Peter Johnson, Principal at Jump Capital: How Crypto is Revolutionizing Financial Systems Around the World

Peter Johnson leads Jump Capital's investments in the fintech, insurtech, and crypto/blockchain sectors. In this conversation, Peter and Anthony discuss the stages and types of companies that Jump Capital is investing in, how they work with companies, the value that Jump Trading brings, why he is so bullish on stable coins, and Peter’s deep personal conviction in where the space is going as well as how committed Jump as an institution is to it. CRYPTO. COM-----Crypto.com is a pioneering payment and cryptocurrency platform that seeks to accelerate the world's transition to cryptocurrency. With the vision of "cryptocurrency in every wallet", the Crypto.com App offers a full range of financial products with competitive pricing, well designed UX and high security. It is the best place to buy, sell and pay with crypto. TAXBIT-----Refund-maximizing, cryptocurrency tax software you can depend on. Visit taxbit.com/invite/pomp and receive 10% off your tax plan today by signing up for a free trial. ETORO-----This episode of Off the Chain is sponsored by eToro, the smartest crypto trading platform, and one of the largest in the world. Join 11 million other traders and create an account at etoro.com and build your crypto portfolio the smart way.

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

• 0:00Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off the Chain, simply the best podcast in crypto. Let's kick this thing off. Peter Johnson leads Jump Capital's investments in the fintech, insuretech, and crypto and blockchain sectors. In this conversation, we discuss the stages and types of companies that Jump Capital is investing in, how they work with companies, the value that Jump Trading brings, why he is so bullish on stablecoins, and Peter's deep personal conviction in where the space is going, as well as how committed Jump as an institution is to it. Before we jump into this awesome episode, no pun intended, I want to cover the three advertisers that made this episode possible. The first is Crypto.com.

• 0:44Anthony Pompliano?

  Now Crypto.com is a pioneering payment and cryptocurrency platform that seeks to accelerate the world's transition to cryptocurrency. That's right, they want to get crypto in every single person's wallet. If they can do that, that's why we're all here. The Crypto.com app offers a full range of financial products with competitive pricing, well-designed UX, and high security. It's the best place to buy, sell, and pay with crypto. These guys have been longtime supporters of Off the Chain, and they keep launching new product after new product. So do yourself a favor and go to Crypto.com to check them out. Again, that's Crypto.com. Crypto.com, the best URL in the entire industry, the place where mass adoption is occurring. Again, that's Crypto.com. Now, the next sponsor is TaxBit. Everyone hates taxes, but TaxBit is here to help.

• 1:28Anthony Pompliano?

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• 2:10Anthony Pompliano?

  Tax solution. You can get 10% off your tax plan today with a free trial by going to www.TaxBit.com/invite/pomp. Again, that's TaxBit.com/invite/pomp. My favorite part about TaxBit though is they have live support with experts. So if you have any questions, whenever you need it, you can, uh, you can actually message them or call them and get access to that live support. So these experts are on hand who have experienced facilitating thousands of crypto tax filings and IRS crypto tax audits. Go get help, pay your taxes, use TaxBit. TaxBit.com/invite/pomp. Now, the last sponsor is eToro. Everyone knows eToro is killing it.

• 2:52Anthony Pompliano?

  eToro started in Israel. They built out a bunch of products like stocks, commodities, traditional currencies and cryptocurrencies and offered it to people all around the world outside the United States. Last year, they came to the US and they got started by offering cryptocurrency trading. But they're not just a crypto exchange. They've pioneered two concepts that I think will change crypto exchanges forever. The first is social trading and the second is copy trading. Social trading is essentially layering a social network on top of the exchange. You can navigate to an assets page, let's say Bitcoin, and you can check out the conversation around that asset. There's people sharing information, charts, graphs, ideas, etc. And then you can also trade from that same page. So social network combined with trading, social trading. But if you see

• 3:37Anthony Pompliano?

  someone that you really like, you can then click on the copy trader button. Copy trading essentially allows your portfolio to mirror theirs. If they buy an asset, you buy it. If they sell it, you sell it. The exact percentages in your portfolio as in theirs. eToro is the one helping you do that through this copy trading feature. It's pretty cool. So I think that anytime a crypto exchange can innovate like this and as eToro has with social trading and copy trading all in one location, it's worth checking out. They're up and running in the US and they continue to grow at incredible rate. As you guys have heard me say before, eToro is larger than Robinhood. Just don't tell anyone. So head on over to eToro.com and sign up for an account. I'm a huge fan. I'm even an investor. Let me know what you think about their social trading and copy trading

• 4:20Anthony Pompliano?

  And when you hit etoro.com, let them know that Pomp sent you. They really, really, really, really, really hate getting customer service tickets and social media mentions about me. Etoro.com, let them know I sent you. And before we jump in, also remember, Off the Chain is not just a podcast. I also do a daily letter to our investors, but normally, most investors wouldn't let this be publicized. For me, I don't care. I actually want as many people to read it as possible. So you can go to offthechain.substack.com and sign up today. Again, that's offthechain.substack.com and hear my personal news, analysis, and opinions about the crypto industry. Now, let's get into this awesome episode with Peter.

• 5:00Speaker 01

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

• 5:25Anthony Pompliano?

  Bang, bang. I have Peter here with me, all the way from Chicago. We've got a ton to talk about, so thanks so much for coming to do this.

• 5:32Speaker 02

  Great to be here. Thanks for having me.

• 5:33Anthony Pompliano?

  Absolutely. All right, hold on. We're starting already with, you gotta talk into the microphone. Yes, I've been waiting to embarrass people on the podcast about talking into the microphone, so I just got my first victim. Sorry. What did you do before Jump?

• 5:48Speaker 02

  Ah, yeah, so I started. I was a management consultant. I did strategy and operations work for banks, brokerages, and asset managers. Did that for quite a few years, then saw what investment bankers were doing. Financial structuring looked pretty interesting. So went to Morgan Stanley and did financial structuring and M&A work, again, for banks, brokerages, and asset managers. And did that for a little while, and then met the founders of Jump Capital, just as they were starting the firm, and took the jump over.

• 6:16Anthony Pompliano?

  What year did you jump over to Jump?

• 6:19Speaker 02

  In 2013.

• 6:20Anthony Pompliano?

  Okay, and what was the biggest takeaway from all of the structuring and working with banks, etc.? That's gotta be fascinating to kind of see under the hood of those deals.

• 6:29Speaker 02

  Yeah, it's really interesting work. For me, total finance wonk. Really interesting doing that type of work. Also saw just how slow financial institutions are. Like, innovation does not happen at big financial institutions. So I said that was the biggest takeaway and one of the biggest reasons that I left those types of positions.

• 6:47Anthony Pompliano?

  Got it. When you joined Jump 2013, any idea of crypto, were they talking about crypto, Bitcoin, anything? Or was it more in the fintech and financial services world?

• 7:01Speaker 02

  Yeah, so when I joined Jump Capital, which is the venture capital arm of Jump Trading, I was just as the firm was starting in 2013, beginning of 2013, met Mike McMahon and Such Genis, who are the two guys who were in the process of starting the firm at that time. And I joined them. It was this really unique opportunity to help build a venture capital firm, come in, lead fintech investing for them. And at the time, I'd heard of Bitcoin, wasn't really a focus, certainly wasn't a focus for the firm back at the beginning of 2013. But I started paying close attention to it, really close attention to it shortly after I started. And it was, I forget exactly when, in 2013, it was actually the, kind of what happened in Cyprus, where, you know, the government was going to seize bank deposits, the price of Bitcoin jumped.

• 7:47Anthony Pompliano?

  No pun intended.

• 7:48Speaker 02

  Right, yeah, yeah. But that's what first got me, like, really reading about Bitcoin. And like, okay, like, are people really buying this magical internet money instead of their, you know, keeping money in the bank? Because if so, like, either that's crazy, or there's maybe something there.

• 8:04Anthony Pompliano?

  Yeah. And what did you guys do to figure that out? Like, so I think there's a lot of people who went through that mental exercise during that time period, and then they didn't do anything. You guys went to go try to figure it out in some manner. Was that more of like passive research by like Googling around? You could talk to people? Like, what do you guys do to figure that out?

• 8:21Speaker 02

  Yeah, so it was reading everything possible, which there was not a ton back in 2013 to read about, talking to everyone that knew anything about the space, starting to go to early crypto conferences, which were fascinating and interesting, and then bringing the right people onto the team. And I think it was 2014 or so, actually hired the general counsel from Eric Voorhees, from first startup, or one of his first ones, Coinapult, if you remember that, but hired him for a summer to help me get smarter on crypto.

• 8:51Anthony Pompliano?

  Really?

• 8:51Speaker 02

  Yeah.

• 8:52Anthony Pompliano?

  That's amazing. And so, at what point do you guys say, okay, we thought that this might be a thing, let's go do some research to, this is a thing and we want to participate?

• 9:02Speaker 02

  Yeah, so it was, started looking into it from a venture and investing perspective in, in 2013. And then it was not until... I think late 2014, we made our first equity investment in a crypto company. So it was a significant amount of time that we spent just getting smarter about the space, looking at opportunities, and also working with the trading team, who in, you know, around 2014 is when they, you know, started to get active in the market, mainly down at our research lab, down at Jump Labs, but started to get into the market and that really helped push our thinking as well. But yeah, it was a long, fairly long kind of incubation, you know, evaluation period before we, before we jumped in.

• 9:43Anthony Pompliano?

  So before we go any further, I want to make sure people understand the difference between Jump Trading and Jump Capital. Jump Trading is a traditional kind of Wall Street, in air quotes, type firm where they essentially trade all different types of assets in a very kind of quantitative trading methodology, but maybe just describe, you know, how the firm gets started and what does that look like today, and then we can differentiate that between Jump Trading and Jump Capital.

• 10:08Speaker 02

  Right. So Jump Trading is a, one of the leading quantitative trading firms in the world.

• 10:13Anthony Pompliano?

  Can we say the leading?

• 10:15Speaker 02

  I say one of the leading.

• 10:17Anthony Pompliano?

  All right, all right. Well, being nice today, go ahead.

• 10:22Speaker 02

  They are a, I would say massively successful proprietary trading firm based in Chicago. They've been around 20 years, highly quantitative, highly research-based, trade most every asset class in pretty much everywhere around the world. And just is an amazing firm, what they've done over the last 20 years. Jump Capital is the venture capital affiliate of Jump Trading. We operate generally independently from the trading organization. We're structured as a fairly typical venture capital fund.

• 10:54Anthony Pompliano?

  Okay.

• 10:54Speaker 02

  Except the capital that we invest comes exclusively from the owners and employees of Jump Trading. So we also, you know, because of that, work very closely with the trading firm, you know, kind of when appropriate for making investments. So I lead our fintech and capital markets and crypto investments, so I am very often working very closely with the trading side of the firm. Fintech and crypto is just kind of one sleeve of what we do at Jump Capital.

• 11:17Anthony Pompliano?

  Okay.

• 11:18Speaker 02

  We also invest in IT and data infrastructure. B2B SaaS and media companies and a lot of those and vast majority of those have kind of nothing to do with the trading operation, but just are your more typical venture investments.

• 11:31Anthony Pompliano?

  Got it. So just good investment opportunities and really the thread there, I think, across the media, B2B SaaS and the IT infrastructure, it sounds like is more infrastructure, platforms, etc. It's not what in crypto would be called like an application or media publisher, etc.

• 11:47Speaker 02

  Yeah, absolutely. It's a lot of the kind of infrastructure for those types of companies is typically what we're investing in. It's a lot of data-driven companies. That's definitely a theme. And kind of the way that Jump Capital differentiates itself is, one, it's a thesis-driven firm. So we go very deep in areas and look to invest, you know, develop a thesis of how we think this space is going to develop and invest in best companies in that space. And then we're also very operationally focused. So the team was started, the firm was started by folks that were operators. They've built and run companies from startups all the way up to public companies. We've built an operating team. So we have folks that help our portfolio companies with recruiting, especially around data science and engineering, with M&A, with finance, with corporate development, you know, connecting with potential partners

• 12:31Speaker 02

  and acquirers, with sales and customer success. So we're a very active and involved investor. And that's kind of how we differentiate ourselves, as well as in crypto and fintech, we differentiate ourselves by we're also connected with one of the smartest trading firms in the world.

• 12:48Anthony Pompliano?

  Yeah. And so when you look over at the fintech, capital markets, crypto stuff, from a venture perspective, how much of the investments you guys make there are companies that could be partners or help the trading firm versus these are just good financial investments that we find interesting in those specific verticals?

• 13:08Speaker 02

  Yeah, it's a good split between those. There's a lot of fantastic investments that we do that have nothing to do with the trading world. We're investors in Personal Capital, which is the best online investment manager, and M1 Finance, which is great for the do-it-yourself investor and allows you to borrow against your portfolio. You know, a lot of companies like that. We're investors in companies like TradingView, which kind of span, like they are in capital markets. But it's not necessarily strategic with the trading firm. And then we're investors in crypto exchanges and futures exchanges, which are very clearly strategic to the trading firm. So it's a fairly wide spectrum.

• 13:42Anthony Pompliano?

  So TradingView is a good example, right? We were talking a little bit before we started recording. For people in the crypto world, TradingView is one of, if not the go to like chart type platform. So you can go in, you can chart a bunch of stuff and as I like to say, just draw squiggly lines everywhere and tell everyone where you think the price is going. But from a TradingView seat, crypto is like probably maybe one of the smallest markets, right? Or a very small market because they're in equities and all of these other spaces. And so it's funny to me how like the crypto world thinks TradingView is so important, but TradingView has, you know, I'm not going to say that they don't think crypto is important, right? But probably their larger markets, if you just look at it from a size perspective, are dominating this little small crypto market, you know?

• 14:27Anthony Pompliano?

  So it depends on which side of the market you're sitting on there.

• 14:28Speaker 02

  Yeah, it's funny. You talk to crypto folks about TradingView and they assume it's a crypto company. Crypto is definitely not the largest market on TradingView, much larger in equities and FX and in other markets.

• 14:42Speaker 02

  Yeah, it's interesting, but crypto is certainly a big, big part of what they do and an important part of what they do.

• 14:46Anthony Pompliano?

  Yeah, and really it leads to this idea of, you know, you're looking at fintech capital markets and crypto. Depending on how you slice those three, those could be three very, very separate things, or those could be identical, right? In terms of what company you look at, how do you think about it as you guys are sitting there saying, okay, we're going to come up with thesis? Are they vertical specific or do you more come up with kind of thesis and future, you know, evolutions of these industries? And you don't worry, is that a fintech, is that crypto and try to kind of place it in a bucket?

• 15:18Speaker 02

  Yeah, right now they're still fairly bifurcated, like the crypto world and the fintech world are, are different generally. You're starting to see more overlap, companies that are doing both crypto and fintech things, think like, you know, like a Robin Hood, for example. And then you're also starting to see crypto companies which are building fintech companies, except they're just building it on different rails.

• 15:41Speaker 02

  Like your investors in BlockFi, great company. You look at what they're doing, they're taking deposits and making loans. That sounds like a like a fintech company.

• 15:51Anthony Pompliano?

  And so how do you find these companies? So you guys come up with a thesis, what's kind of, okay, we think exchanges are going to be important. What's that process look like for you guys to go find investments?

• 16:03Speaker 02

  Yeah, so we find investments, you know, kind of three different ways. One is just very thesis driven, and that's I would say the primary way. And that is like, we think, for example, you know, wealth management is going to become digital or kind of hybrid digital. So let's go find out the best company in the space. For us, that was Personal Capital. Or we think kind of fiat on-ramps and off-ramps for crypto around the world are going to be incredibly important. Somewhat obvious, but okay, let's go find the best companies in each country that align with that thesis. We just invested in Bitso, for example, in Mexico, which aligns with that. So that kind of very thesis, this is how we think the world is going to develop. Let's go find the best companies that align with that view. I would call that the primary way.

• 16:43Speaker 02

  We also, you know, find companies through relationships we have with entrepreneurs and with other investors. Because we don't have a monopoly on ideas. There's tons of things that we come across that we never would have thought to have a thesis on. But we see what somebody's doing and wow, that's really amazing. And then we also have some systematic sourcing ways out to just to make sure we're seeing everything.

• 17:04Anthony Pompliano?

  Got it. And what stage are you guys looking for?

• 17:08Speaker 02

  Yeah, so we're mainly investing in Series A companies. So three to $10 million initial investments is what's typical for us. We also have a what we call a growth equity strategy, which is investing in profitable or close to profitable companies. And then we'll occasionally make seed investments or earlier stage, smaller investments. I would say in crypto, that's one of the places that will look, you know, maybe earlier, be more flexible. Just because the industry is so early and there's companies that, you know, the trading side can be strategic to sometimes.

• 17:38Anthony Pompliano?

  Yeah. And in crypto specifically, it sounds like you guys are looking at financial service related infrastructure, right? So things like BlockFi exchanges, Bitso, et cetera. Same thing there in terms of the split between how many of them can help the trading side or the trading side can be helpful versus the ones that are, you know, kind of non-correlated to some degree.

• 18:00Speaker 02

  Yeah, so in that space, like. A lot of them do have like, the trading firm can add significant value, sometimes very, very significant value to companies that we're investing in. But some of them just are, they're fantastic companies, building things that are really interesting, but they have nothing to do with the trading operation. Or maybe they just don't have an opportunity with the trading operation at this time. So there's a pretty good split there as well. Yeah.

• 18:22Anthony Pompliano?

  Got it. And then let's go through kind of some of the theses that you guys have or places that you guys have been investing. So Bitso obviously is one. They have a lot of fiat on and off ramps kind of around the world. Maybe talk through a little bit as like what that thesis looks like and why you guys are so bullish there.

• 18:39Speaker 02

  Yeah. So our view, kind of I would say, kind of my core beliefs are, one, Bitcoin is digital gold. That that's going to be adopted in portfolios. Two is that stable coins are going to become money transfer, transfer rails and FX rails that enable money to move around the world. That, three, emerging markets will increasingly adopt crypto assets. And that, four, that the infrastructure is going to be developed to enable those first three things to happen. So if you believe those things, like, how does, how do people get access to Bitcoin if it's going to be digital gold? And how does, you know, if stable coins are going to be the rails that money moves around the world, like you need, at the endpoints, you need to go back into fiat currencies at some point, at least right now.

• 19:21Speaker 02

  So if you believe those things, the gateways in each country that allow that fiat to crypto conversion are absolutely necessary and key to those things happening. So Bitso, we're extremely excited about, one, because you look at remittances. If you think remittances are going to be a big use case, we do, I do. US to Mexico remittances are a massive market.

• 19:44Anthony Pompliano?

  How big do you think that is? You probably actually know.

• 19:46Speaker 02

  I do know, I don't remember the number offhand.

• 19:48Anthony Pompliano?

  Are we talking, just ballpark, are we talking, you know, a billion dollars a month? Are we talking tens of billions on a annual basis?

• 19:57Speaker 02

  I don't want to quote, yeah, it's a very large number.

• 20:00Anthony Pompliano?

  Yeah.

• 20:02Speaker 02

  And the amount of remittances that are going through Bitso has been increasing exponentially. Bitso just announced, I think over the last week or so, 2.5% of remittances to Mexico are now going through Bitso.

• 20:16Anthony Pompliano?

  Really?

• 20:17Speaker 02

  Yeah.

• 20:17Anthony Pompliano?

  And those are all across crypto rails?

• 20:20Speaker 02

  Yes.

• 20:21Anthony Pompliano?

  Wow. And I mean, it's fascinating to me because there's a lot of things that go into that, right? That 2.5% number is impressive just in general, but that means that, one, people who are sending the money got to figure this out. Two, they got to understand the value proposition. Three, they got to sign up, right? And be able to use it. And then four is the person on the receiving end's got to figure out how to use it as well.

• 20:41Speaker 02

  Yeah.

• 20:42Anthony Pompliano?

  A lot of steps.

• 20:43Speaker 02

  It is a lot of steps, but most of those steps actually aren't happening.

• 20:46Anthony Pompliano?

  Okay.

• 20:46Speaker 02

  Because it's being abstracted away from the end user.

• 20:50Anthony Pompliano?

  How?

• 20:50Speaker 02

  Because the end user doesn't know that they're getting crypto. What's happening, and I think is going to drastically increase, is that, for example, remittance companies are saying, hey, how do I get money to Mexico? I, you know, I take dollars, I go to the correspondent banking system, they get converted to pesos, they come out pesos on the other side. I'm paying X amount of fees for that. Or I could take dollars, go into Bitcoin or XRP or some cryptocurrency, send it to Bitso, convert it to pesos there. And then I know what my fees are, total cost on that rail. It's just a different rail. And remittance companies are increasingly just looking at it as another rail.

• 21:30Anthony Pompliano?

  And so Bitso is frankly, it's not interfacing with the sender or the receiver. They're acting more as the infrastructure for the remittance company.

• 21:38Speaker 02

  For a lot of that remittance flows, yep, it's completely abstracted away from the users.

• 21:43Anthony Pompliano?

  Yeah. And so then really it's not the sender and receiver have to make this decision. It's the remittance companies, which to some degree is easier, I guess, because it's only, you know, a couple of decision makers at a company have to make the decision once. And then all of their volume can, you know, come over and go through Bitso. But two is it's a much harder decision because it's not like the one user who signs up and sends $10. Now you're talking about an entire corporation, understand the value proposition, switching over. So there's kind of pros and cons between the difference of being the infrastructure provider versus the end user provider.

• 22:10Speaker 02

  Yep, absolutely.

• 22:11Anthony Pompliano?

  Yeah, it's super interesting because, okay, so you guys got that. What are the companies on the crypto side?

• 22:17Speaker 02

  BitGo is one fairly recently that we're incredibly excited about.

• 22:21Anthony Pompliano?

  And what's kind of the thought process there?

• 22:23Speaker 02

  Yeah, so private key security and custody for crypto is and will continue to be like one of the biggest issues.

• 22:29Anthony Pompliano?

  Anyone want to argue that? Come on. All right.

• 22:33Speaker 02

  Just incredibly important, like securing private keys. It's a bearer asset. Like, there's nothing more important than securing those. BitGo is the provider, the wallet provider, the custody provider for a vast swath of the crypto industry.

• 22:48Speaker 02

  And they have put themselves at, one, they're just a trusted provider. They're a trusted name. Like, people trust BitGo. And at the end of the day, if you're a custodian, you're selling trust. And they've been doing this for a very long time, and a lot of people trust them. They've also built this incredible network of you have a lot of the industry is custoding their assets with you. You're in a great position to provide settlement solutions, to provide lending solutions, to hold everyone's asset and allow them to transact with each other without actually moving that outside of your custody. Just puts you in a really good place to provide the backend infrastructure for how the industry is going to work in the future. It is very similar to traditional custodians like a State Street, where it's not, it's not a, you know, kind of name that a lot of people know. But they're on the backend for a lot of what's happening in the financial services industry.

• 23:33Anthony Pompliano?

  Yeah. Might as well just keep going through your portfolio. I've never done this before, but we're gonna, we're gonna keep going until you run out of companies. What, what is the one company in the portfolio that you think people will be most surprised you guys have invested in?

• 23:46Speaker 02

  Oh.

• 23:50Anthony Pompliano?

  Most, and just so people at home know, most of your investments are public, but there are a couple that aren't. So we can only talk about the ones that are public, obviously.

• 23:56Speaker 02

  Yeah.

• 23:57Anthony Pompliano?

  So, so what would be the, the one that is known to folks but would still be surprising in terms of it'd be kind of a off the beaten path or a difference in strategy?

• 24:05Speaker 02

  Yeah, Spring Labs is a little bit different.

• 24:08Anthony Pompliano?

  What's that?

• 24:09Speaker 02

  So Spring Labs is building a decentralized credit bureau.

• 24:12Anthony Pompliano?

  A decentralized credit bureau.

• 24:13Speaker 02

  Yes.

• 24:14Anthony Pompliano?

  For lending services?

• 24:15Speaker 02

  For lenders, yes.

• 24:16Anthony Pompliano?

  Okay, explain some more. So how are they doing that?

• 24:18Speaker 02

  They are enabling, so the founders of Spring Labs came from Avant, which is a massive online lender based in Chicago. And what they saw is that credit bureaus are effectively creating, they're taking in data from lenders and other sources. And then they're capturing rents by selling that data back to the lenders that they are taking from the lenders.

• 24:37Anthony Pompliano?

  Good business model, people will buy it.

• 24:38Speaker 02

  Great business model. Good business model to be disrupted. So what they're doing is they're saying, hey, how can we use basically blockchain technology to enable lenders to share information securely with each other and get compensated for that while disintermediating the credit bureaus? Or working alongside the credit bureaus, kind of depending on who you ask.

• 25:04Anthony Pompliano?

  So what is the benefit to the individuals in a transaction? Whether you're a borrower or a lender, using that decentralized credit bureau versus a traditional one?

• 25:14Speaker 02

  It's going to mainly be for the lenders themselves.

• 25:17Anthony Pompliano?

  Got it, so for the lender. And it's more like accuracy of information or?

• 25:20Speaker 02

  Yep, the accuracy of information, cost of information, things like loan stacking, where people are applying for a bunch of loans at the same time with online lenders. If there is a better way for lenders to simply share information with each other about who has loans with them and who's applying for loans, you can help solve that problem.

• 25:38Anthony Pompliano?

  Yeah, this is, it goes into this trend I probably haven't talked too much about, but I've started to think more about. So a lot of the businesses today that are quote-unquote "online", they started out as businesses that were not online and then they had to catch up. So this internet thing happened and like, how do I get my credit bureau, which used to be more in the analog world? Now I got to get it online, right? And so they basically took what they had and they modernized it a little bit, but really they tried to fit what they had to the internet. When I hear like decentralized credit bureau or other people doing, you know, these kind of digitally native businesses, what they do is they start building a high level, it's a credit bureau, but the way that they get there is much more digitally native, much more built for the internet, much more for our global world, but like

• 26:23Anthony Pompliano?

  it changes. And so decentralization is true in some instances, sometimes it's not decentralized, but that to me feels like a pretty big shift in the way that people think about building businesses in certain verticals is because one is built and then brought online and others built for the internet or for this global digital world. And if you do the latter, it seems like that's a much more scalable, valuable type approach than, hey, let me build it how everyone else has always built it and then just put it online.

• 26:50Speaker 02

  Yeah, absolutely. And that kind of spans our investments in fintech and in crypto. Like a lot of our traditional fintech investments are just like, how can we build something that is native, natively digital, which can compete, you know, better with these historical businesses that are trying to transform their business to compete in a digital world.

• 27:07Anthony Pompliano?

  Got it. What are some of the other themes that maybe you guys haven't invested in yet that you're either looking for companies or you're excited about?

• 27:12Speaker 02

  Oh, I mean, the lending and borrowing market, we haven't explicitly invested in, although BitGo is certainly in that market. But that is a market that is, you know, absolutely, taking off, it's maturing, you know, really excited about where that is. So we're certainly looking at, you know, solutions there.

• 27:33Anthony Pompliano?

  And have you looked at, so right now, I think most of the lending and borrowing is happening in what I'll call like true crypto assets, right? So it's Bitcoin, Ethereum, digital dollars, whatever. But have you seen people doing stuff with traditional assets that are tokenized or digitized? Or is that still really, really early and more kind of theoretical than people are actually executing on it?

• 27:53Speaker 02

  I think it's mainly theoretical.

• 27:55Anthony Pompliano?

  Yeah, that's what I've seen as well.

• 27:57Speaker 02

  Yeah, yeah. Like the traditional, the like digitizing or tokenizing assets, I think that the most interesting part of that by far is currencies, effectively stable coins. Like, how do you bring stable coins or fiat currencies into an open network, kind of that is freely tradable? I think that that is the first kind of major shift that we'll see. And that will happen, you know, well before, you know, we really see, let's tokenize equities or real estate or, you know, gold or other things like that.

• 28:27Anthony Pompliano?

  And what's the fascination with the stablecoins? Like, you're very, very bullish, probably more bullish than most. One, there's data, right, that suggests that things like Tether, etc., are being used pretty widely. But what else kind of drives that bullishness for you?

• 28:44Speaker 02

  Yeah, so one is just looking at the data, looking at Tether, for example. There's been shown, there is huge demand for US-denominated settlement and trading accounts for folks that don't have access to the US banking system or want to trade in places that don't have access to the US banking system. And more generally, if you look around the world, there is strong interest in a lot of places in having USD-denominated savings. Like Venezuela, you know, it seems like they've embraced dollarization. So how does that happen digitally? Stablecoins is, in my view, the best way that that happens.

• 29:21Anthony Pompliano?

  And so let's take Venezuela or even like other more kind of nefarious actors slash sanctioned countries like Iran, North Korea, etc. Part of the knock against the USDCs, GUSD, true USDs, all of those types of stablecoins that are originated here in the United States is that they're still heavily regulated right now, but that kind of air quotes for those listening at home, because they can be stopped, assets can be frozen, they can be seized, etc. I think Tether, for example, is much more kind of unregulated, kind of outside of some of those controls, etc. Do we get a world where there's consolidation around one or two of these stablecoins?

• 30:03Anthony Pompliano?

  Or do we see kind of a plethora of the variations and it's kind of a buffet? Like, pick what you want, depending on what you need?

• 30:12Speaker 02

  My inclination is that there would be, there'll be various stablecoins for various degrees of regulation. So, yeah, like Tether is like an unregulated, open network. And I don't think that's going away, at least in the near term. I think Tether's market cap will increase over the next year. More people will be using it. I think that there's going to be a very large market for regulated, open networks, which are coins like USDC.

• 30:37Anthony Pompliano?

  And why do you, sorry to interrupt, but...

• 30:41Anthony Pompliano?

  Regulated open network. The regulated part makes sense. When you talk about open networks, is it open because theoretically anyone can come use it? Is it open because like, how do you come up with?

• 30:54Speaker 02

  Exactly, yeah. And I think that that gets to the core of why I'm so excited about stablecoins.

• 30:58Anthony Pompliano?

  Okay.

• 30:58Speaker 02

  Is because it is, it's an open network. Is that anyone, if you have a crypto wallet, you can receive dollars in USDC or other stablecoins. The banking system, the traditional banking system is a closed network. You need to onboard with a bank to get into that network. Or if you're a business and you want to have, say, you know, real time settlement, you can go to Silvergate and you can onboard into the Silvergate Exchange Network, but that's a closed network you need to onboard into. With stablecoins, you have a US dollar open network that anyone with a crypto wallet can join. Or for, you know, Mexican peso, it's an open network. If you are a US company that wants to own pesos, someday there will be a peso stablecoin

• 31:40Speaker 02

  and you simply need to receive a peso stablecoin in your crypto wallet to own pesos. So that's where I believe the world is going and why I'm so excited about stablecoins.

• 31:48Anthony Pompliano?

  Yeah, it gets at the heart of, you know, one of the things that I don't agree with, that's kind of a public narrative or debate is digital currencies versus fiat currencies. Like to me, it's a foregone conclusion. Every currency will be digital, right? Now, the question comes down to what does that look like, right? So kind of regulated, not regulated, open, closed. But also, what is the monetary policy that supports that digital currency? And that's where the competition to me exists is people now will have accessibility to all of these different currencies. Now there's competition at the monetary policy level. Like if you're in Venezuela, if you can access dollars, the won, the euro, you know, name your other favorite currency, and they're all readily available on an exchange,

• 32:33Anthony Pompliano?

  like crypto exchange, where all you need is an internet connection, what do you use? Is it brand awareness like, hey, the US dollar is the US dollar and I trust the full faith and credit of the United States? Is it monetary policy? And so now you start to actually learn more about it. Like, what drives those decisions around adoption? I don't know, right? I don't think there's a clear answer, but that becomes a very interesting world because right now usually, what country do you live in? Okay, what's the native currency or the reserve currency of that country? That's what you use, right? Because it's just an accessibility thing. But if you take, if you break down those walls and you give choice and have more of a free market competition, is that good or bad? I don't know. What do you think?

• 33:14Speaker 02

  I think it's a good thing.

• 33:15Anthony Pompliano?

  Okay, why?

• 33:16Speaker 02

  It gives people more choice and it allows people in places with, you know, currencies and banking systems that are not working, another option.

• 33:24Anthony Pompliano?

  Yeah, not all currencies are good.

• 33:25Speaker 02

  Not all currencies are good.

• 33:26Anthony Pompliano?

  Yeah.

• 33:28Speaker 02

  So I think that that's a good thing to give people options. If you ask, you know, is it, is it good for people in Venezuela and Argentina? And places like that to have other options other than their local currency, I think most people would agree that that's a good thing.

• 33:40Anthony Pompliano?

  Is it good for the governments?

• 33:43Speaker 02

  I think that's an open question.

• 33:45Anthony Pompliano?

  Yeah, cool. Because it, and not all governments are the same, right? So like, you could argue, I guess one side of the argument would be, digitized currencies from major superpowers would bail out the failure of the Venezuelan government to the Venezuelan people. Right? So you've hyperinflated away your currency. Basically, your people are suffering. If they don't have access to something else, it's quote unquote, good for you as the government, because now all of a sudden you don't have to go come with the solution. Like, they can just get access to a different currency and to kind of stop the bleeding. Vice versa, I don't think there's a lot of governments that want to give up that control.

• 34:19Speaker 02

  Or maybe it's like the kind of the, the escape hatch or bringing competition into a market makes actors behave better. And are you going to have massive inflation in a country if, if people have other options?

• 34:30Anthony Pompliano?

  Yeah.

• 34:31Speaker 02

  So maybe that will happen less. Like, I don't know. I'm just speculating at these things. But I think overall, like, it's a good thing and that it will be like, it will be because you've, for the first time have open networks that any, because it's always been closed network. You live in a country, your, your money is kind of the closed network, the money of that country. In 10 years, that won't be the case. You're going to have a lot of options and that, that's, that's going to be very different and very new.

• 34:52Anthony Pompliano?

  One of the arguments I haven't heard that many people talk about that I would love for somebody to argue, I'm not even going to say whether I agree with it or not because I would have to think about it more, is the digitization of the dollar would actually further enhance the dollar's dominance. Right? So this idea that if you digitize the dollar, more people have access to it. Because it is the global reserve currency today, more people would adopt it. And therefore you would actually build a deeper moat around that global reserve currency. Because accessibility is one of the biggest barriers to that happening. I think that there's a credible argument there. I don't know what the probability of that happening is.

• 35:34Speaker 02

  Yeah, I feel like that is the logical argument. I'm not enough of an expert in that space to argue for or against it. But the case that you just made seems very logical.

• 35:44Anthony Pompliano?

  Well, and I guess it begs the question then, do you think that whether it's dollars, wands, whatever, central banks do this or private companies, like USDC is technically a digital dollar. GUSD is a digital dollar, right? Tether is a digital dollar, all done by private companies versus the governments themselves. Can, is that a sustainable model or do we need the central banks to do it?

• 36:04Speaker 02

  I think it will largely be done by private companies, like what we're seeing right now.

• 36:08Anthony Pompliano?

  Okay, why do you think that?

• 36:10Speaker 02

  Because it's central bank digital currencies, as they're proposed in most places, are issued on private blockchains or databases even. It's basically the government is keeping the records. So like, how are records kept? Is kind of what we're talking about here. Like in the current system for individuals, you know, kind of balances. Right now, the current system is banks keep the records. In crypto, we're all keeping the records. In central bank digital currencies, as they're generally proposed, the government is keeping the records. I think in most places, the government doesn't want to or really have the capability to keep the, keep the records. Some places like China, I think would be the exception to that. Generally, I don't like, I don't think the US isn't going to start keeping the records of all kind of US balances for a whole variety of reasons.

• 36:55Speaker 02

  So I think that will be done by kind of commercial banks and technology companies as we're seeing right now.

• 37:01Anthony Pompliano?

  How do you think kind of surveillance and the nefarious activities of governments play into this, right? So like, one of the arguments, Alex Gladstein from the Human Rights Foundation is the chief strategy officer there. He's done a fantastic job outlining. I don't know if you could say it's a probable situation as much as it's a potential situation where governments realize, hey, this technology is great because now I can keep track of everything. And if I want to know what my citizens are doing, I should digitize my currency, pull cash out of the market. Now they use this digital wand, digital dollar, whatever it is, and I have full surveillance over all their financial activities. Scary, right? Very scary. But is that enough of a pull to get people to do it? Like to get the governments to do it? How do you think about that?

• 37:45Speaker 02

  I don't know. I mean, I hope not. Like that, I think that that is the fear when you talk about central bank digital currencies is just kind of what you outlined is the nightmare scenario. Are the scenario that people worry about. I certainly hope we don't go in that direction. And I don't think we would in most countries, but yeah, but that's the concern.

• 38:03Anthony Pompliano?

  Some of them for sure. And then how do you think about corporations interacting with these stable coins, right? So if you look at like a Bitso who's doing more like remittance type stuff, that's one component, but USDC, Tether, whatever it is. Businesses going to move money around the world as well. Do you see adoption happening there? Do you have any insight into like how they're thinking about these stable coins or digital currencies?

• 38:25Speaker 02

  Yeah, my hope is and my belief is that long-term they will, or at least this will be used on the backend for what they're doing. It's like, it's a better way to move money. Like you move 24/7, money 24/7, it's open on the weekends.

• 38:36Anthony Pompliano?

  I mean, I think that we're at the point now where it's like, pretty hard to debate it that it's not better, right? Like it's cheaper, it's faster, it's 24/7, 365, it's available in every country.

• 38:53Anthony Pompliano?

  You get it. You're gonna have a hard time convincing me otherwise, right?

• 38:55Speaker 02

  It's pretty compelling. At the same, like business, our business is looking at using stable coins right now for moving money around now. Like general corporations aren't, that's not even on the radar at this point. You know, it probably will be at some point, or the vendors that they use will be using this as rails on the backend, which is probably more likely.

• 39:11Anthony Pompliano?

  Yeah. All right. What other, what are the themes other than kind of stablecoin stuff? Are you, you interested in? You said lending and borrowing?

• 39:18Speaker 02

  Yeah, I mean, like market infrastructure, like how does this market evolve to look like more traditional markets in ways that it should? So that's something that we, you know, look at a lot because we are very close to the traditional markets. So things like, you know, different types of companies in the crypto market focusing on their core competencies and kind of getting separated out into like, should there be, should an exchange be a brokerage and a custodian? And does this all really belong together? Or should there be companies that are really good exchanges and really good brokerages and really good custodians?

• 39:51Speaker 02

  That's something that we think is certainly like the market is maturing and it's going in that direction. So we look to certainly invest behind that trend.

• 39:58Anthony Pompliano?

  So in traditional markets, there's definitely folks who come from traditional world who look at crypto and they're like, I can't believe that the exchange and the custody provider are the same, right? Or some other variation of these different components being vertically integrated.

• 40:16Anthony Pompliano?

  Is crypto different? Like, is this time different? Or do you think that whether it's regulation or just market forces force these to separate, become different service providers for whatever reason?

• 40:27Speaker 02

  I think that generally it makes sense that they are different companies that are providing these services. If you look at, because the core competencies that you need for each of them are different. To be a really good brokerage, you need to be really good at acquiring and servicing customers. For being an exchange, it's really about bringing parties together, you know, having that network effect of liquidity is kind of the key to having a successful exchange. For custody, it's security. It's securing, you know, folks' assets, especially in crypto, is the most important thing. So why would the same company have all those different core competencies which are very different? So I think it's very natural that they get separated into, you know, best in class for each of those. I think you see that even, you know, Brian Armstrong at Coinbase recently

• 41:08Speaker 02

  said that, you know, that Coinbase, like they're separating the brokerage from, from the exchange, which, which makes it end the custody piece. Like they're breaking it down just like you would expect from a traditional market. So I think, I think that the crypto market- Market is learning from traditional markets on, you know, kind of what works in traditional markets. But they're also learning what didn't work and like they're going to like kind of take over places in the traditional markets that they can improve upon. For example, like why are markets not open 24/7 like that? That's absurd like the crypto market is open 24/7 like why are markets not accessible to everyone? The crypto market is accessible to everyone. So I think that that's where we're going is we're going into a future where you're going to take the best things from the traditional markets.

• 41:53Speaker 02

  The crypto markets is going to learn from, and they're also going to improve on the things that aren't ideal in the traditional markets.

• 41:59Anthony Pompliano?

  So this is one of my favorite topics, which is every once in a while I'll see a tweet dunk, which essentially is somebody quote retweets some announcement and says, congratulations, you learned finance. And it's usually somebody from Wall Street or the traditional markets realizing that the crypto world was unsophisticated in some aspect. Right? And the announcement is basically getting to kind of a comparable, you know, position as the traditional market. So could be something around regulation, around custody, you know, whatever it is. And the reason why I like talking about it is because I think from the finance perspective, a lot of folks are like, hey idiots.

• 42:44Anthony Pompliano?

  Like we've been doing this a long time. Like we know what we're doing, right? Which, oh, okay, that's a position to take. I think the other argument, though, on the crypto side is, wait a minute. Just because you are do something the way you do it, doesn't mean that there's not a better way to do it. Right? And those two forces collide a lot, I think, in crypto. And I think what you're saying, if I'm understanding correctly, and correct me if I'm wrong, is if you start out saying, well, maybe there's a different way to do it. Sometimes you're actually going to end up saying, well, the way they do it is the best way. And so we're going to do it that way. But sometimes you end up saying, wait a minute, there's this other thing to do. And like, it's an improvement on that old world. Is that generally right?

• 43:18Speaker 02

  Yeah. And that's the great thing about crypto is that it's kind of building a new financial system from the ground up. And sometimes you land, well, the existing financial system kind of got it right. And sometimes you land, the financial system got it way wrong and we're going to build something better.

• 43:31Anthony Pompliano?

  Yeah. How do you know if you're like from the investor seat, right? When you're talking with a founder and working with them? How do you know when, oh, the existing model works versus we should go innovate or create something different? Is that like a pretty black and white? Let's go left, let's go right? Or is it more of you just kind of keep doing what's best for your business than you end up somewhere?

• 43:52Speaker 02

  I think it's more of the latter. And I really like companies that have people that come from both. Like the people that know the financials, traditional financial space and they know how it works. And then you've kind of more crypto native folks that they can bring both those mindsets into maybe, you know, what works and what doesn't and what we can improve upon, because it's not always clear.

• 44:10Anthony Pompliano?

  Yeah, it's, um, it's interesting to me how we're seeing the disruption in innovation. And Wall Street hasn't seen that very much, right? I think the tech world's used to it at this point. They kind of know how this stuff, you know, okay, here's the market cycles. Here's how you go into these large industries. There's very well understood business models, you know? Hey, we're going to execute the platform strategy or execute this, you know, B to B strategy, whatever. Wall Street pretty much has done the same thing for a long time. And, you know, if you think about crypto, starting at the most important component, which is the base unit of account and having innovation there around like, let's say a Bitcoin, now I'm getting into stable coins, et cetera. Like, can we rebuild the financial system? Can there be a complete replacement?

• 44:54Anthony Pompliano?

  Or is this, uh, we coexist, you know, the, the crypto world and the legacy financial world?

• 45:00Speaker 02

  Yeah, I think it's definitely a coexist.

• 45:01Anthony Pompliano?

  Like, why? I'm going to push you on this. Why?

• 45:07Speaker 02

  Oh, I just have a very hard time seeing a future where, you know, the crypto world displaces the traditional financial world in, you know, the developed markets. I just don't think that will happen. I think that there is opportunities in other markets that maybe don't have a, as a developed of a financial system.

• 45:23Anthony Pompliano?

  Okay. So you're going to bifurcate, let's say, take the globe bifurcate, developed, undeveloped, or developing worlds, I think is the more appropriate way to say it. The developed nations, much harder to see the financial system as it exists today, completely going away. And then developing world, easier to see that happening, right? Is that fair so far?

• 45:39Speaker 02

  Yeah.

• 45:41Anthony Pompliano?

  I don't disagree on the developing world side, right? In terms of if you don't have a lot to start with and something new comes along, it's pretty easy to see people wanting to switch, right? Now, somebody's got to build that, it's got to work, all that kind of stuff, but that's pretty self-explanatory. In the developed world, let's say you're right. The legacy world can't go away. If you were the disruptor, what are the one or two things that you would have to see happen to change your mind? Like, what would be, hey, X happened? Oh, you know what? Actually, I think they could get disrupted. And I'll bail you out a little bit with this question. I don't know if I have an answer, but it's an interesting way to think about, okay, we both agree that like, legacy world is pretty big, they're pretty powerful, it works.

• 46:26Anthony Pompliano?

  You know, I always joke, US dollar works in the United States pretty well, right? But what would have to happen to say, you know what? Actually, this crypto thing could displace or just completely disrupt the legacy world?

• 46:39Speaker 02

  I think you need to find the little places, the edges where crypto is better.

• 46:45Anthony Pompliano?

  Okay, so you would go more of outside and you got to start gaining traction somewhere where crypto is better?

• 46:52Speaker 02

  Yeah, yeah, like find those places where it's a little bit better.

• 46:56Anthony Pompliano?

  And is this kind of what you're thinking about with like Bitso and the remittance type stuff?

• 47:00Speaker 02

  Exactly, yeah, yeah, yeah. Like, find the place where it's just like, okay, we need to get, you know, dollars into pesos and get those in Mexico. What's the best way for us to do that? It happens to be using crypto rails, so we're going to start using crypto rails. Or we're going to start experimenting with it. And then, you know, maybe it's better 10% of the time. So we're going to be using that 10% of the time. And then, you know, crypto markets are getting more liquid, spreads are getting tighter, it gets more than 10%. Next thing you know, all the remittances to Mexico are going through crypto rails because it's just a fundamentally better rail.

• 47:31Anthony Pompliano?

  Yeah, it's almost like the Trojan horse type, you know, model, right? Where, hey, do you want to get paid in, you know, you're going to send money back to a country that your family lives in, right? So traditional remittance, I'm your employer and I say, would you like to get paid in the currency that you sent? Right? And you say, you know what? I'll take 10% of my salary. Well, at some point, you say, okay, give me more, give me more, even more. And do you say, you know what, I'm gonna send the money I send back, but then the money that I keep here in the US, I'm actually gonna keep in that currency as well. And now I want to spend it. And it almost like eats into your wallet share to some degree, or your portfolio share. I haven't thought enough about it to know like how realistic that is, but it's an interesting way to, you start on the fringe or like the more like

• 48:13Anthony Pompliano?

  toy, you know, type thing. And then eventually it becomes more serious and like, oh shit, like, you know, 80% of my wealth is in this stuff.

• 48:19Speaker 02

  Yeah, like, how do you get that little, little edge? And you talk about like, how do you get folks off zero? I think it's the same for like a lot of these use cases. It's like, how do you get people, folks off your, off zero? How do you get, you know, part of their innovation budget, like using this in some way and trying it? Cause it's a lot harder to get, going from zero to one. It's much harder than going from, you know, one to 50 and 100.

• 48:40Anthony Pompliano?

  Agree, I definitely agree with that. Um, all right, you're bullish, I'm bullish. What's your biggest fears in the market? Like, what do you, what do you wake up? And when, when you wake up, you're like, if X, Y, or Z happened, I would like, go do something else.

• 48:55Speaker 02

  So that wouldn't happen. Uh, I'm,

• 48:58Anthony Pompliano?

  That's a bold statement.

• 48:59Speaker 02

  No, I'm, I'm hyper, hyper bullish on crypto.

• 49:02Anthony Pompliano?

  Okay, so what are like the, the big fears?

• 49:03Speaker 02

  So what do I worry about? And I did want to ask you this as well. What, what I worry about, like, what's most damaging to the crypto space? Is if regulators decide they want to really clamp down on crypto and then just kill innovation, um, like outlaw, you know, holding crypto in, you know, the major developed markets that matter. This, it obviously does not shut down Bitcoin and crypto at the network level, at the protocol level. Like you think, you can't shut that down. That's why Bitcoin is Bitcoin.

• 49:33Speaker 02

  But if you, you know, shut it down, like you cannot hold these things, you can't work on them. Like that, that is just very, very damaging to the industry. Um, so by far, that's my biggest worry.

• 49:44Anthony Pompliano?

  Okay, so if you ask me the same question, I have two, that's one of them for sure. And again, I think you're saying the same thing of it's not because you shut down Bitcoin, it's because you basically kill the adoption and the innovation and it's kind of like drugs, right? Like, look, drugs still prevail in the United States in the sense of they're there, people use it, whatever, but if it was legal, there's way more people who would use them than probably not.

• 50:09Speaker 02

  Yep. People are straightly going to use Bitcoin and the network you can't shut down. But if you outlaw it, then it's only criminals using it and that's a nightmare scenario.

• 50:20Anthony Pompliano?

  Yeah. So my other one is I call it the self-inflicted wound, right? There's, we rush, something happens and there's a bug introduced into the code or something where like it has nothing to do with the external forces, has nothing to do with how Bitcoin is designed, has nothing to do with kind of a black swan event or regulation or any stuff. It's just simply, we all trust that code is being contributed and it's getting introduced and it goes through a very kind of serious vetting process that's pretty methodical for a reason, etc. But if at some point there was a bug that was introduced, that wouldn't be good. So I think about those two things, which one's external, one's internal, but at the end of the day, they kind of end up at the same place, right? Where it ends up

• 51:01Anthony Pompliano?

  not, it either ends up being not as valuable or it's a massive, massive, I wouldn't even say it's a speed bump, it's probably a stop sign at that point, right? In terms of regulation.

• 51:10Speaker 02

  Yeah. If you talk about what could effectively kill Bitcoin, like those are, I think that's probably the biggest two things.

• 51:18Anthony Pompliano?

  Yeah. What about Facebook and Libra and Calibra and all that? What are kind of your thoughts there?

• 51:23Speaker 02

  So, love it because it's getting everybody talking about crypto.

• 51:28Speaker 02

  I think that somebody needs to onboard the world to crypto, which is like one of the, very much aligned with our thesis and especially Calibra, the wallet, kind of that their goal is to onboard the world into crypto. So I think that that's fantastic. I love that. Will, you know, Libra eventually look like, you know, as it is proposed? It might. Is it more compelling if you just do individual stablecoin currencies? My personal view is that versus a basket. But overall, I think it's highly positive.

• 51:56Anthony Pompliano?

  I mean, I'll admit, I lobbied hard for them to just do with Bitcoin.

• 52:00Speaker 02

  Just do Bitcoin?

• 52:00Anthony Pompliano?

  Yeah, I mean... Because it's, look, yes, I understand they're saying there's too much price volatility, can't be used as a means of payment, but you know, yada, yada, whatever. But it's also the most decentralized, is also the most adopted, is the most liquid. And in hindsight, it probably gets you from a lot of the kind of regulatory backlash that they're getting, or at least from the legislators, etc. The question is like, that short-term pain, is there a long-term gain, right? Versus Bitcoin or stable coins that already exist probably wouldn't have that short-term pain because the regulators, you know, whatever. But is that long-term sustainable? We don't know, right?

• 52:40Anthony Pompliano?

  We may never find out, but to me, it's, it's hard to come out and say like, hey, we're going to create a new currency when you're Facebook. Right? And like, even though there's other corporations or whatever, like I, I can almost, this is one test I would love to do. I'd love to go ask every single congressperson, who created Libra? They would all say Facebook, right? Yep. And then if you said, name five other corporations that are in the Libra Association. My guess is that, I don't think that a single congressperson could do it.

• 53:13Anthony Pompliano?

  Five of the 21.

• 53:16Anthony Pompliano?

  Probably be tough. Yeah. Because you know, I don't think I could.

• 53:21Anthony Pompliano?

  Because you know, the names that most people know, like if, if we went and asked people in crypto, they know the names of the corporations that have left. Yeah, the, the Card Networks, yeah. Right? Like, you know, I could tell you that Strife was in there at one point, I could tell you that, you know, you know, A, B, C, D, whatever. But the people who are left, actually, like I would struggle to name five of them. And so, is that good, bad? You know, you can debate that all day long, but I do think that that's part of this as well as like, you haven't seen Amazon. You haven't seen, you know, Google, you haven't seen, like, to me, Tesla is a no-brainer for them to eventually come out with their own digital token. And it's more of like a credit in their energy grid, right? And so all of a sudden, you got a power wall, you got your Tesla, you got charging and all stuff.

• 54:04Anthony Pompliano?

  Like, why can't your Tesla car pay for the energy that it is using at the electric vehicle? You know, not pump, but like the charger station. Station, yeah. Yeah. I'm sure at some point, somebody there's thought about that, right? And so we started thinking about that stuff. It's a, it's pretty crazy that, you know, 11 years ago, none of this existed. And now here we are talking about.

• 54:29Speaker 02

  We've come a long way, an amazing way.

• 54:31Anthony Pompliano?

  Yeah. Right. All right. What one area around the world are you most excited about other than the major developing markets?

• 54:43Speaker 02

  Oh, I think that the, the emerging markets are the most interesting place for crypto by far. So.

• 54:47Anthony Pompliano?

  Why? Cause there's less competition?

• 54:51Speaker 02

  Because there's more real use cases for it.

• 54:53Anthony Pompliano?

  Okay.

• 54:53Speaker 02

  Because if you look at the, like the use case in developed markets for crypto broadly, like digital gold of Bitcoin is the most compelling use case in my view. If you start to go to places that don't have, you know, stable currencies and good banking systems, then it's, it's beyond digital gold. It's actual, you know, payments and using for commerce, which, which I think gets a lot more interesting. So, you know, Latin America, Africa, some parts of Asia. I think that that's where the most interesting things in crypto are more likely to happen.

• 55:22Anthony Pompliano?

  Yeah. And do you think that's kind of what like Jack Dorsey at, at Twitter and Square sees, sees you at Binance? You think that's kind of why they're spending so much time in these areas?

• 55:30Speaker 02

  Yeah, absolutely. Yeah.

• 55:33Anthony Pompliano?

  Square and Twitter ever merge?

• 55:37Anthony Pompliano?

  I love this conversation because I get to just throw wild ideas that you would see your reaction.

• 55:41Speaker 02

  I never thought of that one.

• 55:43Anthony Pompliano?

  So here's my, here's my pitch. I don't have an opinion as to whether it's going to happen or not. But if you said to me it happened and I had to come up with a thesis as to why, Twitter has connected individuals around communication. And now all of a sudden, if you overlay it with a payment network, so take paying businesses, right? Using Square and then also paying individuals through the Cash App. And I overlay the communication layer and the payment layer. I don't know what that looks like, but it's something new and could be super valuable. And like, who's the one guy who's super bullish on both of those things and owns companies that do both? Jack Dorsey.

• 56:21Speaker 02

  Makes a lot of sense.

• 56:22Anthony Pompliano?

  Right? And so, because this idea of connectivity to me is, uh, it's new, right? So we know how it works when it comes to communication and individuals. So like, let's say you and I, uh, 30 years ago, live in the world, two different cities. Uh, the way we communicate is basically faxing, telephone. Maybe we were really, really early to like an email type service, uh, or letters, right? And that's how we communicated. The second that we get internet connections, we get services where we can communicate, sharing of information, feedback loops, you know, all the things that we know that's great about the internet. Well, like that happened to words and text and communication. When that happens to money, like that to me feels like an even bigger deal than communication. Right? But is that really what's happening in crypto?

• 57:06Anthony Pompliano?

  Or are we simply saying, oh, no, the people who are already connected via communication, now we're just going to put money in there as well? Like, are we onboarding new people to money? Or are we just simply trying to improve the people who already have access?

• 57:19Speaker 02

  I think we're moving from a, from closed networks to open networks. And I think that that is what happened with, with communications, with a lot of things that they used to be closed networks.

• 57:27Anthony Pompliano?

  Explain that, though. Why do you think we're moving to open networks when it comes to money?

• 57:32Speaker 02

  Uh, because before the internet, um, like most things were closed networks. Most things were not accessible to everyone, like that, that's kind of the major kind of innovation.

• 57:40Anthony Pompliano?

  Hard to argue.

• 57:40Speaker 02

  Yeah. Uh, innovation of the, of the internet is that it opened information up to everyone. And that's what I think we're, we're seeing with money is that money has been closed networks. Um, and now with crypto, money becomes open networks that anyone can access money. Anyone can access different types of money.

• 57:58Speaker 02

  So yeah, I think kind of it's that same type of disruption, which is really interesting.

• 58:03Anthony Pompliano?

  So, uh, I don't disagree. What that then leads to is do we eventually get to a point where there's a separation of state and money?

• 58:11Anthony Pompliano?

  And not in like the, uh, let me caveat this. I'm trying to be better about not putting people in bad positions. Not in like the anarchist way, right? Like, hey, we've got to take down the dollar for that to happen. But in the sense of you as a user have a government currency, you have a non-government backed currency. Then you've got these like digital hybrids, right? Where it's a USDC, so it's not technically the one that the government issued, but it's digitization of a government currency. Let's say those are the three options. When you have those options, you as a user are going to choose, right? Are the other two sustainable? Like, will the regulators, will the governments allow non-government currencies? Or like you said earlier, kind of that, that, um, Really, really bad case. They come in and they say, absolutely not. We're going to regulate this out of existence.

• 58:56Speaker 02

  Yeah, my, my hope and my vision on how it plays out is that it is different fiat currencies and cryptocurrencies coexist. It gives people options. They can use different things for different use cases to transaction around the world. You know, to hold Bitcoin as, as kind of the asset that I think it will be as part of a portfolio and a store of wealth. To transact and, you know, the different, different currencies for different, uh, you know, countries that they're in or, or, you know, parties that they're interacting with. That's where I think and hope it's going.

• 59:25Anthony Pompliano?

  So I go even further. Uh, what's the uncomfortable idea in the room? True separation of state and money. Governments don't want to control money. If you said in the mid sixties, one day those paper notes in your pocket will not be backed by gold. You would, it's blasphemy, right? Like no way is that ever going to happen. 1971 or whatever it was, right? Happens. To me, the world would look a lot different. And so I don't necessarily think it's going to happen. What I think is that it's a higher probability than people assign to it. Right? So it's almost like we're all, we're mispricing the probability. And what I don't know is if that's good or bad.

• 1:00:07Anthony Pompliano?

  Right? So let's say that if I went out on the street and asked 20 people, uh, the consensus would be there's less than a 5% probability of separation of money and, and state. And actually, if you could somehow measure this and come up with an equation, uh, the probability is actually 15%, right? Still, it's only 15%, not very high, but difference between five and 15, pretty material.

• 1:00:30Anthony Pompliano?

  That's a very interesting, like we're edging more towards this like, wait, maybe the world is not expecting something. Right? Um, and I don't think a lot of people are talking about that.

• 1:00:42Speaker 02

  No, I mean, does the world go in that direction? My inclination is no, but at the same time, I agree. We as people generally underprice the probability of drastic changes happening. So I think that's fair.

• 1:00:54Anthony Pompliano?

  Yeah.

• 1:00:57Anthony Pompliano?

  Is there anything else that you've been thinking about in crypto that you haven't heard anyone talking about? Like, what do you think is important, whether it's for 2020 or, or beyond that you're like, man, I wish more people were talking about X?

• 1:01:11Anthony Pompliano?

  I got them thinking. Yes.

• 1:01:14Speaker 02

  I think I.

• 1:01:15Anthony Pompliano?

  No, come on. You gotta have something.

• 1:01:25Speaker 02

  I mean, people are talking about what I think is the thing we haven't talked about or directly hit on that I think is kind of most interesting is when and how does this become like a real global macro play that we see like somebody come out and makes like they're going to be the next Soros and they're going to make their name in crypto.

• 1:01:46Anthony Pompliano?

  Okay, before I dig into that, what would, what is kind of the milestone that would put somebody there? Is it they take a lot of fiat and convert it and then they're very public about it? Is it they make some directional bet? Like, how do you think about?

• 1:02:03Speaker 02

  Yeah, I think it's like a big global macro hedge fund that publicly, you know,

• 1:02:08Anthony Pompliano?

  Says, we're all in.

• 1:02:10Speaker 02

  We're all in.

• 1:02:10Anthony Pompliano?

  Right?

• 1:02:11Speaker 02

  We're all in in a meaningful way.

• 1:02:12Anthony Pompliano?

  Yeah, we believe this is how the world is going and we are going to put a lot of risk on the table in terms of how we're going to do this.

• 1:02:19Speaker 02

  When Ray Dalio writes his letter that he recently wrote about kind of how the world is broken.

• 1:02:23Anthony Pompliano?

  Yep.

• 1:02:24Speaker 02

  Or the system is broken. But instead of ending it with buy gold, he ends it with buy Bitcoin. Like, I think that somebody like Ray, like making that announcement could be a seminal moment for the industry.

• 1:02:35Anthony Pompliano?

  Okay.

• 1:02:39Anthony Pompliano?

  I don't disagree at all that that would be a seminal moment for the industry. My question is, historically, do the innovators who became the man, right? Because every innovator always becomes the man. Look back in history. Bill Gates was disrupting and now he is the man. Everyone's going to try to disrupt Microsoft. Same thing happens in finance. So the Ray Dalios of the world, Steve Cohen, all these guys, they were no names that built into who they are today. Can you get the innovators who became the man to do that? Or do you need new innovators to disrupt the kind of the old guard?

• 1:03:15Speaker 02

  I'm not sure, what do you mean?

• 1:03:17Anthony Pompliano?

  So, to me, I don't think that you're gonna get those big global macro folks, no matter how much time you spend with them on it. I think that it's classic innovator's dilemma, right? Your entire life, you've made money and been very, very good. If you look at money as the scoreboard, you've been highly, highly successful. You've won almost every game you've ever played with one specific strategy, with one specific view of the world, one specific understanding of the system. To get somebody to flip that on its head around separation of money and state, decentralization, digitization, developing world adopts technology before developed world, all these kind of different mechanisms.

• 1:04:01Anthony Pompliano?

  I don't think you can get those guys to do it, right? I think it's actually the opposite. I think you need young people who, those ideas are not as radical to them. Like, they almost don't know better, right? They're too naive to know the world works, you know, option one.

• 1:04:16Speaker 02

  Yeah, that it's not gonna be Dalio and Cohen that do it. It's gonna be folks that become the next Dalio and Cohen because of what they're doing.

• 1:04:25Anthony Pompliano?

  Yeah, so like, what that does, though, is that puts you in a position where that next Soros, that next Dalio, whatever, probably is already here, right? But we just don't know who that is. Like, who becomes them and has recognized them? One of the anecdotes that I have that blew my mind and frankly made me feel old was I asked my brother, who's 23 years old, and I said, "Hey, you ever sent a bank wire?" And he said, "What's that?" And I said, "Fair, right?" I said, "How do you send money to your friends?" He said, "Two ways." I said, "Okay." He said, "Venmo and Uber."

• 1:05:00Anthony Pompliano?

  For those that are only listening, Peter's had a pretty visceral reaction to that.

• 1:05:05Speaker 02

  Uber, really?

• 1:05:06Anthony Pompliano?

  So, Venmo makes sense. Uber, what he was hinting at was when him and his friends take an Uber together, they split the ride. And so he's not actually sending money to his friend. What they're doing is they're essentially combining capital to pay for something. But in his head, his buddy ordered the Uber and his buddy then same thing as requesting money on Venmo. His buddy is requesting that they share the ride, so he just hits accept. Whether he's accepting on Venmo and the actual mechanism is money's going to you. Or we get in the car together and you request to help pay for the ride and I just hit accept. The user experience is the same for me, I accept.

• 1:05:44Speaker 02

  That's interesting.

• 1:05:45Anthony Pompliano?

  And so I started thinking about that and I was like, damn. Like, like either I'm an idiot, I'm, I'm old or both. Cause I'd never thought of it that way. But it just really started to make me think like, if you grew up with a phone in your hand, right? And all of these digital technologies, fintech companies, et cetera, like that's all you've ever known. You do think about money differently. You do think about these mechanisms and the way that you, uh, you know, kind of, uh, conduct transactions in commerce, et cetera. Very, very differently than even me who's, you know, I'm 31 years old and not, somebody would have told me like, I don't understand technology or fintech. I've been like, ah, maybe not, but here we are.

• 1:06:20Speaker 02

  Yeah. And, and, and it's going to be really interesting, like years from now, when you have people that are, you know, coming of age that grew up in a world where, you know, Bitcoin wasn't a new thing. Like, like that's like, do they, do they have crypto wallets before they have bank accounts? And like, what, what, what does that mean? Like, it'd be really interesting.

• 1:06:38Anthony Pompliano?

  I want to know. How many kids under the age of 18? Have Venmo, but no bank account. Actually, I don't know if they could sign up for a Venmo account. But I will tell you, you know what they do have? How many kids have the Starbucks app and their parents put money onto their app so that they can buy things? Versus have a bank account? Way more have the Starbucks app, I bet. How many kids use either their parents' credentials for Uber? Or have their own Uber account and their parents deposit money into their Uber account? Way more than have a bank account. Like, again, is that good, right? Vertical-specific accounts where your parent is still the same thing, rather than me sending

• 1:07:22Anthony Pompliano?

  you money to your bank account. And, you know, when I was a kid, my mom put 20 bucks in my bank account. I was ecstatic, go swipe my card and, you know, I was, I was rich. But if today they're doing it on your Starbucks or on your Uber, right? Is that, isn't that the same thing?

• 1:07:35Speaker 02

  Yeah, it's digital dollars. That's not directly held with a bank. Like, it's abstracting.

• 1:07:39Anthony Pompliano?

  It's pretty crazy to think about. All right. For people who want to pitch jump, where can they go?

• 1:07:46Speaker 02

  The Chicago VC on Twitter. Reach out to me there.

• 1:07:50Anthony Pompliano?

  All right. Are DMs open?

• 1:07:53Speaker 02

  Uh, DMs are open.

• 1:07:54Anthony Pompliano?

  Why? Why do you have your DMs open? You like it?

• 1:07:57Speaker 02

  So startup founders can find me.

• 1:07:58Anthony Pompliano?

  All right, that's fair.

• 1:07:59Speaker 02

  Or [email protected].

• 1:08:02Anthony Pompliano?

  Okay. Twitter, I think, is the best tool in the world.

• 1:08:07Speaker 02

  Yeah, I love Twitter.

• 1:08:09Anthony Pompliano?

  Somebody tweeted yesterday, they said, "Yo, Jack, if you ever wanted to charge us all $1 a month, now's the time to do it." Whenever there's sports, politics, potential war, like everything going on on Twitter, they're like, "Dude, right now would be a really good time to turn that monetization on." But it's all there, right? And then are there specific types of companies you're looking for right now? Series A-ish?

• 1:08:34Speaker 02

  Yeah, Series A-ish, typical for Jump Capital, you know, the 3 to 10 million dollars Series A investments, companies with meaningful revenue. That is the core of what we do. If there are companies that are, you know, in the, the trading, investing space, love those types of companies, if jump trading can be a partner, liquidity provider, customer, you know, strategic partner in some way, that's even better. Absolutely love to hear about kind of anything there.

• 1:09:00Anthony Pompliano?

  All right. Any last parting words before we get into the rapid fire? Anything you want people to know? Other than, you got a pretty cool Twitter handle, the Chicago VCs.

• 1:09:10Speaker 02

  The Chicago VC.

• 1:09:11Anthony Pompliano?

  What happens if you move? Do you change it or you keep it? Or you're never moving?

• 1:09:16Speaker 02

  Never moving, never leaving crypto.

• 1:09:21Anthony Pompliano?

  All right, you guys heard it here. He's never gonna leave Chicago.

• 1:09:27Anthony Pompliano?

  What's the most important company in crypto, other than Jump?

• 1:09:30Speaker 02

  Jump's pretty important. I think the easy answer is Binance, because just the way that they're innovating and like blitzscaling a crypto-native country company. My view is actually BitGo.

• 1:09:41Anthony Pompliano?

  BitGo, okay, why?

• 1:09:42Speaker 02

  BitGo. Because as we talked about earlier, like, they are the infrastructure provider for such a big part of the industry. Private key security is so incredibly important, and I think that there's significant network effects of being kind of the largest independent custodian in the space. Kind of the back office, infrastructure and services and tools that you can build off the back of that, I think is incredibly important. Now, I would say if I would add one more, the sleeper is LMAX Digital, which has quietly built what is probably the largest crypto spot exchange in the world. And I feel like a lot of people don't even know their name.

• 1:10:16Anthony Pompliano?

  All right, explain.

• 1:10:18Speaker 02

  Because LMAX Digital, because they're-

• 1:10:20Anthony Pompliano?

  So it's L-M-A-X, right?

• 1:10:22Speaker 02

  Yeah, yeah, LMAX Digital. I mean, they just put their volumes up publicly. So for a long time, they didn't publicly disclose volumes. They're now up, you can see them.

• 1:10:31Anthony Pompliano?

  And they're providing infrastructure where people can tap into?

• 1:10:34Speaker 02

  It's a spot exchange.

• 1:10:35Anthony Pompliano?

  Yeah, but it's spot where any consumer can go in and use it, or it's mostly like trading firms?

• 1:10:41Speaker 02

  Yeah, mainly trading firms. Yeah, so they're based in the UK, so a lot of US folks haven't heard of them. And they are focused on trading firms. So a lot of people haven't heard of them, but that's where, you know, a huge amount of actual spot crypto trading is now happening, is on LMAX Digital.

• 1:10:55Anthony Pompliano?

  Did you guys invest?

• 1:10:56Speaker 02

  We're partners with them.

• 1:10:57Anthony Pompliano?

  Got it. And then you guys invested in BitGo, right?

• 1:11:02Speaker 02

  Yes.

• 1:11:02Anthony Pompliano?

  All right. People get all upset when I don't say who invested in what now. I was accused of talking about great companies and not saying which ones I invested in and not. And I said, "It's like Jeopardy, you gotta figure it out." All right. What um, what is the one regulation or law that you would change if you could?

• 1:11:21Speaker 02

  Oh, a bit license, probably. It's just such a hassle for for New York.

• 1:11:25Anthony Pompliano?

  Yeah, it's pretty crazy. It still exists.

• 1:11:28Speaker 02

  Yeah.

• 1:11:28Anthony Pompliano?

  Like, my favorite fact about the bit license is the gentleman who like led that whole thing, then left, started a firm to consult people to then navigated like, so I got one, one rule in politics, which is, uh, I wish that there was a rule that said, if you're a politician, uh, and you get elected into, um, a seed representative, whatever. We go back and we look at who put you there, right? So whatever industry was your biggest donor, you cannot legislate over that, uh, while you're in office. So you're a congressman, healthcare is your biggest donor, you get put into office, you can't actually vote or legislate over the healthcare industry because you're biased, right?

• 1:12:12Anthony Pompliano?

  I actually think that now, when I heard this, uh, bit license thing, it's like same thing. Like, hey, you can't be a regulator, create a law that is so onerous and hard for people. And then turn around and be like, okay, now pay me and I'll help you navigate this.

• 1:12:25Speaker 02

  Yeah, I don't know if you read, like Matt Levine, but he talks about that. Like, that's the best thing to do as regulator is actually you, you create really tough laws, because then you can, it gives you a lot of work when you go to the other side and you consult around it.

• 1:12:35Anthony Pompliano?

  So I haven't heard him say that, but, uh, I get his email every day. I don't read it every day, but when I read it, like, he's fantastic.

• 1:12:41Speaker 02

  So good.

• 1:12:42Anthony Pompliano?

  He, uh, I wish that he did like a stand-up comedy, right? Like in terms of, he didn't even have to be that funny, because it's kind of, you know, dry humor type stuff with with finance. But like, if he just stood there and talked about like what he writes about and just like a one hour special, put on Netflix, I'd watch.

• 1:12:56Speaker 02

  I'd watch it.

• 1:12:59Anthony Pompliano?

  All right. What, uh, what's the most controversial thought you have in crypto? That everyone, when they hear it, will disagree?

• 1:13:10Speaker 02

  I don't know if anything is that controversial. I would say that I am much more bullish about the future of stable coins than most people I talk to.

• 1:13:19Anthony Pompliano?

  That's not really controversial.

• 1:13:20Speaker 02

  Not really controversial, though.

• 1:13:21Anthony Pompliano?

  I'll let you off the hook. Uh, most important book you've ever read?

• 1:13:24Speaker 02

  Principles by Ray Dalio.

• 1:13:26Anthony Pompliano?

  Why that one?

• 1:13:27Speaker 02

  Yeah, so.

• 1:13:28Anthony Pompliano?

  It's mentioned a lot, but why?

• 1:13:30Speaker 02

  So Ray, I think, is one of the most, probably the most thoughtful investor in the world. What I love about Principles is it's about looking down at your career and your life like it's a machine and really understanding how that machine works and being the designer of the machine, um, instead of just kind of being part of the machine. And I think that's just a brilliant way to think about your life and your career and everything.

• 1:13:50Anthony Pompliano?

  So, um, this idea of, uh, being able to step out of your body and, and take a more kind of, uh, transparent, honest view of where you are, et cetera, uh, is very similar to a concept that Jaco Willink, um, the Navy SEAL commander has where he basically, uh, he tells a story, you know, one time they're doing an exercise and he realizes like no one's leading. And all of a sudden, he just took a deep breath and he took a step back, like a physical step back, looked around, figured out what was happening and then just started ordering people what to do. And he said, like, that's one of the things that he does in a lot of his executive coaching and corporate coaching is like, hey, you can't just be in the weeds every day. Like sometimes you gotta take that step back. And I think that's kind of what Ray talks about, uh, in other words, but similar concept of

• 1:14:32Anthony Pompliano?

  just like designing, right? Being aware of what's going on in a broader picture, which is, uh, it's pretty powerful.

• 1:14:38Speaker 02

  Absolutely.

• 1:14:40Anthony Pompliano?

  Do you have a second most important book?

• 1:14:44Speaker 02

  I don't know about most, second most important. I would say most interesting book I recently read.

• 1:14:48Anthony Pompliano?

  Okay.

• 1:14:49Speaker 02

  Uh, was Devil Take the Hindmost.

• 1:14:50Anthony Pompliano?

  Devil, what'd you say again?

• 1:14:52Speaker 02

  Devil Take the Hindmost.

• 1:14:53Anthony Pompliano?

  I don't know what that is.

• 1:14:54Speaker 02

  Uh, the subtitle is A History of Financial Speculation.

• 1:14:58Anthony Pompliano?

  Ooh. Okay, devil take hind most?

• 1:15:01Speaker 02

  Yep, devil take the hind most.

• 1:15:03Anthony Pompliano?

  Okay. Check that out.

• 1:15:05Speaker 02

  Yeah, so it goes through history, kind of every, you've got a period of financial speculation. So tulips, railroads, South Sea Bubble, and kind of how each of these, you know, bubbles or periods of financial speculation played out. And it is, one, it's just an absolutely fascinating, entertaining read. And two, you can very clearly see some of the ways that things are similar and not to crypto, which has kind of gone through many periods of financial speculation.

• 1:15:35Anthony Pompliano?

  Joe, put it back up there. Joe is on top of it. He's got the computer and he is pulling it up on Amazon.

• 1:15:42Speaker 02

  There it is.

• 1:15:43Anthony Pompliano?

  My, uh, my goal this year is to get people to start coming up to me and asking, where's Joe? Cause Joe is always sitting in the corner where I record the podcast. He's firing away. Um, all right, aliens, what, uh, what do you think? Believer, non-believer?

• 1:15:58Speaker 02

  Uh, I think there probably are aliens. Uh, I think it was the-

• 1:16:01Anthony Pompliano?

  You're, you're smiling when you're saying this. Why? What's the catch?

• 1:16:04Speaker 02

  Yeah, so we, we were talking about this before the show. Uh, so I think it's the, I think it was like the Drake equation or whatever it is, like number of planets.

• 1:16:12Anthony Pompliano?

  Drake equation and Fermi paradox.

• 1:16:14Speaker 02

  Yes, yes. So you go through the probabilities, like, is there probably life somewhere else in the universe, uh, just based on fewer numbers? Like, probably. Then the next question that, that you have is, do aliens have pets?

• 1:16:30Anthony Pompliano?

  You know, when somebody comes in and brings up that question, they've been listening for a long time.

• 1:16:34Speaker 02

  Yeah. So, so that one really got me thinking. I think that's the harder question. So I was thinking, you know, how many species are there on Earth? So I looked it up, there's over eight million.

• 1:16:43Anthony Pompliano?

  Eight million species on Earth?

• 1:16:45Speaker 02

  Apparently.

• 1:16:45Anthony Pompliano?

  Wow. That's a lot.

• 1:16:47Speaker 02

  Yeah, like, I'm guessing that goes all the way down to, you know, a single cell organism, that type of species. Uh, and how many of these species have, have pets?

• 1:16:54Anthony Pompliano?

  Did you Google that too?

• 1:16:55Speaker 02

  I did not. I just, I just assumed it was us.

• 1:16:58Anthony Pompliano?

  Joe, how many species on Earth have pets?

• 1:17:03Anthony Pompliano?

  All right, so you, so you-

• 1:17:04Speaker 02

  So if you follow that there's eight million species on Earth, we're the only ones that have pets, then that's pretty damn rare. So my guess would be, there's aliens, but they don't have pets.

• 1:17:15Anthony Pompliano?

  Man, I think they got pets.

• 1:17:16Speaker 02

  Think they got pets?

• 1:17:17Anthony Pompliano?

  Yeah, just because aliens is so broad, right? Like, I don't know. Well, it brings up the question, we talked beforehand, a buddy of mine who will go unnamed because he would be absolutely mortified if I said that he said this, said to me, "But your pets have pets." And I was like, "What do you mean?" And he said, "Well, your dog has a, what we call a toy, humans, right? Dumb us, we call them toys, but your dog plays with an inanimate object that maybe your dog thinks has its pet." And I was like, "Damn, that's a really good way to look at it." I don't know if you're right, but like, really expanding my mind right now.

• 1:17:53Speaker 02

  Blows your mind.

• 1:17:55Anthony Pompliano?

  Well, because then it gets into like, you know, Toy Story, right? Like, what happens if you leave the room and the toys all talk to each other?

• 1:18:03Anthony Pompliano?

  I think actually in Toy Story, one of the toys had a pet.

• 1:18:06Speaker 02

  I think so, yeah, I think so.

• 1:18:08Anthony Pompliano?

  Yeah. All right, Joe, you got an answer for us on the species?

• 1:18:12Anthony Pompliano?

  How many species have pets? There's no answer. All right, the unanswered questions of life.

• 1:18:20Anthony Pompliano?

  What one question do you have for me to end this thing?

• 1:18:22Speaker 02

  Yeah, so you talk with a ton of really smart people, investors. What differentiates the top two or three investors that you've talked to from, you know, the top 10%?

• 1:18:31Anthony Pompliano?

  So, I'm going to cheat because I actually asked this question to Mark Yusko, who, when I, when Mark and I first decided to work together, me, him and Jason were sitting there and I said something to him like, you know, "Explain what you've done in your career," right? Essentially was one of the questions out of many that we talked about. And what I found fascinating about Mark was he was always in the allocator seat for a long time, right? At Notre Dame, UNC, and even at Morgan Creek. And so, he has met with

• 1:19:05Anthony Pompliano?

  Thousands of managers, including the very, very top, right? So one of, you know, in Mark's words, one of his mentors and friends is Julian Robertson at Tiger, right? And then you kind of go through that whole kind of era of investors, the absolute best in the world, he knows he's allocated to, all the way down to probably some that ended up being very good, right? And so when I asked him the question, I said, what separates the five best from the 1%, right? Which is essentially the same question you're asking, right? Like, the absolute best in the world from the ones who are really, really, really good. And without flinching, I don't even think he took a breath. He said to me immediately, like, oh duh, he goes, "They cut their losers faster than

• 1:19:50Anthony Pompliano?

  anyone and they press their winners harder than anyone else." And so, cutting losers, I think is a pretty well-understood concept, right? Hey, I've got some kind of risk profile or stop-loss or whatever, and if I down at X percent, I cut and live to fight another day. But the concept of pressing the winners was one that I really pushed, explain that more. And what he essentially said is Soros, Cohen, Dalio, all these guys have this knack for what Mark calls doubling up. So in times of absolute despair, when everyone's running, fear, the blood's in the street, etc., they're sitting there, they're cool, calm, collected, and they double up. And so, when you think about investing, you don't think about those guys being kind of grand slam hitters, right?

• 1:20:35Anthony Pompliano?

  You think of them more as consistent returns over 20, 30, 40 years. But if you actually go back and look, like Soros broke a bank, right? Like, my favorite story is, I'm going to forget the guy's name, who's the guy who chased the naval ship from like Argentina or whatever? The guy, he goes and he buys distressed government debt. Was it Loeb?

• 1:21:00Anthony Pompliano?

  No, no, no, no, he would probably do it. No, not Einhardt either. Um, I'm gonna forget the name, but uh, there's an investor, uh, if you just Google it, he basically, he goes in and he buys super distressed, uh, government debt and, uh, tries to buy it, you know, first pennies on the dollar and then at some point either, uh, tries to get paid par value or, uh, basically strikes a deal, right? And says, hey, look, you know, I bought your, uh, debt for five cents on the dollar. If you pay me 30 cents on the dollar, I'll go away. Right? Uh, sometimes they do it and sometimes they say, you know, basically fuck you and no. And so one of the cases, he hired, I think it was like a private army to storm a naval ship that was off the coast of like Somalia or something.

• 1:21:44Anthony Pompliano?

  They actually took a ship, right? I can't remember if they took the ship or not, but like they definitely did something. Uh, oh, Paul Singer. Yeah. Elliott Capital. Okay. Yeah, Joe, man, you are on top of it. All right. So Paul Singer, uh, it was an Argentine naval vessel, uh, and they had a subsidiary of Elliott Capital, won an injunction in Ogana, in Ghanaian Superior Court to hold a ship in the port city. And it's like, dude, you're really serious, man. He went after a naval ship of a country and had it held in a port until they paid you the money they owe you. That's wild. That's serious. And so it's like, is that pressing the winners? Is that cutting the losers? I don't know, but like

• 1:22:29Anthony Pompliano?

  that, that guy's going to really, really extremes that I think a lot of other investors wouldn't do. So that's my answer. It's not really my answer. It's more Mark's answer, but, uh, when he said it to me, it's just stuck with me that like, cut the losers, press the winners and, uh, that knack for doubling up, I think, kind of separates people. Has there been anybody in crypto other than Morgan Creek that, that has stood out to you as, you know, uh, kind of inviting that?

• 1:22:55Anthony Pompliano?

  I'm gonna answer no. And the reason is, I know people who I'm very impressed by. I don't think we've had enough time to see, like, to do it in 2017. Literally, you could have thrown a rock left-handed and, you know, hit some kind of profit. Did you do it in 18? Did you do it in 19? Or you could do it in 20? Like, we're talking about for most of the fund managers, three to four-year, you know, history. Uh, and one of those was such an outlier compared to traditional markets. It's unfair to say like, oh, you're, you know, you're a genius. You're great at this because of that one scenario. So I think you probably need two market cycles, right? You need two bulls, two bears, get through both of them.

• 1:23:40Anthony Pompliano?

  If you're sitting there like, you know, the, um, uh, what is, uh, uh, Jim Simons, right? If you're sitting there saying, hey, we've done 66% a year, right? Okay, you've done that for 20, 30 years, like, you're probably pretty good. Uh, I think that we just need more time to identify who in, uh, who in crypto could do that. Um, and the big question, going back to your thing about the macro, is that gonna be, you know, people like Jump, people like, uh, Renaissance, et cetera, that are well-established players in other markets who come into crypto? Or will we see kind of the digitally native investor or firm kind of rise up and end up being that, uh, that, that group? I don't know.

• 1:24:18Speaker 02

  I don't know. We'll see.

• 1:24:19Anthony Pompliano?

  All right. We're, uh, we're, we're, we're ending this, uh, frankly, because Plana's calling me and, uh, and is gonna yell at me if I don't hurry up and go meet her. So, uh, shout out, Plana. Thanks for, uh, interrupting the podcast. If you listened to this far, now, now you're embarrassed. All right. Listen, Peter, I really appreciate you coming in. Uh, this is super fun. We're gonna have to do this more often. But, uh, uh, where can, uh, people find [email protected]?

• 1:24:44Speaker 02

  Yep. [email protected]. Twitter's probably best, just.

• 1:24:47Anthony Pompliano?

  At the Chicago VC.

• 1:24:49Speaker 02

  The Chicago VC. Yep.

• 1:24:50Anthony Pompliano?

  All right, man. Thank you so much.

• 1:24:52Speaker 02

  Thank you, Pop. Ton of fun.

• 1:24:54Anthony Pompliano?

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