one piece of it.

• 49:38Speaker 02

  So I, I started to do that with the Mexican thing.

• 49:40Speaker 01

  Right. So with Mexico as an example, so I can send money to Mexico via TransferWise today, right? I can send a wire today. I can actually send money as long as they have their bank account hooked up to an intermediary like a Venmo or a PayPal or whomever. I can send money that way.

• 49:55Speaker 02

  So this isn't about sending, this is about converting your paycheck when the example that I was using.

• 49:59Speaker 01

  I'm convert, so I'm, I live in Mexico and I want to get my paycheck now.

• 50:04Speaker 02

  I want access to dollars versus pesos, correct.

• 50:07Speaker 01

  Okay, but then how do I spend those dollars locally?

• 50:10Speaker 02

  Oh, this may not be for the entirety of your paycheck. I mean, there, there are, as you know, many people who want to preserve the value of their savings while keeping the value of the money that they spend in the local currency.

• 50:21Speaker 01

  So this is like, I can store my excess savings in a US stablecoin that when I do want to use it, I do have to transfer it into local currency. That's the use case.

• 50:31Speaker 02

  Yeah, and this app will effectuate that conversion.

• 50:33Speaker 01

  Because the bank, the bank can't allow me to hold dollars.

• 50:36Speaker 02

  The bank can't allow me to hold dollars.

• 50:39Speaker 01

  TransferWise allows me to hold dollars.

• 50:41Speaker 02

  Here in the States, you're saying, or?

• 50:43Speaker 01

  No, if I'm in Mexico, I can hold dollars in TransferWise. I don't have to have a bank, a, a local currency denominated bank account using TransferWise today.

• 50:49Speaker 02

  I don't know. I, I, I don't know the limitations, but knowing banks, I would guess that there are some controls on how much USD. You can hold an account?

• 50:59Speaker 01

  Right, but like, so now we're like-

• 51:00Speaker 02

  Let's research that one.

• 51:01Speaker 01

  Yeah, no, because I know you can do this because I've seen it in other countries. And then, you know, you're limiting this to now, first of all, people who have excess savings they want to keep. Plus, they can do it already. And then you've got this other-

• 51:11Speaker 02

  By the way, in the example, so the way that you argue things, I've noticed, is that you keep going to very specific, I won't call it a straw man, but a, an example that you've honed in on and then extrapolating out and saying, "Hey, this thing doesn't work because it's extremely narrow, but it's only the example that we're talking about that's narrow."

• 51:32Speaker 01

  Well, those are called-

• 51:33Speaker 02

  And so we could probably-

• 51:34Speaker 01

  Those are called users.

• 51:35Speaker 02

  If we had 24 hours, we could go through 100 of these.

• 51:37Speaker 01

  Right, no, but each one of those is a user and a use case that is supposed to generate some sort of revenue. So, we've talked about the issue with like authoritarian country trying to get money in, because the vast majority of people can't legally actually use that money, which by the way, subjects them, because that authoritarian regime is going to say, "Absolutely no cryptocurrency here." Right? It actually subjects them to police. Showing up at your house via the middleman, who they bust and then ask for their client list, or directly at your house, saying, "Give me your computer and your crypto."

• 52:10Speaker 02

  I know, it's amazing that people have to take those types of risks to have any money, right?

• 52:14Speaker 01

  Right, and so like, that use case to me is just-

• 52:16Speaker 02

  But the alternative is not having money. I mean, and not having money at the level you need, like, I don't know what to tell you, but that's-

• 52:23Speaker 01

  No, I, I, I agree, it sucks and it's-

• 52:26Speaker 02

  The alternatives are bad, yes. Like, this stuff doesn't exist because, you know, it doesn't exist in those examples for me and you. It exists for people who don't have very good alternatives.

• 52:36Speaker 01

  Totally, and I think it's like, it's unfortunate we have to have this use case as even part of a discussion. Unfortunately, the total market cap of that use case is very, very small. When you compare it to something like the $31 billion that were invested in venture crypto funds just in 2021 alone. So I agree, there is a tiny little thread of like, that could maybe work.

• 52:56Speaker 02

  Well, the beauty is like, look, there were 95 deals announced in the past two weeks, uh, in, you know, Venture Web 3. A lot of use cases, you know, being gone out, that people are going after that go far beyond that use case that we just talked about. You know, we invested in 23 companies and projects and protocols this year, none of which were in those 95 that were announced. Like, yes, uh, any, you can basically slice-

• 53:21Speaker 02

  Specific use cases down to, you know, very small TAMs, um, but they add up and then.

• 53:26Speaker 01

  Well, I guess my argument is they don't. They don't add up. Like we kind of hand wavy say they add up, but actually they really don't because when you actually go and figure out like where is this use case better?

• 53:37Speaker 02

  Where we'll see. Stablecoins are like less than two years old, like DeFi is less than two years old. So like they, they are starting to add up.

• 53:44Speaker 01

  But that's the feature, not the use case. That's the tool.

• 53:47Speaker 02

  Tell me what you mean by that. Tell me what you mean by that.

• 53:49Speaker 01

  Well, if it for a stablecoin to hold its value, to be useful, there has to be reasons to use it. And those reasons to use it have to be material. You have to add it up beyond speculation.

• 53:59Speaker 02

  I'll give you an example. I've funded like over a hundred investments and it's much, much easier to fund instantly in stablecoin. Uh, than it is to fund, you know, via a bank wire. Uh, that's one.

• 54:12Speaker 01

  That's just not true. By the way, first of all.

• 54:14Speaker 02

  Say that like.

• 54:15Speaker 01

  Because I can send, I have sent crypto and like you go in, you send crypto. I have sent wires. You go and send wires. Here's the problem. What happens when you make a mistake?

• 54:23Speaker 02

  That's not true. The people on the receiving end in many of these countries that we back can't actually accept wires. They can't get bank accounts for a big number of reasons. Well, you and I invest in different types of startups.

• 54:34Speaker 01

  You invest in, in companies that can't get a bank account in their local country.

• 54:38Speaker 02

  I actually know a significant number of companies that all operate in the crypto space that can't get access to bank accounts. Yes.

• 54:45Speaker 01

  Because they're operating in crypto, right? Because it's illegal in the country?

• 54:48Speaker 02

  It's not illegal. Actually, the things that many of these folks are doing, I would argue, it wasn't easy for me to get a bank account.

• 54:54Speaker 01

  It's a kind of funny reflexive argument of like, the reason, you know, the use case works is because I'm sending them money. But like, by the way, when you send somebody money, you send one of these companies money, right? You send them a stablecoin. What happens if that company turns out to not be real? What happens when you actually make a mistake when you send that wire or you send the stablecoin? You, you fat finger.

• 55:15Speaker 02

  Yeah. I mean, the beauty of, the beauty of that latter one is that it's, you know, the beauty and the curse is that it's typically irreversible. Like I'm responsible for what I do with my money. Yep.

• 55:25Speaker 01

  So this works exclusively when you know and have triple confirmed the counterparty that you know is real.

• 55:30Speaker 02

  Yeah. You send a test transaction typically to ensure it's instantaneous. And then a couple of minutes later, you send the full transaction.

• 55:36Speaker 01

  Do you know if that business has a license to operate?

• 55:39Speaker 02

  Uh, which one?

• 55:40Speaker 01

  The business you're investing in? Have you done KYC on that company?

• 55:43Speaker 02

  We're, we're professional VCs. I do diligence.

• 55:45Logan Bartlett?

  I think the question that Zach is going down the thread of, which is one that I'm actually curious about to, to ask is there's this whole thing about middlemen and disintermediating middlemen, right? And getting rid of KYC and getting rid of title insurance and, you know, Packy kind of walked into this real estate example and all of that. But I think what, what we, what, yeah, no, what we're saying, we have.

• 56:06Speaker 02

  Don't go there. I, I'm not there yet. I'm not there yet.

• 56:10Logan Bartlett?

  But one of the things I think what Zach's getting at here is that middlemen in a lot of cases are not bugs of the system, right? These are actually features that serve a purpose, right? And so when people.

• 56:23Speaker 02

  So I would agree with that. Absolutely.

• 56:26Logan Bartlett?

  When people are in your replies, you, you posted like, what are your favorite crypto use cases? And I'm looking at like the stream of them and other than the people that are being assholes of like pump and dump and NFTs, which made me laugh every time. By the way, I, it was just, it was funny every time someone replied.

• 56:40Speaker 02

  And when I reply, like you're trolling, I'm doing it in good faith. Like I, I have, I'm sorry, in jest. I have a good time with these folks to be honest.

• 56:47Logan Bartlett?

  I mean, you follow me on Twitter, so clearly you have some tolerance for like asshole jokes, but, um, but yeah. So the middlemen point of KYC and verification and all that, can you talk about like, people will talk about that all the time, right? And I think we're not there yet, and that's, that's kills me.

• 57:05Speaker 02

  So to your point, both of you, I think, I think, so now I get the point Zach was getting at. Um, yeah, so a big part like of our fund is investing and, and all the folks that, you know, some of us love and some of us don't. A16Z paradigm and others are investing in multi-coin is that we do not have, uh, the, you know, foundational primitives, things like, um, you know.

• 57:31Speaker 02

  I hate using the word decentralized, but you know, non-centralized identity. We don't have, you know, non-centralized KYC. So to your point, there is no question that much of Web three in its current form relies on a hybrid of centralized trusted parties. Even the projects themselves, many of them today are relying on foundations and trusted centralized teams with the promise that they will progressively decentralize. So I am the absolute first to admit that the utopian vision of Web three,

• 58:14Speaker 02

  you know, user-owned coordinated networks with, you know, no dominant centralized party is not the 2022, you know, June 2022 reality.

• 58:29Speaker 01

  So, yeah. I mean, that irreversibility, right? Like, I send some money to some counterparty that I have to personally confirm every piece of detail that they are real, that they haven't been hacked, that they aren't on some terrorist watch list, that it would actually subject me to scrutiny from the US government, that like I haven't been hacked. All of these are actually fundamental issues with the fact that

• 58:55Speaker 02

  So people are working on that.

• 58:56Speaker 01

  What does that mean, working on it? Like, how do you solve it when you can't reverse a transaction?

• 59:00Speaker 02

  Sorry, I was talking about the component parts of what you were saying. So ultimately, there will be an opportunity. Like, one example would be like KYC, okay? The information contained within KYC should be able to be verified by me providing it once. Okay. And then having, let's say, a decentralized identity service validate that information and then allowing me to provide it in a non-personally identifiable way, you know, using ZK proofs to an application, to a business, to an entity that wants to know that information about me. That doesn't exist today.

• 59:41Speaker 01

  I'm the receiver in this case, you're saying? Like, I'm the person getting the money?

• 59:46Speaker 02

  Uh, you would be, yeah. So it would be, it would be like Mike Dudas has an LP for his fund. And instead of having to have a fund admin do a formal KYC check, you know, where I send all the documents and plain text attached to a Gmail file and anybody can see it. There would be an opportunity to basically select and look at a credible, like there could be a credibly, credibly decentralized identity service that could validate all of these things about this particular person. And they could choose to share that with the receiving party, me, who needs to verify that LP's information.

• 1:00:22Speaker 01

  Who did that validation?

• 1:00:23Speaker 02

  By signing a transaction. Sorry, say that again.

• 1:00:25Speaker 01

  Who did the validation, right? So at some point, somebody provided some third party with a set of information about them. Maybe it was the person who provided it that's actually real. Maybe it was actually that person was hacked. Someone goes through and does, there's like a human being, right? That has to do the KYC validation at some point. So who is saying that you are who you are? That actually checked the documents you sent them.

• 1:00:46Speaker 02

  So basically, I mean, in the same manner that, uh, you know, these things can be automated and then validated and verified by a collection of people versus any one individual, right? And the same way that

• 1:01:00Speaker 01

  When they make a mistake.

• 1:01:01Speaker 02

  Documentation today is done automatically, like you scan your ID. Yeah.

• 1:01:05Speaker 01

  Well, it's done automatically because the entity that does the KYC ultimately takes on rest.

• 1:01:10Speaker 02

  That doesn't need to be a single entity. It could be a group of validating nodes and folks who are, you know, basically staking and it slashed if they're wrong, who are participating in this identity service. Like that's one of the core tenets of what you think about.

• 1:01:23Speaker 01

  This is where I disagree because so if, if I have to send you money, right? And I need to know that you are you, right? Before I send you this money. And in order for me to do that right now, I have to go ask somebody like, hey, is this really Mike? Like, is this person, by the way, has Mike been hacked? Has he changed anything? I have to do the actual validation because I can't reverse my transaction. As a feature, right? We talked about this. It's an inherent feature of cryptos. I cannot reverse this transaction once I send it to you. Because if you are a scammer, or you are not who you say you are, that money is gone. So I have to do all the validation work that I can do upfront. So you, Mike, do this, maybe, send me a link that says, hey, my endpoint has been validated by KYC Group B.

• 1:02:08Speaker 01

  That's what we're talking about, right? So you've done like KYC with KYC Group B. Cool. KYC Group B, now we're saying is actually not a person. It's a decentralized group of people who, for whatever reason, maybe they're paid, maybe they're not, is doing that validation. So I'm trusting this decentralized group. Before I send you a lot of money, by the way, I'm trusting this third-party group, who is still doing validations typically by hand, because KYC is not just like checking a license, right? It's also checking to make sure you're not on like terrorist lists and money laundering lists, and that actually the person who gave me the form is the person who's on the other side of it. And then they make a mistake. Because mistakes happen. I mean, if there's anything that crypto has proven, it's that like there's bad actors out there, and people are subject to hacks and mistakes.

• 1:02:52Speaker 01

  And then I send you money. Let me just get through this one, right? So this KYC group has said, you are Mike, I'm gonna send, he's cool. Now I send you $4 million, or $2 million, or $1 million, and then it turns out you're not actually Mike. You're Logan's cousin who lives somewhere outside of the United States, who has just stolen all of my money. Who do I sue?

• 1:03:10Speaker 02

  Uh, so we're gonna need some decentralized insurance for that, but like...

• 1:03:14Speaker 01

  But who's gonna provide insurance? Who's gonna provide insurance when I can't actually sue the entity that made sense? Like, there's an entity that made, that made a mistake.

• 1:03:23Speaker 02

  You're not gonna recover that money. There's gonna be some assumed loss rate at scale of these services.

• 1:03:28Speaker 01

  So we've now just said that the history of middlemen in financial services, which is to provide a trusted third-party who can be sued when something goes wrong.

• 1:03:37Speaker 02

  If they fail, and there are lawsuits, to your point, and they do incur cost, I'm saying the model will now change to where the remedies themselves will also potentially, in a world where this exists at scale, this world's not coming tomorrow.

• 1:03:52Speaker 01

  Right.

• 1:03:52Speaker 02

  There is a mechanism in place to like DeFi hacks. There are mechanisms in place for decentralized insurance.

• 1:03:59Speaker 01

  We just described every single crypto transaction ever created, which is in finance, right? Instead of sending money, every single crypto transaction in terms of sending money is me sending money that cannot be reversed. 100% of that, right? That is the important point of crypto is that is irreversible, right? Immutable. And so now what we're saying is every single transaction is subject to hacks, risks, because it can't be reversed. You cannot make a mistake, which means I have to go rely on these like new future, don't exist yet, third parties, who also, maybe if they're decentralized, I can't sue them because it's not a legal entity that has any balance sheets. Like, I'm not going to sue them. Where am I going to get the money from? Individual people? And then, by the way, because I can't sue them, guess who won't give me insurance?

• 1:04:43Speaker 01

  Insurance companies, because they can't recover the money either. The whole thing breaks, right? And it breaks because that trusted middleman in a financial system is a feature. And that feature that that financial middleman provides.

• 1:04:56Speaker 02

  It's an expensive feature.

• 1:04:57Speaker 01

  It's not a feature that's expensive.

• 1:04:59Logan Bartlett?

  Isn't the whole point, by the way, and just to, Zach, I agree with you here, but the whole point, like, if you have hurricane insurance and your house gets destroyed, you don't, like, no one's suing the hurricane. You're paying for the insurance of the fact that something could go catastrophically wrong, and the premium should reflect that.

• 1:05:17Speaker 01

  Well, and by the way, the reason I bought that insurance is because that insurance company is a US-regulated entity with a balance sheet of like $40 billion. So I know they have money. And by the way, they have to legally keep a certain amount of money on their balance sheet to be a regulated insurance company. Plus, they have reinsurance behind it, right?

• 1:05:33Speaker 02

  So to be clear, I just want to interject because we have to close out here. There are companies, by the way, being pitched on daily, who are basically taking people who are willing to put up risk capital to ensure, not this specific use case I'm not talking about, because it candidly doesn't exist yet, as we've discussed. But the one that does exist is these catastrophic hacks, right? So you have Nexus Mutual and others, and you have other folks who are coming. People are willing to put up risk capital. The willing, the reason they're willing to put up risk capital is because people are willing to pay premiums to be prevented from hacks. And you can actually earn money by staking in some of these protocols, because you're also, at the same time, you're putting up risk capital, securing the base layer networks.

• 1:06:17Speaker 02

  Um, so there are people willing to do this. It's risky, but it's emergent and every, by the way, everything you said is, is true. Like there is an existing system that works in a very specific way. There is a group of people increasingly large that's looking to build an alternative system that works in a different way.

• 1:06:39Speaker 01

  But it's not alternative. That's kind of the point I'm trying to make, which is like, in order to get the feature of irreversibility that we supposedly think is valuable, I would argue it's a bug, not a feature. We now have to recreate insurance and middlemen. We have to recreate KYC. I have to know who I can sue. It's all the same things. And this is where I think almost all crypto people who are engineers go wrong, which is they've always been the borrower. They've always been the person on the other side of this. Like the borrower doesn't like the middleman because the middleman is kind of annoying. You know who likes the middleman? The lender. Because the lender is the one actually taking on all the risk. That's why the middlemen are important. Because the lender has certainty that if something has gone wrong and they send money

• 1:07:21Speaker 01

  to the wrong person, or actually turns out that person lied on their mortgage application, or it turns out their ID was fake, or someone stole their passport, or someone hacked their Gmail account, all the stuff that goes wrong when people borrow money or ask you for money, those middlemen take on risk. They're big companies that take on risk and it gives certainty to the lenders and that certainty provides liquidity. That's why people are willing to lend. This whole thing is like, this is how the financial system works. And then we took the one feature in the financial system that actually makes a lot of sense, which is like, hey, if somebody screws with us, we can reverse it and we can sue them. That's the number one most important feature in credit. I can sue the person, I know the person, like, and we said, you know what? We don't need that because crypto.

• 1:08:04Speaker 02

  Well, we didn't say because, we didn't say because crypto. And the, the, the beautiful thing is the things that happen on, these things happen on chain and in cases where. They are, you know, where there is wrongdoing. Um, these things are like fairly transparent, like the thing happened.

• 1:08:24Speaker 01

  You're telling me you're gonna go get the guy in China who has my money? You're gonna get that money back?

• 1:08:29Speaker 02

  No, but I'm saying there are people who are going to underwrite this with the knowledge that there's some loss rate that's reasonable at scale, that's reasonable.

• 1:08:38Speaker 01

  Those guys are gonna, those guys are gonna go bankrupt very fast. And by the way, like, if you don't have a big, like, middleman type of, like, insurance and liquidity, you don't have lending. And if you don't have lending, you don't have the use case. And therein lies the underlying problem, which is like.

• 1:08:55Speaker 02

  I'm gonna let Zach have the last word, because I have to go, but I'd love to do part two. I appreciate it.

• 1:09:01Speaker 01

  Let's do it.

• 1:09:01Logan Bartlett?

  Mike, we're gonna, this is part one. Thanks for doing this. You're a great sport. You did an awesome job. We're gonna do part two, uh, coming up soon. That was certainly an interesting conversation there, uh, two bright guys that are both well-versed in their, uh, different positions. So we're excited to hopefully bring you a part two soon. Um, what you're gonna hear next is my conversation with founder, CEO, Eric Lyman of Ramp. Eric, thanks for doing this. Good to be here. Thanks for having me. It's been a, uh, it's been a long time coming in some, uh, ways, I guess. We, so, I invested in Ramp Series B, which was probably 18 months ago, and, uh, it was about eight rounds ago, I think, maybe 15. I forget the exact number. There's been a few rounds in between now and then. So thank you, uh, thank you for your performance and for the venture

• 1:09:46Logan Bartlett?

  industry's, uh, excitement in what you guys are doing. Uh, I feel, yeah, it's been a fun, uh, run. It's hard to believe it's only been, uh, it's been 18 months, but, uh, I don't know if you remember this. I, so I've been spending time in, like, spend management, your category broadly, but in Delian from Founder's Fund kept telling me how well you guys were doing. And I was like, ah, corporate credit cards, like, that's not for me. I'm like a pure software guy. So I, I'd sent one, maybe two emails, and this was like November 2020 and but then I written it off. I was like, ah, you know, they have they have founders fund. They have co2, they have D1. These guys have T-shirt cannons full of capital like this isn't corporate credit card hedge funds involved, not for me. And then out of the blue, you responded like

• 1:10:31Logan Bartlett?

  probably four weeks later. And I was like, what? That's interesting. I wonder what the prompt was. Do you remember what it was that was like, oh, yeah, I should get back to this guy now four weeks later?

• 1:10:41Speaker 03

  I I really got to figure it out after this. I'm going to dig in, see if I can put it together. Honestly, I just think it was, you know, I think it was the number of people who had mentioned that you were digging. We really should should do it. And I'm happy I did. It's it's been an amazing relationship. Help us figure out a lot of, you know, what are today or past this spring products. But I got to go back to where it all started. I don't know.

• 1:11:04Logan Bartlett?

  Well, thank you for that. Yeah, I'm going to clip that up and send it to now in future cold emails. I send you saying that. Yeah, normally I have to pay people to say nice things about me. So I guess in some ways I did pay you to do that. But yeah, well, this is this is great. I fortunate to have been a small part during the journey. It's hard to believe it's yeah, it's only been whatever 18 months now. But so maybe we'll go in a bunch of different directions here. But I think try to try to talk through some stuff that you maybe haven't talked about in the past. So first, you're from Las Vegas. You grew up in Las Vegas, right?

• 1:11:37Speaker 03

  I did. Yeah.

• 1:11:38Logan Bartlett?

  That's a I didn't. People live there. And so maybe. Yeah, exactly. I had no idea. So how did your family end up in Vegas originally? What was the connection? I assume at least two generations of people, for the most part, haven't lived in Vegas, right? Your dad's not from Vegas.

• 1:11:53Speaker 03

  No, no, no, they were from Southern California originally. And it was one of those things where my parents met in LA. I think that they imagined they'd be there for most of their lives. But my dad was finishing medical school. He was a doctor. He got a call from a friend who was a few years older who had gone out to Las Vegas. It turned out open a practice and he said, you know, I'm a little bit, I'm really busy. I could use the help if you come up here.

• 1:12:18Logan Bartlett?

  No way. What year is this?

• 1:12:20Speaker 03

  Probably mid 80s, something like that.

• 1:12:22Logan Bartlett?

  Vegas, I assume. Was like booming from a growth standpoint then?

• 1:12:25Speaker 03

  It was just about to really get rubbing. I mean, I think at some point in the late 90s, it was the fastest growing city. I think in the US and I think in even the Western Hemisphere. And it was one of these things where I was born in 1990. I think there was about 300,000 people, just about.

• 1:12:44Speaker 03

  You know, when I left for college 18 years later, there was almost 2 million people. So it just boomed and it changed a lot. But yeah, the city kind of sucked him in. He went out there and, you know, stayed for a lot of years and I guess I had a sort of funky warped childhood.

• 1:12:59Logan Bartlett?

  I was gonna say, were you like high school classmates, like kids of pit bosses and like blackjack dealers and yeah?

• 1:13:05Speaker 03

  Yeah, yeah, all of it. I mean, it was like, like tons of people worked in the casino industry directly, lots of people in construction. I had a neighbor who used to drive, fly every day to Area 51. He never would really tell me what was going on, but like, it was funky in all the ways that you would, you know, you would think about it and I don't know, I guess I realized it was like a strange city.

• 1:13:23Logan Bartlett?

  Did you know that as a kid, that it was a strange city? Or I mean, as a kid, you're sort of like, ah, I don't know, you know? This is normal. Like his dad's in the circus.

• 1:13:30Speaker 03

  His dad's in the circus. Like you go to like a gas station and there's like a slot machine ringing. There's like an ad for like, I don't know, you know, nightclubs, chip and heels, whatever it is, that's just like a thing. You know, restaurants were open 24/7.

• 1:13:43Logan Bartlett?

  Nightclubs.

• 1:13:44Speaker 03

  Yeah, exactly. True.

• 1:13:46Logan Bartlett?

  Yeah, yeah, yeah.

• 1:13:48Speaker 03

  But it just was, I don't know.

• 1:13:51Logan Bartlett?

  Did that, did that, I mean, seeing a city grow that fast, obviously, you know, we'll talk about rampant a bit, but like, did that impact your view on like what was possible from like a building growth standpoint? It's time to build type thing?

• 1:14:06Speaker 03

  Doesn't one of those guys live in Las Vegas?

• 1:14:09Logan Bartlett?

  Somewhere in Nevada. Yeah, yeah. I think they may be both there.

• 1:14:12Speaker 03

  Yeah, it's time to build, I guess. But what is it? So for sure. Look, I just, growing up, it just was like they would just build new parts of town all the time and I'll put it this way, I never really appreciated it and went to scout in Boston and there like these buildings that were like 300, 400 years old. I later spent a bunch of time in China and they had buildings that were We're 2,000 years old. My idea of an old building in Las Vegas was like 30 years old, 40 years was like ancient, like the old city hall. There was nothing quite like it. And it just was a place too, where when you have that, those kind of time horizons, the people who built these things were still alive.

• 1:14:47Logan Bartlett?

  Yeah.

• 1:14:48Speaker 03

  The city was built by other people and, you know, it was very different than kind of the east coaster sort of friends that they'd meet later where the, the view of the world was this is the world you live in it. Go get like a high paying job and do stuff where I think for me, I, I never appreciated the time. What, um, sure. What you did was just build new stuff, build new parts of town, build new businesses. Um, and I, I think I feel really lucky for that.

• 1:15:10Logan Bartlett?

  Yeah, no, it's super cool. So, so then you, uh, the school in Boston, uh, it was nice of you to not say Cambridge. Uh, so you went to Harvard and you were, you majored in Chinese there?

• 1:15:20Speaker 03

  Uh, econ in, in Mandarin was the second.

• 1:15:23Logan Bartlett?

  Mandarin, got it. And, uh, what was that? I mean, uh, that was a popular, uh, I mean, it still is a very popular language, but a, uh, popular field of study around them. But what were, what was your thought process then?

• 1:15:34Speaker 03

  I mean, it just was so different than, than anything. Like I, I, growing up, I never was great at languages and Spanish is like fine.

• 1:15:40Logan Bartlett?

  Really?

• 1:15:40Speaker 03

  It's like, yeah. Um, but it just was one of these things where I was like, all right, I'm at Harvard. They take four people a year from Nevada. Like maybe I should learn something I could never learn before. And, uh,

• 1:15:51Logan Bartlett?

  That's wild. Cause I mean, like there's no derivative, really elements of like the English language that tie to Chinese, like Spanish is, uh, much, much closer and easier to learn. And you're like, yeah, I'm going to go dive in and do this. Why not?

• 1:16:04Speaker 03

  Yeah. Basically, I mean, it, it, there were, there was funny things too. I mean, so I, I should have been 2008. The Olympics had just happened. Uh, the Vegas casinos, people I was close with, they were opening things out in Macau. Um, it just seemed, everyone at the time was talking about this was like the next giant economy you had to know about. And I thought, okay, like I'm going to do it. I'm going to go, go learn it. And, um, it was fascinating for a lot of years. I actually thought I would spend my whole career out there. I ended up living in China for almost two years across, I guess 10, 12 trips. Um, after before never, you know, I think I'd only gone to Canada once. Um, um, and so it just was, uh,

• 1:16:37Speaker 03

  kind of a, a fun time to be out there. Um, obviously not there today, but, um, it was, uh, I enjoyed it a lot because I think even what Las Vegas was doing, you'd meet people who said they grew up in like a village out in China. You're like, wow, how many people live there? And they're like three million. Um, and so you'd find sort of just the scale of things was totally different. Um, I, I liked it.

• 1:16:58Logan Bartlett?

  Yeah, I've heard you say that like in doing this, well, one, I need the story about debating.

• 1:17:05Speaker 03

  Oh, yeah.

• 1:17:05Logan Bartlett?

  Yeah, so let's start there, the famous debate story.

• 1:17:08Speaker 03

  So there's a video online on YouTube where it's sort of a pastime, I think in Asia, where they basically put foreigners on TV and they have them like debate or go on game shows or something. And so they had arranged this debate between like Harvard University and universities in England, all around the world. And so there's a debate of us, me debating love and marriage at the age of, I think, 19 years old. So haircut was worse, didn't know what I was talking about, but it was all in Mandarin, it was all on TV and it was sort of a fun clip.

• 1:17:34Logan Bartlett?

  Yeah, and whatever, 12, 14 years later, you still like.

• 1:17:38Speaker 03

  I don't know.

• 1:17:38Logan Bartlett?

  Yeah, yeah, still, yeah.

• 1:17:53Logan Bartlett?

  Your debate, did you win? How did it actually go?

• 1:17:55Speaker 03

  I, so in the round that's there was incredible, one, the two, I actually lost in the finals.

• 1:18:03Logan Bartlett?

  I don't know, that wouldn't have impacted my investment decision, but I, that's, that's. And so I'd heard you say that like, being over there, you're like, hey, I'm not that special comparatively to, you know, other people that have the skillsets I have. I mean, I think you're special, but in what way, yeah, yeah. In what way was, did that inform like your career decision and ultimately to leave China?

• 1:18:28Speaker 03

  Well, there was a set of things going on. So one, first, like, there's quite literally, there's over a billion people in China and people were incredibly kind, incredibly welcoming and it felt like, you know, wow, I'm meeting with the, you know, people running companies at different places, this seems like the place for me. But if you really dug into it, thought about it, there was a billion people there who spoke perfect native Mandarin. It was unusual that I spoke Mandarin, but the reality was there was tens of millions of people in China who spoke fantastic, perfect English. And so at some level, I'm looking at if my unique skill is I can speak Mandarin and actually it's not that unique, like, is that really so unique? Am I actually? She's so special. Um, and the answer was, um, other than maybe you and my mom and a few other people.

• 1:19:13Speaker 03

  I mean, it's just like, not really statistically.

• 1:19:15Logan Bartlett?

  And I think a lot of investors.

• 1:19:17Speaker 03

  Yeah, we'll keep safe. I, I guess the, for me, the, the question was like, all right, I'm about to start my career. Could actually pick up something, um, that was different. And I guess at the time, um, my hometown, Vegas had gone through like a lot of hard times, a financial crisis, all kinds of issues with housing. Um, and I, I felt that in China, um, they were growing, um, GDP through investment was like 20% a year, but the actual economy was growing like six, eight percent per year. And that was disconnected. And the question was, okay, well, would there be a debt crisis somewhere in the future? And maybe by that time, um, I could speak manner, but I could have experience of that. Maybe I should go learn it. And so I ended up starting my career in financial restructuring. I had this like harebrained scheme of like, in a decade, I'll come back and it'll be ready.

• 1:20:01Speaker 03

  And it turned out, um, oh, there is more distress, but I'm not there. I definitely don't have the right skills for it, but it ended up pulling me back to the, to the States.

• 1:20:10Logan Bartlett?

  So you're doing corporate restructuring, which I assume is as sexy as it sounds.

• 1:20:14Speaker 03

  It's, well, it's now in vogue.

• 1:20:17Logan Bartlett?

  Give us a few months and it's going to be really, really sexy. Yeah. And, uh, so take me to that path to starting Paribus, your first company.

• 1:20:25Speaker 03

  Yeah. Um, so I'd been, gosh, so I was working in midtown. Um, I think it was like a good, it was an amazing day. If one day per month, you could like leave the office when it was still sunny.

• 1:20:34Logan Bartlett?

  Yep.

• 1:20:35Speaker 03

  So just was working a lot of hours, but I stumbled into, I guess it was two things. One, I had like more than, um, uh, you know, a few dollars of disposable income. I, and I thought back to first, my first job was at an Express. I told t-shirts and jeans off the strip. Um, and I remember there was, it was this constant sales culture, um, um, where, um, on Saturday it'd be 20% off. On Tuesday it'd be 40% off. You had, you know, some people who'd come in on Tuesdays, say, I want the difference, others who kind of, you made money because people didn't know. Um, I always thought that was weird. Um, but then later, um, once they had it, you know, a little bit, you know, a little bit more to spend, it started happening. Um, you'd buy a TV and if you're Spartan, you know, apartment, um, and you, um, and you know, the price.

• 1:21:18Speaker 03

  Change and there was kind of one moment when a group of us went on a trip booked it the next day or want to join me saw that the price was like hundreds of dollars different. It was over a thousand dollars across all of it. And it was sitting there. I was like, this is really like really frustrating. And so I found that the airline would refund the difference if you ask. I had taken a little bit of computer science in college and it was a slow day at work, thankfully. And I just sat there and I was like, gosh, like, I wish there was software that told me this, like, there should be some way to track it. And then maybe you could just tell me, or maybe. Could it contact the store? Could it do this automatically and just kept pulling at that thread? And I went over that night to my friend Kareem's house. Kareem became the co-founder of Paribus and co-founder now of Ramp as well.

• 1:22:01Speaker 03

  And, you know, we just thought, you know, what if there was software that would help you get that discount difference in price automatically? And so a little bit wandering, but it came from just experiences, my first job to. Things that I just had enough time in the day to notice and do something about.

• 1:22:17Logan Bartlett?

  And so how did it? How did it work? I mean, you guys got to, were you on Good Morning America or you were on something? Today Show or one of those, right? So take me through. I mean, it's a wild, it was a very fast. You went through the full startup cycle in like 24 months or something, right?

• 1:22:33Speaker 03

  It was slow to fast. Yeah. So first like that, like that happened, that moment when I went over to Kareem's, we were talking about it. It was probably back in 2013. That we were like, we're kind of on to it. And so for like, the better part of a year, we just, we're trying to figure out like, is this real?

• 1:22:47Logan Bartlett?

  And you quit your job to do this?

• 1:22:49Speaker 03

  After almost a year, we did.

• 1:22:51Logan Bartlett?

  So 12 months mucking around and then?

• 1:22:53Speaker 03

  Yeah, basically. And we were lucky. I think Amazon went from changing like a few hundred thousand prices per day to tens of millions per day over the time period. And so we, some of it was luck, but we'd figured out. Okay, you could build like a small email app. That's where receipts lived. You could figure out. And so the premise of Paribus was, it was a Gmail, Yahoo, whatever app. Where you link your email, we track the receipts, the prices of what you bought. And if you were eligible for a discount, we'd actually, the software would write a note to the retailer, the retailer would refund you the difference and we charged a cut. And so we basically tinkered for a year until it was real, like prices were changing all the time. You could make it that easy. You could just write it with software and do it with no human intervention. And the market was large. And so after a year, we left our jobs, we worked

• 1:23:37Speaker 03

  out on the side, and then we launched the product in May of 2015. It just took off. Within a year, we had almost a million customers. We were on Good Morning America, the Today Show, CNN, all kinds of different outlets, some multiple times. And we, a complicated history, we got a, but we got a pretty life-changing offer from Capital One. You know, essentially, I think it was like a year after launching publicly.

• 1:24:02Logan Bartlett?

  And how many people were on the team at this point?

• 1:24:04Speaker 03

  Fifteen, maybe. And I think we, we sold-

• 1:24:07Logan Bartlett?

  Raised a couple of million bucks.

• 1:24:08Speaker 03

  Two million.

• 1:24:09Logan Bartlett?

  Yeah, and went through YC, right?

• 1:24:11Speaker 03

  Yeah, went through YC, things took off. And yeah, it was, it was a tough decision because we were basically evaluating, we, we closed like a large Series A round of funding from a firm we really, you know, at the time excited about, could grow and scale this thing all the way through, or do we sell? And at first, we were like, no, we can't do that. We're gonna go and, and take this all the way. But at some point, first, I mean, some of our merchants liked us, others hated us. There was a real risk-

• 1:24:37Logan Bartlett?

  I can imagine if you're sending thousands of emails a day to amazon.com, you're probably not like getting on Jeff Bezos's Christmas card or holiday cards.

• 1:24:44Speaker 03

  It was growing like 40% a month. And so it was getting like exponentially nutty. Meanwhile, like Kareem was on a visa. It was a life-changing amount of, I'd never seen anything close to, to like it of the effect personally. And so we decided to go for it. And we, we sold the company in October 2016, and it was very fast. And we ended up spending the next almost three years there.

• 1:25:01Logan Bartlett?

  So from, from quitting your job, doing restructuring to sale, that was how long?

• 1:25:09Speaker 03

  Uh, two years, just under.

• 1:25:12Logan Bartlett?

  Okay, got it. Well, and you stayed at Capital One for how long?

• 1:25:16Speaker 03

  Uh, actually longer than Peribus was independent for. So we left in February of 2019.

• 1:25:24Logan Bartlett?

  Interesting. And so then you you left February 2019 and take me to Ramp.

• 1:25:30Speaker 03

  Yeah. So there that in between period was was where it all came together. I mean, so our job at Capital One was save people money. And so we spent a lot of times journeying data into savings. This was the predecessor to a lot of the activity now, which is not only their Capital One shopping, but could we build software to help people either spend less upfront after the purchase? And we felt like we were just scratching the surface of what we could do.

• 1:25:54Logan Bartlett?

  And was this all through like, was Paribus actually integrated within Capital Ones? Or did they sort of take the lessons you learned and throw it out and be like, hey, go work on this stuff?

• 1:26:03Speaker 03

  That was so we were really lucky. They'd gone through enough acquisitions that were like a bit funky, put things in like cost centers versus parts of the group with the P and L, that they actually put us in the credit card division and they gave us a full year before really any integration in a deep way to say, go scale this, get your bearings, spend time with it and think about how these things can come together. And going down back and forth to McLean once a month to figure out how this would come. But a lot of it was actually this weird email savings group operating with the support of a large, large P and L. The second year was bringing it together. And then the beginning of the third, we acquired, it's going to be called Wiki Buy, which became the backbone of Capital One Shopping. A year later PayPal bought Honey.

• 1:26:47Speaker 03

  There's a whole suite of services around helping people save before, during and after they shop. But you know, a lot of it was around savings. And then we were right in the heart of the card business. And the thing that was wild was one, we got to see like, why is Capital One so profitable? What makes the credit card business great? And it is an amazing business. And people were thinking about things that you would expect, like, how do you grow purchase volume? How do you go revenue? How do you reduce net interest, like our increased net interest margin, reduce the cost of rewards? And in my job, I would just call up customers and I asked them to do my points, cash back, something different. It was really misaligned. A lot of customers were actually looking for more in their bank account, not more points. And what was making many customers, if you could actually just help them spend less,

• 1:27:32Speaker 03

  it would help them first get more of what they were looking for. And could you actually stop competing on price? Stop competing on the cost of rewards and then compete on value. And so we just got obsessed with this idea of what if there was a card and software that could help people spend less. And so I guess what led to ramp was just too many months of just kind of thinking and obsessing over it, combined with things that were happening in the market that made it possible to actually start a new credit card company in a way that just wasn't possible for 30 years. And so we, yeah, after we ended up spending six months transitioning the team, making sure it's a good spot. February 2019 left and in March, so about three years and almost three months ago incorporated the company. And it's just,

• 1:28:15Speaker 03

  you know, learned a lot of things along the way. We thought the be all end all was saving people money. It turned out saving companies time was much more important than we appreciated too. But we still think we're the first and only that credit card company that actually measures ourselves by how much money have we put back into our customer bank account that actually measures how much time have we saved? Which is very different than most people are thinking about what cool lounges can they open up? How can they get you to spend more on the points programs and devalue them in the background? And yeah, I don't know. It's helped us grow quickly.

• 1:28:46Logan Bartlett?

  Yeah. Well, who knows? Maybe you'll get a cafe one day. But so, so maybe you touched on this earlier, but we're working on a blog post thing about like the underlying infrastructure and the enablement that's allowed fintech companies to exist today. I think it's a really interesting thread. As you were sort of within Capital One, you were watching some of these play out. Would love to maybe tell me, tell me about what you think has happened in the last, whatever, 15 years, 12 years, whatever it's been, that's enabled the success of folks like yourself as well as, you know, other companies in the, in the fintech space to really succeed.

• 1:29:26Speaker 03

  Well, I mean, first, it just was like so striking to us when we got to Capital. It just felt like this crazy anomaly where this product that has had a very similar form factor, like the credit card that we use is quite similar to the card maybe parents might use 30 years back. Super profitable and has innovation is like, how could that be? Like, how could that market to exist with no new entrants for a long period of time? And as we started digging into it, a lot of it had to do with first, if you were going to issue a financial product in the US and move cards, move credit cards, you needed to be an FDIC insured bank. And the cost of starting one of these banks, buying one of these banks was incredibly hard

• 1:30:08Speaker 03

  from a regulatory and time perspective and cost prohibitive was one. And so I think one of the first things that changed actually came out of the financial crisis. A lot came out of the Durbin Act in part to help prevent banks, which had been consolidating, buying up small banks and stop the too big to fail problem. Dick Durbin and the regulation basically propped up small banks and said, you know, there's an unregulated and regulated interchange. And if you were a small bank, your interchange could be on debit, could be unregulated, and you could make more. And it gave small banks like Sutton Bank, Celtic Bank, Web Bank, other banks you might see on the back of these fintech cards. The incentive and market opportunity where if they could find people that could bring volume

• 1:30:52Speaker 03

  and they could partner, they could actually go and capture and have a business. So suddenly had small banks willing and interested in looking for folks that could bring business. As that was coming up, infrastructure players started making that possible, if not doing it directly. So on the merchant side, you had Stripe. On the issuing side, you have folks like Marketta and later Stripe, who built these platforms originally for neo-banks debit products. But the infrastructure to issue and manage cards were there. You know, next, so you, you know, this paradigm of banks could work with you. You had infrastructure you could tap into and through an API, you could actually go and issue it. The cost of capital went to almost zero. And so if you wanted to, you know, interchange is great. If you can make, you know, two and a half percent on a transaction, that's awesome. But it means you need to put a hundred dollars out to make 250.

• 1:31:38Speaker 03

  If interest rates are low, the cost of borrowing is low. And so even a startup could tap into that. And last, I think you could, you could tap into underwriting data too. The proliferation of things like Plaid, Finicity, things like that. Mint, you could underwrite not someone's credit history, but that this company raised $10 million. It's probably fine to give them half a million dollars in credit for 30 days. And so all these things locked together in sequence. And so we were just looking at this, which is like, you've got this space that's very lucrative, that has had almost no product innovation. Suddenly the pieces fell that if you worked with the right partner, you could issue cards out. And by the way, you could do this.

• 1:32:23Speaker 03

  I think we had our first card transaction within 50 days of incorporation. And so you could not only go after a clear product, but lock the pieces in place from a market perspective to go and build ramp. And, and that's what allowed us, I think, by when we launched February of 2020, to be supporting large businesses, some spending millions of dollars per month and, and rocket so quickly. I think it just was a market that was waiting and needed this, this different way of building.

• 1:32:50Logan Bartlett?

  Yeah, it's fascinating. I mean, everyone bitches and moans about like regulatory capture and government bureaucracy and all that. But like, you know, preventing, one, preventing things like the global financial crisis from occurring again.

• 1:33:02Speaker 03

  Thank you.

• 1:33:03Logan Bartlett?

  And two, I mean, this sort of had, it had some unintended benefits as well around, you know, I don't think Dick Durbin was thinking through the, the fintech element of how this is going to be enabledment. But it has, I mean, Jamie Dimon bitches about it today about like the interchange rates and what they can do versus what these up and coming banks can do and all that stuff. And so, I don't know, it's kind of, it's kind of worked in some ways. And I think it's probably a good thing that some of these banks have been capped in terms of what they can do.

• 1:33:30Speaker 03

  I mean, I just think in general, what we want to make things that are so good, it's hard for folks to compete. I think competition is good.

• 1:33:37Logan Bartlett?

  Yeah.

• 1:33:37Speaker 03

  I think it forces people who are building things to be better, push it.

• 1:33:42Logan Bartlett?

  So Ramp, how do you describe what Ramp does today?

• 1:33:47Speaker 03

  Yeah, it's a, I think it's, here's how we think about it. It's, so we think about it as a finance automation platform. So we offer the fastest growing corporate card today in the US. We have built in expense management software, deep accounting integrations, bill payments. And all of these products have been designed with the focus of helping businesses reduce the amount of dollars they're spending on their services and reduce the amount of time that it takes to close their books. And so I think like a shorthand is like, imagine you could get all the capabilities and more of, let's say, an American Express, of, let's say, an Expensify, a Concur, a Bill.com, all wrapped into one.

• 1:34:31Speaker 03

  On top of it, you're getting insights regularly that'll show you and your employees ways to get better prices on things you're already doing, but also just a better design and little subtle things like on a, you know, let's say something like a Concur or an Expensify, employees might turn receipts in days to weeks after. I think on one of the platforms, it's three to four weeks after is the average time between purchase to receipt. On Ramp, because we're processing the credit card transaction, businesses can set rules. We can approve or deny based on your actual expense policy and we collect the average receipts in 30 minutes. And so it just makes companies work a lot more efficiently. We also connect to 100 different sets of, you know, whether it's HRIS, productivity

• 1:35:14Speaker 03

  software, but it's really about making the workflow of where companies are spending money simpler, more efficient and automated and trying to take steps away. So companies can be more efficient. So maybe a little bit more long-winded, but hopefully it gives you the breadth.

• 1:35:28Logan Bartlett?

  No, no, it's helpful. I always give the example of like, hey, I think if you were to start from scratch, you would integrate all of these things together, right? And I always say like, all your non payroll spend should be on Ramp. And the example I'll give to people is like, how obvious this is, is I'm at a restaurant, I'm taking Eric out to dinner, right? And we have a rule, if I spend my Ramp card over a hundred dollars. I need a note attached to it and I need the receipt as well, right? And so the second that's card gets swiped, one either gets approved or denied. But thankfully, after, after talking to my finance department, they now approve my stuff. And then I get an immediate text message and that text message goes to, to my phone.

• 1:36:11Logan Bartlett?

  I take a picture of the receipt and add dinner with Eric Lyman. And then I press send and it's done. The receipt's in there and it's, it's just the integration of all this stuff together that I really like. And then using it, I don't know, it's made our finance department's team, our life's a lot, a lot better. But yeah, actually using it in the wild, it was counterintuitive to me. I made the joke about like not wanting to invest in a corporate credit card, which is true until I realized that like, it was actually kind of a software company and corporate card was the wedge within this, right?

• 1:36:43Speaker 03

  Exactly it. I mean, the card, it's, I mean, you talk, like, we were processing transactions in 50 days. Like there's complexities around underwriting, but that's not the hard part. The hard part is really trying to figure out, like in these companies, it's not like I need another card. They might have like, you know, three or four, they've been pitched on like a hundred of these things. It's more of like, understanding all the areas of just like, pain in that business where people are wasting a lot of time, where people are buying software, they're getting charged too much. And can you bring, surface that data up, automate away a lot of the workflow to make it much easier? And, and, and just kind of drive a more efficient and profitable business is really how we're measuring ourselves and what we're trying to deliver to, to our customers.

• 1:37:26Logan Bartlett?

  Yeah, no, it's great. So we talked about a bunch of the enabling infrastructure that made this moment in time make sense for a, you know, fintech company. Whenever I see ramp in the, the news or whatever, when people are talking about the industry, much to my chagrin, there's another company that's mentioned in there. So I want you to say something nice about Brex, Eric. No, no, I, so what, uh, how, how do you position? Cause that's always the question I get is like, okay, how is this different than Brex? And I think now people have started to understand it a little bit more. But how would you, if, if, if in an RFP process? Right, let's give you a little bit of a commercial here, but like, what would you say that you specifically focus on?

• 1:38:08Logan Bartlett?

  Because they've continued to evolve some of their stuff and we can say, you know, where inspiration came from, we can debate that. But they've continued to evolve and how do you position yourself versus your largest venture backed company? That, you know, probably buys adwords against you.

• 1:38:23Speaker 03

  Yeah, um, so a couple of things, I mean, first, I think a lot of it comes down to like, you can see the, you know, the history of what are these companies about? And how do they really orient? I think if you go back to even 20, you know, 2020, um, when what we were doing publicly launched, this orientation, the first moniker was this credit card designed to help you spend less. And I think at the time, um, it was about, um, you know, what you would, you would find on the Wayback Machine, you know, seven X points on Rideshares, three X points on this, two X, which was a product of the time. I mean, we work in Uber, we're still all the rage and it was very much about excess. Whereas Ramp, I think has singularly and always been really about, um, we are aligning our incentives with your bottom line. We're trying to help you spend less money, spend less time.

• 1:39:08Speaker 03

  And so first, it's, it's philosophical, but beyond it, um, you know, we backups too. We've helped companies spend $135 million less, automated away a ton of work. But I think the bigger part of it now is there is a much richer set of integrations. We integrate with far more software, the quality of the integrations, like for example, like, let's say you're a company integrating to NetSuite, which if we're going head to head and there's an RFP, you might see this, maybe it's a later stage company. Not only do we handle two-way syncs, but we'll handle multiple entities in the US, um, abroad, internationally. You can automatically code at a level where, you know, essentially you can achieve 80% of your accounting is actually done through software.

• 1:39:47Speaker 03

  And it even replaces things. So for example, one of the subtleties with a, let's say Brex, um, would be you still would need, let's say, an expensifier concur on top of it. With Ramp, it replaces all the way through and you get a lot of efficiencies. So some of this is more sophistication, some of it's more alignment, um, and capability. But it has to do with really the spend management. What I'd say is they focus a lot on their banking products. They focused on, I think, some financial planning. I think that they made a different choice in trying to go more horizontal for very early-stage companies. I think, um, yeah, I think that there's a very powerful set and I think that, um, I think highly of them. I think it's good to think highly of other folks.

• 1:40:27Logan Bartlett?

  Yeah, I mean, that's the, um, that was, uh, very gracious of you. Thank you. And, uh, I, I think that, um, you know, they, they cast cash-based underwriting recognition that they had early on. I think was, was a great insight, right? Um, and I sort of go back to, I think, I think companies are often, their foundational DNA is sort of established early on and how they operate and the decisions they make and the culture and the people they bring on and all of that stuff. And I, you all, I, I was always attracted to your business because you're a software company at the end of the day. And I think at, at times they've had elements of being a financial service business as well, right? I think at one point they were going to get their banking license. I'm not sure if they did, uh, around that. So there's certainly the rewards versus cash back philosophy.

• 1:41:12Logan Bartlett?

  But then there's, you know, there, there's some elements of, of the product suite you build out. And I'm sure my, my friends that are invested in Brex would yell at me for saying that, but I do think of it as more of a financial service business rather than you guys are more of a software company, even though you both monetize in a similar way.

• 1:41:29Speaker 03

  I mean, I, I think they would say that too.

• 1:41:31Logan Bartlett?

  Yeah.

• 1:41:31Speaker 03

  And I, I think if you look at the, the history of, of what's been said publicly to even, you know, independent board members where they're trying to go and pull to even, you know, decisions. I think that we've made a lot of decisions in our history, um, that are focused on, uh, unambiguous and clear and strong. Um, you know, we've hired cash back, our cash back and our rewards program is more, um, done the math. It is much more valuable, um, for, for businesses and we've done it at the expensive margin. There's been areas where I think that they've, um, tried to have deposits on hand for, for different benefit, for, you know, go compete. I think trying to be a business neo-bank at one point was part of their pitch and I think there's a lot of worlds that make sense.

• 1:42:08Speaker 03

  We just have a view of, you know, um, we think that there is room for a truly great product and engineering-driven organization. That's really thinking about, um, almost more of the workflows.

• 1:42:22Speaker 03

  What are the causes of waste and how can you keep shifting new software day in, day out that chips away, that helps companies be more efficient? And that's the view of the world that we're excited about. And I think, I think that's had influence in the industry. I think if you, if you look at the content of what are people marketing, that's moved, more and more folks are moving to that vision and we're excited to keep doing what we're doing and competing.

• 1:42:46Logan Bartlett?

  I made a joke one time online that how hard is it to set product direction for four different companies? And I, a bunch of different VCs got very mad at me for that joke because they were all investors and competitors and I, the joke was that they were all copying Ramp. And yeah, a lot of my friends did not, did not love that joke. So second time doing this as a founder CEO, second time doing it with Kareem as well. Anything you've, you're doing very purposefully and specifically different than what you did with Paribus? I'm sure there's a thousand things you're doing differently, but like any specific things you've internalized from the past experience that it's, that's super helpful?

• 1:43:21Speaker 03

  Totally. I mean, I think when we, we talked about the start, at the start of like this process of leaving, but in, in starting Paribus, but we, we had, I think our business plan, we had saved up something like 50 grand and like moved to Williamsburg when it was still like not that expensive and grew mustaches and like that was our business plan.

• 1:43:41Logan Bartlett?

  This is at Paribus.

• 1:43:42Speaker 03

  This was at Paribus.

• 1:43:43Logan Bartlett?

  You were not, you were not moving to the same place in Williamsburg.

• 1:43:46Speaker 03

  No, definitely not. And it was just was like, all right, every dollar counts. We don't have a lot of time and we need to produce something or shut it down.

• 1:43:56Logan Bartlett?

  And Kareem was on a visa.

• 1:43:58Speaker 03

  He had six months to get sponsorship or some way, or he was out. And so it was all, just as the company was about cutting costs then, it was all about making every dollar really last. And so scarcity mindset was a lot of it. The next time around, we'd, we'd had, we'd had a sale. We were able to start this company with our own funding at the start before we'd even raised externally. And so much more of the mindset on the second time around was not about all the things that could go wrong and preventing it, but more about what could really go right and surprise I think with with some of the first, you know, at Paribus, there were some people who just had outsized impact.

• 1:44:37Speaker 03

  And so this idea that recruiting and the first 10 people that you hire and hiring itself as being the be all and all was a way bigger part of what we did at Ramp. And I think Keith or Boyd, one of our board members, has this concept of central casting. This idea of, let's say, you're a producer and you're trying to make some new movie, maybe Top Gun. You're like, oh, we got to have Tom Cruise and we'll have this actor and that. And suddenly you do it and just with the right kind of set of people around the table, you've got a whole movie on your hands and things are right. And the reason that's important is later, I think a lot of startups and company building becomes, how can you hire enough people and the right rules? You're changing all the time. Can you attract people?

• 1:45:19Speaker 03

  And one of the first things that people do is they go on your LinkedIn and they see who else is at the company. And if it's like an okay crew, people can get less excited. Or if it's extraordinary, people say, what can I do to actually get there? And so one of the first things that we did differently was out of our first 10 hires, seven were engineers, one was on design, person was from IDEO. One was on talent and the other was me, I got to sneak in, I guess. But but the whole thing, I think on the second time was much more around really trying to view people and hiring itself as like a strategically central point of the company. I think was the biggest difference. I think the second was we were just, I think a lot of first time founders are very heads in the clouds.

• 1:46:03Speaker 03

  What about 10 years from now? What if Google competes with you? You think about all these sorts of questions. I think in second, you're able to constrain the problems and focus a lot more on speed. We talked a lot about, you know, counting the days at Ramp. And the reason we would do this is we tried to measure ourselves. You know, with every 60 days, we're moving slower, faster. How much faster and could we increase kind of that speed and ramp of it? And so, no pun intended, I guess, sorry.

• 1:46:27Logan Bartlett?

  Yeah, I accidentally do that a lot. I mean, both those, all those points are interesting. I, it's, it's, it's one of the things about like a willingness to go big. It's nice when you're embarking a second time founder who's comfortable and willing to swing for the fences. And I think often. Sometimes, you know, I don't know, Stuart Butterfield had Flickr and then had Slack or whatever. Like, there's a lot of examples like that along the way. But that's one of the reasons I actually don't mind, secondary for founders along the way. It's like, hey, I want you to go as big as you possibly can. And so, within reason, right? Like, let's figure out what makes sense so that you're comfortable to swing for the fences. But the other thing is, like, your culture is established so early on, right?

• 1:47:09Logan Bartlett?

  And the expectations of how you operate, who you hire, like, what is good, what is not? It's really, everything sort of sprawls out from the first, I mean, it starts with the founders. But that first 10, like, if there's cancer there, that spreads, right? 100%. If there's an asshole there, like, they're gonna hire an asshole. Or if they're a B player, they're gonna hire a C player. Like, all that stuff spreads. And so, I've always found it's interesting. And not everyone needs to be like, you know, Kobe Bryant or Michael Jordan on the basketball team. Five of them would rip each other's heads off, right? But like, you need to build the composition of the right talent level so that it all works together.

• 1:47:48Logan Bartlett?

  And so, I think it's interesting, because as you guys went from 10 to 50 to 200 or whatever, like, all those, I mean, a lot of them came from referrals from that initial group, right? And so, I think being purposeful and thoughtful about it has been really interesting to watch.

• 1:48:03Speaker 03

  100%.

• 1:48:04Logan Bartlett?

  Yeah.

• 1:48:06Logan Bartlett?

  So, maybe, talking a little bit more about that and the purposefulness and the speed and all that. Your product velocity in terms of how you guys, how quickly you're able to ship product? It's, I've never really seen anything like it. I, we've talked about this, but I almost feel like you're, most companies struggle with the ability to ship the product. And then, like, the communication to their customers is the easy part. I feel like you guys ship products so quickly. Communicating to the customers is like, actually, the, hey, we do all these things now, right? And they're like, didn't you just email me last week? But how have you set up a culture that enables that level of product velocity, right?

• 1:48:46Logan Bartlett?

  Are they, are these discrete teams that are operating autonomously and sort of acting as GMs? Like, how do you hire people that can successfully ship things quickly? And how do you get product into the wild as fast as you do?

• 1:49:02Speaker 03

  Super good. So I think there's two sets of it. So one is like, I think it's a funky product of the history from Paribus to Ramp, which we're going to do. And I think that the other is by focusing a lot on getting process really tight, iterating on that, and then measuring the days and constraining it. The set of problems were the two things. So first is the history of it. And so I met Will Hockey, who started Column a couple of months ago. And I think one of the things we bonded over was like-

• 1:49:33Logan Bartlett?

  Former founder of Plaid.

• 1:49:34Speaker 03

  Of Plaid. And one of the things we bonded over was like for both Plaid and for Paribus, our company, one of the engineering and product problems that we had was many people that we were building integrations into did not want us there. And so it could be as simple as like, you know, we'd have to go and to check the price at a retailer. Maybe the retailer didn't want scraping to be going on.

• 1:49:56Logan Bartlett?

  Japoo was like, fuck off. Right? Like, leave us alone right now.

• 1:49:58Speaker 03

  Or the marketing team just like changed the email receipt because like they can do that. And it meant that you would be building constantly on QuickStent. And a lot of like the upbringing was you're fighting for your life. 2%, 3% of what you would ship would break every single week. And so a lot of it was how do you build things really quickly and in a modular way so you could switch parts out was just for years and years and years was a lot of it, which sure not, I mean, probably made us a little bit of like crazy and bizarre engineers, but it helped us later when we started.

• 1:50:26Logan Bartlett?

  I'm sure you guys have a lot of like PTSD from like things going down in the middle of the night or whatever and needing to fix it as well.

• 1:50:34Speaker 03

  I mean, and it's just, it's like, you know, so lucky. Like, it's like, I'm really happy that Visa isn't just like, nope, never mind.

• 1:50:40Logan Bartlett?

  Yeah, exactly. Thank you. You can afford a therapist to sort through all the anxieties that came from that. But yeah, no, I can only imagine.

• 1:50:47Speaker 03

  So a lot of it's that. And then a lot of it too is like, okay, there's this large market. What we observed to a Capital One was like, it was very hard, mostly for perceived regulatory risk. I think in 99% of cases, it really wasn't real. It just was processes to really cover the other 1%. Things were really slow. And so the question was, how could you in a space that dealt with real regulatory- Concerned as well as we're moving, gonna move lots of money. How could we isolate the processes that we take for product development? And make sure they're applied correctly. And so there's a part of the ramp engineering product team that let's say deals with credit card transactions where, you know, if that breaks, it's not funny like

• 1:51:32Speaker 03

  credit cards all break like it's you can't just have it go down 1% of the time. And for that, it's all about like correctness, low latency, extreme level of testing. And that actually ships quite slow. There is another and a very large part of our products where if it's if it's down for a little bit. You know, a front end page like it can be down for a couple of minutes, bring it back up. And there's lots of things and you know, you might measure maybe only 2% of people. Half a percent of people might go on. It's a small number at the start. But for those areas, it's all around designing first just to sprints where the United is you're going to move very, very quickly. You're going to set at the start, what are you going to get done? Move through retro the things before and increase sort of the speed that you're moving progressively.

• 1:52:15Speaker 03

  And we try to have most of our engineering and especially the things that we're building in-house and not relying on APIs for really move super rapidly. And that's what allows us to just spin up, not just cards, bill payments, expense management, and really replace full sets of what at other companies are full products or companies. Which is add-ons, we try to run those in those sets of teams. But separate the duties out would be last. And I think last is just like anything. The more you can set standards around process and then tweak what works progressively. That works.

• 1:52:48Logan Bartlett?

  So, so the, obviously you, you were baptized. I always joke that like B to B is easy mode compared to or compared to being a consumer app team, like people get very, very mad at you. B to B customers are like, I'm going to churn in three months. Consumer customers are like, what the fuck are you doing? Like I, you know, whatever. I'm trying to get on this flight and you mess this up. So, uh, no, that that'll make sense. And then setting the process and expectations and some things can go fast, some things don't. What about from a team standpoint? Like, how do you actually delegate the responsibilities of these things? I mean, ramps are very integrated. Product but has modular elements of it and not everyone's buying 100% of all those things. And so do you have GMs that sort of own and operate autonomously?

• 1:53:32Logan Bartlett?

  Do you, is there like teams that are working on this and they're sort of scrum teams? And they, this is the new initiative and then they go around and they're the entrepreneurial people that you just go point at problems? Is it a hybrid?

• 1:53:44Speaker 03

  I mean, I, I, so the first time around with Paribus, engineering sat with, you know, Kareem and Gene. Marketing and product sat with me, you know, design. And I think one of the best things that we did this time was actually flip it. And so with Ramp, Kareem oversees the majority of the headcount by a lot of engineering, of product, of design and data science. And the way that we think about it is, is things of structure, things that are being repeated multiple times over are going to sort of multiply out and cascade throughout the product suite.

• 1:54:28Speaker 03

  Put these together and have folks essentially work in pods. And I think that the complexity of this has grown over time. But in general, even against it, where at the start it might've been effectively one team, a few different threads, but effectively very, you know, one or a few very small teams to now multiple teams where it either could be, you know, one person on product, maybe, you know, six engineers, maybe one person on design. There's rough ratios and depending on the certain group that you're in. And effectively we have backlogs and I think about being B2B is customers will tell you like, you know, if you just ship this, we'll use it. And so you can actually quantify like against all the different needs, have a long backlog and prioritize what takes a small amount of work,

• 1:55:11Speaker 03

  unlocks a lot of spend, you know, simple feature that unlocks lots of future things. And we try to build like a car, not a faster horse kind of a thing. And, you know, effectively cascade and run it against it. And so the structure has evolved over time, but I think one of the best things we did this time was keeping the people who were functionally building. And now actually to earlier question you'd ask of like, how do we market these things when product moves so quickly? We recently moved product marketing to work with product and to be closer to the sense of build. But things of structure that you need to have, you know, clear view and cascade out, we try to put together.

• 1:55:47Logan Bartlett?

  And so, I mean, I think some element of this as well that you, we've kind of touched on of the culture and the product velocity and all that, but you guys are also very accommodating to entrepreneurs within the company, right? And so you have a bunch of founders that work at the business, but also you will encourage people to, hey, treat this as a tour of duty. Let's do two, three years together and then we'll fund you to go start your company if you so choose. Is that, I assume you wasn't that way at Paribus. Like, some people are very paranoid about talent. Like, hey, you gotta stay here, like, golden handcuffs, RSUs, options, we're gonna hold, you know, whatever, delayed vestings on all this stuff. But you guys are actually very different in your mindset.

• 1:56:31Logan Bartlett?

  Do you think that, one, is that a fair characterization? And two, does that attract a different, I assume it does, a different type of person and then also a different type of culture internally?

• 1:56:40Speaker 03

  One, I do think it's accurate. And two, like, I think it's, I think it's part of, without that philosophy, I don't know that we could do what we do. I mean, I think at one point, I think a third of the headcount, even if you're like 50, 70 people, is still quite high, were former founders. It's people who sort of would take, you know, I think the default state of a company is it doesn't work, there is no company, people go work somewhere else. Which is, how can you get enough momentum and a sense of inevitability? Like, you need people who are gonna bang their head against the wall and try to make things, things work. And so, I think if you take that as sort of a central premise, and a lot of these people are stubborn and independent and want to go start their companies, and also I'd be

• 1:57:22Speaker 03

  a giant hypocrite if I wasn't like supportive of other people starting businesses and entrepreneurs. Like, then the question is like, okay, how do we make this work? And there actually is this really interesting pitch within it, which is, at Ramp, we're trying to move extraordinarily quickly. We've taken the time to have talent be an early part of the organization. We're very careful and thoughtful about who we can bring in and have like amazing talent engineering. Can you create a place that people want to go to that can feel the sense of talent density? And you could see what it's like, maybe they'll meet a future co-founder, maybe they sort of see processes they can bring to their own company. And then later, too, if the time is right for someone... And it's really ready to be genuine and supportive. And you know, I think well, the vast, vast majority of people at Ramp from the early days are still here. There are some which were with us

• 1:58:06Speaker 03

  from from months to, you know, year a little bit over, who've started now very fast scaling companies. And I think part of, I think what the, I mean, I guess they call themselves the PayPal Mafia got kind of right is actually supporting people in an ecosystem over the course of their life is actually just good business. I think it brings out great motivation for people. I think a lot of companies are fundamentally just a system of trust. People who want to work together to build a great company. And if you're sincere in that, hopefully it lasts together for a very, very long time. But if people are ready being there too, like, I think you can't get real commitment without that, honestly.

• 1:58:45Logan Bartlett?

  It's interesting. You touched on the sense of inevitability point, right? And I think that's an interesting thing that you guys are thoughtful about of like, creating this sentiment that, hey, we're going, this is a rocket ship, get on, here's where we're going. And here's the, you know, here's where we're going to be tomorrow, because you're counting your days, right? And here's where we're going to be in three months. And here's where we're going to be in six months. But, you know, in 10 years, like, we're going to be this huge company. Can you talk a little bit about like, how you think about creating this sense of inevitability and what the compounding loops are that lead to just this moving from inertia to success?

• 1:59:25Speaker 03

  Yeah. I, well, so one, it's like, why do people work at these name brand companies anyway? Like, why do people work in some large consultancy or a large bank? And, you know, when you look at these things, at some point, like, this was some person's startup company or some amalgamation of different corporates.

• 1:59:41Logan Bartlett?

  Totally. Vegas had 200,000 people and Capital One started from scratch and?

• 1:59:45Speaker 03

  Yeah. And like, why, exactly. And why did Vegas grow? Because it was growing. Like, why do people go to IBM? Because, well, you know, IBM is growing. Because it feels safe. And I think that if you're trying to endeavor to build something that is going to be a, for the business plan to work, a large part of the industry, a product that is ubiquitous, the question is like, well,

• 2:00:07Speaker 03

  How do you create faith in this new system of the sense of like this is gonna work? And that evolves at different phases. I think early on, it might be is this this large market? Is this a real problem? Is there some unique insight? Is this amazing talent density? Sometimes people say things like the Sandbergism of like, you know, if you see, if you get a chance to jump on a rocket ship, don't ask what seat. Like, what makes people say that? And I think even too, like, we're now like a large investment position of Stripe. And I remember it was back in 2017, 18, and we'd ask people like, okay, like, if you were gonna go to a great fintech company where engineering is important, where would you go? And like 99 people out of 100 who were in the industry would say Stripe. Like, you got, you gotta go there.

• 2:00:52Speaker 03

  And that density and the excitement around it actually became the core driver for them, recruiting extraordinary people, which became the core driver for them, building great software, you know, solving business problems, having higher marginal that. So the question at the start was like, how do we do that?

• 2:01:11Logan Bartlett?

  Yeah.

• 2:01:12Speaker 03

  How do we do like the Stripe of New York or like this equivalent in the car space? And so a lot of it came back to first kind of like, there's this large market, this different way, and a unique story to it. Let's build a great team. Let's have a clear model and a sense and actually go and model out. What does the business look like over time? And then really try to bring it together. And you'll see this down to how we hire to maybe the investors that we decided to,

• 2:01:36Speaker 03

  and fortunate to work with, to even, you know, the set of products and even the pacing and the cadence of it. I think using that as a framework of how do you create the sense of inevitability to start sale is actually quite useful, because if you can do that, I actually believe it lowers the cost of attracting extraordinary people, of bringing in customers, all these things. And so a lot of it was around in order to do that, what are the ingredients that result in that?

• 2:02:03Logan Bartlett?

  Yeah, no, it's, I mean, if you can get that flywheel spinning, it's the reason you go to Harvard, right? It's the reason people go work at Stripe. It's like, I would imagine that the education you can get at Harvard, like, there's other places. Those books exist, right? But like, the association with it, the credibility of having gone there, the people you'll meet, all of that is, you know, worth its weight in Bitcoin, as the case may be. But, no, no, it's, it's, it's, it's a fascinating.

• 2:02:34Logan Bartlett?

  Yeah, it's a fascinating thing. You touched on fundraising as a part of that and the investors you bring in and all that. I think you've, the company's been started and kind of existed up until, you know, what are the last couple of months in one of the all-time boom markets that have existed. I think you have uniquely had a level of pursuit from, because of your success, because of this sense of inevitability, because I think the pursuit of ramp from an investor standpoint, I know me personally, is unparalleled from that vantage point. But maybe you've also been thoughtful about the round construction and who to bring in and

• 2:03:18Logan Bartlett?

  how to actually make that work. Can you talk a little bit about that and like how you thought through your investor base besides, you know, people with great podcasts and all that stuff? But what were some of the other criteria?

• 2:03:32Speaker 03

  So I mean, I think a lot of it, so now I think just with the growth of the venture industry and also the angel community, it comes back to just like the first, I think even half a year of the company where before, you know, we did our first transaction 50 day, like within 50 days, I think we brought on our first customer with, I think before the, in five months, six months, something like that. But even before all of that, we were talking to lots of different finance teams, angels, different people and said, here's our idea. We don't have a card designed to help people spend less. Super curious to get your insight, take feedback. And we kind of like tried to change the dynamic around, I'm, you know, not like, I'm going to sell something. What do you think? Would you buy

• 2:04:17Speaker 03

  this? To, we're trying to solve this problem. How would you approach this? And suddenly people were on the same side of the table. And that led to, and I think our first round was something like You know, almost 50 different angels, some larger institutions came in and we kind of had this feeling of co-building together. And this idea was, okay, well, they're a part of it, they want to have a small piece. And we tried to have a more collaborative approach in how we sort of sourced our ideas. It turned out it led to lots of people who are willing and wanted to become customers, wanted to invest and wanted to talk about it. As we started going out into later rounds and wanted to funders, we tried to keep that approach. We would, in the same way, it wasn't transactional, it wasn't like, I have to do this round, let me pitch everybody down Sand Hill Road and see what happens, where to get the highest price. We tried to, you know, go collaboratively and we would have, we'd get interest and we

• 2:05:02Speaker 03

  would bring the price down, sell less. And so in a way, it allowed for employees, future people who joined and for the company to preserve more ownership, but also for investors to be a part of it. And when you think about, you know, what are the, I'm curious how you felt about it too, but like, what are the needs of like the GP or different partners on the other side? You could say, actually, it was a really tough to get into a deal and the price was very attractive. Could you make sure there was a win involved for everyone on the way through? And then because of the multiple round part of it, we, because we did smaller parts of the company that we're selling, we could do more rounds and kind of price more efficiently.

• 2:05:43Speaker 03

  But more than that, as we built real relationships, and I think the turning point where we started working really closely together was, you know, first it started with a, you know, I think a certain small check and then we started digging into new verticals and you helped us figure out and crack bill payments, which is an extraordinarily fast growing part of the business. And the reason that we're working well together is, you know, a lot of people said, you know, how can I be helpful? The difference is you were. You actually came back with like really informed research and like time put us together with people who joined the company and changed the trajectory. And at the next round, we could say like, we want you to be a really large part of the round. And in some ways, like it's trying to be more efficient. I know at times it probably was uniquely frustrating because it sort of broke the

• 2:06:28Speaker 03

  norm.

• 2:06:29Speaker 02

  That's one way of putting it.

• 2:06:30Speaker 03

  Yeah.

• 2:06:31Logan Bartlett?

  No, I will say, no, in honesty though. I think it was amazing and it's, you know, different people have talked about investing in, having a bunch of investors to crowd out competitors and all that, right? Which I don't know. I don't think that was your intent. I mean, maybe that was a nice byproduct. I didn't feel like that was your intent. I think what you all did or were able to do, I don't know if I would give advice to try to replicate it necessarily in that the product market fit you had, the repeat founder element of it, the speed at which you were growing, the venture market that that was when you guys were running, like, I'm not sure. It'll be interesting to see. I'm

• 2:07:13Logan Bartlett?

  not sure it's totally replicable, but it worked actually perfectly well where you you kept everyone, it felt like wanting more and wanting to add more value and wanting to help and feeling like they they got a good deal just because they got involved at all, right? And so let me go earn an even better deal this next go around. And so it's fascinating. I don't know if I would give it as advice to people going forward, but it worked really well, I think.

• 2:07:40Speaker 03

  Yeah.

• 2:07:40Logan Bartlett?

  And so on the valuation point, I mean, that's another one that you guys have never taken the highest price, if I if I remember correctly. And so how do you think about, I mean, valuations to some extent, the private markets, you could say it's arbitrary in that it's an agreement between one investor and often, I mean, in your guys' case more, but and a founder, right? For what the price of the preferred is worth. Now, there's a bunch of implications that go into that, right? The 409A is based on it and how options are going to get issued and, you know, whether that GP is going to keep their job or not, right? There's a bunch of things that go into it, but I'm okay. Thank you. But I, how did you

• 2:08:23Logan Bartlett?

  think about that over time in raising these rounds? And then we'll talk about, you know, the most recent round. But let's, let's, let's start with the first one of how do you even philosophically think about valuations?

• 2:08:37Speaker 03

  It's a super like so first, I think a lot of the the way that people think about rounds.

• 2:08:48Speaker 03

  The first time you go through it is I'm going to sell a part of the company that I'm never going to get back. And so I better get the highest price for as little dilution as possible. And like, that is the way I think 90% plus of people will fundraise. And it ties to all the old like advice to you about fundraising. It's like, go see everybody, run a process, do it in under a month. Don't say more than you need to and just see what happens and run this auction. And I think that makes sense if you're selling thing once and that's it. But people forget, like, when you sell part of your company, like, you're tied together for years.

• 2:09:25Logan Bartlett?

  Yeah, the joke I'll make is like, if you're selling your house, who gives a shit? If that person's moving into your Airbnb over there and staying with you for the next, like, you know, four years, you want to check. You're like, you want to make sure they're hygiene and all that, right? And I think it's true. If you're like, it's actually one of the few relationships you can't legally unwind, right?

• 2:09:44Speaker 03

  Yeah, like, it's not up to me. Like, it's like, it's a part of the company has been sold and beyond it. Like, there's real fiduciary obligations to do in the best what's in the best interest of all share all the way through. And so actually, I think like, the right optimization is like, what is going to maximize the total enterprise value of the company over time? Or keep it simpler, create a sense of inevitability to help you achieve, help you recruit incredible people to have excitement for the next round, people who feel like they want to buy more of the company. Enough capitalization to be there to even all the other attributes. Like, you had kind of hinted at it, but like, foreign and A is a real consideration where in some ways, if you don't push the price up all the way, you know,

• 2:10:28Speaker 03

  one, maybe don't sell much, and you retain a higher percentage of the company. But the other subtlety is on the, you know, the valuation that employees are able to buy the stock. It is dictated functionally by where was the last round priced. And if you don't push it, it actually is a benefit to employees, which at the start, we talked about this, like, probably the Most important thing in building a great company. And so we sort of just arrived as if you kind of ran through the logic to its conclusion. You know, we felt the right way was like form real partnerships with people. Have more distributed ownership in part because you can see who is adding a lot of value.

• 2:11:06Speaker 03

  Keeping the portion smaller and at lower prices, which benefit employees, which allows you to be more efficient with price finding at any given time. And then last, even the simple stuff of like, I hate people like talking about like what's going well in their portfolio. And it turns out when you have a lot of people saying like, this is working well, people hear about it, people are willing to help. And, you know, well, you can't always predict, not, not everyone is equally helpful. Is, you know, I'm not just saying this to make you blush as you've been, but like it's.

• 2:11:39Speaker 03

  I, I think if you can pull it off, especially for like a very long multi-year business that that's moving, I think it's a great model.

• 2:11:45Logan Bartlett?

  Yeah, no, it, it makes a lot of sense. And that's one of the things, I mean, it's obviously self-serving for me to, to say like, just don't optimize price, like find what fair market is. I don't think that I or VCs deserve a super discount, right? But like, feel out what the fair price is for this and then go from there and pick the best partner.

• 2:12:09Speaker 03

  Well, even too, like on, on moments like, I don't know, it's, uh, we're filming this, it's, it's, it's June of 2022. There are a lot of tech stocks that are from November down like 70%. If you have kind of the most outliers could be like 90. And the reality is at any point of the market, like it's a long walk, there's some people, things that are up and down. And if you're trying to juice and take every dollar in a maximum, like it might help over the short run and you might have more in your coffers than any one period of time. But if you're thinking over the course of 10 years or longer, the investor can be with you every step of the way. And so are you ever just setting yourself up, your employees up for a bad time?

• 2:12:48Speaker 03

  I think that you are, if you push it to the extreme all the time. And so again, it goes back to like, all right, a lot of this is keeping people aligned for the very long run. Viewing it as like you have stakeholders in a real partnership across every step of the way, like I. I think is better.

• 2:13:03Logan Bartlett?

  Yeah, no, I mean, I agree, but it's also self-serving for me to say that. So now, last round was announced in March.

• 2:13:11Speaker 03

  That's right.

• 2:13:11Logan Bartlett?

  And happened before that, obviously, and you alluded to Tech Talk's. I are not doing quite as well, at least as they were in March and before that. So I guess I'll give you an opportunity for a commercial here. What do you say to an executive that that is saying, hey, you know, whatever? You did this round and now the market's down XYZ percent, right? And it's something that goes back to like the arbitrariness of valuations. But what what is that message that you'll say to a sophisticated executive? A sophisticated engineer who's trying to understand the valuation and justify like, why I should get on this rocket ship now?

• 2:13:52Speaker 03

  Yeah, I will first, I mean, just to give like the the ramp pitch. And then I'll give like the forget what the company does. Let's just look at its size and sort of think about it. I think first on the ramp side of this, like our core value proposition is to help companies spend less money and spend less time. It's viewing a dollar as valuable. And in a world where the cost of the of a dollar has gone up dramatically, the importance of making sure that you're getting a high return on it. It's never been more important. And so in many ways, like it's been a huge opportunity for Ramp. It's we have to be there for for customers and increasingly deliver more and more value. But it's led to some of our fastest growing months.

• 2:14:35Speaker 03

  I think since we've started during this period, because suddenly like saving is not a nice to have. It's important. So over the long run, that should that should help that that I think probably safe to say lounges are nice. A glass of wine every six months in a lounge is a great thing. But, you know, cutting costs now when it's important and people have that scrutiny matters. But let's say it's not just ramp. Let's say it's any kind of company.

• 2:14:59Logan Bartlett?

  Yeah, let's say company valued at $8 billion and you know, what's your, how do you explain that point?

• 2:15:06Speaker 03

  Yeah, so let's take like sort of two, two companies. You know anything about the companies? One company is, let's say, November 2020, 8 billion. Let's say another company, it's at 100 billion.

• 2:15:19Logan Bartlett?

  2022.

• 2:15:20Speaker 03

  Yeah, or 2021, 2021. Let's say that both are in the same sector, they're trading at the same, let's say, if you want to take a revenue multiple or something like that. The public company, let's say it's at, you know, goes down to 25. Let's say you don't have a view on the company at all. You don't know anything about the cash flow behavior. Totally opaque and you know, we can talk about more of that, but you know, you say, oh, all right. Well, it should move at least in line with it to, fine. All right. You want to take that. Now, company A, let's say is growing at 50% per year. Now, if you're going to go and do 50% per year, maybe it's going to take five, six years. If things totally go right, they maintain that growth rate to get back to 100.

• 2:16:05Speaker 03

  Company B, let's say is growing 400% per year. And so the question is, one, assume that they're both are equally in the same situation. Which one do you want to be at? And if the second, by the way, is not just growing faster, but has strong cash flow characteristics, is burning very little, has a large cash bank. Which one do you think is going to be easier to one, grow into it? And then later to, by the way, grow faster, I'd argue just simply mathematically. You don't need to know anything about either company. There's a lot of advantage to the second. Beyond that, when you take a company that has almost all the capital it's ever raised, is uniquely well-suited, has extraordinary product market fit. And by the way, has grown, well, that can be the exact figures fairly dramatically.

• 2:16:49Speaker 03

  You know, what I'd say is, look, I, people need to pick what feels right, you know, for them and be the right fit, not just in competition, but in career. But I think there's actually really a unique selling point to one that's going after a very large industry.

• 2:17:07Logan Bartlett?

  I guess the two things that you didn't hit that I think are also, I mean, maybe self-evident, but we talked about it earlier. You haven't taken the highest price along the way, right? It's not just one person that agreed to this price. It's a lot of fairly smart, I mean, take me out of the equation, but otherwise fairly smart people that agreed to invest at that price as well. And so presumably there's buffer on what the high watermark could have been, right? Also, the growth rate is far beyond, right, what anything else is. And then for employees, I mean, there usually is a buffer with the 409A as well, right? And so there should be really good upside now. Sometimes that buffer doesn't always work out,

• 2:17:51Logan Bartlett?

  but I feel pretty comfortable with you guys. Yeah, that all makes sense. So shifting gears out of the valuation discussion. So between Paribus and Ramp, you've had a lot of investors court you along the way. Any crazy stories of like what an investor has done that to try to get onto the cap table?

• 2:18:13Speaker 03

  I think probably like one of the more interesting, more memorable ones is if you go way back into Twitter history and if you're a large, well, could be any size Shaq fan, and you look at his tweet history, you'll find that he tweeted about Paribus. And if you look at it, it'll say, you know, kazam, you know, Paribus just saved me $200 on this hot tub. You know, it'll grant you one wish. Thanks, Paribus, helped me save this money. Glad I did. Check it out. You know, Paribus, I totally butchered the tweet. But the idea is like Shaq out of nowhere, after years of, I think, not talking about kazam publicly for like multiple decades, like was tweeting on some reference to like this product that had, I think, like 5,000 users at the time, maybe?

• 2:18:58Speaker 03

  And it totally blows my mind. Like, how did that happen? Well, there was an investor, I won't say which one, who said like, you know, look, like, we can show you, we know lots of celebrities, we have a lot of influence, and like, we can get people to talk. And I'm like, dude, I don't know what you're talking about. We're working out of like an apartment, we have a small number of users. Like who would you want? Are there any celebrities, basketball players that you know? Like I'm close to Shaq. I'm like, well, if you get Shaq to tweet like Kazam, like, you know, like, could you do it? And he's like, yeah, I'll get it done. I didn't believe him. A few days later, he's like, I'm with Shaq. He's gonna tweet it tonight. What do you want it to say? And I'm like, are you serious? Like dude, I'm totally serious. Like, send this to me. You've only got two hours. He's gonna do this. So we put this together, get together with our friend Zach,

• 2:19:39Speaker 03

  and we were like coming up with like, what would Shaq say? We didn't really watch basketball, but we knew a lot about Kazam and video games and Big Bites and that kind of thing from our childhood. And so we were like, we knew about that. We were trying to figure out then, what would Shaq buy? And so we agreed, well, maybe he'd be in like a hot tub somewhere. And so all that, we put that he bought a hot tub for $1,400. And it turns out in retrospect Shaq would probably buy a much nicer hot tub. Not sure that he would fit in it, or that anyone could get a hot tub for that price. And that we'd had him save like $200 on the thing, but he posted it. It blew up. Everyone at YC is like, what is going on? You've got like celebrities from a decade ago talking about you. And so that was very memorable. I don't think it, I think maybe it added like 10 users, but

• 2:20:22Logan Bartlett?

  Is that right?

• 2:20:22Speaker 03

  No, it didn't even work, but we loved it.

• 2:20:25Logan Bartlett?

  Yeah, that's so good. Did that person get on the capital?

• 2:20:27Speaker 03

  Uh, yes.

• 2:20:28Logan Bartlett?

  Good.

• 2:20:29Speaker 03

  I still work with them.

• 2:20:31Logan Bartlett?

  We'll talk offline. Yeah. All right. So I don't know if you know, if you know this, but you deserve either credit or blame, depending on what people think, for this being a thing. We were sitting at, right after I hired Josh, whose nice apartment we're at right now. He's a partner at Redpoint. I had hired him from NASDAQ to come over. And part of my vision was the ability for us to do more. We were in a pretty competitive environment, right? Of this was, I guess, December, November of last year, trying to find ways to stand out and cut through the noise and kind of create the sense of inevitability, as you talk about, right? And so we were at Jeffrey's Grocery in the West Village, getting drinks, and you, me and Josh, and we were sort

• 2:21:15Logan Bartlett?

  of mapping out like, the different types of things that we could do to try to stand out. And I think I probably have notes from it, like talking you through, hey, I think I'll do this podcast. And I don't know exactly what form it'll take. So depending on whether or not people think this is good, you either deserve credit or blame from it. But one of the interesting things, I guess, you have a very Interesting perspective and thoughtfulness around the media, around content, around branding and all of that. I think you're very purposeful with Ramp's brand. I've learned a lot from you about like how to think through dissemination of information, the ability to create that sense of inevitability or coolness, or whatever that is. Can you talk a little bit about how

• 2:22:00Logan Bartlett?

  you think about that as it relates to Ramp or brands in general? How do you think about the relationship that exists between companies, between branding, between media, how all those things kind of fit together?

• 2:22:16Speaker 03

  Definitely. So some of this kind of came back from the Paribus days when we really, we established we had no money, we did have mustaches, but we, you know, our way of acquiring customers for the savings app was quite limited. You know, maybe we could get referral to work that didn't cost a lot of money and could help us get to the millions of users that we would need in order to have a workable business. Couldn't really buy ads, but you know, we said, well, we're helping people save money. I used to watch local news as a kid. It was on in Las Vegas and I was like, well, how could we get, how could we be on Good Morning America one day? How could we be on a local pitch? And it turned out, Good Morning America did not want to hear from me. You know, if they were telling news

• 2:23:01Speaker 03

  that it needed to be national news, they weren't going to take a pitch. CNN was not going to go and answer and email on it. And the question was like, well, is there anyone who would? And we learned a lot from other founders, but also just noticing there's some great books on this too. One of which, tough title, probably doesn't make me look wonderful, but is a book called Trust Me, I'm Lying by Ryan Holiday, which his job was basically how could you blow up like it was like Tucker Maxx and I think American Apparel. And a lot of what that philosophy was around is it was really around this question of how could you do things that were interesting and figuring out who was actually receptive to different pitches, different levels?

• 2:23:38Logan Bartlett?

  He pushed, it's an amazing book. After we talked about it, Jeffrey's Grocery, I went and read it and it's fascinating. I mean, the type of stuff he does is definitely on the line of ethics. I think that we could talk about like, one of the examples was he went and Tucker Max was coming to a city and he went and graffiti the billboard himself, even though he was the PR person for Tucker Max and then took a picture of it and said, "People are so mad about this. Let's send it to the local news." And so, he did some stuff that was a little more ethically dubious. Good podcaster now, it seems like. But, yes, it's a fascinating book about the relationship between media and brands and all that stuff.

• 2:24:12Speaker 03

  But I think the thing that was incredible about it and the big insight, which in some ways sounds obvious when you say it, but is so different in the way people will approach telling stories is in storytelling, it is not about like the marketing message that you have and your message and how do you get it out there? I think a lot of people are like, "I've got to, I need more people to hear about me. I need comms. I need to go and send this stuff out." The question is, what is actually interesting to people? Ryan maybe was more manipulative, but like, the question is like, who is this message actually appealing for? How could you craft that, pull that together? And so, a lot of this is really trying to think through what's interesting on the other side of it. And then if you have that, can you create momentum on it? Were like the two critical insights.

• 2:24:54Speaker 03

  And so, it turned out that the local reporter in Las Vegas on, you know, that ABC 13 was not getting pitched very often, even though there was someone on staff, which was like, you know, consumer five on, you know, consumer on your side, or stretch your dollar, or different segments that were on real tactical ways that people could save more money that week. It was also true not just of Las Vegas, but of local affiliates in Tampa, in Topeka, Kansas, in New York, in all these places. And if you could actually think about who's actually there, what's the producer? We might have had a couple of users in all these different states, maybe people were saving money. Could we have a unique way to reach out to someone who actually was interested in that story?

• 2:25:36Speaker 03

  And we started doing this. We would reach out to people and email people in Las Vegas and, you know, in LA, in New York. And before you knew it, there was coverage that was starting to pop up all across the country. And then later, we could go, you know, to national news and actually say like, you know, ABC, good morning here. Like, "We've been on 10 ABC affiliates with these segments. It's great. These are real people saving. We'd love to take this as large as thing and you establish the credibility." It came through and you could kind of move through the ecosystem. And I guess there's going to be different things that resonate with different markets. But I think just being, you know, receptive of one,

• 2:26:13Speaker 03

  You know, at this point, if you're still with us in the podcast, it's like been over an hour. Like, if most people have tuned out because maybe this is interesting, but hopefully we did a good enough job of actually being interesting enough to stay on. And I think that's true of most media. If you can actually think through of like, what is a message that either is worth listening into, or will be interesting to someone who is covering a certain beat and you can, you know, effectively be a good partner, have something real in it. And so I think a lot of it comes down to, one, don't just like pitch people blindly, like actually be thoughtful, like who's on the other end. And two, like, if you can, you can, you can do that, have things that are actually interesting, that can be, not just a thing to be managed, but a great way where you can reach a lot more

• 2:26:56Speaker 03

  people, tell interesting stories, get more into the background, the ideas, the philosophy, the mystique, the bizarre shack stories. And I don't know, it's a build a different kind of audience.

• 2:27:06Logan Bartlett?

  No, it's been super helpful. It's been super helpful with me. And I've been purposeful about like, when to have you on, just because I wanted to make sure I was, you know, I didn't want to do you first because I knew our conversation would be different. And I wanted to learn a little bit of stylistically. But each person I've on gives a little bit more credibility to the next person that's going to come on, right? And sort of creating that sense of like, all right, well, if this person did it, then that person did it, then maybe, okay, so that's good. Those are all real people. Like, I like that, right? And but we talked about like, even, you know, the part of the, we kind of have our newsish section and commentary, and then I bundle it with the interview. And people are like, oh, I just want the interview, or I just want the news. And I'm like, you know what? You're getting both. Because some people come just for the interview. Some people

• 2:27:48Logan Bartlett?

  come just for the news. But if you, if you can keep them together, like, I think ultimately people come for, they might come for the interview, the person that's going to be on, but stay for the connectivity between the two or the personalities that are on and all that stuff. And so it's, yeah, it's interesting. I mean, I give you a lot of credit both from like how ramp's been built, as well as like at a very product level, you know, you guys have these modular elements, right? But you integrate them together in a really nice way. But then also the branding and purposefulness and the inevitability of all that stuff. And so, yeah, thanks. Thanks for doing this. All that stuff is something that I've, I've really internalized. And not that this little podcast is a, is a business

• 2:28:31Logan Bartlett?

  itself. But I think there's a lot of lessons that you guys have executed on that, that I've certainly internalized.

• 2:28:37Speaker 03

  So we feel super lucky to be able to work with you and this has been a ton of fun. It's been fun seeing the podcast blow up too.

• 2:28:43Logan Bartlett?

  Yeah, yeah, well, good. Well, thanks for doing this, Eric.

• 2:28:46Speaker 03

  Well, thank you.

• 2:28:51Logan Bartlett?

  And that will do it for the 20th episode of Cartoon Avatars. Thank you to Zach Weinberg, I guess, per usual at this point, as well as Mike Dudas for putting his feet to the fire to talk through all things crypto, Web 3, Bitcoin, all of that stuff. Look forward to having both of them back on soon. And then also my friend and portfolio company CEO Eric Lyman for telling his story. We look forward to, we look forward to seeing everyone here next week as well. Thanks for joining.