#477 Avichal Garg on His Crypto Thesis

Avichal Garg is a co-founder and partner on the investment team at Electric Capital. Avichal is a successful serial entrepreneur with executive experience at Google and Facebook, which acquired his previous company in 2012. In this conversation, we discuss Avichal’s crypto thesis, decentralized finance, why smart contracts are undervalued, crypto infrastructure, and why decentralization is the natural end state. ======================= Choice is a new self-directed IRA product that I'm really excited about. If you are listening to this, you are likely part of the 7.1 million bitcoin owners who have retirement accounts with dollars in them, but not bitcoin. I was in that situation too. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it too. Absolute game changer. https://www.retirewithchoice.com/pomp ======================= The Rodman Law Group is dedicated to helping entrepreneurs realize their vision by helping them operate defensibly in sectors where laws and regulations haven’t caught up to the realities of the industry. The Rodman Law Group’s legal expertise combined with its understanding of blockchain technology makes it the ideal legal service provider for the industry. http://www.therodmanlawgroup.com/pomp

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

• 0:02Anthony Pompliano?

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

• 0:12Anthony Pompliano?

  Avichel Garg is co-founder and partner on the investment team at Electric Capital. Avichel is a successful serial entrepreneur with executive experience at Google and Facebook, which acquired his previous company in 2012. In this conversation, we discuss Avichel's crypto thesis, decentralized finance, why smart contracts are undervalued, crypto infrastructure, and why decentralization is the natural end state. I really enjoyed this conversation with Avichel, and I think you will as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is BlockFi. BlockFi provides financial products for crypto investors. Those products include a high-yield interest

• 0:54Anthony Pompliano?

  account, a US dollar loan against your crypto collateral, and no fee trading on their crypto exchange. As an investor and someone who sits on the board, my favorite is the high-yield interest account, where you can earn up to 8.6% APY in an interest-bearing account. If you want to get started today, you can go to blockfi.com/pomp. Again, blockfi.com/pomp. And if you've got an account, you can sign up for the waitlist for the new credit card that they'll be launching that'll pay you rewards in Bitcoin rather than cash or airline miles. Again, blockfi.com/pomp. Next up is Choice. It's a new self-directed IRA product that I'm really excited about. If you're listening to this, you are likely part of

• 1:36Anthony Pompliano?

  the 7.1 million Bitcoin owners who have retirement accounts with dollars in them, but not Bitcoin. I was in that situation, too. But now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it, too. It's an absolute game changer. A self-directed IRA product that allows you to buy Bitcoin, hold the private key, and use tax-advantaged dollars to do it. Head on over to retirewithchoice.com/pomp. Again, retirewithchoice.com/pomp.

• 2:07Anthony Pompliano?

  Next up, and lastly, is the Rodman Law Group. They are dedicated to helping entrepreneurs realize their vision by helping them operate defensively in sectors where laws and regulations haven't caught up to the realities of the industry. I've been investing a long time now, and I know that having a great lawyer, whether you're an investor or an entrepreneur, is one of the key things to success. The Rodman Law Group has been accepting Bitcoin as payment since 2017. They've also moved part of their treasury into Bitcoin. They get it. They understand the industry. So if you are looking for help on the legal

• 2:46Anthony Pompliano?

  side, go check out the Rodman Law Group. You can go to therodmanlawgroup.com/pomp. Again, therodmanlawgroup.com/pomp. You'll get a discount on the legal services for the first year. Again, therodmanlawgroup.com/pomp. A law group that not only understands Bitcoin, cryptocurrencies, and blockchain technology, but also are great lawyers and understand the law as well. So head on over to therodmanlawgroup.com/pomp. All right, let's get in this episode with the virtual. I hope you guys enjoy this one.

• 3:21Speaker 02

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

• 3:52Anthony Pompliano?

  All right, guys. Bang, bang. I've got a virtual here. Thank you so much for doing this, sir.

• 3:56Speaker 03

  Great to see you. Thanks for having me.

• 3:58Anthony Pompliano?

  For sure. Let's just jump into your background. You didn't work on crypto forever. So what did you do before crypto? Where'd you grow up? Facebook? Just tell us the whole story.

• 4:07Speaker 03

  Yeah, well, where I grew up, I grew up, I was born in India. I grew up mostly in the Midwest, Kentucky and Ohio. And then came out west for school and spent most of my career as an entrepreneur. So I started and sold two companies. Second one to Facebook. And I worked on a bunch of stuff there, worked on products and some ad stuff and had a good time. And with that second company, actually, the way I got into crypto with that second company. What we were doing was we were kind of like a. We were actually kind of like a TiVo in the cloud. So you give us the URL, we copy whatever was on the other side of it and make a copy of it. But the way that we did that was we built all of this really amazing infrastructure. Where we could control computers and all sorts of remote data centers. We kind of built our own little mini distributed system.

• 4:52Speaker 03

  And we're able to cost optimize that and like buy remnant compute power all over the world. And this was in like 2010, 2011. And my co-founder Curtis, who's also my co-founder at Electric. He worked on protein folding at home. He worked on like some distributed systems like 15 years ago. And he came across Bitcoin and said, hey, I think this actually might solve the hardest problem we had, which was like, how do you get people to donate? Computational resources to to this network, like this Bitcoin thing might solve it. And so for a hot minute, we said, maybe we should just become Bitcoin miners. So in like 2011, we just started like mining a bunch of Bitcoin. This is like pre ASIC era, right?

• 5:31Speaker 03

  And so 2010, 2011, and and we were, we were not pressing it. We were not visionary. We didn't hang on to it. So we like, you know. There was a period where it ran up to like, you know, a hundred bucks or whatever. And we basically just sold it. We're like, this is insane. We're out. And but that was kind of like our original foray into it. And then Facebook bought all that IP. And then we stuck around as hobbyists. And so we did a little bit of like Ethereum and Monero mining. And and then we left in 2016. And we're thinking about what to do. And we're just spending all of our time in crypto personally. We were, you know, it was kind of like the first thing that felt as raw as the internet felt to us. When we were kids, where you just like go into a chat room and nobody knew.

• 6:14Speaker 03

  How old you were, where you lived, you know, who you were. It was just like your handle. And you had some ideas and you like throw them out there. And if they made sense and like people engage with you and if they didn't make sense, you got ignored. And you could kind of had this like just amazing experience. I'm sure you remember this from like 2017 where you would. You'd show up in a chatroom or Telegram group or a Signal or whatever. And it would be, you know, like this motley crew of people, like the group of people in crypto, even to today, I think it's like, you know, Wall Street people, you have entrepreneurs, you have academics, you have touring award winners, you have professors that have dropped out of school, you have college kids, you have like adult film stars, you, you, you know,

• 6:57Speaker 03

  obviously you have some drug dealers, but like, that's a really strange group of people to all be in one place. And, you know, like if you threw a dinner, like if you threw a house party and that was who showed up, you'd be like, what the hell house party is this? Right? Like you had some porn stars and some drug dealers and like my college professor and like a bunch of college kids and like some Wall Street guys. It's just be like a weird party. So.

• 7:16Anthony Pompliano?

  It'd be fun.

• 7:17Speaker 03

  It could be a blast, right? Well, it is a blast, right? I mean, that's what makes crypto really fun. It's just like all these people on the fringe kind of like showed up to the same party. And so we looked at in 2017 and we were like, this is so fun. We just want to do this all day. So we threw, we just threw down some desks at my place and Curtis would come over every day and we would like be in these chat rooms and be reading white papers and we're hacking on some code and writing some smart contracts, just having fun with it. And kind of as the last Bitcoin cycle was going up, all these VCs started reaching out to us because we had done some company, so a bunch of folks know us. And so they started reaching out and saying, hey, could you come in and talk to the partnership about this crypto stuff? Like, I remember you guys telling me about Bitcoin like five years ago, six years ago, is it real this time? Should I like, should I buy some Bitcoin?

• 8:02Speaker 03

  What's ETH? What's an ICO? You know, like, should I do one? Like, how do, you know, should this company do one? And so we started doing all this education in 2017. And by the end of 2017, all these people, a bunch of the more traditional VCs who are phenomenal, I mean, these are like the world's best investors, really quickly realized that crypto is different and they're not really set up to do it. You know, like regulatory challenges, you don't want to go register with the SEC. You know, back then, it's a lot better now, but you know, four years ago, if you, if you invest in some token network, like what, all of a sudden, one day, like a USB stick shows up with $5 million on it? Like, what do you do with that? Does your associate just hang on to that at their house? That doesn't seem like a good idea, right? So they were like, okay, we don't want to do this. Can we just give you guys money?

• 8:46Speaker 03

  Like if I if I give you money of each and Curtis, I know you're not going to go buy some Monero and like move to Costa Rica and like live that John McAfee life, right? So here, take some money and like do what you do and just like, you know, we trust you guys. And so that's that's actually how electric happened. So Curtis and I joke, we're kind of like accidental VCs. We never, we were like entrepreneurs that were just kind of doing our thing. And a bunch of people said, hey, take some money. And I mean, anybody who's done a company is like, if people show up with money and they're like, hey, take our money, you should probably take it. Like if you've been burned, we lived through 2008. And so like one of the number one lessons we learned is like, if people want to give you money, you should probably take it. And so that's how we started electric and now we focus 100% on crypto and crypto networks and have been fortunate to be able to do that for the last few years.

• 9:31Anthony Pompliano?

  So you are my favorite accidental VC, which goes right next to my favorite non VC, which is Jeff Lewis at Bedrock, who continues to tell everyone that. So we've got accidental VCs, we have not a VC, and I'm sure that somebody will call us something new. Talk through just a little bit about kind of your thesis on crypto in general, right? So there's some major themes that I think you guys have, but just when you sit down with an LP and you say, hey, you know, here's how we think about this space. Here's why we're excited about it. What do you share with them?

• 10:00Speaker 03

  Yeah. So we, I mean, we're, we're engineers and like product people. And so we came at it from like a really different perspective. I think there's this really valid, which we learned just, just by doing worldview on this stuff, which is a little bit more top down, right? Which is like the, the money supply, fixed supply, Austrian School of Economics, like all that kind of stuff that we sort of, you know, we, we bootstrapped up into to understand. But we come at it from like a much more bottoms up perspective. Like our, our take on it is, is through the lens of software. And so what you have here is, in our opinion, the pendulum swinging away from the internet, like the internet as we know it today. We're like, if you think about what the internet was designed to do or what has become, it really optimizes for like speed and throughput and scalability.

• 10:47Speaker 03

  And what we gave up were things like privacy as we've now realized. The ownership of our data and hand over control to these like massive centralized organizations. And you know, these crypto networks and all of this distributed technology, all of a sudden just says, what happens if I do the opposite? Like instead of optimizing for speed and scalability and throughput, what if I optimize for you owning your own data? And what if I optimize for censorship resistance? And what if I optimize for privacy? Like, what can I do? And once you change the constraint set like that, it's there's sort of that like Marshall McLuhan, the the medium is the message kind of a thing, right? It's like, actually, the, once you change the constraints, people just become really creative and you realize you can do totally different things.

• 11:31Speaker 03

  And so the question then is, okay, well, you have this technology stack that basically does this totally different set of things in the internet. It's the inverse of the internet. So what is it good for? And I think the failing that most people have had is they look at it and they say, oh, it's bad at all of these things instead of saying like, what is it good for? And so it reminds me a little bit of like, the iPhone launch. Like, I was, I was actually really fortunate. I slept outside Moscone to be able to get into that iPhone launch. And I watched Steve Jobs like launch the iPhone. It was just a sick, just like an unbelievable, it was a masterclass in like how you do a product launch. It was unbelievable. But the, the, the thing that I remember afterwards was like, I went back to work and I tried to like, explain to people this thing that had just happened. And I couldn't, I just like totally failed to explain it.

• 12:14Speaker 03

  And the criticisms were like, hey, because BlackBerry was so dominant at the time, the criticisms were like, oh, it doesn't have a keyboard. And like, you know, like it, it doesn't let me do this, or you know, the screen is really small, or the internet connection is slow, or there's no apps. Like there are all these criticisms. And what people totally missed were like, oh, well, it has a GPS on the device and has a pretty good camera. And the touchscreen lets you just do totally different things. And so I think if you look at the, the sort of blockchain and crypto universe, the question is, what is all this stuff really good for? Like, where does privacy matter? Where is okay if things don't happen in like? Thirty milliseconds if it takes a couple of minutes like where is that okay? And it turns out anything that deals with money. Those are actually very reasonable trade offs to make like you don't need to get a loan.

• 12:54Speaker 03

  In like thirty milliseconds, especially if like you think about how you get a loan today from the bank. Um, it might take you thirty days, it might take you sixty days. So actually like thirty minutes to get a loan or three minutes to get a loan is still way better. It's orders of magnitude better than thirty days. Um, and so what you have is this like technology that's just good at a totally different set of stuff than the internet. And a massive market, which has everything to do with money that the technology is just a perfect fit for. Um, and so it's us, that's like, that's where all this starts. And so that's, you know, like our understanding of Bitcoin and our understanding of Ethereum really came kind of more like bottoms up. And then we sort of like learned about the economic side of it and we're like, oh, this is kind of like digital gold.

• 13:37Speaker 03

  Um, but to us, it's like the technology that's always been the the interesting wedge.

• 13:41Anthony Pompliano?

  Yeah, so let's talk a little bit just about kind of decentralization in general. I think that this is probably one of the underlying themes across, you know, a lot of what you guys are doing and and really just the industry in general. And so it there's kind of a couple of schools of thought. One is, hey, Bitcoin is the king, Bitcoin will remain the king and everything will be built on top of Bitcoin. Uh, there's another school of thought that is, um, we're going to take all of the ethos of Bitcoin around decentralization. Um, they had a consensus and we're going to go apply it in a million different ways with all sorts of different technology. Um, and go touch every other industry. Um, and then there's kind of a hybrid, which is like, well, Bitcoin's gonna be really important. And, uh, that's likely to be the winner in the digital currency space. And then like, there's a bunch of other stuff, but they don't necessarily compete with Bitcoin.

• 14:24Anthony Pompliano?

  My guess is that you're in the third bucket, but one, I want to make sure that that's true. And then just kind of explain like everything else other than Bitcoin, uh, as you're kind of thinking through decentralization to the protocols.

• 14:34Speaker 03

  Yeah, we're absolutely in that third bucket like Bitcoin is the biggest and most important protocol today. It will be one of the biggest and most important things in this entire space. It's the gateway drug for a lot of people. It's like how you get into the space is is you you sort of get your head around Bitcoin. Um, and then once you start getting your head around Bitcoin, you start realizing that there there are certain things that Bitcoin's phenomenal for and great for and then actually if you sort of just tweak the consideration set a little bit or the constraints a little bit, you might be able to do more. And so something as simple as like, yes, technically, you know, there's Bitcoin script and it's programmable. Not quite the way that that other platforms are, but like, wouldn't it be great if it were much easier for developers to come in and write these kinds of smart contracts? And and and that very naturally starts to lead you to something like Ethereum.

• 15:19Speaker 03

  Or hey, wouldn't it be great if actually you could tweak some of the parameters and and make it much, much better for like micropayments like ETH has has some challenges around gas fees. And that might lead you to something like like Mobilecoin, which is really optimized for payment flows. And so you can start, I think Bitcoin's really, really important, but we sort of think that there's going to be many, many thousands of tokens. There are going to be many, many thousands of protocols. And they're going to all sort of interrupt with each other. And and we're going to essentially recreate a lot of, in our opinion, what the internet was supposed to be. And but it'll take 20 to 30 years. Like, I think we're like in the first first inning of this. So happy to talk about that. I mean, I think the the sort of natural one that we we spend a lot of time on these days

• 16:03Speaker 03

  is um is essentially the smart contract universe. Like, you know, I think one of the most fundamental things here that most people, even people in the space, including ourselves, I think, have not really fully internalized is what it means for computers to be able to own money, right? So like, if you start from this place of, you know, Bitcoin is money, like it the bits themselves are the value. That's kind of a crazy concept, right? That's it's a bearer instrument. That that means, you know, unlike your bank account, when you go to your bank, that's a representation of money, like you log in and then you got to go to the bank. It's really an IOU from the bank.

• 16:43Speaker 03

  And which is really, it's funny because then that's an IOU from the government. But You know Bitcoin is different because you own the bits. And if you own the bits, you know, you own the money. And the way that you assert ownership over the bits is with a private key, which is just another set of bits. And so very quickly, you realize, well, doesn't that mean that like a piece of code can create a wallet? And have its own private key and it never tells me what the private key is. And then I could send money into the wallet. And actually now that piece of code essentially custodies the money, it owns the money. And that's a pretty fundamental breakthrough. Because what that means is that computers can be counterparties to humans. And there doesn't need to be a human on the other side. Or what it means is that actually computers, like machines can pay machines.

• 17:25Speaker 03

  And so when you start playing that out, you're like, wait, so that means like you could do really crazy stuff. Eventually, things like you have a self-driving car driving down the street. And enough of them line up and they like all decide to pay the stoplight to turn green. And so you can do like microtransactions. And actually now like all the lights in the city would turn green kind of at the right, you know, at the right times. And like your traffic would flow more swiftly. And actually you'd be gathering taxes exactly for the streets where there's the most usage. Right? Like that kind of stuff, you're like, oh, that could actually now happen. And there need to be no humans in the loop. Like you just, the way you go to the gas station, maybe you like plug in your car to charge. And like using your mobile app, you like fill up the wallet on your car's wallet. Right? That kind of crazy stuff can start to happen. But in the short term, you start saying, well, you know, what are these things really good for?

• 18:10Speaker 03

  And in our opinion, going back to this idea of like money, smart contracts are this really interesting thing. Because what they do is they take like a quadrillion dollars of stuff that's happening in the world and allow you to express it in code. And so if you think about anything that has to do with money, right? A will or a trust or an escrow or a REIT or a mortgage or a security or a derivative, like literally a quadrillion dollars of the world is here's a pile of money. And here's a bunch of rules around that money. Like, you know, Anthony has access to it, Avichal doesn't. But like in six months, Avichal has access to it and Anthony doesn't. So like in some future time horizon, like please execute these instructions. And today we just do that with like spreadsheets and legal documents and email. And like, that's actually how all of that stuff works today.

• 18:55Speaker 03

  And so along comes something like Ethereum, which is just like, well, I can own the money. And now you can just write those instructions out in code. And it's deterministic, like I can tell you exactly what the code is going to do. And there's no way to change it. And that's, that's literally the one thing that computers are better than humans at is like deterministically executing instructions. So. To us, it's just like, you know, literally a quadrillion dollars of stuff is going to get eaten up by these kinds of tools. How it happens and stuff, you know, I think it's going to take a decade to play out. We're still in the really early days. I mean, we very well, you know, using a Facebook analogy, we very well may be in the like MySpace era of this, where we kind of are starting to see that this is possible, but actually like we haven't realized how it's going to go mainstream yet. Or maybe Ethereum is Facebook. We'll know in 10 years.

• 19:37Speaker 03

  But, you know, I think, I think we haven't yet really figured out how this stuff is going to change everybody's lives. And it is, I think it's going to change everybody's lives. I think it's going to touch 7 billion people.

• 19:46Anthony Pompliano?

  So I completely agree with you. How do you think about like, let's just take smart contract platforms in general, right? So I think Ethereum is by far the leader there. There's a bunch of people working on bringing smart contract functionality to Bitcoin. But then there's also, you know, a gazillion other, it seems, smart contract platforms that are popping up that really, you know, Ethereum killers, competition, whatever you want to kind of label them. But how do you think about this? Is it a one smart contract platform to rule them all? Is there coexistence? Is it literally every protocol will have to have smart contract compatibility? And so it's less about like, which one is the smart contract platform? And it's just like, at what point does a protocol add that functionality? Just like, how do you think about that among the different protocols?

• 20:28Speaker 03

  Yeah, I think it's a really good question and it's a tough question. And there's a different question. There's like a slightly, there's two different questions there. There's the question of like, what happens in the world? And what do you think is going to happen in the world? And then there's the like investor variant of that question, which is like, okay, well then how do you construct a portfolio? You know, to minimize your downside, but maximize your upside. And you might do something slightly different, like you might be really convinced that Ethereum is going to win. But as a, you know, that might be like a 90% chance, you're like, okay, just think Ethereum is going to win. But as an investor, you might still take a bunch of positions into things, you know, to just in case, right? From a, from a return perspective, it might still make sense to do that. So to that first question, like, I think the way it's going to likely play out is it's going to be winner takes most, because the network effects are real.

• 21:12Speaker 03

  You know, developer network effects, integration network effects, fiat on-ramps and off-ramps, regulatory network effects, like these are all things that are moats around a layer one protocol. And Ethereum far and away has the lead there, but it's still very early days. And then I think you'll get like number two, number three, number four. And depending on how you think about it as an investor, that could still be a fantastic opportunity. So if you look at like social networking, which is another network effect driven sort of business, Facebook was obviously the big winner, but LinkedIn did fantastically. Twitter is really important. TikTok is really important. Snap is really important. Like you, you actually have, if the market size is like large enough, is, you know, it's multiple billions of people, then odds are you can have second and third and fourth place winners that are still really,

• 21:55Speaker 03

  really massive. And so I don't think it's, I don't think it's, you know, winner take all. I think it's winner take most. But actually, we're in such early days here that actually, from an investor perspective, kind of having, having a few different bets, you'll probably still do really well if you pick well. And then each of those networks will specialize in the same way that, that media companies or that social media companies or other network effect things do. And so you might get one thing that's sort of the, the money chain, which might be like ETH. You might get something that's much better for NFTs because like, you know, scalability is such a challenge and gas fees are so high that like crowds, crowds out a lot of non-fungible token use cases. And so maybe that just moves somewhere else. And so, you know, I think it's TBD how, who wins and how they win. But I think

• 22:37Speaker 03

  that my best guess is that's how it'll be, is like winner take most, and then specialized chains for, for different use cases that are optimized to, to meet the needs of that sort of crowd of people.

• 22:47Anthony Pompliano?

  Yeah. I mean, it makes sense. And, you know, the beauty of it is the market will ultimately decide, but I think that that's a pretty rational view of the world. Let's look around, you, we talked a lot about kind of the technology infrastructure and kind of how that plays out, and really where investors are thinking about capital and returns. But how does this look for users in terms of how does the crypto infrastructure kind of change the products and services and goods that we interact with on a daily basis? I think people understand the argument for Bitcoin as money and that not being kind of fiat or kind of in the traditional technology format. But what else? Like, how do you think about the, the actual everyday life of a person somewhere in the world changing because of this crypto infrastructure?

• 23:29Speaker 03

  Yeah, I think it's going to be kind of like. The phone in a sense, which is to say that it's gonna change everything, but you will stop thinking about it as a separate thing. So like, there was a time when people were doing mobile apps, where like investors would see pitch decks, or founders would go in and pitch and be like, we're a mobile app company, right? And here's what we do. And like, if you did that today, your investors would just be like, well, like, of course you are, like, what else would you be, right? Like, of course you're a mobile company, right? And so I think that will, that's kind of how it will happen. So the question is like, what are the use cases where people are gonna use these things? And they won't even realize that it's crypto behind the scenes, right? And then one day, five or 10 years from now, like, every company will just have this, and it'll just make sense to use these primitives.

• 24:14Speaker 03

  And then you won't even call them crypto companies. It'll just be, that's just like an app, or that's just a company, right? So, a really concrete example would be, you know, like, Facebook is doing this, what used to be called Libra is now called DM, which is the idea that you could have this, this way to move money really, really quickly, between people all over the world. And of course, that makes sense inside something like Facebook Messenger or WhatsApp. And in a lot of other use cases. And so like Shopify is part of that network. And they're trying to make that happen, and they have all sorts of challenges. But you can imagine if they launched that, like, all of a sudden, a billion people would be moving money around the world using crypto infrastructure, because that's actually a better way to do this stuff. It's actually like the 2020s computer science version of how do I move money around the world? And sort of like 1970s infrastructure, which is kind of how we do it today. And so I think that's how it plays out.

• 24:58Speaker 03

  Or like, another good, good way this is, I think, gonna play out is like, through the creator economy. Like, creators are, you know, musicians and artists, and, you know, all these people that are just so creative about how they're using media. And they're, they're, you're already seeing, starting to see it happen, right? Like, what does it, what does it mean for a musician to like, make music, but retain the rights to that music? Right? Is there a way for them to essentially have, like, the, the rights be digital and be guaranteed that they own them, but perhaps be able to resell them? Or, what does it mean for a creator to be able to, like, raise money? Right? So, creators are really interesting. Creators are like the new small business. Like, 15 years ago, if you were a SaaS business and you went to a bank, and you're like, hey, look, we have really good ARR. Will you lend us money?

• 25:43Speaker 03

  The banks were like, no, I don't, that's not a, that's like, not a physical asset. How do I lend against that? They didn't understand this concept of recurring revenue. How do you do that as like a YouTube creator or TikTok creator today? Can you go to a bank and be like, hey, I have 18 million fans or followers? Like, please lend me money so I can like hire staff and make better content and like monetize better? Like, no bank is going to give you money, right? Uh, because they don't understand that asset. Um, but your fans might, right? And so maybe what you can do is like issue a token and your fans will all buy that token. Um, and if you're, if they find you when you're, when you're just starting out, uh, and there's a limited number of tokens and there's those tokens give you benefits. Like you get to be a part of a, a, an invite only fan club. Like maybe those tokens appreciate in value over time. Um, and so when that, when that creator is really popular, then those tokens are worth a lot of money.

• 26:28Speaker 03

  Um, and so, you know, that you get to, and creators are playing with this kind of stuff today, right? It's, it becomes for the creator like a financing mechanism and for the fans, a way to like, support the people that they create, care about, but also potentially participate in the like financial upside of identifying people. So you can become like a talent scout. That's totally going to happen. Um, and it, and it very well will, will happen on crypto infrastructure. It's just like people may not realize that that's what they're doing behind the scenes, right? So I think that's, that's kind of how it plays out is like five, over the next five years, there will just be some killer use cases. Um, and, and the average person won't even realize that what, what they're using is crypto.

• 27:00Anthony Pompliano?

  And so those killer use cases, I think I separated them into two buckets, right? One is like, hey, uh, Amazon already has gift cards. And so that's a version of a quote, quote, token. It's got a different technology form factor, but, uh, it unlocks certain types of behavior and certain value for that ecosystem. The other would be something like, hey, Uber wouldn't have been possible without mobile phones with GPS in it. And therefore there was a technology leap and then that unlocked, you know, a whole bunch of services, not just Uber, but, but many like it that use that GPS functionality. And so it almost sounds like you're basically making the argument like both will happen, right? It's not a binary world, like some of it is just taking existing things in the world and now using tokens and, and protocols and smart contracts to now put them in this new technology form factor.

• 27:42Anthony Pompliano?

  But also because there is innovation around the technology that we can unlock brand new use cases, uh, and brand new things in the world that we haven't seen before because of that technology leap.

• 27:52Speaker 03

  Yeah, that's right. And I think, you know, there are like a couple of different ways to look at that. So the historical analog is like, if you go back, I went back and read a bunch of articles from like the early 90s, when the internet was just getting off the ground. And it's, they're hilarious. I totally, if anybody is like, like a student of history, you should totally go back and read these articles. Because like, you see them trying to explain this new thing, the internet. And they're just like, to now to us, it's just like so obvious, but they're just struggling. And so you have these like hilarious videos and stuff of people trying to explain the internet. And, and the prevailing wisdom at one point was, once people got their head around the idea that, that the internet was like the information superhighway, the natural conclusion was, oh, well,

• 28:36Speaker 03

  of course, this is going to be great for CNN and the New York Times. Like, they're going to be just huge businesses. And Walmart is totally going to be able to sell stuff online and be like, an even bigger company. And in retrospect, you're like, oh, that was totally wrong. Like, the real winners were Facebook and YouTube and TikTok and Twitter and Amazon. It was not, you know, the incumbents. And, and the reason is that, like, adopting this technology natively and using it natively, requires you to change the human organization around the technology. Right? So like, at Amazon, the people that make all the decisions are the engineers, not the brand managers. It's not the guy who has the relationship with Procter and Gamble that gets to make the call.

• 29:16Speaker 03

  And so the question in crypto land is, yeah, like, all of this stuff gets baked in to existing companies, Shopify and Facebook and whatever else. But like, what does a crypto native organization look like? And like, what use cases does that infrastructure unlock that you just couldn't do before? Because if you play that forward, I mean, Amazon was sort of an obvious one, like in the sense that like, you could see e-commerce was going to happen. But a lot of the really biggest businesses that came out of the internet were the things that were really counterintuitive. They like, they just didn't make sense at the time. Like, it's hard to imagine now, but like, Facebook and Airbnb and Uber just like made no sense at the time. They actually, you know, like, they're basically, the biggest businesses on the internet are like, basically, all of the things you're not supposed to do. Right? Like, you're not supposed to

• 30:01Speaker 03

  Talk to strangers, you like shouldn't get into a stranger's car, you feel like shouldn't go to a stranger's house. Like really, you're gonna take everything about your life, like where you live and who you are and who you're married to and like what your kids look like and put it into a public database where anybody can find you. Like, these are all the things you're not supposed to do, and they're like the biggest businesses, right? So the question I I sort of think through is like, what is the wave of stuff where it's gonna look really obvious in hindsight, but in the moment, you're like, that looks batshit. Like, why would anybody do that? And that's really hard, but I think those are gonna be actually the really big thing. So there's like this set of obvious stuff that we just talked about, like, you know, mobile payments. But I think there's gonna be just be some really, really wild stuff that I don't think we've like fully scratched the surface of. That that's gonna start to happen. And the the other thing that is important to realize is like, that takes time.

• 30:46Speaker 03

  You know, like, we didn't, we didn't start to see the counterintuitive stuff on the internet in some sense really start to hit until like fifteen years later, right? Like, the internet really started, let's say, nineteen ninety-ish.

• 30:56Speaker 03

  Like, the really counterintuitive stuff was like two thousand and five is like people were ready for it. Or like even with the iPhone, right? Like, the iPhone happened. And the first version of the apps were like skeuomorphic. It was like leather and paper and wood, right? It's just because like it was touched. So we're like, oh, we're used to like touching wood, so we should make it look like wood. Or, you know, have like a GPS, and so we could take like the desktop maps and say like, oh, okay, I can put a map on a phone now. We could like port it over. But it literally took like, I think Uber was twenty ten. And so that means it took about three years of people playing around on the iPhone. For people to figure out that like the killer app was not that I could go somewhere, but it was that like other stuff could come to me. You had to like turn the idea on its head, and that was actually the killer app for GPS.

• 31:40Speaker 03

  And so like, I think we're we're still like in the very early days of this exploration, and it might, it very well might take like three to ten years for us to stumble into a bunch of like really counterintuitive stuff. Which just turns on its head the idea of like any of what what we think is possible today. And so that's like the really fun stuff. I mean, you know this too, as like a venture investor, it's like the stuff that you like. You walk away from a meeting and you're just like, okay, that was either the stupidest thing I've ever heard, or that was brilliant, and I don't know what, right? Like, I don't know, it could be either one, and I don't know. And that's like the really interesting stuff, in my opinion.

• 32:09Anthony Pompliano?

  So one of the things that the venture capital community has figured out is like, sometimes the best investment strategy is like, I'm gonna go find the smartest people that are going after the biggest markets. I'm just gonna give them money and like, why I think I'm smarter than like, they'll just figure it out. When it comes to crypto and decentralization, is the team or the person less important? Because you're now talking about a decentralized system, they don't have control and kind of there's all these, you know, new frameworks or paradigms? Or actually, is it still the same thing when you think about allocating capital? Like, you're just looking for really, really smart people going after unique problems or hard problems? And that's kind of a big, you know, milestone or thing that you look for when you're actually investing?

• 32:49Speaker 03

  Yeah, so I think at a high level, it's a great question, because, well, because I think the real answer is nobody knows yet, actually, right? And we'll find out in 10 years. That being said, I think we tend to think that that value creation follows great people. And so just like, give people who give the best people the most money and they'll do, they'll do great things with it. That being said, I think the challenge is that the what like, how do you define great? Like, what does it mean to be great in crypto versus what does it mean to be great on the internet? And, you know, on the internet, you had people like Jeff Bezos, or Travis Kalanick, or Mark Zuckerberg create just huge amounts of value. And they had a certain archetype, there's a certain profile there, there's a certain set of skills. And I think what's interesting

• 33:29Speaker 03

  about crypto is that the skill set is very different. And so you have brilliant people like Vitalik, but he operates totally differently from Zapp, as you know, right? Like, and there's this sense of like, what is that set of skills that it's actually going to take to be successful? And like, a bunch of the people that move over, I think, from the internet are probably likely to fail, even if they're super successful, because it goes back to this idea of like, what does it mean to be a crypto native entrepreneur? So it's actually, I would say it's probably the hardest part of my job, actually, is just like, you meet these really, really brilliant people, but you're not sure if there's like founder market fit. You're like, is this the kind of person that can succeed in this market? And that's sort of a process that I think all the investors and all the founders and everybody's trying to figure out is like, who are the kinds

• 34:14Speaker 03

  of people that can really be successful here and why? But I mean, I think you can look at somebody like Vitalik and you're like, I don't know, would he have been successful, like going through Y Combinator? Maybe. But he's clearly, clearly the right type of person to be to be operating crypto network and be sort of, you know, the steward of that.

• 34:29Anthony Pompliano?

  Yeah. Talk a little bit about conversations with limited partners or investors in your fund and how that sentiment has shifted over the years in terms of 2017, 2018. People sound like they were just like literally throwing money at you like, hey, solve my problem. I don't understand this. And then kind of how that maybe went through a trough and then has recovered a little bit.

• 34:50Speaker 03

  Yeah, it has. And in a funny way, I think for crypto, like COVID was a great catalyst. Like COVID, COVID was tailwind for Netflix and Amazon, but also COVID was great tailwind for Bitcoin. In part because all of these things that Bitcoin people have been saying and crypto people have been saying, like, hey, look, the money printing is just going to get worse. They're not going to dial it down. Right. And like, this is going to get really bad. And like, you know, we don't trust our institutions anymore. And like, there are real problems here, like censorship is a problem. Like, all of these things that crypto people have been saying for years and years. And, and we all sounded like loonies. All of a sudden, the LPs that had heard these people talking about these things sat up one day and were like, wait, maybe you're right. And that basically happened in like March, April. And I think that was, that was a pretty pivotal moment.

• 35:32Speaker 03

  But even, even before that, you know, I think you have to kind of break down like institutional investors into like, what kinds of institutional investors? And there are like large family offices or ultra high net worths. There are endowments, there are pension funds, you know, there are sovereign wealth funds. And so there's a spectrum there. And, you know, like 2017, the people who were, who were kind of clued in to crypto, I would say, were essentially ultra, ultra high net worths, you know, like billionaires and some, some family offices. And kind of where we moved, like where the dominoes have moved to now is like the endowments and like a very small number of very forward thinking pension funds and corporate treasuries, you know, folks like Square or MicroStrategy. And, but we're not yet like sovereign wealth funds. We're not yet at central banks. Like, we're not there yet.

• 36:17Speaker 03

  And so that's kind of where the line is. And I think, you know, the conversation, the, the big shift basically has been that every time, like the best way to, in my opinion, to like have LPs set up and take note is if the person to their left just made a bunch of money. And so like what ended up happening in like 2016, 2017 was a bunch of billionaires had some friend or a friend. Friend who was like a, you know, a hundred millionaire and like that guy became a billionaire. And then they looked over and they're like, wait, that guy's a billionaire. Like, how did that guy become a billionaire? And they started looking what he's doing and, and there was crypto in the mix. And then, so all those people started buying in. And then when those people started buying in, the really large family office just started to look over. And then once the really large family offices started to look over, um, you know, endowments and pensions started to look over.

• 37:00Speaker 03

  And so you kind of have this like domino effect. Um, and we're just sort of like, at, at this point, it's like, we're, we're far enough along that it gets, the rest of the dominoes are clearly going to fall. You know, the other thing I'll say is I think one of the big learnings for us too is, um, even inside every sort of group of LPs. There are some people that are just way more rational about it than others. Um, and so I've been really impressed to, to the degree to which there are these like really smart, ultra rational investors. Uh, and when you meet them, how quickly they get it. And like the three things that those guys are all into now, that all those people are into, these like hyper rational, smart institutional folks. And they get, um, is crypto, marijuana and esports. It's like really interesting.

• 37:44Speaker 03

  Like they get those things in a way that like a lot of other institutional investors don't.

• 37:49Speaker 03

  And so, you know, I, if, um, if, if we were, if we were talking to LPs like three or four years ago, I think we looked like crazy people. And like today, you, you have the same conversation and people like, oh man, like you guys are, you, you have like seen the future. It's like pretty dramatic how quickly it changed too.

• 38:03Anthony Pompliano?

  I, I always laugh and say you can go talk to like any kid between ages, like maybe, I don't know, 15 and 25 and be like, hey, our electric vehicle is going to be a thing. And they're like, of course, every car is going to be electric. It's like, hey, is, you know, digital money going to be a thing? Like, of course, like, what are you talking about? You know, is esports going to be a thing? Of course. And so there's this element of like, uh, when I talk to a bunch of institutional investors, a lot of them will literally reference like, my kid is all into this, right? And like it's driving them. They hear them talking about it. And for whatever reason, they have this inclination, like my kid's probably right. My kid knows nothing about investing, but like my kid's probably right. Uh, it's, I do think that that has a big impact though, right?

• 38:39Speaker 03

  That's hilarious. Yeah. I mean, that's, that's a fantastic investment thesis. You should just like do what the young people are doing. If you just like bet long on that, you'll probably, you'll probably do the right thing. Cause all these things are going to happen and you're totally right.

• 38:51Anthony Pompliano?

  The other thing that I keep going back to as well is I've been fortunate enough, as I'm sure you have as well, to talk to some of the most successful investors in the world. And most of these folks are considered the most successful because not only have they had great returns, but they've been doing it for a very long period of time. It's just naturally, with experience comes age, right? And so they end up being in their 50s, 60s, sometimes even older. And in almost every single situation, they have somebody who is younger than them that has gotten them in, right? So whether it is their child, a friend, you know, whatever it is. And so it's always fascinating to see that in those conversations, they'll say something like, oh, you know, my kid's been like, every single time I see him, like, he's always just pounding away at me about this stuff. But then all of a sudden, they see

• 39:35Anthony Pompliano?

  market prices move, and they say, wait a second, like, maybe I should spend more time here. Or maybe actually, this is the right kind of thesis. And so how do you think that that plays out, not only from a Bitcoin sample, because everyone's paying attention to Bitcoin, CNBC, all the media organizations pay attention to Bitcoin price, but what about everything else, right? When everything else starts to kind of move up, does that further unlock even more capital than just the Bitcoin price? Or do you think institutions yet aren't paying attention to like, the things outside of Bitcoin necessarily? And so we've still got some way to go until they start to really understand the rest of it?

• 40:05Speaker 03

  Yeah, it's very early days for anything that's not Bitcoin. It's, you know, when we talk to institutions, I would say the most forward-thinking ones look at Ethereum, and they think it's going to be a thing, kind of the way they thought Bitcoin was probably going to be a thing in the 2017 move. And they have not yet made the decision to move into it. Whereas we've had lots of conversations with institutions that are trying to figure out how to own Bitcoin directly, you know, whether or not they've actually pulled the trigger, they're like, at that point now, like, the investment committees are okay with it. But nobody, no, very, very, very few people are there with Ethereum. And that's just Ethereum. That's not even trying to touch on like, DeFi, or any other alternative tokens, or, you know, thinking about things beyond Ethereum. So it's still very, very

• 40:49Speaker 03

  early days when it comes to like, institutions coming to this space. And to your point, yeah, a lot of the times, there is usually one person, and they almost, I would say 90% of the time, not always, but like, 90% of the time, they tend to skew younger. It's kind of like that saying, it's like, Things that are created when you're like sixty five don't make sense and are like unnatural. Things that are created when you're thirty five are, you know, innovative and things that are, you know, created when you're five are just like the natural order of the thing, you know, of the world. To your point earlier, right? So like, for like a fifteen year old today, like all this stuff is just like how the world is going to be. But yeah, I think most institutions are not quite there yet. I mean, I think the other thing that that's worth noting here is like,

• 41:33Speaker 03

  they're not irrational, right? Like, these are really smart people. And part of what happens behind the scenes is like how these decisions get made. And so like, I think, like, I didn't know this before I became an investor is like the the process by which an institution decides to make an investment decision. A is a pretty heavy lift. The bigger the organization, the heavier the lift. But also, B, it's really hard to unwind. And so you got to get the entire organization there. And there's a lot of like principal agent risk mixed in, which is, you know, like, are, am I going to be the person that puts my neck out to do this? And like, why am I going to do that inside this organization? And so you either have to have people who really, really, really believe. Or there has to be some sort of catalyst. And and this is where I think like COVID really changed a lot.

• 42:17Speaker 03

  Like, everybody sort of realized that if we're going to a zero interest rate world in in USD dollars, like USD denominated world, like the euro is already there. Then if you have like yield targets, if you're trying to make seven percent a year, like, how are you going to do that? And so all of a sudden, people are open to the idea because kind of they have to be. And so I think it's inevitable. But yeah, it's still very early days for anything that's that's not Bitcoin.

• 42:41Anthony Pompliano?

  Is there anything that you think maybe is getting tons of attention and a lot of people are flocking with, there's individual like intellectual capital or financial capital that maybe you're not as bullish on or something that you think that, you know, might not actually be sustainable?

• 42:56Speaker 03

  Yeah, well, I think these things all go through like a hype cycle, and I think hype cycles are actually really important. Like, I think a lot of people think hype cycles are a bad thing, but I think they're necessary. It's just like you have to get the hype cycle because the overinvestment is what allows you to invest in the stuff that needs to like go mainstream across the chasm. And if you don't get the overinvestment, the thing is never going to accrue enough capital, enough intention, or enough people to like really make sense. And you see that there's like this, this whole like, if anybody wants to go read Carlotta Perez, there's like a whole economic theory around like why you need bubbles, basically. And it's an important part of like innovation. And, and the thing that I think might be in a little bit of a hype cycle right now is essentially decentralized infrastructure.

• 43:37Speaker 03

  And in part, it's, I think, you know, the, the people who are forward thinking developers have experienced this themselves. Like developers have been experiencing this pain of like, oh, I used to build on Twitter and then Twitter shut down the API on me. Or I used to build on Facebook and then Facebook shut down the API on me and killed my business. Or, you know, we just, we just saw this last week, right? Like, setting aside the politics of, of it all, it kind of doesn't matter, you know, what you think of Parler. The fact that like Amazon can just shut that thing off and Apple and Google can just kick it out from the App Store. All of a sudden, I think the world kind of woke up and said, wait a second, this like five companies control whether or not you exist. And if they decide to take you out from the internet, like you don't exist. And developers have been feeling that pain for a long time. And so now everybody sort of, I think, is starting to understand that the pain is acute. I kind of, I kind of liken it to the Bear Stearns moment in 2008.

• 44:23Speaker 03

  Or like, if you were paying attention, Bear Stearns was a really big deal. But the Lehman moment was like a year later. And so I think we're now building up to this, like, bigger and bigger stuff is going to happen. And the world is waking up to the idea that literally, you know, five to 10 companies control whether or not you exist on the internet. And the internet is like your life.

• 44:41Speaker 03

  And so all of that is now a problem statement, but I don't think the technology is quite where it needs to be to actually solve the problem yet. It's getting there, but it's not quite there yet. And so I suspect what's going to happen is those things are maybe where DeFi was in like 2015, where a lot of really smart people are going to pour a lot of energy into it, which is great. But it's not going to quite work the way that we need it to work yet. And then there will be sort of a hype cycle around that and probably flames out. And then on the other side of that is where this stuff really starts to work. But I suspect that's like, you know, three, four, or five years out. I don't think it's like in the next 12 months, all of a sudden you can just go truly decent. Like you can't, I think it's going to be hard to build like a truly decentralized Twitter that just works in the next 12 months.

• 45:19Anthony Pompliano?

  Yeah, and it feels like we're now getting to the point where technologists understand like centralization is a risk, but maybe the users don't yet. And so I keep talking about like the developer, it's the developer's responsibility to build decentralized systems because the users don't care. But at some point in the future, users will care, right? It's kind of like encryption, like now users do care about encryption, but maybe 10 years ago, like that wasn't as big of a deal. And so if you wanted to protect your users, you put encryption in, but they weren't necessarily demanding it. It just feels like that we're getting pulled in that direction. What's kind of your thought process around like the regulatory response to all this? So like, you know, you and I sit down and we're super bullish and we get really excited and we're like, oh, my God, Bitcoin's gonna like, you know, have this great ascent. There's

• 46:02Anthony Pompliano?

  gonna be all these decentralized systems, like, you know, the internet is the king. And there's a lot of regulators who are like, okay, crazy guys, like chill out. That world's never gonna happen, right? Like, we don't want that to happen. Like, who wins essentially, right? Or is it actually there's coexistence? Like, maybe there isn't such a competition, it's literally just coexistence. How do you think through that?

• 46:22Speaker 03

  Yeah, it's a really great question. I spent a lot of time thinking about this and have spent actually a fair amount of time talking to regulators and policy folks and people in the intelligence community as well and law enforcement. And I think, you know, if you have to sort of think through it, I think game theoretically, which is like, who are the actors and what are their incentives and what does that mean? And I think if there were only two actors in the mix, if it was just like the US government and the crypto people, it would probably play out sort of straightforwardly, which is like, hey, we don't really like this. Like, you know, maybe we'll shut it down. But there's a third actor in the mix here, which is the Chinese government. And I think the Chinese government actually is the like, hyper rational, like, amazing, I mean, like, they're so impressive in how

• 47:06Speaker 03

  they manage to use technology. You know, again, setting aside what you think they do with the technology, just their ability to use technology is they're the best government in the world at this. And so What are they doing? Well, what the Chinese government has done is they basically said, you know what? We're going to let the supply chain for Bitcoin exist here. Like, yeah, make the ASICs. That's great. Run them here. Like, run your mining pools here. That's awesome. We love that. But you know what? We don't really love people buying a lot of this stuff. So we're going to make sure that, like, that's pretty much under our control. And so they hit this, like, perfect sweet spot where they, like, have influence over this stuff. They're building capacity. Like, President Xi said, we're going to invest a bunch in blockchain infrastructure. We're going to subsidize that. We have the blockchain network happening. They're investing in their DCEP system, their digital currency electronic payment system,

• 47:49Speaker 03

  which is a blockchain-based central bank digital currency. And then they're going to take that, which now lets them have truly digital cash, and they're going to push it through the Belt and Road. So they're investing trillions of dollars, you know, to, for these strategic initiatives in developing markets, you know, all the way from Singapore to Sri Lanka to, to East Africa, into the Gulf, and into Europe. And they're just going to push it through there. And so all of a sudden, you know, if you're doing any kind of international trade, if you're doing any kind of goods transfers, if you're doing any financial transactions, all of a sudden, you have this way better system now. It's not like the old-school 1970s Fedwire system that takes, you know, weeks for your cash to show up where you need because it has to go through three hops and three different people need to settle along the way. It's instant. And that's pretty compelling, right? If you're trying to do business, that's pretty compelling.

• 48:35Speaker 03

  And if your largest trading partner says, hey, why don't we use this, this platform? That's even more compelling. And so that's kind of what's happening. That's the third actor, is now the, the Chinese government could actually become the platform on which, like, international trade is settled. And if you're the US government, that is actually a much bigger challenge than crypto. Like, if, if I'm, if I'm the US government, if I'm Treasury, if I'm, you know, FinCEN, if I'm the CIA, like, anybody in government actually needs to be thinking about how, how do we operate in a world where today, one of the best tools for US national security is the fact that the US dollar is the reserve currency of the world? And if that gets weakened, and there's an entire system that allows countries to circumvent that, what does that mean for us?

• 49:20Speaker 03

  And that is a pretty existential threat. So you say, okay, well, that's a given. That's happening. That's not like crypto, you know, paranoia. Like literally, you can just go read like that's literally the Chinese government is very transparent about this.

• 49:32Speaker 03

  And so if that's what's happening, what do you do if you're the government, if you're the US government? And you kind of have two options. You can either try to like compete with them head on. And if you try to do that, I think you fail. Like healthcare.gov, you know, the, the, the history of the US government writing technology in like the last 20 years is not good. So they're gonna try and they should, like you should modernize these, modernize these systems. But you're already seven years behind and you don't have a great track record. So I don't think you win if you do that. But how do you win? If you're a startup person, like you immediately start thinking about like startup 101 is just like, what is the judo move here? Like, what is the thing that you can do that the other person just can't do structurally? Right? So like Snap one. And large part because they just did the opposite of Facebook.

• 50:17Speaker 03

  Like you opened up the phone and it was a camera instead of a feed. There was no permanent identity. You know, it was all ephemeral and Facebook is entirely about, you know, permanent identity. It's just like they did the opposite of Facebook in so many ways. And that's why Facebook has such a hard time with it. And so what do you need to do if you're the US government? I would argue you actually need to embrace crypto. Because crypto is the one thing that the Chinese government will not do. Like they don't want capital to leave China and not be in their control. They don't want to give away privacy and crypto is about privacy and self-sufficiency and censor and censorship resistance. Like all of the things that make crypto work are all of the things that the Chinese government doesn't want to do. So I think if you're the US government, you like double down on crypto, actually. You like really embrace it and you say, this is actually our offensive tool.

• 51:00Speaker 03

  Like, we're gonna do all the stuff we need to do to upgrade our infrastructure and try to compete. But let's like actually embrace US-backed stable coins. Like, let's get USDC and Cello dollars and, and Libra, you know, or DM dollars or whatever. Let's just get that everywhere. Let's get that into the developing world because that's, that's reinforcing the network effect of the US dollar. Let's actually embrace Bitcoin. Let's actually make sure that all the crypto innovation that's happening happens in American companies and happens in American banks and happens in American. You know, happens onshore, basically, instead of pushing it out to, to regions of the world where, where other governments have more influence. So it's, it's maybe a little counterintuitive on the surface, but I actually think like the game theory optimal move for the US government.

• 51:40Speaker 03

  Is to double down on crypto and really embrace it because that's actually how you can, you can have a shot against competing against the Chinese government. Without which I think, I think you're really gonna struggle if you, US government. And I think, and at least in my conversations. I think there are enough people in government that actually get that. So there's actually a contingent of people inside the US government across all of these different groups that get that and are trying to make that case right now.

• 52:04Anthony Pompliano?

  I could not agree more. I think that the whole idea of like the government's going to ban it is the exact kind of intuitiveness that ends up not coming to fruition. And it's the counterintuitive move of no, the first countries to embrace this actually win. And although the United States is very good at sometimes getting in its way, I do think that this we're going to end up and you're alluding to everything from there's congressmen, there's senators, there's people up and down the US government that I think are kind of starting to wake up to this. And as somebody said to me in a very blunt way, they said, look, all old people die eventually and they're replaced by younger people. And so the odds that a president in the future is a Bitcoiner or a crypto person is like very high.

• 52:46Anthony Pompliano?

  And that's just maybe 20 years from now, but like that happens at some point, right? It's just naturally, if you grew up, like there's people who now are assuming positions of power and influence in the government that grew up with a cellphone in their hand, right? And they're just starting. And so 20 years from now, like almost everyone will be that way. So it's pretty interesting. Before we get into rapid fire questions to wrap up, what is kind of your sweet spot from an investment standpoint? So for founders or people who are building in the crypto ecosystem, what are you looking for, both from a thematic standpoint and also from like a stage of the company or the project?

• 53:22Speaker 03

  Yeah, we're seed and series A investors. We'll do tokens, we'll do crypto networks, we'll do hybrid, we'll do equity. So we're kind of do everything. But our sweet spot is like, you know, a couple of people and an idea and maybe a prototype. Cause we're builders and we kind of know how to take, we've seen a lot of companies inside crypto and outside go from nothing to something to, you know, a couple of billion dollars to an IPO, like we've seen that whole lifecycle. And so in the early stages where we can be the most helpful and that's where we add the most value, so that's where we focus. In terms of sectors and stuff, it goes back to kind of what we were talking about before. Like there's a bunch of stuff that we have conviction on, things like DeFi and decentralized infrastructure, frankly, we think it will happen.

• 54:03Speaker 03

  Something that gets us really excited is like when you meet with a founder and you walk out of the meeting saying, well, I went into the meeting believing X and I walked out of the meeting believing not X. Like that person actually turned upside down like what I think about the world. That's the kind of person that you you just bet on. You're just like, okay, like I had some long held belief about the world and you actually changed that. You found something, you figured out something that's true about the world that most people think is not true. And when you find somebody like that, you're just like, okay, take all my money. And that doesn't happen that often, but those are the people that like we love working with. It's just like you find one of those people and you're just like, cool, take all my money.

• 54:41Anthony Pompliano?

  I love it. That is a fantastic thesis. All right, I got three questions for you and then you'll get to ask me when to finish up. The first is, what's the most important book you've ever read?

• 54:50Speaker 03

  Oh, we did this before. It's still the Bible.

• 54:53Anthony Pompliano?

  Second question is a new one. What is your sleep routine? Our friends over at Eight Sleep have officially sponsored this question now because they know I'm a big sleep nut and I try to get at least eight, if not nine hours a night. What uh, what would you say is your sleep routine?

• 55:09Speaker 03

  I would say my sleep routine is terrible. I don't have one. We have, we have a little baby and so I don't get it. I don't get it. My sleep routine is terrible. I wish I had a routine.

• 55:19Anthony Pompliano?

  How old is the baby?

• 55:21Speaker 03

  He's eight months old now. So he's starting to settle in.

• 55:23Anthony Pompliano?

  Okay, so here's the the three answers that I get. One is I work too much. Two is I'm religious about my sleep and I already have an eight sleep and it's amazing. Or three is I have a young child. And whenever somebody says I have a young child, it's immediately known, just like there is no sleep schedule. It's horrible. You're lucky that I showed up here and like showered before I came.

• 55:44Speaker 03

  Yeah, no, it's it's it's hard, but it's wonderful in all sorts of other ways. A++ like would recommend. Everybody should have children. It's great.

• 55:53Anthony Pompliano?

  Last question is aliens. Are you still believing? Are we, do we have any change of opinion from a Galactic Federation or whatever other crazy UFO stuff that's starting to come out?

• 56:06Speaker 03

  I'm still a believer. I don't know. Have you been tracking like the David Faber stuff of like Tic Tac and Gimbal and all that stuff? And then the Oomama, which was like the Harvard guy is convinced it was a spaceship. You been tracking all this?

• 56:16Anthony Pompliano?

  Yeah, so I, people naturally send me everything. And so all the things you just mentioned, yes. The one that I recently saw that I have not looked at yet is, I guess Rogan had some guy on who claims that he might have been abducted by a UFO or something. And supposedly, from what I gleaned, again, I didn't listen yet, but what I saw online was he and his friends went into the woods. There's this big white light. Something happened. He basically blacked out. He came to many days later. His friends ran away. They've all taken polygraph tests like multiple times throughout the years and they all have the exact same story. They all pass the polygraphs every time. And so like, I'll have to listen to kind of all the details,

• 56:58Anthony Pompliano?

  but like, you know, if that stuff starts to happen where it's like, you know, same story for 20 years, polygraphs are passed. Like, I don't know, man. It's, uh, you, you, you start to wonder, you know, what, what's really going on?

• 57:11Speaker 03

  Have you, um, have you heard of, you know, the Betty and Barney Hill abduction from the 1960s? It was like 1964 or something? It's like a really famous one. Yeah. So it's, um, it was like the first modern UFO abduction that kind of like went into the press. And so it's like the first modern one. But it turns out, um, that guy's granddaughter is an MMA fighter. And so she's like, just a super interesting person. So if you want a guest to like, talk about, like, alien stuff, but also it's just like a super interesting person. She's like a legit MMA fighter, too.

• 57:41Anthony Pompliano?

  They, they like, my grandfather got abducted by aliens and now I beat people up in the ring?

• 57:46Speaker 03

  It's super interesting. Cause I just saw her tweeting about it, um, a couple of days ago. And she, she, I think she's going to do like some, she's, she's going to talk about her grandparents or something and all the stories that they told her about this stuff.

• 57:56Anthony Pompliano?

  That's cr- okay. I'll definitely go check that out. Uh, you could ask me one question to finish up. What you got for me?

• 58:01Speaker 03

  Uh, what are you most looking forward to in 2021?

• 58:05Anthony Pompliano?

  Getting back to, and I'll put in air quotes, normal. Like just, you know, kind of getting vaccines done, masks, open up the businesses, just, just get back to the closest semblance we possibly can of normal. You know, you know, many people will debate, like, I don't know if we ever lived in a normal world. So like, are we, you know, where are we going back to? Uh, but, but just, I think a lot of the, the additional obstacles and hardships that people are facing, like, just get over that stuff.

• 58:30Speaker 03

  Yeah. Yeah. That would be nice to get back to normal, whatever that is now, the new normal.

• 58:34Anthony Pompliano?

  For sure. Where can we send people to find you on the internet or find out more about Electric?

• 58:37Speaker 03

  Yeah, just, uh, follow me on Twitter, at Avichal. Um, Electric's pretty easy to find. It's electriccapital.com.

• 58:43Anthony Pompliano?

  Awesome, man. Well, listen, thank you so much for doing this. I'll do it again in the future.

• 58:47Speaker 03

  Yeah, for the board.