Winning the Degenerate Economy with StockTwits CEO Howard Lindzon

Barry speaks with Howard Lindzon, co-founder and CEO of StockTwits, and founder and managing partner at Social Leverage. They discuss his outlook for venture capital investing including what he sees as potentially profitable from human behavior. See omnystudio.com/listener https://omnystudio.com/listener for privacy information.

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

• 0:00Speaker 00

  At Brookfield, we invest in the thing behind the thing behind the next big thing. Our focus across infrastructure, energy, real estate, private equity and credit is helping to build the backbone of the global economy. We combine deep operational expertise with disciplined long-term investing, uncovering value and partnering alongside clients to shape tomorrow's economy today. Learn how you can own what's next at Brookfield.com/own. This is not an offer to sell or investment advice. Investing involves risks, including loss of capital.

• 0:34Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 1:16Speaker 01

  and hiring practices, but according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 1:57Speaker 02

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• 2:35Speaker 01

  Bloomberg Audio Studios. Podcasts, radio, news.

• 2:43Speaker 01

  This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

• 2:49Barry Ritholtz?

  This week on the podcast, strap yourself in for a banger. I welcome back my old friend, degenerate gambler Howard Linsen. We talk about stock twits, about social leverage, about his early investment in Robinhood, about why he's concerned about the degeneracy economy between meme coins and end-of-day options and parlays. He's concerned about what the next generation is doing. I thought this conversation was hilarious, and I think you will also. With no further ado, my sit-down with the one and only Howard Linsen.

• 3:26Speaker 04

  Wow, if only my kids could hear that.

• 3:29Barry Ritholtz?

  I know, they think you're just an old man. They have no idea.

• 3:31Speaker 04

  They wince.

• 3:32Barry Ritholtz?

  Show, use the finger and ask for pity. Surgically reattached.

• 3:38Speaker 04

  Surgically reattached is a lesson of how lucky we are. What we're just, I've lived without acute pain.

• 3:47Speaker 04

  Like, first of all, when I, when I cut it off, it's amazing how many people do do that.

• 3:52Barry Ritholtz?

  Was it still dangling on or was it severed completely?

• 3:55Speaker 04

  You pick it up, you call 911 and you go, as a Jew, I wasn't sure if I boil it or freeze it. So that was the question I asked 911, because it's never happened to me.

• 4:04Barry Ritholtz?

  Well, as a Jew, you're only supposed to take the tip off, not the whole thing.

• 4:07Speaker 04

  I don't know if you cook it, I don't know if you freeze it, it's like lobster. So, uh, the woman on 911 said, please don't bleed out. I go, that is not helpful right now. Now, as luck would have it, I live on Coronado.

• 4:21Barry Ritholtz?

  Good advice, don't bleed out.

• 4:23Speaker 04

  I'm like, the one time I got a call, 911, I go, let's not talk, get me a machine over to my house, get me a robot. So, living in Coronado is a magical place, you've been there.

• 4:33Barry Ritholtz?

  Uh huh, a couple of times.

• 4:34Speaker 04

  And the great news about Coronado is the Navy bays, Navy SEALs are there, it's like, it's the greatest place in the world.

• 4:40Barry Ritholtz?

  They have a hospital right there?

• 4:41Speaker 04

  They do, but I'm saying, there's cops and firemen everywhere.

• 4:44Barry Ritholtz?

  Everywhere, right.

• 4:45Speaker 04

  So, literally as I'm dialing 911, I, it's like they knew I cut my finger off. So, so as the miracle would have it, uh, the, the, the young, um, I've never really had to be in an ambulance. So again, I'm lucky. And, um, they took me off island because they found a hand surgeon. Who turned out to be 30 years old, which freaked me out.

• 5:04Barry Ritholtz?

  Right.

• 5:05Speaker 04

  Because I thought he'd sew it on backwards or whatever. Anyways, long story short, you know, I was at peace. Once you realize you're gonna live.

• 5:12Barry Ritholtz?

  Yeah.

• 5:12Speaker 04

  Because it's, I've never had that happen, like something like that happen.

• 5:15Barry Ritholtz?

  Were you gushing blood? Was it frightening?

• 5:16Speaker 04

  Yeah, yeah, yeah. I, as a favorite of my wife, I went to the neighbors to bleed. So, it was like the next day, it was spotless in front of our house. But, um, as luck would have, everybody did a great job. The, the amazing thing, we make fun of so many things in America these days. The emergency system, I needed it, I don't care what I pay in taxes, it was, it was amazing.

• 5:39Barry Ritholtz?

  Right. And yet, you still have 10 fingers?

• 5:42Speaker 04

  Yeah, I have 10 fingers for now. The joke in the family is, I don't want it. Because it's kind of like a dead finger at this point.

• 5:47Barry Ritholtz?

  Oh, really? Will it be functional? Will you regain function?

• 5:50Speaker 04

  It feels like if I'm using it, it just feels like a wet skin.

• 5:54Barry Ritholtz?

  Right.

• 5:55Speaker 04

  And, uh, so I'm not happy. But the doctor was like, you can decide later. It was his, it was his call.

• 6:02Barry Ritholtz?

  If you want a prosthetic or?

• 6:03Speaker 04

  No, not prosthetic, if you just want to work with a nub. It's only a third of the finger.

• 6:07Barry Ritholtz?

  Right.

• 6:08Speaker 04

  So anyways, it, it was traumatic, but here we are.

• 6:11Barry Ritholtz?

  Wow, alright.

• 6:12Speaker 04

  Yeah, it was great stories. If you're a storyteller, cut a finger off.

• 6:17Speaker 04

  I mean, if you want traffic on Twitter, bleed out.

• 6:20Barry Ritholtz?

  Um, yeah, you'll get traffic, but no engagement. That's the problem with Twitter.

• 6:24Speaker 04

  I want to go viral. I got nine chances left.

• 6:28Barry Ritholtz?

  Uh, 21, if you want to be accurate.

• 6:30Speaker 04

  Toes are not good in the alphabet. Fingers are good.

• 6:33Barry Ritholtz?

  And 21, the 21st, no go?

• 6:36Speaker 04

  The 21st, he could be president.

• 6:40Barry Ritholtz?

  So let's roll back a little bit and, and start with your, your early, uh, education. Bachelors from Commerce, uh, University, Bachelors in Commerce from the University at Western Ontario.

• 6:57Speaker 04

  Yeah, it's a famous business school for Canada.

• 6:59Barry Ritholtz?

  MBA Arizona State.

• 7:00Speaker 04

  Famous for, uh, bums. It was an estate business school. What does that even mean?

• 7:05Barry Ritholtz?

  And then Masters at Thunderbird School of Global Management.

• 7:08Speaker 04

  Which was a great school now owned by Arizona State.

• 7:10Barry Ritholtz?

  Animated cartoon in the 60s and 70s.

• 7:13Speaker 04

  Correct, correct.

• 7:14Barry Ritholtz?

  Um, so what, given all that, what was the original career plan?

• 7:18Speaker 04

  Comedy. Yeah, I grew up, uh...

• 7:21Barry Ritholtz?

  You and Martin Short right out of Canada, right?

• 7:23Speaker 04

  Not Martin, he was already older. But I grew up in Toronto and that was, so when I was 75, watching Johnny Carson on my first TV. Um, you saw everybody and it was like your living room. And so Toronto had Second City. You had John Candy, Martin Short, Eugene Levy. Second City was before Saturday Night Live. And so I grew up to surround.

• 7:45Barry Ritholtz?

  Around the same time, weren't they?

• 7:46Speaker 04

  A little earlier. Yeah, yeah. So I'm like 12 years old giggling, you know, and there was no internet. So you were like, go to the comedy clubs with your friends. Toronto had this club called Yak Yaks, which was a famous chain, like the improv, but of Canada. And you had Mike Myers.

• 8:04Barry Ritholtz?

  Another Canadian.

• 8:05Speaker 04

  Yeah, everybody exploding onto the scene at the same time.

• 8:10Speaker 04

  And so I was doing stand up in high school.

• 8:12Barry Ritholtz?

  Get out.

• 8:13Speaker 04

  But not good, obviously, but Mike Myers would come up. Mike Myers would come up and kill. He was like seventeen years old.

• 8:20Barry Ritholtz?

  Right.

• 8:20Speaker 04

  Jim Carrey, fourteen years old, and killing.

• 8:22Barry Ritholtz?

  Right.

• 8:23Speaker 04

  And so everybody wanted to be a comic, no different than like the web two point O. Everybody went to Stanford to be an engineer.

• 8:29Barry Ritholtz?

  Right.

• 8:29Speaker 04

  It's certain in nineties, it was investment banking.

• 8:32Barry Ritholtz?

  Right.

• 8:32Speaker 04

  Now it'll be robots and AI. It's just what's in the water. And I grew up with comedy in the water. And so that was the goal. And obviously, you know, with Jewish parents at the time, that ain't flying. Especially I wasn't good.

• 8:46Barry Ritholtz?

  Right.

• 8:47Speaker 04

  And so I went to school.

• 8:48Barry Ritholtz?

  You you dropped that you weren't good as like an afterthought. I think if you're successful and earning a living.

• 8:56Speaker 04

  Well, I wasn't.

• 8:57Barry Ritholtz?

  Even a Jewish parent will put up with you.

• 8:59Speaker 04

  Now, we'd be nuts if you weren't a comic.

• 9:01Barry Ritholtz?

  Seinfeld's mom is fine with it.

• 9:03Speaker 04

  Yes. But I'm saying now if my son came to me and said, I'm gonna go hit the comedy tour. I'd warn him how dark it is, but I'd say, go make it, go on YouTube. Like, go do your ten thousand hours.

• 9:13Barry Ritholtz?

  You don't have to live in motels.

• 9:14Speaker 04

  Ten thousand hours.

• 9:15Barry Ritholtz?

  Yeah.

• 9:15Speaker 04

  The faster you get those ten thousand hours, and the better.

• 9:18Barry Ritholtz?

  That's right. So you grew up in Canada. You start your career in Phoenix and San Diego and New York City. I'm curious, that's an interesting, you know, Toronto, Phoenix, San Diego, New York. How did that geographical upbringing affect your perspective as an investor?

• 9:40Speaker 04

  Who is an investor? I don't know.

• 9:41Barry Ritholtz?

  As a human being.

• 9:42Speaker 04

  As a kid, I was lucky.

• 9:43Barry Ritholtz?

  Yeah.

• 9:44Speaker 04

  Because if you're Jewish in Toronto or New York at that area, you go to Florida. You know, the original Del Boca Vista. And but my dad was different and he discovered Phoenix.

• 9:56Barry Ritholtz?

  Uh huh.

• 9:57Speaker 04

  And so in the eighties, like Phoenix was like swamp coolers and he just liked the weather and I don't know.

• 10:02Barry Ritholtz?

  I'll let you in on a little secret. The weather in Florida ain't great. It's humid.

• 10:07Speaker 04

  To my dad, obviously, that's what he thought. Yeah. So that's where he discovered Phoenix and bought a home and I liked golf and biking. And so lucky for me, we had a, I went, instead of going to Florida, we were going to Arizona. And so I would go to the football games as a kid and I was like, ASU. That was my dream is just get, just, just go to Arizona State University, which I ended up, you know, doing for grad school, which isn't a great grad school, but it was party school, but. That was my dream, get out of Canada.

• 10:36Barry Ritholtz?

  Right.

• 10:36Speaker 04

  So I got lucky. I, you know, my parents exposed me to, you know, Arizona. And I went to ASU at the time. It was amazing. And then if you're Jewish in Phoenix. Cause the summers. It's like New York goes to Florida in the winter. Jewish people in Phoenix go to this, go to San Diego in the summer to get out of the.

• 10:57Barry Ritholtz?

  Right. They want to be closer to the ocean. It's a nice weather.

• 11:00Speaker 04

  Six hour drive and it's 70 degrees.

• 11:02Barry Ritholtz?

  And I love La Jolla and that whole area is just.

• 11:05Speaker 04

  It's called Zonies. So Arizona and flood San Diego to, to Del Mar.

• 11:11Barry Ritholtz?

  I wish.

• 11:12Speaker 04

  So we grew up Coronado, uh, not grew up, sorry. I, I, my in-laws had a place in Coronado. And so when we had kids, I'm like, get out of the heat. If you're not rich.

• 11:21Barry Ritholtz?

  Summer in Coronado.

• 11:22Speaker 04

  Yeah, we were not summer, but a week here, a week there.

• 11:24Barry Ritholtz?

  I wish California wasn't six hours away. If it was two hours away, a hundred percent. We were just in San Francisco.

• 11:33Speaker 04

  It's fun again.

• 11:34Barry Ritholtz?

  It, it's a boom town. Tales of an apocalyptic hellscape have been wildly exaggerated.

• 11:39Speaker 04

  It's still not my favorite, but it's cool.

• 11:40Barry Ritholtz?

  It's less homeless than New York.

• 11:42Speaker 04

  Yeah, I'm, I'm not just talking about homeless. The people are still.

• 11:46Barry Ritholtz?

  They're educated. They're intelligent. I mean, if you're, if you lose, if you're used to New York City.

• 11:52Speaker 04

  It's not New York.

• 11:53Barry Ritholtz?

  You could, uh, you know, when you leave New York, I, I, I don't know about you. I make a conscious effort to not be that New York [BLEEP] abroad, even out of, out of town.

• 12:06Speaker 04

  Yeah.

• 12:07Barry Ritholtz?

  California, especially San Francisco, it doesn't feel like you've left town.

• 12:14Speaker 04

  I love it.

• 12:15Barry Ritholtz?

  Yeah.

• 12:15Speaker 04

  I mean, I just have the California bug.

• 12:17Barry Ritholtz?

  Yeah.

• 12:17Speaker 04

  Coast to coast is a dream and I get to live it. So.

• 12:20Barry Ritholtz?

  It, it's just a lot of travel.

• 12:22Speaker 04

  The thing about, and I do like Florida a lot, but same as you, six hours, like Phoenix or San Diego, Florida is like not on the.

• 12:29Barry Ritholtz?

  No brain, no, right.

• 12:30Speaker 04

  No, no one does it. Like it's not a thing.

• 12:32Barry Ritholtz?

  Right. No, it's, uh, Phoenix to San Diego makes sense. Phoenix to Florida, just like New York to Florida makes sense.

• 12:39Speaker 04

  Correct.

• 12:39Barry Ritholtz?

  New York to.

• 12:40Speaker 04

  So you ask, so you ask how that happened. That's the right of passage. Instead of Toronto, Florida, my whole life. I jumped to the West Coast. And then I discovered San Diego through my in-laws and my wife and man.

• 12:53Barry Ritholtz?

  Yeah.

• 12:53Speaker 04

  Well, you've been to Coronado.

• 12:54Barry Ritholtz?

  Oh, yeah, it's lovely. Yeah, so let's, let me, let me wrestle this.

• 12:58Speaker 04

  Yeah, yeah.

• 12:58Barry Ritholtz?

  Back into submission. So you've worn a lot of hats. You're a hedge fund manager, a founder, a CEO, a seed investor, a media personality. How do you describe to people who don't know you, what you do?

• 13:11Speaker 04

  It's a great question. My in-laws are in their 80s and they, they still ask me, what do we tell people you do? And I'm like, who the hell cares?

• 13:18Barry Ritholtz?

  Well.

• 13:18Speaker 04

  And the world's now decided that for you. No one cares.

• 13:21Barry Ritholtz?

  Right.

• 13:22Speaker 04

  So what do you do, right? Like, I think we're getting back into like where it's, you should be proud to have like a, um, what do you call it, profession?

• 13:30Barry Ritholtz?

  Mm-hmm.

• 13:30Speaker 04

  I don't have a profession. So you asked how I got started as an investing. I got started as investing because I failed at everything else.

• 13:37Barry Ritholtz?

  Uh-huh.

• 13:38Speaker 04

  And which is kind of the Larry David part of it is like, I stumbled into it because the internet is like water. It'd be like discovering California. Like, internet was like tech. So the 90s were like, I didn't understand, it was semiconductors.

• 13:53Barry Ritholtz?

  Right.

• 13:54Speaker 04

  We're full circle, right?

• 13:55Barry Ritholtz?

  You're not a coder.

• 13:55Speaker 04

  I'm not a coder. I don't even know how things work. I never did Radio Shack.

• 13:59Barry Ritholtz?

  Right.

• 13:59Speaker 04

  Right? Like, so the, I, like, walkie-talkies were freaking me out. So the odds of me being in tech are, are, are part of the comedy. Full circle, we are now back in a tech world. Robots, chips, like, real stuff.

• 14:12Barry Ritholtz?

  You know, a little secret, we never left. It just kind of fell out of favor.

• 14:16Speaker 04

  I, I found the goofball era. Web 2 was the goofball era.

• 14:19Barry Ritholtz?

  Such as?

• 14:20Speaker 04

  Where social media, you could be the class clown and have scale.

• 14:23Barry Ritholtz?

  Okay.

• 14:24Speaker 04

  Now that's gone again and class clown, you now you need to be a bully again. It's, it's, you need to already have distribution.

• 14:31Barry Ritholtz?

  Right. It's hard to build distribution today.

• 14:34Speaker 04

  So I'm saying.

• 14:34Barry Ritholtz?

  Being an early adopter is certainly an advantage.

• 14:38Speaker 04

  But now it, it doesn't matter. You have to have real tech chops again. You can't pose like I am. Like, I have imposter syndrome for the right reasons.

• 14:45Barry Ritholtz?

  Right.

• 14:45Speaker 04

  Because I'm an imposter. Meaning, the internet left a little opening in 2006 for goofballs. And we got to participate in an era of free growth. When Facebook didn't charge you or have an AI algorithm that blocked you. You could say whatever you want and people go, he's funny. And you could scale for free, which is why we had an internet boom, web 2.0 internet boom, right after the internet craze. Now, we live in an era where those people are confusing. Their genius for a bull market.

• 15:16Barry Ritholtz?

  Right.

• 15:16Speaker 04

  And we're all sick of those people.

• 15:18Barry Ritholtz?

  Can I push back on you a tiny little bit? Cause I know you for so, so well for so long.

• 15:25Barry Ritholtz?

  Hold the imposter syndrome aside.

• 15:31Barry Ritholtz?

  The early internet rewarded people who could communicate effectively. Be it working your way through the media, be it blogs. Or short form blogs like Twitter or other social media. Or podcasts or video and YouTube. There's a whole run of different ways to use the internet to scale. So it's not an imposter. You basically just kept tacking into what was working. Oh, this works. Let's do more of it.

• 16:10Speaker 04

  Of course, but the era was free. So you had the great financial crisis. No one thought the internet was gonna happen. So meaning Uber couldn't be possible without Google Maps. Like people say Uber is great. It wasn't possible unless there was an iPhone, the cloud.

• 16:27Barry Ritholtz?

  Metro Media Fiber, Global Crossing.

• 16:29Speaker 04

  People would just be typing, I want a taxi without Google Maps. No one would know where to go.

• 16:32Barry Ritholtz?

  That's right. And all of that only worked because of the bubble and the build out of Global Crossing and Metro Media Fiber.

• 16:39Speaker 04

  So I'm saying.

• 16:39Barry Ritholtz?

  A thousand dollars a mile bought for pennies.

• 16:42Speaker 04

  But my imposter syndrome is born of, of course I have an ego. But my imposter syndrome was surrounded by crazy people who, who are mistaking. As I was talking to Tim O'Brien. If this was, we went from a world where strength mattered, not that long ago.

• 16:57Barry Ritholtz?

  A century, not even a century.

• 16:58Speaker 04

  This matters.

• 16:59Barry Ritholtz?

  Right, no.

• 17:00Speaker 04

  And I'm like, people just, the humility is gone. And I feel it's with my kids and everything. It's with the injury and everything. You have to have some humility. We need to get back to having some humility and laughing at our success and going. Wait a minute, it was a bull market, zero interest, there was Zerp. There was the free internet, AWS. You had YouTube. You had, if you, here's my question. If you aren't successful. That'd be more interesting. I want to talk to the guy, like the Larry David commercial with FTX. When he was like, "Oh, the circle. Fire."

• 17:34Barry Ritholtz?

  Who needs a wheel?

• 17:35Speaker 04

  Who needs fire? That was such a great commercial because only Larry David or F, you know, I know the guys who wrote the commercial. That what made that commercial great is Larry David gets the joke.

• 17:46Barry Ritholtz?

  Right.

• 17:46Speaker 04

  You idiots.

• 17:47Barry Ritholtz?

  He's in on it.

• 17:47Speaker 04

  You're in on the fact that, of course, you made money. You worked at Facebook. It grew because the product was genius and tricked people into signing up. You did nothing except ride the, the train. No, I'm not saying smart people didn't work there, but let's remember Game of Thrones, we're all dead. The people that are successful today are Marc Andreessen, the people that I can't, like hilarious to me. They have no humility is that Game of Thrones era, we're all dead first second, first scene.

• 18:16Barry Ritholtz?

  Right.

• 18:16Speaker 04

  There's a hammer in our heads. And, and you and I might have a chance because we're the court jesters.

• 18:21Barry Ritholtz?

  Right. That's right.

• 18:22Speaker 04

  And if we dance well enough.

• 18:24Barry Ritholtz?

  Dance for me, monkey boy.

• 18:25Speaker 04

  But Andreessen dead, Jamar dead. There's just a pitchfork in their foreheads on the first scene of Gladiator.

• 18:31Barry Ritholtz?

  Well, if you, you know.

• 18:32Speaker 04

  So that's the.

• 18:33Barry Ritholtz?

  You have people like Da Vinci that were consultants to the king to help build weapons and things. So unless you can, you know, early days of Palantir, unless you can say, "Hey, here's how to make a better catapult."

• 18:47Speaker 04

  Sure.

• 18:48Barry Ritholtz?

  You know, th- those guys survived.

• 18:49Speaker 04

  So I'm saying, I come along like tweeting, stock twits, like it was just enabling communication. Listen, I'm very proud of this stuff. And I'm also can laugh about how stupid it is. Like, I don't have another trick. Right? The internet left this opening, kind of like discovering California. If you're early to discover California, you mean to pass the Indians and the mountains.

• 19:10Barry Ritholtz?

  Right.

• 19:11Speaker 04

  Didn't get robbed by like.

• 19:12Barry Ritholtz?

  Murdered, stampeded.

• 19:14Speaker 04

  Cash, like, let's carry all our money in a stage coast pulled by horses at three miles an hour. What are the odds we get killed?

• 19:20Barry Ritholtz?

  Right.

• 19:21Speaker 04

  It's impossible. So the internet left this opening and I snuck through it. And it's fun to look back with some humor at the whole thing.

• 19:29Barry Ritholtz?

  You're gonna laugh.

• 19:29Speaker 04

  I think the hole's closed up. Like Elon owns the pipes, Zuckerberg owns the pipes.

• 19:36Speaker 04

  True Social owns their version of a pipe. TikTok has an algorithm. How do you break through?

• 19:41Barry Ritholtz?

  Cause those things get tired and the next gen says, just the way, just the way Facebook became, oh, my parents are on Facebook, I'm out. I'm gonna go to Insta and then I'm gonna go to TikTok and so there'll be something new.

• 19:55Speaker 04

  I'm not questioning that. I'm just questioning, it'll never have been, it'll never be easier than when I made money. And I'm cool with that. Like, that's the imposter syndrome.

• 20:04Barry Ritholtz?

  I don't completely disagree with you and you're touching on a pet thesis I love to ask. What would have happened to you had you been born 100 years earlier?

• 20:15Speaker 04

  Yeah, first seen.

• 20:16Barry Ritholtz?

  Or even 25 years earlier, right? If you're born in 1940, what happened?

• 20:23Speaker 04

  I'm a furrier.

• 20:26Speaker 04

  Look at my ahs. Moshe, take a look at my furrier.

• 20:30Barry Ritholtz?

  Beaver pelts. I have all these beaver pelts.

• 20:31Speaker 04

  I have a cafe that has so many dishes on it that make no sense. And I'm selling furs somewhere. I mean, I had no shot. I have no strength.

• 20:40Barry Ritholtz?

  Right. Just think about how fortunate you were.

• 20:42Speaker 04

  I cut my own finger off.

• 20:43Barry Ritholtz?

  Right. So if you didn't bleed out, you're nine fingered Howie forever. No, you should have showed that off. You stick, you stick your finger into the fire and you cauterize it. That's what the old timers would tell you. Get a, get a piece of steel in the, in the fire. They'll heat up the iron. You just burn it and that's your nine fingered knob, Howie.

• 21:03Speaker 04

  Let's see, what's the, is the ambulance gonna charge too much? And should I bleed at the neighbor's house? Those were my first two thoughts. My wife will kill me that I'm bleeding in our yard.

• 21:12Barry Ritholtz?

  Coming up, we continue our conversation with Howard Lindzon, co-founder of Social Leverage, discussing what he calls the degenerate economy. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.

• 21:35Speaker 00

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• 22:14Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices,

• 22:57Speaker 01

  but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 23:39Barry Ritholtz?

  I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest is someone I've known for too long, Howard Lindzen, co-founder of Social Leverage, one of the earliest seed investors in Robinhood, which is a chapter in my book.

• 23:56Speaker 04

  Oh, wow.

• 23:56Barry Ritholtz?

  Let's do segment two, and I have to start by asking about Social Leverage. You've been doing this for 20 years?

• 24:05Speaker 04

  Yeah.

• 24:06Barry Ritholtz?

  So, from the first seed fund you did to today,

• 24:09Speaker 04

  Yeah.

• 24:09Barry Ritholtz?

  where you have a portfolio of 150-plus companies,

• 24:12Speaker 04

  Yeah.

• 24:13Barry Ritholtz?

  how has this evolved? First of all, what was the first company you invested in?

• 24:16Speaker 04

  So, the first company I invested in was so dumb. Cars Direct, 1998, the tippy-top. As my wire left digitally my fingertips, or wherever bank it was coming from, it was worthless.

• 24:33Barry Ritholtz?

  Right.

• 24:33Speaker 04

  Meaning, like, it was a Series Q.

• 24:35Barry Ritholtz?

  Right.

• 24:36Speaker 04

  Uh...

• 24:36Barry Ritholtz?

  But you were just early.

• 24:38Speaker 04

  Yeah, yeah, yeah.

• 24:38Barry Ritholtz?

  Pets.com eventually became Chewy.

• 24:40Speaker 04

  But I was late in that cycle.

• 24:41Barry Ritholtz?

  And now Carvana would have been...

• 24:43Speaker 04

  Yeah, so I was the retail idiot. So, I grew up, like I said, I went to ASU.

• 24:48Barry Ritholtz?

  Right.

• 24:48Speaker 04

  You're gonna be a furrier.

• 24:49Barry Ritholtz?

  Right.

• 24:50Speaker 04

  That's your chance. And so, and a bad one, because, you know. So, the internet comes along, I fall in love with stock market, because I had made some money at my first startup, and I had to be my own broker, and so Yahoo Finance, JimCramerStreet.com, like, they're still around.

• 25:07Barry Ritholtz?

  Right.

• 25:08Speaker 04

  So, so those were my onboarding. And you, you were writing for theStreet.com.

• 25:12Barry Ritholtz?

  They were the dominant, like, people who were younger don't realize that.

• 25:16Speaker 04

  By the way, Yahoo's still massive.

• 25:17Barry Ritholtz?

  Right.

• 25:18Speaker 04

  Kramer's still massive.

• 25:19Barry Ritholtz?

  I think theStreet.com doesn't get the traffic it used to.

• 25:22Speaker 04

  No, but Kramer's massive.

• 25:22Barry Ritholtz?

  Well, yeah, well, he's on TV twice a day.

• 25:25Speaker 04

  But I'm saying, this is 30 years.

• 25:26Barry Ritholtz?

  Yeah.

• 25:27Speaker 04

  So that was my introduction to retail investing because I couldn't afford a Bloomberg. Still can't. So I can afford the drapes.

• 25:35Barry Ritholtz?

  I think you can afford a Bloomberg post.

• 25:37Speaker 04

  I couldn't. I wouldn't know how to use it.

• 25:38Barry Ritholtz?

  Post Robin Hood exit.

• 25:39Speaker 04

  I wouldn't know how to use it unless there's a phone line. What? Huh? Chart.

• 25:43Barry Ritholtz?

  Especially with nine fingers. You need all 10 fingers for the terminal.

• 25:46Speaker 04

  So I was inspired by you. The street.com had murder's row of writers.

• 25:51Barry Ritholtz?

  It's amazing.

• 25:51Speaker 04

  To a new investor, I just would sit and wait for articles to come out and Yahoo Finance. So it was on the message boards. Pearlman, you, like, we were on the message.

• 26:00Barry Ritholtz?

  What was the first? So Cars Direct was your first investment?

• 26:04Speaker 04

  And 10 years later, I got 10% of my money back after it being successful. So my first thing was a disaster.

• 26:11Barry Ritholtz?

  What was your first successful investment?

• 26:13Speaker 04

  So my first successful investment was a cold call that I made pre-internet in a company I probably talked about on the last show called The Grip. It was the, so I had the good fortune of being an hour before the internet. Before the internet, an hour before the internet. The thing before the thing was QVC.

• 26:31Barry Ritholtz?

  I recall.

• 26:32Speaker 04

  Okay. So before the internet.

• 26:33Barry Ritholtz?

  Still on TV?

• 26:34Speaker 04

  QVC was the internet.

• 26:35Barry Ritholtz?

  Right.

• 26:36Speaker 04

  Meaning there was, the whole of Philadelphia was just old people on the phone saying, yes, yes, we'll take your order and your credit card. And if you were on, QVC was a studio like this.

• 26:46Barry Ritholtz?

  What was The Grip?

• 26:46Speaker 04

  And we had a product called The Grip.

• 26:48Barry Ritholtz?

  I recall this.

• 26:48Speaker 04

  And it's in the QVC Hall of Fame.

• 26:50Barry Ritholtz?

  Uh huh.

• 26:51Speaker 04

  So I made a cold call while I was a stockbroker to this kid, thinking he was rich because back in the 90s, it was just like the movie Wall Street. You would get a newspaper and decide who you were going to cold call that day. So I hated my job. That was my first job out of college and I was cold calling to get rich clients. And I called this kid and he ended up needing money. Like, he was just promoting himself.

• 27:13Barry Ritholtz?

  He reverse pitched you.

• 27:14Speaker 04

  He, he, he reverse pitched me.

• 27:16Barry Ritholtz?

  Right.

• 27:16Speaker 04

  And, and I, and I had to cobble up 25 grand from my mom and friends and I hated my, and I'm like, I'm in. And then he paid off his Amex with that 25,000 dollars.

• 27:27Barry Ritholtz?

  Every, every stockbroker and salesperson appreciates a good sales pitch.

• 27:31Speaker 04

  Yeah.

• 27:31Barry Ritholtz?

  They're sucker for a good sales pitch.

• 27:32Speaker 04

  Well, he was promoting himself and I was trying to sell him some and he sold me on his company.

• 27:37Barry Ritholtz?

  So what was the grip?

• 27:38Speaker 04

  Turned out to be a home run company.

• 27:39Barry Ritholtz?

  What was the grip?

• 27:39Speaker 04

  It was, he was a dropout, Mark Scadino, unbelievable entrepreneur. And he had, he'd made this product with five balloons wrapped around this Siberian millet. And we were the largest Siberian millet orderers in the world in the nineties. Cause we were making millions of balls a month by, by hand and selling them with corporate logos on them during the whole nineties run of pharmacies.

• 28:03Barry Ritholtz?

  And this was just a desk toy, a squeeze toy?

• 28:06Speaker 04

  Our genius was putting corporate logos on it.

• 28:08Barry Ritholtz?

  Nobody had done that before.

• 28:09Speaker 04

  Well, that industry was huge in the nineties, corporate giveaways, right? With trade shows and whatever, and we just got the right product at the right time and.

• 28:18Barry Ritholtz?

  It worked.

• 28:19Speaker 04

  Oh my God, we were just.

• 28:20Barry Ritholtz?

  How many did they sell?

• 28:21Speaker 04

  There's so many ball jokes, but they'd all get deleted here. We were the ball boys of the nineties.

• 28:26Barry Ritholtz?

  How many did you sell?

• 28:27Speaker 04

  We did sixty, seventy million in sales.

• 28:29Barry Ritholtz?

  Get out, that's amazing.

• 28:31Speaker 04

  And the margins were crazy because unlike retail, if you put Bed Bath & Beyond or Compaq on a ball, they own it.

• 28:37Barry Ritholtz?

  Right.

• 28:37Speaker 04

  There's no returns.

• 28:38Barry Ritholtz?

  Uh huh.

• 28:39Speaker 04

  And so, so we just had this pet rock business where like Compaq would call us and we need a million balls for Comdex. And we'd just hire people, illegal aliens, and they would come into Phoenix and they would all cut their fingers off like making these things. But.

• 28:53Barry Ritholtz?

  You made it in the States.

• 28:54Speaker 04

  We made it in the States. We spent, we, all our money was trying to figure out how to machine make these in the nineties. And we wasted so much money trying to like get humans out of the process. Compaq would order a million, pay you.

• 29:07Barry Ritholtz?

  Right, in advance.

• 29:08Speaker 04

  To start. So we'd be buying cars. It was just a two-person company, like a bunch of like staff. And so we'd go out to lunch and buy cars because we were paid before we even started making the product. And, and so we were like, that's how I learned this, kind of like back to school.

• 29:26Barry Ritholtz?

  And you started this on QVC?

• 29:27Speaker 04

  No, QVC picked us up.

• 29:29Barry Ritholtz?

  Uh huh.

• 29:29Speaker 04

  And Mark used to go on TV and back, back in the nineties in QVC, if it was selling, they just kept you out there like a cartoon character. They didn't, they hadn't scientifically gone to the profit per second.

• 29:41Barry Ritholtz?

  Right.

• 29:41Speaker 04

  Model. Because they were surprised at their success.

• 29:44Barry Ritholtz?

  Right.

• 29:44Speaker 04

  So the grip appealed to like seventy-year-old women who had carpal, like they just like squeezing balls.

• 29:50Barry Ritholtz?

  Little arthritis, little carpal tunnel, right.

• 29:52Speaker 04

  So we created this nineteen-dollar three-pack that had soft, medium, and I swear to God, you can't make this up. And soft medium and firm and QVC just kept Mark on stage all day and the numbers would go.

• 30:04Barry Ritholtz?

  Unbelievable.

• 30:04Speaker 04

  And, and it was a miracle. That was our first success. So that was, so I was very much, that was my first internet success.

• 30:14Barry Ritholtz?

  So when did-

• 30:14Speaker 04

  Sorry, that was my first success.

• 30:16Barry Ritholtz?

  When did social leverage launch?

• 30:18Speaker 04

  So, so, so you, you and I both lived through this, the, the great financial crisis.

• 30:24Barry Ritholtz?

  Uh huh.

• 30:25Speaker 04

  And that was an era of, so up until 2007, 2006, we lived in a world of financial leverage.

• 30:32Barry Ritholtz?

  Mm hmm.

• 30:32Speaker 04

  Meaning, and we know what happened at the end of that, stacking, you know, Excel came out.

• 30:38Barry Ritholtz?

  A hundred years ago.

• 30:40Speaker 04

  My dad, when I grew up with my dad in Toronto, if you did an acquisition, it was like 700 pieces of paper with pencil taped together, then Excel comes out, which of course, nothing, you know, everything's made up at that point and one, one sell off can change the world.

• 30:57Barry Ritholtz?

  Sure.

• 30:58Speaker 04

  But, but we became a world of stacking things, financial leverage, right? That was the banking era and the end of financial leverage era came in 2006, 2007, at the same time that social media came out. So the, the play on words was, I wanted to do, as an early adopter of social media, I was like, if an idiot like me, so the idea was, social leverage, you can implode with social leverage, whereas this financial leverage-

• 31:25Barry Ritholtz?

  You can be canceled.

• 31:25Speaker 04

  Of course. Well, that was pre canceled. So I'm saying my thesis was, oh my God, an idiot like me, who knows the right three people, can just grow their network for free forever.

• 31:37Barry Ritholtz?

  Right.

• 31:37Speaker 04

  And so that was the birth of the, the name social leverage.

• 31:41Barry Ritholtz?

  It makes a lot of sense.

• 31:42Speaker 04

  Yeah, it was just like a play on words. Some, some people will call me and go, oh, you guys do social investing. I go, that's the last thing I do. Meaning, I'm not, there's no impact. It was just the, the play on words of financial leverage to social leverage.

• 31:53Barry Ritholtz?

  I, I like it.

• 31:53Speaker 04

  But good point. You can blow up on social leverage.

• 31:56Barry Ritholtz?

  So now you're up to fund four?

• 31:58Speaker 04

  Fund six.

• 31:59Barry Ritholtz?

  Fund six? Wow. I have the I and the V in that.

• 32:02Speaker 04

  The good news, you passed on all of them.

• 32:04Barry Ritholtz?

  I did pass on all of them.

• 32:04Speaker 04

  So we continue to do well until you commit.

• 32:06Barry Ritholtz?

  Soon as I come in, it's over.

• 32:07Speaker 04

  Well, that's when we shut down.

• 32:09Barry Ritholtz?

  And, and I famously-

• 32:12Barry Ritholtz?

  Um, or infamously was an investor in StockTwits. And then when you pitched me on Robinhood, it's a line in the book. How that's the dumbest F and idea I've ever heard in my life.

• 32:22Speaker 04

  You weren't the only one.

• 32:24Barry Ritholtz?

  And it was, I will, I will, I will, I

• 32:28Speaker 04

  You're in the majority. You're in the majority.

• 32:29Barry Ritholtz?

  I own it in the book. And between you and me, I'll say, A, it was off brand. And B, no doubt that the pandemic lockdown helped them dramatically.

• 32:40Speaker 04

  No, no, the thing about Robinhood, because I was there from day one. And by day one, I mean, they had, it was another company.

• 32:48Barry Ritholtz?

  Right.

• 32:49Speaker 04

  Cronos Research before. They were like high frequency guys and math guys. But you could only, this is about, you ask about investing, you know, the life I've led, boots on, like just curiosity, your eyes, nose, ears, feet. You become a great investor by like touching, feeling.

• 33:09Barry Ritholtz?

  Right.

• 33:10Speaker 04

  You gotta be on street level. The best investors are street level. I'm talking about private markets. Public markets are a different thing.

• 33:16Barry Ritholtz?

  So let's talk about private.

• 33:18Speaker 04

  No, so we were talking about Robinhood. So, so the great thing about Robinhood is it's not that I got it right. It's like I was, if I didn't get that right, I'm nobody, meaning I had to get that right. As Yahoo Finance user, street.com guy, E-Trade baby, you know what I mean? Twitter user, StockTwits founder. And, and I, if I had any nerve or any tech skills or any like real balls or whatever we're gonna call it, I build my own brokerage. Like I was there to do all that. But in 2010, even until, until Robinhood started, no one wanted to start it. Brokerage ideas are terrible ideas.

• 33:56Speaker 04

  So you have to understand that in 2013, when I saw Robinhood, no one in America, that's shocking that no one wanted to build E-Trade 2.0. But what the venture capitalists were doing, they were enamored, and this is where venture capitalists, I always goof on venture capitalists. They were enamored with the wrong thing. At the time, it was like Wealthfront Betterment. The VCs were enamored with assets under management, AUM. They felt like

• 34:22Speaker 04

  Vanguard was the one to disrupt. So everybody wanted to be the next, if you're a venture capitalist, you want to be the next Vanguard. No one need, and I thought that was flawed. I thought that was flawed because the margins are tiny and, and you're never going to build something 10 times better than Vanguard. Meaning, wait a minute, what's wrong with Vanguard? Versus E-Trade, I'm like, it's interface, uh, trade, you know, it's just ripping me off. And I was, I was the right guy to get that pitch at the right time. So of course I had to do that deal. It would have been, that's what, that's why the podcast with the guy who passed. If I passed on Robin, I'd be a more interesting guest, like.

• 35:00Barry Ritholtz?

  So how much did you put into, to?

• 35:03Speaker 04

  Well, we did a hundred, like I, we had, it was our first fund.

• 35:06Barry Ritholtz?

  Uh huh.

• 35:07Speaker 04

  So we were writing a hundred thousand dollar checks. So it was a hundred thousand dollars at eight million, I thought it was expensive. Eight million dollars. Valuation, like at the time we were doing three million valuations. So, you know, we're in the go, like I met them.

• 35:20Barry Ritholtz?

  Uh huh.

• 35:21Speaker 04

  By Jo and Vlade, I flew up. Because they called me, because of StockTwits. So they called me and said, we have this app. They were, they were out of, they were out of money. And I flew up to Silicon Valley. And they showed up wearing Google Glass. Two idiots, like I'm like, immediately I'm like, no one, you know what I mean? Like, remember that era?

• 35:41Barry Ritholtz?

  Glass holes is what everybody.

• 35:42Speaker 04

  I don't know what it was, but I was immediately like, what? And, uh, two dorks. But they showed me the app. They had this guy, uh, Joe, who was their designer, who had been at Facebook. And he showed me the app and that's when I knew. It wasn't live, they didn't have their FINRA, they didn't have their brokers. So it was really early. But because of StockTwits and Twitter, I knew that if you build it, they will come. If you build a design, like Uber, if you build Uber for trading. Okay, what people didn't get again was they were all betting, hundreds of millions have been invested in Betterment and Wealthfront at the time. So the Silicon Valley was leaning into the Vanguard model.

• 36:21Barry Ritholtz?

  Right.

• 36:21Speaker 04

  So no one wanted to do the deal. Because who needs another brokerage? And by the way, building a brokerage, getting SEC approval. VCs don't like doing work. They don't like waiting a year.

• 36:32Barry Ritholtz?

  It's a grind, yeah.

• 36:33Speaker 04

  VCs do not like doing investment. Now they do because there's so much money in sovereign. You know, you can get so much money and charge 2%. But back in 2013, it was like, so much something that's working. I want to be the Uber of that. So to take a year off and go get SEC approval, to go do those things, they deserved to be.

• 36:50Barry Ritholtz?

  It's laborious.

• 36:51Speaker 04

  And you had to wait. You couldn't just go launch it and get sued.

• 36:54Barry Ritholtz?

  This is in hindsight. If you want to be the next vanguard, wait. Their secret sauce is that they have such scale, they can charge four bips and still make money. You're losing money at 25 bips.

• 37:08Speaker 04

  And if you switch, you switch. But they have so much assets, so switching costs. So we could talk about this forever. I was in the right place, right time, right people pitched me, right valuation. Everything worked. I could tell you 100 stories of like, everything lined up and it doesn't work. Robinhood would have worked whether I showed up or not.

• 37:25Barry Ritholtz?

  Right.

• 37:25Speaker 04

  So we did 100,000. Now, obviously, we helped them tremendously with StockTwits. We were like responsible for hundreds of thousands of early signups because StockTwits users love the idea.

• 37:35Barry Ritholtz?

  Yeah, of course, free trading.

• 37:36Speaker 04

  Free trade. No, but also the API, hooking in that you could slide right on.

• 37:40Barry Ritholtz?

  Right over.

• 37:41Speaker 04

  And trade.

• 37:42Barry Ritholtz?

  Yeah.

• 37:42Speaker 04

  It's pretty funny. Now, that idea in 07, when I had it, Jack and Ev, like as a Twitter guy. I went to Jack and Ev. Yeah, and Ev, and Fred Wilson put me in the room with them. And I'm like, guys, what are you talking about? Kim Kardashian taking a poop on Kanye West? That's not interesting. You know what's interesting? The president's going to tweet one day and the markets are going to move. Like, this is literally my pitch to Jack and Ev, set up by Fred Wilson, who was this. They were like kumbaya, a plane lands on a Hudson.

• 38:10Barry Ritholtz?

  Right.

• 38:11Speaker 04

  Uh, you know, we're growing our beards. Uh, no, you know, like, I mean, they were just the darlings. They didn't need ideas. So they were like.

• 38:20Barry Ritholtz?

  It was the town, the town.

• 38:22Speaker 04

  No, they weren't mass, they weren't financial guys. They were kumbaya guys. They were builders. So my pitch fell on, like, who are you?

• 38:31Barry Ritholtz?

  They didn't get monetizing Twitter through brokerage.

• 38:34Speaker 04

  It's not about monet, they didn't understand.

• 38:38Speaker 04

  What they had, meaning selling ads against something that Goldman Sachs will pay infinity for, meaning a new pipe, where Bloomberg's charging $2,000 to get real time information. Now, like Osama bin Laden getting killed, the futures with like in oh eight, whenever Osama was finally killed.

• 38:57Barry Ritholtz?

  Eleven, twelve.

• 38:58Speaker 04

  I know where I was.

• 38:59Barry Ritholtz?

  Right.

• 39:00Speaker 04

  Because immediately I checked the futures and they had already moved. And that's because of Twitter, right? Because some guy in Pakistan saw it and the futures moved.

• 39:07Barry Ritholtz?

  Right.

• 39:08Speaker 04

  Like, that's when it should have clicked, is like, shut down everything, delay the feed 30 seconds, and you know what's gonna happen? Goldman will call you, Reuters, Bloomberg, they'll see that you're off by 30 seconds and they'll pay you fortunes to get the real time feed.

• 39:22Barry Ritholtz?

  Right.

• 39:23Speaker 04

  You and me, schmuck two and three, don't need real time, one second.

• 39:26Barry Ritholtz?

  It's five minutes, right.

• 39:27Speaker 04

  So, my pitch to Jack and Ev with Fred Wilson was like, slow down the feed, because 99% of the population, and then we're there anyways with AI, no one gets the real time feed.

• 39:38Barry Ritholtz?

  Right.

• 39:39Speaker 04

  Slow down the feed, your phone will ring for the people that know that the feed's not in real time, and they will pay you infinity to get the pipe. And they were like, no, let's sell ads. So here we are.

• 39:51Barry Ritholtz?

  So, you haven't talked about the cash tag, which I really want to talk about, something Stock Twits invented.

• 39:57Speaker 04

  Yes.

• 39:58Barry Ritholtz?

  A dollar sign and then AAPL is the symbol for Apple or...

• 40:02Speaker 04

  So, this is the Jack and Ev story, so again, I didn't want to start a company. I just sold Wallstrip, which you know, which was my best work, but again, stupid work. But my best, no, personally, I'm most proud of it. You sell a company to CBS when you are literally an idiot is the dream.

• 40:18Barry Ritholtz?

  I think that's a fair disclosure.

• 40:20Speaker 04

  Yeah, yeah, yeah. Like, they said, by the way, as they wrote, as Les Moonves wrote the check, he goes, I can't believe we're writing an idiot like this, a check.

• 40:27Barry Ritholtz?

  He said that, that's the quote.

• 40:28Speaker 04

  I said, please write that, like you in your book, please write that you're so angry. So anyways, they had just bought my company, and literally a month later, I'm like, you made the wrong acquisition, you need to buy Twitter.

• 40:43Barry Ritholtz?

  You said this to them.

• 40:44Speaker 04

  Like Twitter to Quincy at, who had bought my company at CBS. And I remember, there was no iPhone yet.

• 40:52Speaker 04

  And Twitter came out and I thought it was stupid. You thought it was stupid. We all thought it was stupid.

• 40:55Barry Ritholtz?

  It was just annoying.

• 40:56Speaker 04

  Andy Swan, an old friend, was like, I get this. This is financial. Because, you know, at the beginning, I'm on, we all had our BlackBerry. It wasn't even, it wasn't even a native mobile app. It was just the web and it was all venture capital. And my shtick in 2006, 2007 was, I just peed at the Gramercy. Like, so the VCs loved me. They were like, who's this idiot talking about with bowel movements? And, and then Andy Swan said, you know, this is like financial. This is like a new Bloomberg, right? And I said, and I just, so, so the hashtag was the thing. And I'm like, it was all spam. Like, if you went to Apple, like hashtag A A P L or hashtag apples, like I went to the store and bought a green apple. Like, that's literally what people were saying. It was so, now it would be let's nuke apples.

• 41:40Speaker 04

  But like, at the beginning, it was like, I bought a green apple. And I'm like, that's spam. So I sent Fred Wilson the first message and I'm saying like, and back then BlackBerry was the hot stock. And I'm like, I just bought dollar sign R I M M. And Fred Wilson, who's the godfather of all this and was an investor in Twitter, sent me back a text. He goes, this is genius. You need to start a company. And that's what set me down the stock twits path.

• 42:02Barry Ritholtz?

  Was Wilson an investor in stock twits?

• 42:03Speaker 04

  No, because he was an investor in Twitter and he thought there would be a conflict.

• 42:06Barry Ritholtz?

  There's no conflict.

• 42:07Speaker 04

  I agree, but Fred is the, Fred is the OG. Why Fred's the OG? So Fred's, Fred's strategy is if he bets on one, he does, and I, I follow Fred's strategy. There's other people who spray and pray and don't care who they, and 90% do that. But Fred was of the opinion back then is like, I work with you. Um, there's going to be, conflicts are a thing, like no conflict, no interest. That, that's, he's very cool that way, but don't create conflict just to create conflict. So in his wisdom, he was like, you know, what's going to happen if you guys get in a fight and yada, yada, yada? So he politely backed out, but we were backed by good VCs. Raising money was not my problem. My VC should have said, Harry, you know, it's not a good enough idea.

• 42:52Barry Ritholtz?

  So as an investor in stock twits, I always wondered, why the hell didn't Twitter buy stock twits?

• 42:58Speaker 04

  Well, they don't understand finance. They should have bought it. You remember the last scene in Raiders of the Lost Ark?

• 43:03Barry Ritholtz?

  Yeah, of course.

• 43:03Speaker 04

  The whole movie is about getting, and then the last scene is, this is a very important, again, why media matters to investing. And it's just a black hole.

• 43:14Barry Ritholtz?

  Forever, right.

• 43:15Speaker 04

  Never to be seen again. The best tech. Companies like Salesforce, he understands corporate debt. Sometimes you buy something to kill it.

• 43:25Barry Ritholtz?

  Right.

• 43:26Speaker 04

  To see, and by the way,

• 43:27Barry Ritholtz?

  And just incorporate the best features.

• 43:29Speaker 04

  They're like my Newman. Twitter's like my Newman from Seinfeld. It's like Twitter. Like, you know.

• 43:35Barry Ritholtz?

  Now who's dating themselves?

• 43:36Speaker 04

  So, no, but what I'm saying is, they're my Newman, like in Seinfeld. Meaning, these people, it was a clown car, as Zuckerberg said. There's so many people that got rich off non-executing.

• 43:47Barry Ritholtz?

  I love the line. It was in one of your recent posts.

• 43:50Speaker 04

  Right, but Zuckerberg said it first.

• 43:52Barry Ritholtz?

  Which was?

• 43:53Speaker 04

  It's a clown car, I don't know.

• 43:54Barry Ritholtz?

  That crashed into a gold mine.

• 43:56Speaker 04

  Yeah. And so Twitter, and the real problem with Twitter was, it was a financial product. And Elon knows that better than anybody in the end, because

• 44:05Barry Ritholtz?

  Although he just

• 44:06Speaker 04

  Well, he monetized it by stuffing it in a shell company. It's still like, it's an asset. And he's made tremendous mistakes. To, to, to think that Trump end around the whole thing, meaning Twitter's supposed to be a real-time network.

• 44:20Barry Ritholtz?

  Right.

• 44:21Speaker 04

  They have to poll Truth Social.

• 44:23Barry Ritholtz?

  Right.

• 44:24Speaker 04

  Truth Social is worthless, other than one guy who sits on top of Twitter, and you have to copy paste his tweet. Like, so Twitter

• 44:31Barry Ritholtz?

  Well, on a different platform.

• 44:32Speaker 04

  Forgetting how bungled the company is. The fact that they owned Real Time, and do not own Real Time, and that I'm the schmuck that came up with the original, like, Trump is gonna tweet, now, obviously, Obama was president when I had this idea, but like, that the pipe matters, and who is king of the pipe, to think that Trump beat Elon at his own game is pretty insane.

• 44:54Barry Ritholtz?

  He, he is savvy in ways that people don't appreciate.

• 44:57Speaker 04

  Insane that Truth Social exists. It's worthless but for one guy tweeting.

• 45:01Barry Ritholtz?

  Right.

• 45:01Speaker 04

  Unbelievable. It's inconceivable.

• 45:05Barry Ritholtz?

  To, to bring back

• 45:06Speaker 04

  You bested my man of orange. So the poison cannot be in front of you.

• 45:10Barry Ritholtz?

  So, so now, 2024, you come back to StockTwits as CEO.

• 45:16Speaker 04

  Yeah.

• 45:16Barry Ritholtz?

  What motivated that? Are the early investors gonna see an exit? What's, what's going on?

• 45:22Speaker 04

  That's inside information.

• 45:23Barry Ritholtz?

  No, it's not public.

• 45:24Speaker 04

  No, so

• 45:25Barry Ritholtz?

  It's, it's, it's non-public information, but it's not illegal inside information.

• 45:30Speaker 04

  No, StockTwits is like a, a corn on your foot. No, I mean, listen, here's the thing about venture capital, is Here's the thing about venture capital. Not everything should be venture capital.

• 45:41Barry Ritholtz?

  True.

• 45:42Speaker 04

  Okay, so I joke about this with with my finger, like

• 45:47Barry Ritholtz?

  Whose fault is it?

• 45:49Speaker 04

  Okay, I think StockTwits is a great idea. The cash tag was a great idea. I'm very proud of it. I'm now proud of having to run a company 17 years later. Not that it wasn't my dream when I started StockTwits is to be sitting here answering questions about how am I going to make money?

• 46:03Barry Ritholtz?

  Let me bust your chops.

• 46:04Speaker 04

  But you were very right to do this. So what I'm saying is, I, and young kids need to know this, like math, not everybody gets to have a startup.

• 46:12Barry Ritholtz?

  Of course.

• 46:13Speaker 04

  Okay, well, my venture capitalists, if they're as good as they say, and they are great, should have stopped me and said, this isn't quite venture capital.

• 46:22Barry Ritholtz?

  Let me push back on that because I knew you were going to go there.

• 46:25Speaker 04

  I am.

• 46:25Barry Ritholtz?

  And your venture capitalists, and we know a lot of the same people, said, hey, there was a window to get out. You wouldn't have gotten an FU number, but you would have gotten a pretty good number.

• 46:37Speaker 04

  No, I never got a number.

• 46:38Barry Ritholtz?

  There was never, I thought there were discussions that just never came to fruition. Yeah. I thought you guys were on the one yard line.

• 46:45Speaker 04

  I'm discussing it right now openly. There's always a price. Who, which camera? Camera two? No, uh, listen, we have never, some things are only fairly valued for a second.

• 46:57Barry Ritholtz?

  Right.

• 46:57Speaker 04

  And some things stay overvalued or undervalued forever, as we know from the markets. And I think StockTwits, I'll take full responsibility, we've always missed a window of positioning.

• 47:09Barry Ritholtz?

  Right.

• 47:10Speaker 04

  But the good news is StockTwits is thriving.

• 47:12Barry Ritholtz?

  Right. It's doing well. This is a perfect

• 47:15Speaker 04

  So I'm saying like

• 47:16Barry Ritholtz?

  Robin Hood should really be the part.

• 47:17Speaker 04

  We were 10 years ahead of our time. If you think about where public, when I started StockTwits, retail investing was a laughing stock.

• 47:24Barry Ritholtz?

  Yeah.

• 47:24Speaker 04

  And it still is to most institutions.

• 47:27Barry Ritholtz?

  Much less so today than it was. Now it's

• 47:29Speaker 04

  So again, if you look at my portfolio.

• 47:31Barry Ritholtz?

  By the way, the private equity, private credit wouldn't be so hungry for retail investors if it was truly

• 47:39Speaker 04

  They call me every day.

• 47:40Barry Ritholtz?

  Right.

• 47:41Speaker 04

  So there's two worlds that I live in. The world where retail doesn't take itself seriously enough. And private equity guys call me, CEOs of public companies call me to take like, I'm in a crazy seat.

• 47:53Barry Ritholtz?

  Right.

• 47:53Speaker 04

  Because I'm a goofball.

• 47:54Barry Ritholtz?

  Right.

• 47:55Speaker 04

  But I am serio-, you know, like, I am serious, like, I'm trying to be serious.

• 47:58Barry Ritholtz?

  You used to be sixty forty goofball serious, now you're forty sixty.

• 48:02Speaker 04

  Yeah, it switches.

• 48:03Barry Ritholtz?

  You're the new sixty forty.

• 48:05Speaker 04

  Yeah, I'm, I'm, uh, I can laugh at myself, but I'm trying to run a serious business, right? Because, because it's been a long time. And we were just way ahead of the curve. Like, Jack and Ev didn't understand what we have. Fred Wilson understood it.

• 48:19Barry Ritholtz?

  Right.

• 48:20Speaker 04

  Um, there are very few people that understood. Very few people liked Robinhood until twenty twenty and GameStop. They like it for the wrong reasons, by the way. I don't like the Robinhood that became. Like, I'm not, I call it the degenerate economy, but when I invested in Robinhood, I didn't know that the degenerate economy existed. I didn't know that prediction markets would exist. I didn't know options would be their biggest product. I was just wanting to see.

• 48:44Barry Ritholtz?

  Options are bigger than crypto for Robinhood?

• 48:46Speaker 04

  Crypto, tiny. Options is everything.

• 48:49Barry Ritholtz?

  Huh.

• 48:49Speaker 04

  Ninety percent of their fucking profits will come from options, any brokerage.

• 48:53Barry Ritholtz?

  Wow, I didn't realize that.

• 48:54Speaker 04

  How are they gonna make money on zero commission, other than options? People doing YOLO trades.

• 48:58Barry Ritholtz?

  Payment for order flow, margin loans.

• 49:01Speaker 04

  That's just, that's just media being bad media.

• 49:03Barry Ritholtz?

  I'm gonna tell you that the big shops like Fidelity and Schwab, the single biggest line on them, line item of profitability are credit loans.

• 49:13Speaker 04

  Okay, it could be. I'm ninety, I don't know, I don't, I don't go do the financials.

• 49:17Barry Ritholtz?

  At one point in time, it was over half at Schwab, I don't know what it is today.

• 49:19Speaker 04

  When we invested in Robinhood, here was my thinking. Is, first of all, I love the product. You gotta be a user of the product to be a good investor. I'm not the guy who's like, here's space check, and here's a biotech, what do I know? So, the odds have to be stacked in my favor, first of all. But second of all, and they were, I was Yahoo, I was Yahoo Finance, I was you, I was blogging, I was doing everything. And, and they came along at the right time. When Robin, the pitch for me with Robinhood was not that they were gonna make money. It was an eight million valuation. Like, you know, at my event, people were like, how are they gonna make money? I'm like, chill the hell out. They haven't even launched the thing yet. The point was Schwab was paying a hundred and fifty dollars to get a customer.

• 50:00Barry Ritholtz?

  To acquire, customer acquisition, yeah.

• 50:02Speaker 04

  And my thesis was like Uber, Robinhood would pay zero. So if you get a million people, even if they're four dollars in their account, it's a hundred, that's a good arb. Those don't come along very, I think it could be a thirty billion dollar. I'm not so psycho that I thought I was investing in a thirty, forty million dollar company. Billion, billion. So of course I'm not that smart. But what I'm saying is, I saw the arb. And all they had to do was deliver the product. Now, it went way beyond my expectations. That's the Larry David part.

• 50:31Barry Ritholtz?

  By the way, you didn't give me that pitch. The pitch was.

• 50:33Speaker 04

  I, I'm sure I did.

• 50:34Barry Ritholtz?

  The pitch was, free trading millennials, the whole next generation, you're gonna capture them before anybody else.

• 50:40Speaker 04

  Well, I knew that from stock to, I knew I'd capture them. But if I say, if I mention the arb trade, people are like, oh, they're gonna have to raise so much money. There was a lot of problems.

• 50:49Barry Ritholtz?

  In hindsight, the arb trade would have been compelling. And, and again, I, it's a chapter in the book.

• 50:56Speaker 04

  I'll tell you a great.

• 50:57Barry Ritholtz?

  It's so off-brand for me.

• 50:58Speaker 04

  One great story.

• 50:59Barry Ritholtz?

  Go ahead.

• 50:59Speaker 04

  Cause, cause this is just a, an investing story. So we're very small fund. The first one was six million. We've, we've done, now we run hundred million dollar funds.

• 51:07Barry Ritholtz?

  You cap it at a hundred or?

• 51:09Speaker 04

  Yeah, I don't think, I don't think our returns would be good. We like writing one to two million dollar checks.

• 51:14Barry Ritholtz?

  I get that.

• 51:15Speaker 04

  Stay in your lane is something everybody hates saying, but I think in my world, unless you're fee gathering, stay in your lane. Like, people know what we do.

• 51:22Barry Ritholtz?

  You're gonna laugh.

• 51:23Speaker 04

  I, I believe in that. I hate when people say it, but I practice it.

• 51:28Barry Ritholtz?

  That's an annoying way to say I disagree with what you're saying. But, but what you're saying is, hey, here's our expertise, here's my skill set, I'm gonna apply my, the area I know best.

• 51:38Speaker 04

  So with Robin, so occasionally, and again.

• 51:41Barry Ritholtz?

  Stars all aligned.

• 51:42Speaker 04

  And I had breakfast with Fred this morning. We're talking about like you're a legend. Josh is a legend. Like I'm around surrounded by legends because I've lived long enough.

• 51:50Barry Ritholtz?

  Okay.

• 51:51Speaker 04

  I've lived long enough and I'm curious and I'm nice and I call people to say hello. I'm a salesman. So who do I see this morning? Fred Wilson? Like who did I run into? Tim O'Brien? Like I'm friends with like people that have, you have signal. Right. You have what you've been on the street. And you have experience, not maybe in space, but in what you do, you have signal. So with Robinhood and I had learned from Fred Wilson, like if you really believe in something. And I'm not a poker player. I don't gamble. You gotta go in as a VC. You have to. So Robinhood.

• 52:21Barry Ritholtz?

  You're convincing me to throw money into Fund Seven and that'll be the end of your run.

• 52:26Speaker 04

  But that's different. Every fund is like a crop of wine. It could go [BLEEP]. Depending on how, you know, we're wrong all the time.

• 52:33Barry Ritholtz?

  24 was a good vintage.

• 52:34Speaker 04

  2020, 2021, terrible vintage. So, so, so when Robinhood was doing very well. But they, the two guys were like, it was not popular. Everybody, all the VCs had committed to Betterment Wealthfront type model. So now they needed to raise another round and I'm like, they wanted to raise.

• 52:53Barry Ritholtz?

  This is 14 or 15?

• 52:54Speaker 04

  14.

• 52:55Barry Ritholtz?

  Yeah. So I think that's when we spoke.

• 52:56Speaker 04

  Yeah. So they were like, and I'm like inexperienced because we write one check. We don't have more money. So they call me up and they go, can you write us a term sheet? It's a very sophisticated way of saying like, you won't have to like actually invest. But if you come in, like we can shop, like we can kind of shop it around. So I'm like, dude, screw that. I want to invest. So over like July 4th weekend, Tom, my partner. And I was, two of us at the time. I'm like, let's just write an 11 million. They needed to raise 11 million bucks and they wanted to raise it at some stupid valuation. It was 60 million ish. And I'm like, well, we're never going to have to really write it. But even if we do, I can convince my friends, like this is the one. And I called Fred Wilson and he goes, what are you calling me for? You know what to do.

• 53:40Speaker 04

  It's write a term sheet. I go, but we don't have 11 million dollars. And Fred goes, you'll find it. Just, just do it like a six week.

• 53:48Barry Ritholtz?

  Right.

• 53:48Speaker 04

  Which is absurd. Now today people write billion dollar checks. in an hour, but like, go just ask for six weeks, right? So we, you know, we're, you know, whatever you're typing it up, send him a term sheet.

• 53:59Barry Ritholtz?

  Back then you had ten fingers, so it was much better.

• 54:02Speaker 04

  But, you know, ten fingers, more errors. So anyway, so we write up this term sheet. We send it to them and they shop it as they probably index ventures. Jan Hammer, who's like, like one of the best investors, comes back with a term sheet of 11 million on 65 million.

• 54:22Barry Ritholtz?

  Wow.

• 54:22Speaker 04

  And like a five day close. So like, you know, they got what they wanted. Oh, and by the way, index in their term sheet, index in their term sheet, like social leverage. That's a typical, like, who are they?

• 54:36Barry Ritholtz?

  Right.

• 54:37Speaker 04

  Luckily, by writing that term sheet, Vlad and Bajiu did the right thing and they carved out like as much as we could. We couldn't even raise a million. So when we, so they carved us out, we put 800 grand in the series A. If we had done the 11 million, I'd be a billionaire.

• 54:52Barry Ritholtz?

  Like 200X on, on the, that's unbelievable.

• 54:55Speaker 04

  No, way bigger, like at the peak, but like, um, but we've had better investments.

• 55:00Barry Ritholtz?

  You're not still sitting with the Robin Hood shares.

• 55:02Speaker 04

  A lot of my LPs, we distributed the stock. A lot of my LPs have not sold.

• 55:06Barry Ritholtz?

  No one collars it? Nobody says?

• 55:08Speaker 04

  I don't ask. Our job is to deliver them.

• 55:10Barry Ritholtz?

  There you go.

• 55:11Speaker 04

  The, the, the, the cash.

• 55:13Barry Ritholtz?

  I want to start with a quote of yours that I really love.

• 55:16Speaker 04

  Okay.

• 55:16Barry Ritholtz?

  Quote, "The whole world has become a casino. Thanks to AI and prediction markets, we are all more productive and degenerate now. Let's talk a little bit about the degenerate economy. Explain to listeners, what is the degenerate economy or the degener economy?

• 55:37Speaker 04

  Well, I don't like the word degener. So when I say degenerate, I say it in the humoristic way. You and I are degenerates.

• 55:44Barry Ritholtz?

  Right.

• 55:44Speaker 04

  Because we'll buy a watch, we'll bet on a game, we laugh at degeneracy. We don't, we don't, we appreciate the art of degeneracy versus

• 55:54Barry Ritholtz?

  Meaning?

• 55:55Speaker 04

  Meaning laserized was dumb.

• 55:57Barry Ritholtz?

  Right.

• 55:57Speaker 04

  But degeneracy is an art form like speculation. And I live, I own and I joke that I own and operate two millennials. And when you own and operate two millennials, you watch, you look over their shoulders.

• 56:10Barry Ritholtz?

  Those were your first startups?

• 56:12Speaker 04

  No, my kids, yes, but the important startups, my, the only startups that matter.

• 56:17Barry Ritholtz?

  Did either of them merge yet? Do we have any M and A activity yet?

• 56:20Speaker 04

  We need, we need.

• 56:22Barry Ritholtz?

  I'm not talking about spinoffs, I'm not talking about dividends, I'm talking about, are they married?

• 56:27Speaker 04

  No.

• 56:27Barry Ritholtz?

  So no mergers yet?

• 56:28Speaker 04

  No, my son was, my son was in a long relationship.

• 56:31Barry Ritholtz?

  You should be chairman of their board.

• 56:33Speaker 04

  I'm on the board, I'm trying to get them kicked off, I'm trying to get them fired.

• 56:38Speaker 04

  I'm trying to get medical checks to see if anything's working. So, um. So the degenerate economy was born of this idea that. I couldn't believe where we went, like with GameStop, like, I was so stressed during the GameStop thing because.

• 56:54Barry Ritholtz?

  Really?

• 56:54Speaker 04

  I hadn't monetized, I hadn't monetized our investment. I'm like, there was a weekend.

• 57:00Barry Ritholtz?

  Yeah.

• 57:00Speaker 04

  When Robinhood was worth forty billion.

• 57:02Barry Ritholtz?

  Right.

• 57:03Speaker 04

  And it could have been worthless. You understand, like, I wasn't rich. And I'm like, it wasn't even their, blame whoever you want, people lost their minds.

• 57:13Barry Ritholtz?

  Let me annotate.

• 57:14Speaker 04

  Let me just explain to you, if you have your phone.

• 57:16Barry Ritholtz?

  Go ahead.

• 57:17Speaker 04

  What Robinhood perfected, which no one figured out, was like, when we used to play pinball.

• 57:24Speaker 04

  Everybody, there was always that kid who was so good at it.

• 57:26Barry Ritholtz?

  Crazy flippers fingers.

• 57:28Speaker 04

  Well, he could bump it without tilting it.

• 57:30Barry Ritholtz?

  Right.

• 57:30Speaker 04

  And he could just get the, he could just get the machine to dance for him. Tilt happened. Everybody, the, the app was so well designed, the app was so well designed that everybody pushed the same button at the same time.

• 57:43Barry Ritholtz?

  And it couldn't carry the, I remember when it was crafted, sure.

• 57:46Speaker 04

  That's literally what happened. It was a design flaw, it was a design flaw.

• 57:51Barry Ritholtz?

  It wasn't a design flaw, nobody expected it to scale ten thousand X.

• 57:55Speaker 04

  No, but if you push everybody to one button, or another button.

• 57:59Barry Ritholtz?

  Yeah.

• 57:59Speaker 04

  And then people come on, see me, say, push this button, and everybody's like, let's see what happens. And guess what happened?

• 58:05Barry Ritholtz?

  Crash.

• 58:05Speaker 04

  Not to be repeated again, hasn't been repeated again. And that's what makes the markets great, that hole was filled by the hole being created.

• 58:12Barry Ritholtz?

  Right.

• 58:12Speaker 04

  We haven't seen another thing like this, although recently with Car, Avis, but like, GameStop broke the machine.

• 58:18Barry Ritholtz?

  Yeah.

• 58:18Speaker 04

  And almost bankrupted the company.

• 58:21Barry Ritholtz?

  Right.

• 58:21Speaker 04

  And, and it was many lessons in there. The most important was Robinhood.

• 58:28Speaker 04

  None in their hubris or anything, they mistook success for a brand. When you build a brand in four years, not forty years, you don't appreciate that you have no brand value.

• 58:39Barry Ritholtz?

  Right.

• 58:40Speaker 04

  And I'm like, no one understands this. Like, they were one of the first case studies in like, what? It didn't deserve to be zero. Who knows what all the things that went wrong, but I'm just some guy who's like,

• 58:51Speaker 04

  I'm like, how embarrassing would it be if it goes from forty billion to zero? And you know, Galloway and all these guys are piling on and all these people piling on. I'm like, you don't even understand what's going on.

• 59:01Barry Ritholtz?

  So wait, let me tease this out of you a little bit. I thought you were going in a different direction. How degenerate the trading in things like GameStop and when Hertz was bankrupt and, or was it Avis? I don't even remember which. Some really foolish, reckless, and I think those of us with gray hair looked at it and kind of laughed because we knew exactly how that was going to end.

• 59:24Speaker 04

  Yeah, the apes and all the AMC stuff. I hated it, but it doesn't mean I can stop it.

• 59:29Barry Ritholtz?

  That wasn't your concern. Your concern was, hey, here's a fire hose of new clients, new orders. This is the scale this company needs to become wildly successful. And they're just not prepared to deal with the sheer volume. And if this crash goes on more for a couple of hours, two days from now, this is a zero.

• 59:48Speaker 04

  It was a zero. We can argue, I don't know the whole story, but I imagine someone called someone at the options clearing firm and said, you're bankrupt. And the VCs are lucky we're in so big, they had to put in more money.

• 59:58Barry Ritholtz?

  They didn't have the reserve cash you need for margin trades of options.

• 1:00:02Speaker 04

  We'll never know the real story.

• 1:00:03Barry Ritholtz?

  So technically, CBO is the counterparty on all trades. And they also own the platform, so they demand a certain amount of capital if you're going to trade X. And they're trading billions of dollars. They didn't have that capital.

• 1:00:18Speaker 04

  So, so this is why my degenerate economy index was born. Meaning, I don't think AMC's in, what's in my index, which is outperforming everything, is CBO is one of my number one positions. Who benefits? So my degenerate economy thesis is finding the companies that benefit from global degeneracy.

• 1:00:37Barry Ritholtz?

  Last year, two years ago?

• 1:00:39Speaker 04

  Three years ago.

• 1:00:39Barry Ritholtz?

  All right.

• 1:00:40Speaker 04

  It's crushing. It's free, I just share it.

• 1:00:41Barry Ritholtz?

  Just to put some numbers on this.

• 1:00:44Speaker 04

  Yeah.

• 1:00:45Barry Ritholtz?

  It's gambling, it's day trading, it's meme coin speculation.

• 1:00:48Speaker 04

  It's vaping, unfortunately.

• 1:00:49Barry Ritholtz?

  It's up 170%. The NASDAQ 100 over the same time period isn't even up 100%. It's up 94%.

• 1:00:56Speaker 04

  Correct.

• 1:00:56Barry Ritholtz?

  You're almost doubling the NASDAQ.

• 1:00:59Speaker 04

  And I give it away for free because, and I share the position size.

• 1:01:01Barry Ritholtz?

  Why isn't this an ETF?

• 1:01:03Speaker 04

  Because Van Eck always talks to me, Van Eck always like, why do you want to be in the ETF business?

• 1:01:07Barry Ritholtz?

  So do, you know, you use ETF architect.

• 1:01:11Speaker 04

  No, I get it.

• 1:01:11Barry Ritholtz?

  Work with Van Eck.

• 1:01:12Speaker 04

  But then I'm gonna have, again, this is, I think, part of like, you know, the age I'm at is like, I don't want to be someone yelling at me that my, that I, Kathy, what, but I, as soon as I monetize it, it'll go to zero. Like, this thing will stop working. I love the idea that I can give it away for free. This goes back to the original social media. Meaning, what am I gonna make? It's like, as soon as I start charging for it, the whole thing becomes stressful.

• 1:01:37Barry Ritholtz?

  I took ads off the blog because they were annoying and ugly. And the amount of revenue it made was just too annoying. You're saying the same thing.

• 1:01:45Speaker 04

  Yeah, I'm saying like, hey, man, I'm like, I got a little thesis. It's not that complicated.

• 1:01:52Barry Ritholtz?

  I, I love this thesis. I would, I think people would be buyers.

• 1:01:55Speaker 04

  So CBOE, CME, Hyperliquid now is in there, and no one knows what Hyperliquid is. I constantly am adding, Hyperliquid is the, is the thing. Meaning, today, all I get pitched on are by the next Robin Hood. And I'm like, the world doesn't need another Robin Hood. But all they keep talking about is, you know, we've got perps trading 24/7 on Hyperliquid. It's, it's, it's the new Solana, let's call it. Because I'm not a crypto guy. And I'm like, after getting 100 pitches of the same product, and they all talked about Hyperliquid, I just bought Hyperliquid.

• 1:02:25Barry Ritholtz?

  And what's the market cap of that?

• 1:02:29Barry Ritholtz?

  Couple of billions?

• 1:02:29Speaker 04

  It's like 12 people on one of the most profitable companies in the world, out of Singapore. Like, the guy has no freedom because he's so rich. It's like a system, it's like a very fast chain.

• 1:02:39Barry Ritholtz?

  What's the symbol?

• 1:02:41Speaker 04

  H Y P E.

• 1:02:42Barry Ritholtz?

  Hype. What a great symbol.

• 1:02:43Speaker 04

  Yeah. It's a token, and you can buy it on Robin Hood. Again, I'm not promoting, I'm just saying.

• 1:02:48Barry Ritholtz?

  So this, you could buy it on Robin Hood, but does this not trade over the counter? You can't get it anywhere?

• 1:02:52Speaker 04

  You can trade it as a, there's a DAT called P U R R. Again, I'm not recommending it, but I'm long a little, is.

• 1:03:01Speaker 04

  A way that you can trade it over the counter.

• 1:03:03Barry Ritholtz?

  And again, you're betting on the fact you don't know anything about supply and demand. You're just, it's the system that everybody's trading. Pure speculation.

• 1:03:09Speaker 04

  Pure speculation.

• 1:03:10Barry Ritholtz?

  On other people's speculation.

• 1:03:13Speaker 04

  That's what, that's my thesis. So anyways, what I'm, what, so the degenerate economy is about picks and shovels.

• 1:03:19Barry Ritholtz?

  Uh huh.

• 1:03:20Speaker 04

  We can't stop, if, if a young person like my son, and again, I own and operate two millennials and, and they'll, I don't want them betting. My son will call me and goes, I can't believe I lost a 20-team parlay. I go, who are you? Are we even of my, this is why I have to do a step in takeover of my son's company. Cause I'm like, are you talking to me? Like you asked him to Venmo you 50 bucks to put on a 20-team parlay and you're complaining about a three threat. It's so idiotic. So I'm like trying to teach them not to be idiots. You can have a degenerate economy.

• 1:03:50Barry Ritholtz?

  You just need a little bit of math. The problem is not our kids have taken math.

• 1:03:54Speaker 04

  And you also, full circle on the general economy, you have the wrong teachers right now. I got brought on board by guys like you, Kramer, the people who'd experienced that, Fred Wilson. These kids are learning from Chamath and David Sacks. These guys were born of one generation. They worked at Facebook. They worked for Elon. You could, if you're not rich, working for Elon or Facebook, that would be interesting. If you are rich and you're kissing the nipple of Facebook and it's not interesting. You were supposed to be rich.

• 1:04:22Barry Ritholtz?

  Right.

• 1:04:22Speaker 04

  Have some human, have, so we're, our job is to teach.

• 1:04:24Barry Ritholtz?

  A little humility or you're a little hubris.

• 1:04:25Speaker 04

  So my job is to teach my kid is like, stop being a degenerate.

• 1:04:29Barry Ritholtz?

  Right.

• 1:04:30Speaker 04

  But the fact is, you can't not be a degenerate when prices, kids are YOLOing because they can.

• 1:04:38Barry Ritholtz?

  And it's frictionless.

• 1:04:39Speaker 04

  Frictionless and they'll learn. Some of these kids will learn how to be good put sellers or premium sellers.

• 1:04:45Barry Ritholtz?

  Very few.

• 1:04:45Speaker 04

  I understand, but the markets are very important. Meaning having a price on everything is fantastic.

• 1:04:50Barry Ritholtz?

  Coming up, we continue our conversation with Howard Lindzen, co-founder of Social Leverage. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.

• 1:05:13Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume, so writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 1:05:55Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 1:06:40Barry Ritholtz?

  I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My old friend Howard Lindzen of Social Leverage is here, and when I say old, it's only partly because we know each other so long. It's mostly because he's an old man and is now 60 years old. Years ago, my wife and I, I'm not a cruise person. We were young, we were broke. We used to use this website called vacations2go.com. You book last minute, it would cost you nothing, like a week-long cruise through eight islands in the Caribbean, 500 bucks, food and drink included, booze included. So as soon as they hit international waters, the casino opens. I am not a gambler.

• 1:07:22Barry Ritholtz?

  We walk through and I just decide to look at the roulette table, not bet. Look at it. And this is the difference between my wife, who taught fashion illustration and design, is a visual person. I'm a little more of a math guy. And I say to her, so we're watching 20 minutes of roulette. And it's just, it's so dumb.

• 1:07:44Speaker 04

  Yeah, I hate losing money.

• 1:07:45Barry Ritholtz?

  It's for, for random stupid reason. But I point out to her, look, the red pays, or red or black, or odd or even pay two to one, but you have zero and double zero, so it's not even odds. And then this group pays three to, three to one, but it's one in four chance of winning. So they're making money and I'm going over all the math with her. And she listens to all the numbers and says to me, I don't know about the ratios or the math, but all I can tell you is I see people, I see the croupier taking off a whole lot more money than she's handing out to gamblers. That, that's the takeaway, not, not the odds. Be the house. Don't be.

• 1:08:30Speaker 04

  So CBOE hit all time high.

• 1:08:32Barry Ritholtz?

  They're the house. Yeah.

• 1:08:33Speaker 04

  Have you ever hear anybody on social media talking about CBOE? They love that no one's talking about them. So the other thesis that I have is trends with no friends.

• 1:08:41Barry Ritholtz?

  Uh huh.

• 1:08:42Speaker 04

  Okay, so, so I'm looking for trends, because again, I run a huge social media site, right? So I, if I have a choice between Nvidia and SanDisk, everybody's talking about Nvidia.

• 1:08:52Barry Ritholtz?

  You want SanDisk.

• 1:08:52Speaker 04

  I'm not saying I know much about SanDisk.

• 1:08:54Barry Ritholtz?

  We're just talking about Broadcom, same thing.

• 1:08:55Speaker 04

  Same thing. So on Stockton, I can look for tickers that are trending with very few followers. No, not to be, I don't like small caps, so I'm like five billion and above.

• 1:09:05Barry Ritholtz?

  No, I mean early, I mean before it really goes up 10x.

• 1:09:07Speaker 04

  Yeah, so I, it's the one thing that Stockton has, and I have, AI, you asked me why I came back to Stockton. It's two things, AI and the fact that like I can now code with Clog Code. And so I can call bullshit on engineers a little bit.

• 1:09:21Barry Ritholtz?

  Oh, this could take six weeks. I need it by today.

• 1:09:23Speaker 04

  Well, again, there's not today, but there's not six weeks.

• 1:09:25Barry Ritholtz?

  Right.

• 1:09:26Speaker 04

  Okay, so, so there's that. And then there's the fact that we have all this data and we have a great community. So I wanted to come back and like see this thing through. And we're, and we're doing very well. The, the, the issue is now I can explain to people, and I can pull out the data to show people trends with no friends. Meaning, I want to, you want to find stocks that are trending that have very little discussion.

• 1:09:48Barry Ritholtz?

  Makes a lot of sense.

• 1:09:49Speaker 04

  Yeah, it's just intuitive, meaning IBD, I learned on IBD, I love price relative strength. We, I've just added a layer to that that matches high price relative strength with low social. It's almost like the moosh of Vegas. I'm trying to find the stocks that no, even though I run a social media site, I'm like betting on the fact that like they'll discover this in time.

• 1:10:10Barry Ritholtz?

  You should talk to Ben Hunt and what he's doing with Perseant. Cause they're

• 1:10:14Speaker 04

  Yeah, they have a narrative thing.

• 1:10:16Barry Ritholtz?

  They're too, but the combination of where the narrative is just starting to tick up.

• 1:10:21Speaker 04

  Correct, tipping.

• 1:10:21Barry Ritholtz?

  And, and where the trends is

• 1:10:24Speaker 04

  But I've been doing this for 20 years, so that's why, so I give it away for free.

• 1:10:27Barry Ritholtz?

  He's quantified it.

• 1:10:28Speaker 04

  Yeah, I hate the quant side.

• 1:10:30Barry Ritholtz?

  Yeah.

• 1:10:30Speaker 04

  I just visually see it.

• 1:10:32Barry Ritholtz?

  Right.

• 1:10:32Speaker 04

  From years of being a non quant, I went to ASU, I don't even know math.

• 1:10:35Barry Ritholtz?

  But, but if you want AI to help you with this, the math matters.

• 1:10:39Speaker 04

  That's awesome, but, but he also sees the world a little darker than I see it. I'm a much more of an optimist.

• 1:10:45Barry Ritholtz?

  Uh, you and I both.

• 1:10:46Speaker 04

  Yeah.

• 1:10:46Barry Ritholtz?

  But, but when I want to know what's the worst case scenario, like when the tariffs were first rolled out, uh, not so much losing the finger, but his piece, the end of the Pax Americana.

• 1:10:58Speaker 04

  It's true.

• 1:10:58Barry Ritholtz?

  Was the endpoint where if this really goes off the rails, this is how bad it could get.

• 1:11:04Speaker 04

  It's de-globalization.

• 1:11:05Barry Ritholtz?

  Right, but, but he, he works out the details.

• 1:11:08Speaker 04

  Yeah.

• 1:11:09Barry Ritholtz?

  So, but again, you and I are both a little more of optimists.

• 1:11:12Speaker 04

  I'm much more simple.

• 1:11:13Barry Ritholtz?

  Right.

• 1:11:13Speaker 04

  If I see something going up.

• 1:11:15Barry Ritholtz?

  You want to own it.

• 1:11:16Speaker 04

  That's my cue to look, and then if it's a certain market cap, and then I check stocks and I go, no one cares? I love that. Then I, I need to tell a story. Everybody needs to tell stories, stocks are stories. And some people are great at storytelling, the Palantir guy, there's certain, but again, the numbers eventually matter.

• 1:11:34Barry Ritholtz?

  Right.

• 1:11:35Speaker 04

  And I'm trying to find companies going up, right? And that's not complicated, but then I have other layers to it. And I need to understand the catalyst myself. Like if it's just something I'll never understand, it's hard for me to ride the waves. So if I don't really understand and use the product, the odds of me getting scared out of a trade are 99%.

• 1:11:55Barry Ritholtz?

  So, so let's talk about your

• 1:11:57Speaker 04

  So that's my index.

• 1:11:58Barry Ritholtz?

  Let, let's talk about your startups who are becoming degenerates, your kids.

• 1:12:04Barry Ritholtz?

  Given social apps, zero commission trading, all the option stuff that's going on, for your kids' benefit, what sort of guardrails, I don't know if it's the product, regulation, educational, what do you wish was in place to protect them that isn't there yet? And let's also add, these are not minors, these are late twenties, adults, out of school for almost a decade, real people, what guardrail should they have to protect them from their own worst instincts?

• 1:12:38Speaker 04

  Listen, we could argue, let the, we put our negative hat on, it's like you can go buy bullets at Walmart, so it's like, what is a guardrail? Right? In a world where you can buy bullets, and you know, everybody's got drones. So I'm like, more like, okay guys, if I hear that you did a parlay, we can't be related. So like, stop betting. Betting is different than investing. So if Shane at Polymarket, and they're partners of ours, if Shane or Tariq at Kalshi had pitched me those ideas at the same time that Robin had pitched me their idea, I would have passed. Why? I don't bet. I think it's stupid.

• 1:13:14Barry Ritholtz?

  Right.

• 1:13:15Speaker 04

  Okay, like, I think it's funny, and I think prediction markets are news, better than the New York Times, no offense, because I like prediction markets, because I don't have an opinion. I just look at the price and I go, whether I believe it or not. I think that's the genius of it. But if Polymarket and Kalshi went out to VCs and said, "We're the new news," their valuation would be a dollar.

• 1:13:34Barry Ritholtz?

  Right.

• 1:13:35Speaker 04

  Okay. So we know the real story, they can't tell what they really are good at, which is news.

• 1:13:39Barry Ritholtz?

  And by the way, they're not great at news.

• 1:13:41Speaker 04

  I understand, but neither is news good at news.

• 1:13:43Barry Ritholtz?

  It's probability of something happening.

• 1:13:46Speaker 04

  But I'd rather not read someone's opinion, I don't need to see Elon's finger on the news, because that's a story, that's not the real story. Give me the numbers, I know it's fake, but I got a number. If Mandom isn't 90% and my daughter's mad, I go, Rachel, here's what you do then. Bet the other side, you'll make eight or or put

• 1:14:06Barry Ritholtz?

  It's 10 to 1.

• 1:14:07Speaker 04

  10 to 1, but I would bet money on Madami. And if you really want to change how you think about the world, go help somebody on the other side who has a chance. Go put in the time, go help Mark Cuban. If you really want to be

• 1:14:17Barry Ritholtz?

  I love what he's doing on the healthcare side.

• 1:14:19Speaker 04

  But what I said to my daughter, I said, call Mark. I'll get you in touch with Mark. Do something, but just complaining about the numbers that you see. And the numbers were right. Whether whether they whether they tipped it in this. Again, I don't want to get in all like the fraud and all the fake stuff about it. But the numbers much easier than reading an opinion piece.

• 1:14:37Barry Ritholtz?

  I'm gonna, can I tell, share something fun?

• 1:14:39Speaker 04

  Yeah.

• 1:14:40Barry Ritholtz?

  So there were some of the early bets about outcome of the war and different events happening. And I said in a quarterly call, hey, I don't really know. Uh, who's putting, we don't know who's putting these bets in.

• 1:14:54Speaker 04

  Yeah.

• 1:14:54Barry Ritholtz?

  But if you stop and think about it, if you're negotiating with another side, this being a psy op, because you spent half a million dollars to move uh, the outcome of something. That's the least money the Department of Defense will ever spend. And anybody on this side is looking at this, oh, they're they're really going to put boots on the ground. That's look at the track record here. Here, here's a, a, a wallet that's 10 for 10. Oh, my God, we have to stop and think about. You don't really know who's using this, who's betting this, who's manipulating.

• 1:15:28Speaker 04

  But we didn't know.

• 1:15:29Barry Ritholtz?

  That guy who got arrested, that was a throwaway. That's a false flag.

• 1:15:32Speaker 04

  It's still better than Russia and China using our social media.

• 1:15:35Barry Ritholtz?

  Oh, my God.

• 1:15:36Speaker 04

  So I'm very

• 1:15:38Barry Ritholtz?

  And North Korea and Iran.

• 1:15:39Speaker 04

  Yeah, so I'm not saying I'm for, I'm an investor in Polly Marketing Kalshi personally. At crazy valuation because I wouldn't have invested. Like I just chased it in in SPV personally.

• 1:15:49Barry Ritholtz?

  The co, um, founder of Kalshi, the woman, what's her name?

• 1:15:54Speaker 04

  I don't know, but I know it's a woman. I just can't remember.

• 1:15:57Barry Ritholtz?

  Uh, no, she was a guest on the podcast.

• 1:15:58Speaker 04

  Was she great?

• 1:15:59Barry Ritholtz?

  She was really good. This is years ago. This is three years ago. I should never even thought to put money into it.

• 1:16:04Speaker 04

  So that's what I'm saying.

• 1:16:05Barry Ritholtz?

  It sounded more academic than anything.

• 1:16:08Speaker 04

  It was academic and it still is because there's very few people using these products. For all the free presses, it's like Twitter. There's very few people using Twitter.

• 1:16:16Barry Ritholtz?

  Well Twitter's circling the drain at this point.

• 1:16:19Speaker 04

  No, but I'm saying at the beginning, it had a lot of power even though there weren't that many users.

• 1:16:24Barry Ritholtz?

  It was, it was, you know, it was a fraction of Instagram or TikTok.

• 1:16:27Speaker 04

  So prediction markets is the same.

• 1:16:29Barry Ritholtz?

  Fraction.

• 1:16:29Speaker 04

  It's a fraction of the news, but I'd rather my son and daughter go to page two of polymarket. Cause you know what they're gonna see? News that they didn't, wouldn't ever look at in the New York Times. They can go look at the election in Peru. And now at least I'll know the names.

• 1:16:43Barry Ritholtz?

  Or Venezuela for that.

• 1:16:44Speaker 04

  Or Venezuela. So I'm super bullish for different reasons on prediction markets. And I know there's like, obviously I have money on the side.

• 1:16:52Barry Ritholtz?

  Fits right into the degeneracy index.

• 1:16:54Speaker 04

  Completely.

• 1:16:55Barry Ritholtz?

  How long does the DGEN index run for? Is this a short term thing? Or does this have less?

• 1:17:01Speaker 04

  That's why I don't want to charge for it. Cause I think I'm a lot, cause Google and Apple are my biggest positions. Because they are the rails for the degenerate economy. They are the front facing tool of it.

• 1:17:12Barry Ritholtz?

  And you, Apple because of the phones and mobile.

• 1:17:14Speaker 04

  And Google because of the phones and YouTube and App Store. The casino games all run on App Stores. The free games that you have, they make a fortune off that.

• 1:17:24Barry Ritholtz?

  Why not, why not Amazon or Facebook?

• 1:17:26Speaker 04

  Amazon just added at the beginning of the year because of robots, Axons.

• 1:17:30Barry Ritholtz?

  Not, not because of the Amazon Web Service? Cause of robots?

• 1:17:33Speaker 04

  Yeah. I mean, it just, you can't not own Amazon at this era in the degenerate economy. Cause they are the center of it.

• 1:17:39Barry Ritholtz?

  Which robot, which robot shops do you like?

• 1:17:42Speaker 04

  Degenerate economy, but you have to own Amazon.

• 1:17:43Barry Ritholtz?

  Any of the robot builders you like?

• 1:17:45Speaker 04

  No, because they're too early. I'm a personal investor in a few, but clear secure.

• 1:17:49Barry Ritholtz?

  Give us some names.

• 1:17:50Speaker 04

  Apptronic, which is just massive. But again, it's a personal investment.

• 1:17:55Barry Ritholtz?

  You have any interest in what Elon is doing with Grok and?

• 1:18:00Speaker 04

  Yeah, but it's a holding company. Like I don't know what this position is.

• 1:18:04Barry Ritholtz?

  It's kind of random.

• 1:18:05Speaker 04

  So, so.

• 1:18:06Barry Ritholtz?

  Meaning Tesla is a holding company for everything but.

• 1:18:08Speaker 04

  Or is that gonna be the entity that goes public for SpaceX?

• 1:18:12Barry Ritholtz?

  SpaceX.

• 1:18:12Speaker 04

  No, but I'm saying to SpaceX, why does he need two tickers? Like again, I don't understand what the final being is. So why do I need to own some Elon holding company? I think that's stupid.

• 1:18:23Barry Ritholtz?

  So you're betting on him and you don't think he's a?

• 1:18:25Speaker 04

  Who cares? I'd rather bet on. Something I understand.

• 1:18:27Barry Ritholtz?

  Okay, I'm with you. I'm not, I don't disagree. I'm trying to.

• 1:18:30Speaker 04

  Yeah, another recent ad is, it's already doubled, is Clear Secure. You know Clear when you go through it?

• 1:18:35Barry Ritholtz?

  Sure, I love Clear.

• 1:18:36Speaker 04

  So to me, if the world's degenerates, you need security. So it's like, so Clear, Clear's been a home run. They don't have a lot of tech, but they're a great brand.

• 1:18:43Barry Ritholtz?

  Yeah.

• 1:18:44Speaker 04

  Uh, and they.

• 1:18:44Barry Ritholtz?

  I thought they have tech, isn't it?

• 1:18:46Speaker 04

  I think they license a lot of the tech.

• 1:18:48Barry Ritholtz?

  Oh, that's not theirs? They don't own it?

• 1:18:49Speaker 04

  Yeah. So again, once you dig into a story, my conviction comes like how much of this they own, but they're a hell of a brand and the company's been around forever.

• 1:18:56Barry Ritholtz?

  And they have the relationship with FAA and the airports.

• 1:19:00Speaker 04

  And they can do so much more around stadiums. The brand matters.

• 1:19:04Barry Ritholtz?

  What are you talking about? You go to watch a Knicks game, it's Clear. You use Clear on the way in.

• 1:19:09Speaker 04

  That was my bet. Um, it's just a Clear trend. No one ever talks about it too. So it's a massive uptrend.

• 1:19:16Barry Ritholtz?

  And.

• 1:19:16Speaker 04

  Broke out and you never hear people talk about it. I like that.

• 1:19:19Barry Ritholtz?

  If you use either Chase Sapphire Reserve or Amex, I want to say Platinum, you get a credit towards any travel and Clear is just an automatic. It's no brainer.

• 1:19:29Speaker 04

  Yeah.

• 1:19:30Barry Ritholtz?

  What is it? A hundred and fifty dollars a year? It's fantastic.

• 1:19:33Speaker 04

  My son would call me, goes, that's the greatest gift you ever got. I'm like, wow. When a twenty year old knows something and an eighty year old knows something, those are good trends.

• 1:19:40Barry Ritholtz?

  Yeah.

• 1:19:40Speaker 04

  You know, that's a brand.

• 1:19:41Barry Ritholtz?

  Yeah.

• 1:19:42Speaker 04

  When it's just a twenty year old knows it, not a brand.

• 1:19:44Barry Ritholtz?

  Maybe it catches on, maybe it doesn't.

• 1:19:45Speaker 04

  Yeah. CBOE, I love it. Cause they power the whole thing. You can't do this without CBOE, CME, the Merck, uh, you know, IS, you know, the New York Stock Exchange.

• 1:19:56Barry Ritholtz?

  Let me ask you a question, a direct investing question before we get to our favorite questions. That I, I think a lot of investors have a hard time with. I started on Trading Desk, so I'm okay with losses. It's a given. But if you say to somebody, I want you to put a little money into these ten or twenty stocks, half of them are going to go out of business.

• 1:20:18Speaker 04

  Yeah.

• 1:20:18Barry Ritholtz?

  Maybe five are a break even. You'll make money on a couple and maybe one's a home run. How do you deal with that really fat head, long tail? You're not a math guy.

• 1:20:28Speaker 04

  I'm so into indexing.

• 1:20:31Barry Ritholtz?

  No, I mean on your, on your private seed state, like most of the seed investment. You're gonna make. Or I'm gonna give you a great return. How do you deal with, oh, I'm wrong all the time?

• 1:20:42Speaker 04

  I'm just bearish on my industry, right? I'd never, I believe it was a moment in time with Zerp. I think it got the country through. It's unintended circumstances. We live in all these unintended circumstances.

• 1:20:54Barry Ritholtz?

  Consequences, right?

• 1:20:55Speaker 04

  Yeah, or unintended consequences, sorry.

• 1:20:58Barry Ritholtz?

  By the way, now that you're sixty, that happens a whole lot more.

• 1:21:00Speaker 04

  I am wealthy, just born at the right time, a lot of unintended circumstances. Zerp is a good thing.

• 1:21:05Barry Ritholtz?

  Right.

• 1:21:05Speaker 04

  I'm not saying, I'm not saying I shouldn't be ashamed, but.

• 1:21:08Barry Ritholtz?

  If you have assets, if you're, if you're working stiff, it's like I used to be, it was tough.

• 1:21:13Speaker 04

  Yeah, S and P's at all time highs, cash levels at all time highs. If I hear those two things together, what do I think of? Inflation.

• 1:21:20Barry Ritholtz?

  Right.

• 1:21:20Speaker 04

  There's never been a better time to have assets.

• 1:21:22Barry Ritholtz?

  Right.

• 1:21:23Speaker 04

  Doesn't mean I don't know when it's gonna end.

• 1:21:24Barry Ritholtz?

  Right.

• 1:21:25Speaker 04

  I have cash and stocks, the double whammy. The, the, so I'm lucky. I am so bearish on what I do for a living. Meaning, what value do I add in a world of six percent interest rates? Tying someone up for 10 years when I could go buy SanDisk.

• 1:21:44Barry Ritholtz?

  Right.

• 1:21:44Speaker 04

  In the public markets and get 6,000% in a year. I'm not saying I'm smart enough to hold these things.

• 1:21:49Barry Ritholtz?

  Right.

• 1:21:49Speaker 04

  But in a world where Robin Hood and a thousand Robin Hoods are gonna bloom. If you're asking me my biggest bet, public markets, do the work. You have an analyst in Claude.

• 1:21:59Barry Ritholtz?

  Right.

• 1:21:59Speaker 04

  You can go see beaten ups, no one's following any stock. Everybody's momentum investing. Go find 10 companies. Why would you do a startup investing? Every kid wants to be an angel investor. I'm like, dude, do it in the public markets. You have liquidity and you're not locking up your clients for 10 years.

• 1:22:15Barry Ritholtz?

  But you're not answering my question.

• 1:22:17Speaker 04

  Okay.

• 1:22:17Barry Ritholtz?

  Which is, how do you, as an investor, deal with the psychology of knowing most of your seed investments aren't gonna work out? Is it just the nature of the beast?

• 1:22:30Speaker 04

  No.

• 1:22:30Barry Ritholtz?

  Or does that weigh on you at all?

• 1:22:32Speaker 04

  No, I think it align with how I thought of the world. As, as, as someone who believes their high integrity, wishes, who wants people to believe their high integrity for my kids sake and, you know. The integrity of telling my investors that upfront is the release. Meaning, I'm not telling my investors we're gonna be 90% hit rate. If you give me money, you're gonna hate me. Because you're gonna think the idea that I love is the dumbest idea, the Robin.

• 1:23:00Barry Ritholtz?

  Quote unquote.

• 1:23:01Speaker 04

  Yeah.

• 1:23:01Barry Ritholtz?

  Dumbest idea I've ever heard.

• 1:23:02Speaker 04

  You are betting on me to hang 30 pieces of art in Howie's gallery. The Larry David gallery. And you will pick, if I gave you the choice to invest in all 30, you would pick the two that went to zero. So you're betting on me to deceive the world my way. And then, I'm not telling you we're gonna make 100 times our money. But my job is to find one company that's a hundred bagger. Okay, so I have to know math. I have to do this. I have to have, just get yelled up on my LPs when they read our quarterly letter and go, that was the dumbest idea. I'm like, you're right. Like, I'm embarrassed.

• 1:23:38Speaker 04

  But our job is to find a Robin Hood, and we've found many of them. You know, LifeLock, Robin Hood, Beehive. We've got one called Alpaca. Again, a trend with no.

• 1:23:46Barry Ritholtz?

  AI.

• 1:23:47Speaker 04

  Well, Alpaca powers 1,000 Robin Hoods around the world. They're like the eight modern Apex. So I'm saying, like, our job is to know what we know, take crazy bets. And sell that to our LPs is like, you're investing for 10 years. This is like, you know, it's not as good as it was in 2013 when rates were zero. And, and, and now it's a different game again. And I'm thinking like, you got Claude and you can do an, you can analyze the stock in like three seconds. I'm like, the, the, the, everybody's a CFA all of a sudden if they want to be. What a great time to be a public market investor. And yet, everybody wants to be a private investor.

• 1:24:28Barry Ritholtz?

  It's so funny coming from you.

• 1:24:30Speaker 04

  Yeah. 2020, I've been writing about this since COVID. It's like, public markets are amazing because there's so many stupid people making dumb bets on Robin Hood. And dislocation is everywhere. And it's only getting worse.

• 1:24:42Barry Ritholtz?

  And the degenerate economy is gonna continue driving this theme.

• 1:24:45Speaker 04

  Yes. And I think most people should index, but everybody should learn how to pick stocks too, in this era.

• 1:24:51Barry Ritholtz?

  I got you. All right. So it's almost midnight. I only have you for a few minutes more and you have to end up at

• 1:24:58Speaker 04

  Cash tag awards tonight.

• 1:24:59Barry Ritholtz?

  Cash tag awards.

• 1:25:00Speaker 04

  Breaking news, Oktoberfest, October 6th, coming back to New York. That's our big event.

• 1:25:05Barry Ritholtz?

  That's exciting.

• 1:25:06Speaker 04

  Yeah, a thousand people on the west side.

• 1:25:08Barry Ritholtz?

  I am looking forward to that.

• 1:25:09Speaker 04

  If you want to come, hit me up.

• 1:25:10Barry Ritholtz?

  Let's do our speed round. Five questions.

• 1:25:14Speaker 04

  Two hours.

• 1:25:15Barry Ritholtz?

  Ten seconds each. I'm gonna jump right into it, starting with.

• 1:25:19Speaker 04

  Boxers.

• 1:25:20Barry Ritholtz?

  Who were your early mentors who helped shape your career?

• 1:25:24Speaker 04

  I think part of, I hate saying this, I didn't have good early mentorship. So I really take pride in mentoring other people. Because I think.

• 1:25:33Barry Ritholtz?

  Who were your later mentors? I hear Fred Wilson all the time.

• 1:25:35Speaker 04

  Yeah, like people that I discovered. Like the mentorship came from the community. Being the mentor led me, like stuck to it's being a giver. Opened me up to get mentorship. I think young kids are not getting good mentorship.

• 1:25:47Barry Ritholtz?

  So just pure karma.

• 1:25:48Speaker 04

  Karma.

• 1:25:49Barry Ritholtz?

  I love that. What are some of your favorite books? What are you reading right now? I know what you're reading next. What are you reading now?

• 1:25:54Speaker 04

  Yeah, I got your book. I don't read.

• 1:25:57Barry Ritholtz?

  You're on flights all the time. What do you do? Just movies?

• 1:26:00Speaker 04

  I'm so addicted to like HBO, Amazon.

• 1:26:05Barry Ritholtz?

  So you're watching series?

• 1:26:06Speaker 04

  Yeah, I built, I'm just very into content. But hang on, so you're asking books. I still love the classic Shoe Dog for Business, you know, Phil Knight's book. I loved Agassi's biography. I, I like stuff. I just, I just, my brain doesn't work with books.

• 1:26:20Barry Ritholtz?

  Huh. That's really interesting.

• 1:26:22Speaker 04

  Yeah.

• 1:26:22Barry Ritholtz?

  Tell us what you're watching on Netflix, HBO, Amazon.

• 1:26:26Speaker 04

  I just rewatched The Nick. Have you watched The Nick on HBO, Soderbergh's?

• 1:26:30Barry Ritholtz?

  Why does that sound so familiar?

• 1:26:31Speaker 04

  It's about the 1900s, the Knickerbocker Hospital.

• 1:26:34Barry Ritholtz?

  No, I did not watch that.

• 1:26:35Speaker 04

  Best show.

• 1:26:36Barry Ritholtz?

  Really?

• 1:26:36Speaker 04

  It's, it's like surgery wasn't done until, like barbers used to do surgery in 1900.

• 1:26:42Barry Ritholtz?

  Right.

• 1:26:43Speaker 04

  All the rich oil guys started backing hospitals. And that was the original tech. Surgery was tech.

• 1:26:50Barry Ritholtz?

  Uh huh.

• 1:26:51Speaker 04

  And it's just an incredible period piece about the nineteen hundreds in Soho in New York.

• 1:26:55Barry Ritholtz?

  Huh, I'll check that out. Give us one more.

• 1:26:58Speaker 04

  Uh, there's very little good stuff on TV. I think Rooster is pretty good.

• 1:27:02Barry Ritholtz?

  Can I tell you something?

• 1:27:03Speaker 04

  On HBO, Rooster's funny.

• 1:27:04Barry Ritholtz?

  You have that backwards. There's too much good stuff.

• 1:27:06Speaker 04

  I think I've seen it all.

• 1:27:07Barry Ritholtz?

  Have you seen Landman?

• 1:27:08Speaker 04

  Great. But that's, that's more like Harlequin romance kinda series. They're fun to watch and the kids like them too.

• 1:27:14Barry Ritholtz?

  Okay.

• 1:27:15Speaker 04

  The Nick you'll love because it's just period.

• 1:27:17Barry Ritholtz?

  Three body problem? If you want something a little more.

• 1:27:19Speaker 04

  No, but that's sci-fi, I think. I don't like sci-fi.

• 1:27:22Barry Ritholtz?

  You don't like sci-fi?

• 1:27:23Speaker 04

  No.

• 1:27:24Barry Ritholtz?

  So you didn't watch The Expanse?

• 1:27:26Speaker 04

  No, I didn't like that either. I try it and I never get into it.

• 1:27:29Barry Ritholtz?

  Huh, that's interesting.

• 1:27:30Speaker 04

  I like degenerate stuff.

• 1:27:31Barry Ritholtz?

  How do you feel about, uh, spy, uh, that sort of stuff?

• 1:27:36Speaker 04

  I love them.

• 1:27:37Barry Ritholtz?

  Killing Eve?

• 1:27:38Speaker 04

  Killing Eve's good.

• 1:27:39Barry Ritholtz?

  Was great.

• 1:27:39Speaker 04

  I like spy stuff. I can rarely follow it well.

• 1:27:41Barry Ritholtz?

  Night Agent? Have you seen Night Agent?

• 1:27:43Speaker 04

  Yeah, it was good.

• 1:27:44Barry Ritholtz?

  Wow.

• 1:27:45Speaker 04

  Yeah.

• 1:27:46Barry Ritholtz?

  How about any of the British period pieces?

• 1:27:48Speaker 04

  I love BritBox. I watch BritBox.

• 1:27:50Barry Ritholtz?

  So The Crown, Bridgerton?

• 1:27:52Speaker 04

  Not Bridgerton, but BritBox is a great channel.

• 1:27:55Barry Ritholtz?

  Yeah.

• 1:27:55Speaker 04

  Um, there's that, uh, criteria, criterion for old movies.

• 1:27:59Barry Ritholtz?

  If you have BritBox, go back and watch, uh, what was the name of that show? There was a show that came out around the same time as Friends, only, coupling. And it has, it has teeth. It's, I mean, everything from the nineties is a little dated, but where's Friends was kinda milquetoast and mushy. This has a sharp edge and it's British, so it's nasty and funny in a way that only the Brits can do.

• 1:28:27Speaker 04

  Okay, yeah. So I'm a media fanatic, but not like, I'm weird and I'm so bullish on YouTube, Apple TV.

• 1:28:35Barry Ritholtz?

  YouTube is just great.

• 1:28:36Speaker 04

  I just love YouTube.

• 1:28:37Barry Ritholtz?

  All right. So final two questions. Um, what sort of advice would you give to a college grad interested in either becoming a seed investor or a startup entrepreneur?

• 1:28:51Speaker 04

  Well, I think there's no shame in being a number two, number three, or number four. So Chief of Staff is the new CEO. So go be someone's Chief of Staff. Like, don't worry about pay or title. Worry about finding something that's working this way.

• 1:29:08Barry Ritholtz?

  Uh huh.

• 1:29:08Speaker 04

  It's, it's much easier to go work for a company that's just working. So go, like, ignore the title.

• 1:29:15Barry Ritholtz?

  Low-end job.

• 1:29:16Speaker 04

  Ignore the salary. Find a rocket ship and attach yourself, whether it's Manscaped. You're gonna learn more, you're gonna be smarter people around. There's gonna be, you know, less aggravation. More work, but hey, like, if you're really serious.

• 1:29:30Barry Ritholtz?

  You gotta grind it out.

• 1:29:31Speaker 04

  I tell my daughters, like, if you're really serious about this, it's gonna take a lot of work, but go do it. If you're not serious, be a socialist. Like, it's okay, but like, don't commit, don't fool yourself. Like, go work for a rocket ship. Otherwise, who are you talking to? So like, there's no room anymore for these kids that like, if you want to start a company, do you know it's 24/7?

• 1:29:53Barry Ritholtz?

  Right.

• 1:29:54Speaker 04

  And if you, and no one's gonna like you, and if you want to be a number two, do you know what it takes to be a number two? So I'm like, be honest, but like, go work for a company that's working.

• 1:30:05Barry Ritholtz?

  And our final question, what do you know about the world of venture and seed investing today? That would have been helpful 65, 70 years ago, when you were first getting started?

• 1:30:16Speaker 04

  No, I think I luckily got the right mentorship and entered at the right time. I think you have to do it for a while. You gotta get a crop. Like, if you're gonna go do wine, or Weather Matters, and same with tech. Like, what matters with tech is you have to, if you, if you were of the Google Glass era, not much worked.

• 1:30:31Barry Ritholtz?

  Right.

• 1:30:32Speaker 04

  If you were in the BlackBerry Fund 2008?

• 1:30:34Barry Ritholtz?

  No go.

• 1:30:35Speaker 04

  No go, baby, so.

• 1:30:37Barry Ritholtz?

  Unless, unless you could have been an early investor in Apple, or when they were public.

• 1:30:41Speaker 04

  I'm saying, I think the public markets are underappreciated. Because seed investing became cool because of Zuckerberg and because of a few of these rocket ships.

• 1:30:49Barry Ritholtz?

  See, I thought seed investing or venture investing really became cool in the 90s. And then in the 2000s, it kind of faded.

• 1:30:57Speaker 04

  No, it's never been more, it's never been more loved.

• 1:31:02Barry Ritholtz?

  Today.

• 1:31:02Speaker 04

  Oh, I go see these young kids, it seems like they know nothing and they all want to be venture investors. I'm like, God, have you ever bought a stock? Like, you get wounded like day one, like stock drops 20%, like go open a Robinhood account and learn how to invest. Like, if you don't know the public markets, what are you doing in the private markets?

• 1:31:20Barry Ritholtz?

  Got to graduate to private.

• 1:31:21Speaker 04

  Yeah, I think the most, the guys, the guys who were interesting to me, and I'm not saying they still are, the crossover investors, the people that like knew the public markets and then started doing private. And I think that was my edge. I knew how pricing worked, whether I was right or wrong, I understood how markets worked. And the seed investing, the prices made sense to me relative to public markets. Now the prices in private markets make no sense to me.

• 1:31:42Barry Ritholtz?

  Howard, it is always a blast when you come in. You're a bucking bronco, I never know where we're going to go. You are not Larry David, you are the Zach Galifianakis of finance.

• 1:31:54Speaker 04

  He was just on Conan, watch that episode.

• 1:31:56Barry Ritholtz?

  I should put two ferns in here just for your arrival. Thank you, by the way, for, for being so generous with your time and good luck at the Cash Tags Awards tonight. If you enjoy this conversation, well, check out any of the 600 we've done over the past 12 years. You can find those at iTunes, Spotify, Bloomberg, YouTube, wherever you get your favorite podcasts. I would be remiss if I didn't thank the crack team that helps put these conversations together each week. Alexis Noriega is my overworked video producer. Sean Russo is my researcher. Anna Luke is my podcast producer. I would also like to just drop a little piece of information.

• 1:32:40Barry Ritholtz?

  The paperback of How Not to Invest comes out today. By the time you hear this, it'll be out already. What else do I want to say, other than?

• 1:32:51Speaker 04

  You look good.

• 1:32:52Barry Ritholtz?

  Thanks. I'm Barry Ritholtz, you've been listening to Masters in Business on Bloomberg Radio.

• 1:33:07Speaker 02

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