#576: Preston Pysh on Investing Lessons From Billionaires

Preston Pysh is a financial investor and the host of the podcast, We Study Billionaires. In this conversation, we discuss investing lessons from billionaires, bitcoin, ethereum, ETH 2.0, Elon Musk, Ray Dalio, Warren Buffett, and whether gold has failed or not. ======================= Public Rec is on a mission to make comfort look good. Their fan-favorite Flex Short is the ultimate crossover short you’ll need all summer long. From the beach to the gym, this quick-drying short has you covered. Comfort starts with a better fit. Free shipping. Free returns. Visit www.publicrec.com/pomp and use POMP at checkout for 10% off! ======================= Whether you're an experienced crypto trader or just starting out, Kraken has the tools to help you achieve financial freedom. With the new Kraken app, you can easily buy and sell over 60 of the most popular cryptocurrencies in just a few minutes. Featuring a sleek new design and an easy-to-use interface, you can now take your crypto portfolio with you on the go, 24/7. Visit kraken.com/pomp to learn more or search "kraken" in the app store. ======================= Unstoppable Domains makes crypto easier by replacing your address with [AnyName].crypto. They allow you to send and receive over 70 cryptocurrencies, including BTC, ETH, and LINK with a single blockchain domain. Go to unstoppabledomains.com and get [YourName].crypto to make your crypto life easier. =======================

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

• 0:00Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Preston Pish is a financial investor and the host of the podcast We Study Billionaires. In this conversation, we discuss investing lessons from billionaires: Bitcoin, Ethereum, ETH 2.0, Elon Musk, Ray Dalio, Warren Buffett, and whether gold has failed or not. I really enjoyed this conversation with Preston, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Public Rec. Public Rec is on a mission to make comfort look good. They simply make the most comfortable

• 0:44Anthony Pompliano?

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• 2:10Anthony Pompliano?

  invest in crypto. Visit kraken.com/pomp now to learn more, or search Kraken in the App Store. Again, kraken.com/pomp, or go to Kraken in the App Store, download the app, and start using it today. Last but not least is my friends over at Unstoppable Domains. They've teamed up with OKX to make crypto simpler by supporting .crypto domains on their exchange. Unstoppable Domains allows you to receive over 70 cryptocurrencies, including Bitcoin, Ethereum, and Chainlink with a single blockchain domain name. This makes it so much easier for millions of users to send and receive crypto by using their name, like pomp.crypto. It's the stress-free experience needed for mainstream crypto adoption.

• 2:54Anthony Pompliano?

  Plus, .crypto domains are NFTs that are stored in your wallet, so you permanently own them and can transfer to your other wallets as needed. Go to unstoppabledomains.com and get your name .crypto to make your crypto life easier. Unstoppabledomains.com/r/pomp. Go to the description and click on that link right now, so we get credit and they think we're cool. Unstoppabledomains.com/r/pomp. Go check them out today. All right, let's get into this episode with Preston. I hope you enjoy this one.

• 3:28Speaker 01

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

• 3:57Anthony Pompliano?

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

• 4:00Speaker 02

  Yeah, absolutely.

• 4:01Anthony Pompliano?

  All right. You've been doing the We Study Billionaires podcast for seven years. Let's just start, where'd the name come from? Because it's a pretty good name.

• 4:09Speaker 02

  Well, it actually started off with a name, just The Investors Podcast, and then we realized it was just too generic. It was great for search engine optimization, but it was too generic. And we were just like, well, you know, we were going to do a lot of conversations around Warren Buffett value investing. And it was like, hey, you know, that that might get to be a little bit of an old topic after a while, so let's just change it to We Study Billionaires and then we can, you know, cover whatever great investors are out there. If they had a net worth over a billion dollars, we just kind of wanted to pick apart how they did it, what books did they read? Let's read those books and talk about what we learned. And it was just kind of a...

• 4:51Speaker 02

  You know, a name that just materialized as we realized like you just can't talk about value investing every show.

• 4:56Anthony Pompliano?

  Yeah.

• 4:57Speaker 02

  We need a little bit more breadth.

• 4:59Anthony Pompliano?

  In 2014, 2015, when you started, it's pretty early for podcasting still.

• 5:05Speaker 02

  Like, yeah.

• 5:05Anthony Pompliano?

  Why a podcast and not an email or a blog or, you know, some other medium?

• 5:12Speaker 02

  So I was on, we were at the Berkshire shareholders meeting and I was just leaving Omaha on a flight. And I bumped into this guy, his name's Hari Ramachandra and didn't know him, but he had a LinkedIn jacket. And, uh, and so I just started talking to him like, oh, so your shareholder, like, hey, you know, what else do you do? I see you work for LinkedIn. And so we just started talking. And I told him that I had stood up a website that, um, and the website was just real generic, but it had all these videos that basically take somebody from knowing nothing about investing up to the point where they're doing like a discount cash flow analysis on a, on an equity

• 5:55Speaker 02

  and trying to determine what the valuation of it is through an IRR. And so like you go from knowing nothing through all of that. And I think there was, uh, I can't even remember, maybe like 35 videos, a course, completely free, put it on YouTube, put it on YouTube, designed a website then that housed all of it and then had additional information underneath the videos. And so I was telling him about this website that I had made that teaches people about investing. And there was a book that went along with it and all sorts of stuff. And, and he was like, you should do a podcast. And I was like, I've never listened to one of those.

• 6:34Speaker 02

  And

• 6:35Anthony Pompliano?

  Is that what you LinkedIn people do? You listen to podcasts?

• 6:37Speaker 02

  Yeah. He was like, you should start a podcast. And I said, you know, it sounds interesting. Like what, tell me more about it. I've heard of it, but I didn't really know that much about it. And so there's this guy, his name's Pat Flynn. He has this show that's all about creating passive income and he has a podcast, you should listen to it. I said, okay. So I downloaded it before we got on the plane. We, we go on the plane and I'm literally sitting next to him on the plane.

• 7:02Anthony Pompliano?

  No way.

• 7:03Speaker 02

  Okay. So I need to listen to this guy for some reason. There's too much going on here. Right? And so I downloaded the podcast and I listened to it and I was like, Holy hell, this guy is doing this out of his house. Like, this is like, the barrier to entry here is like, nothing. And I just thought it'd be kind of fun to just, you know, and at the time, I was running a forum on that website, I was running a forum, and I was having conversations about stock valuations. Like, we're like, hey, what do you think of ExxonMobil? What do you think of this company or that company? And one of the people on the forum was Stig Brodesson, who I do the show with. And like, Stig shows up on the forum, and he's writing

• 7:47Speaker 02

  these, these like, five-page analysis on one company. And I mean, they're so detailed, he's getting into his opinions on what the valuations are. And so I was like, hey, man, would you be interested, never had met Stig in my life, shot him a, you know, an email, would you be interested in just like, doing, you know, a conversation like, once a week, once a month, whatever, we'll record it. And then with an RSS feed, we can just pump out whatever we create. He's like, well, he's like, you know, English is my second language. And it's not my first language. And see, he's like, I don't think too many people are gonna really want to listen to me. And I was like, Stig, like, maybe they'll want to listen to you more because you're coming from maybe just

• 8:30Speaker 02

  a different vantage point, or maybe they can empathize with, you know, whatever. And he's like, all right, well, whatever, I guess there's no downside to this. And so we, we started the show, and we started having these conversations, we started sending them out primarily to like, the Berkshire value investing type people. And we garnered a decent-sized audience, just pumping out these conversations, talking about this company, that company, this great investor, that investor. And we eventually, you know, turned it into We Study Billionaires, where we were just studying anybody who was an investment guru and how they do it.

• 9:10Anthony Pompliano?

  How many think you've done this point?

• 9:12Speaker 02

  Say that again?

• 9:13Anthony Pompliano?

  How many billionaires do you think you've studied at this point?

• 9:16Speaker 02

  Oh, God, I don't know.

• 9:17Anthony Pompliano?

  150?

• 9:20Speaker 02

  Yeah, I would say probably more near the 50 mark just because there's a lot that we've covered. Like, everyone knows I'm a big Ray Dalio fan, right? So like, I've covered him a lot. We've covered Stan a lot. Um, so

• 9:36Anthony Pompliano?

  Do they ever reach out after you do an episode and they're like, hey, I appreciate that?

• 9:39Speaker 02

  Not really.

• 9:40Anthony Pompliano?

  No.

• 9:40Speaker 02

  No. Um, you know, like Jesse Itzler. So like Sarah Blakely, um, we were studying her and then I had a friend that I met at a different meeting and they introduced me to Jesse, who's Sarah's husband. And then Jesse and I became friends and then he took me on a hiking excursion. And so like you, it's, we have had, so the answer to your question, yes, some people have like, we have interacted with, but a lot of the other ones, we haven't. And it's just

• 10:11Anthony Pompliano?

  Yeah, it's crazy. Uh, let's say 50, just as an easy number.

• 10:16Speaker 02

  Yeah.

• 10:16Anthony Pompliano?

  So you study 50 of the world's most successful, you know, wealthiest people.

• 10:20Speaker 02

  Yeah.

• 10:21Anthony Pompliano?

  What are the commonalities between them all, right? They come from different industries. They have different viewpoints of the world, but like, what are the things that they all share?

• 10:30Speaker 02

  So I think this was the thing that, that made me want to do this show was I've always had the opinion, like, if you want to accomplish whatever it is, whether it's investing, you want to be a great skier, you want to be whatever, right? Look at who the best person in the world is and don't just like study them, but like really kind of hone in on the books that those people say influenced them or the people that influenced them and then kind of study them. Cause then you can kind of more inherently, you know, understand what it is that drove them. So early on, like with like Buffett, like security analysis, the intelligent investor, how to win friends and influence people. Like there's these books that he has said have influenced

• 11:13Speaker 02

  him in a major way. So we started trying to read those. So the common thread, the first one that I would tell you. Is they're just absolute knowledge pigs on whatever it is that they're trying to accomplish. So if their, if their company is, you know, creating shampoo, right? Then, then that person would study and become just the absolute expert on whatever that one thing is. And they're usually well read way beyond that as, as well. So for us, we, we were like, okay, if these people are just knowledge pigs and readers, like for example Buffett, and I know he's not real popular in the, in the Bitcoin community, but for me.

• 11:55Anthony Pompliano?

  He should be popular. He's a great investor.

• 11:57Speaker 02

  He's a great investor. He's influenced me deeply in, in the way I kind of view things optically from how, how to invest. But um, I, I learned very early on, and this is a great example at one of his shareholders meetings that a person asked a question to, to Warren. He said, how did you pick your, your predecessors, the people that are going to come and replace you? Like, what is the thing that you were looking at? And Warren's response was, they were the only two people we could find that read more than Charlie and myself. And so for him, like just reading as much as possible is, um, you know, and, and you go to the shareholder meeting. He has his, his book list of 30 to 50 books that he read for that year.

• 12:41Speaker 02

  And then they're available there for people to purchase if they want to, you know, read some of them. And he has like little notes on what they're, what the books were about, but just to kind of show you at his age. Yeah. How many books he's written. Now I want to get him a Bitcoin book because I, I kind of suspect he hasn't read one.

• 12:58Speaker 02

  But yeah, that's a enormous part of the success. And it's a common thread that you see almost on every one of them is they're just knowledge pigs.

• 13:05Anthony Pompliano?

  Yeah. Do you think that they're reading, um, for the sake of reading? Or do you think that it's a, like a personal curiosity?

• 13:12Speaker 02

  It's like, well, like that. The latter.

• 13:13Anthony Pompliano?

  Okay. So like they say, hey, I want to learn about shampoo. Like you gave the example. They then go and find as many books as they possibly can about the topic and go read that. It's not just, oh, a friend told me this book was good, so I'm just going to read it without any kind of purpose behind it.

• 13:25Speaker 02

  Yeah. So the, the focusing on who recommended it.

• 13:30Speaker 02

  And then how many books does that person who recommended it like, like I have a lot of people that be like, oh, I go read this book. It's really good. And like, I don't want to sound like a snob, but like in the back of my head, I'm thinking to myself, how many books does this person read a year? Because if they read one book in the last like three years, like

• 13:49Anthony Pompliano?

  They're telling me it's the best book ever.

• 13:50Speaker 02

  Then telling me that that's the book that I need to read. Like, I don't put too much credence in the recommendation. But like when somebody who's, who's reading, like Jeff Booth is a perfect example, like Jeff and I have become very close through doing the podcast and just talking. When Jeff Booth tells me to read a book, I know the filtering process that he has done is tremendous because he does about 50 books a year. And so I place a lot of weight in that. So that's something that I think a guy like Buffett and others, you know, that when they, when they are reading, they're optimizing how they're reading and what they're reading. And it's almost, you know, well, that's

• 14:29Speaker 02

  not all, but a lot of them I find read more of the nonfiction. There's a few that are, that are fiction, but for the most part, a lot of them are nonfiction readers. And that's what I am as well.

• 14:40Anthony Pompliano?

  Same. What about from like a mentality standpoint? Dude, most of these people set out to be rich or successful?

• 14:47Speaker 02

  I think so.

• 14:48Anthony Pompliano?

  You do?

• 14:49Speaker 02

  Yeah.

• 14:49Anthony Pompliano?

  Like, and

• 14:50Speaker 02

  Not all, not all, but I think most have this, you know, at the end of the day, anytime somebody's achieving something at a very high level, you have to ask yourself, why? Why are they so driven that they have to achieve or accomplish that? And typically, when you pull the thread back, there's something that, that early in their life shaped them in a way that maybe like Tony Robbins is a great example. He was broke poor, right? Like, couldn't even pay for a meal. And was like, that's it. I'm done. I've had it. And like, this is not how I'm going to live my life. And just then he found Jim Rowan and just set him on a completely different

• 15:33Speaker 02

  trajectory. So like those, those events early on in your life have this Either a fear or a massive reward that's kind of driving them towards achieving that thing like for Warren, he just always wanted to have a lot of money from even when he was like 10 years old. Like there's stories of him when he was like 14 years old, like running pinball machines in barber shops. And you know, the barbers, he's working deals with the barbers so that he can put it in their shop. Like, hey, you're going to get a cut of whatever percent. If I can put this in your store, he's doing this at like 14, 15 years old. And the barber's like, so who do you work for? Oh, there's a, there's this gentleman that I worked for, but no, it wasn't.

• 16:16Speaker 02

  It was born like he ran and owned the, yeah. So like early on, he had this, you know, I don't know, like for him specifically, like what was driving him? His dad was a representative in Congress.

• 16:31Speaker 02

  But there was something that, that incentivized him to try to make a lot of money through life.

• 16:37Anthony Pompliano?

  How much of this is family driven versus like individualistic? So you just gave two examples that I think are pretty different, right? So Warren Buffett's dad was a little bit of congressman. My understanding of Tony Robbins and his family was it wasn't such a great situation. I think he kind of a broken home and, and not very well off.

• 16:55Anthony Pompliano?

  I do think that I understand that most of the wealth of billionaires and even millionaires, but, but really billionaires is not inherited wealth, right? This is value creation and capture in their lifetime. But how much of it is driven by family? Either, hey, I have really loving parents and they're together and so they provide this great life for me and then I'm able to go on. Maybe like a Jeff Bezos seems like that's probably his story versus more like the Tony Robbins. I'm, I'm running away from something. I'm trying to improve my life because it's so bad.

• 17:25Speaker 02

  I, I think it's a little bit of both. I, I wouldn't be able to say one's more prominent than the other. It seems like it's a little bit of both. And another important point is with our show, if you, if it's not self-made, we don't study the person.

• 17:40Anthony Pompliano?

  Oh, interesting.

• 17:41Speaker 02

  Yeah. So like all the Walton kids, we've never covered them on the show. But Sam Walton, we've read his book, we've talked about how he did what he did. And so like, we really want to focus on the people that actually generated all the, the product or service that created value to society and how they did it and why they did it. And that kind of stuff. But to answer your question, I'd say it's a probably a split.

• 18:07Anthony Pompliano?

  Yeah. What's fascinating to me is I think the story or kind of narrative around wealth, specifically in America, but globally is, oh, most of the people just inherit stuff. And I started to look and the data says the exact opposite. It's like 80% plus, you know, didn't inherit a single dollar, right? Most of the billionaires outside of maybe, you know, the Waltons or a couple of like that, did not inherit anything. And so then you get this world where like, actually it's every industry, right? Like, it is basically the best person in an industry ends up accruing so much value. And there's this power law dynamic to it. And therefore they end up kind of having outsized returns and becoming, you know, worth hundreds of millions, if not billions of dollars. Is it fair to say that they're all more similar than different, though?

• 18:54Anthony Pompliano?

  Or do you see, no, these people are drastically different? They just all ended up in the same spot on like a scorecard of wealth?

• 19:01Speaker 02

  I think when you, when you look at people who have like, what I would classify as like mega wealth, which is billion plus. Like, if you want to grow that and you want to go from a billion to five to 10 and higher, what, what you have to become is an amazing capital allocator. So like Buffett, Bezos, a lot of these people. Because you're moving beyond just creating an operational business. And now you're having to take the free cash flows that that operational business is kicking off. And you have to employ it in a, in a manner that continues to expand and continues to grow. So, you know, I, I like bashing on Mark Cuban. So I guess I'll start there. So like when you.

• 19:45Speaker 02

  When you look at Mark and you look

• 19:46Anthony Pompliano?

  I like Mark. Mark's a nice guy. Go ahead.

• 19:49Speaker 02

  So when you look at Mark, has he grown his net worth when after selling his his stake? Sure. Is it anything that's aggressive over a 20 year period of time? Not really.

• 19:59Anthony Pompliano?

  Why do you, why do you use that as a measurement? Just because that's a measurement of capital allocation?

• 20:03Speaker 02

  Well, I think when you compare it to a guy like Buffett, he's, he's dealing with capital that's way bigger than than Marx. And he's still compounding it at, at a market rate. And the last 10 years have been a little hard. I would, I would argue why I think it's been hard for value investors, which might be an interesting kind of topic to get into. And I think it all relates back to the money and Bitcoin.

• 20:27Speaker 02

  And the cost of capital. But when you look at how he's compounded his wealth, he's done it still, even though he's managing massive amounts and size.

• 20:38Speaker 02

  And but when you look at a, a person, let's say you're dealing with somebody whose net worth is $100 million. You're typically still dealing with them with somebody who's very operationally focused. Like that product or service that they grew to that. And then they kind of hit a roadblock and it's harder for them to go through it because they're running into similar dynamics of like, how do I transition from being a great operator to now being a great capital allocator in addition to continuing to be a great operator? And that's not necessarily an easy transition, or at least it isn't from, you know, how I've, the, the people that I've studied and looked at.

• 21:14Anthony Pompliano?

  The people who are great capital allocators, did most of them start out as operators?

• 21:18Speaker 02

  Yeah.

• 21:19Anthony Pompliano?

  Eventually transition? So it is a true transition.

• 21:21Speaker 02

  I think that's the, that's why it's hard is because most don't do it from like, I would argue, like with our show, we start off on the capital allocator side and not on the operating side of, of things. And so it's almost like for, for me, I feel like I've done things in complete reverse. But.

• 21:43Speaker 02

  You know, you look at some of these, these, these people that have high net worths and they struggle with that transition because now they really have to, to understand, it becomes very financial, it becomes very mathematical. You're looking at free cash flows, you're looking at, okay, how is those free cash flows valued versus all the other competitors in that space? Is the discount worth it based on risk-free rates? And so when you start getting into the risk-free rates and you look at why value investors have struggled over the last decade, it's because the cost of capital is being manipulated, in my personal opinion, I think most would agree.

• 22:16Anthony Pompliano?

  It definitely is. When you think about the capital allocation, how much of this is capital allocation within a business that they're the owner of? And so they're trying to basically take capital, create more production, right, or kind of more value accretion versus just like actual peer investing? So I'm not investing into a business and allocating capital within something that I own. It's more so I'm actually selecting securities, for example, or real estate, or you know, whatever the asset is. How much of it, I guess, is like almost like an internal versus external capital allocation, kind of wealth generation?

• 22:49Speaker 02

  So so much of this comes down to voting rights.

• 22:51Anthony Pompliano?

  Okay, interesting.

• 22:52Speaker 02

  So think about, Michael Saylor is an amazing example of voting rights. So here's a guy who's been able to retain a majority of the voting rights of his company through decades of operational execution, right? And now he's at a point where he's looking at the retained earnings of his company and saying, I need to do something with this because I'm getting debased so heavily. And so now I need to become an amazing capital allocator. What can I do to front run all this, this hurdle rate that's double digits? And so because he had control and because he had his voting rights, he's able to make these bold moves.

• 23:35Speaker 02

  In a way that, let's say you started a company, you had to take on venture money, you get, you get vote, your voting rights get debased down to a point where you're really not fully running the company at that point. The board has so much more power and voting control that you, you have an opinion, but in the grand scheme of things, maybe your idea for how to, how to allocate free cash flows gets completely diminished to the point where you're, you're ineffective. You're still in charge, but strategically, you're really not. And so, the ones that are able to retain the voting rights, I've found are the Jeff Bezos.

• 24:17Speaker 02

  He's been able to, to control the board really well, even though he doesn't have a majority stake, obviously for a company of that size, but he has a lot of control and a lot of voting power to basically do what he wants and to move the company in a direction that not too many people are going to argue with him.

• 24:34Anthony Pompliano?

  And it almost feels like, and we've seen study after study of all kinds of group decision making and stuff, the voting control, you specifically said the bold bets, right? The things that AWS, bold bet, right? Michael said that with Bitcoin, bold bet. You really need the ability to kind of have all of the options on the table to choose from.

• 24:54Speaker 02

  That's right.

• 24:55Anthony Pompliano?

  And the almost evolutionary decision making, or the iterative decision making, ends up giving you kind of iterative results, right? So if you, hey, I'm just going to improve this product a little bit. Okay. Well, maybe get another 5% a year. But if you actually want to have the outlier returns, you have to make outlier decisions. And I think that there's a disconnect a lot of times where people want outlier returns, but they don't have the courage, conviction, the stomach for outlier decision making, right? It's just, well, if we improve the product 5%, then shouldn't we get there?

• 25:26Speaker 02

  I would even take it a step further than that. So as those voting rights get distributed out and get debased from any one person really kind of being able to make bold calls, what you find is that you're the employees that have kind of risen to the top within the organization and now they're the CEO, they're now making decisions that are much more ego-based in, hey, let's do this acquisition of company XYZ, let's bolt them onto our existing organization, let's pay a ridiculous premium to do it. That way,

• 26:01Speaker 02

  I can say that I added 10,000 more employees to the organization. Right. And maybe it's going to increase the top line and whatever their bonus is based on as far as financial metrics and like you're getting away from what is going to provide the most shareholder value and, and it gets much more political within the organization because there's no one entity that's kind of driving the

• 26:28Anthony Pompliano?

  Yeah, I also wonder how much of it, Paul Graham has written a piece, uh, kind of learn to unlearn, right? It's the whole idea that, uh, some people come into the Y Combinator program to come up to Paul and they're like, all right, what's the playbook to raise money? And he's like, go build a great product.

• 26:42Speaker 02

  That's right. That's right.

• 26:43Anthony Pompliano?

  Like, there's no like, okay, go to class, study, you know, uh, pass the test, then move on to the next grade. And like, it's not school in the traditional sense. It's no, the best way to raise money is to build a great product, build a great product. Everyone's going to want to give you money. Um, and so it feels a little bit like if you're an employee that's risen through the ranks, you've probably risen through the ranks because you're actually good at following directions. You're good at being somewhat malleable, right? Yeah. You navigated the politics, all this stuff. And so then when you take over a CEO, again, transitioning, can you go from that person who's used to kind of fitting within the system to then thinking, uh, in kind of the bold bets, thinking about it in a much better, um, kind of sustainable, long-term way. Some people are good at it. Not everybody is though.

• 27:24Speaker 02

  Yeah. Right. It doesn't help that when, and when you get into the monetary policy side of things and you look at the incentive structure of this continual debasement and this continual consolidation of enterprise. And now things are too big to fail. So now we need to print more and stuff it into the hands of these capital allocators that are going out there and, and basically allowing large businesses to become huge businesses. And then when that consolidation happens, you're not able to have these entities with voting rights to go out there and make bold calls in any type

• 28:05Speaker 02

  of large organizations anymore. That's where I think Michael Saylor's, you know, micro strategy is Such a unicorn of of a company is, once you get up into a billion plus market cap, like, it's kind of hard to find people that still retain a lot of the voting rights to go out there and and make bold calls. And so like when when Michael did what he did, I was shocked that that was what we saw first. I I expected to see a big tech company say, oh, yeah, we're we've allocated a 2% position into Bitcoin instead of it all just being in marketable securities. We're now taking 2% of that budget that we typically put into marketable securities and we put it into Bitcoin.

• 28:48Speaker 02

  And then you would really never see that much of a profound impact on the company's performance because it's such a small allocation. Instead, we got literally the exact opposite where you had a person who's like, I'm going all I'm all in. That's it. I'm all in. And you're seeing the stock price follow the price of Bitcoin for for good or worse. And you couldn't have gotten a more demonstrative situation for corporate balance sheets. And, you know, in a few years, I'd say within five years, you'll you'll get a demonstration on what it does for the income statement, which is going to be profound. A lot of people aren't seeing that right now.

• 29:27Anthony Pompliano?

  Explain that.

• 29:28Speaker 02

  So, so right now, it's a balance sheet thing. So as the balance sheet of MicroStrategy gets more and more powerful with its retained earnings, like the market's valuing the stock. But as we get into decentralized finance, and now you can you can take those coins, you can now employ them through lending, right? And let's say the lending rate is 5%. Well, if he has, let's just keep the numbers generic because we're doing public math. If you've got a billion dollars worth of Bitcoin and you're getting 5% interest, well, all of a sudden you're making $50 million of of buying power through lending, okay?

• 30:07Speaker 02

  And if the company like MicroStrategy, I want to say their their bottom line after taxes anywhere from like 50 to 70 million dollars. So now if he can take his Bitcoin position, which is bigger than a billion, right? And it can match the income of of what all the employees are doing. You know, think about all those employees that are working their tails off, creating, you know, productive labor, right? And productive service.

• 30:35Speaker 02

  To society and it's it's netting the same number as these imaginary coins that are just being let out. Like, that's kind of a mind blowing moment for people to realize like, hey, the bottom line of this guy's company has literally doubled on the income statement. And it's not just going up in value with the assets that he's holding on his balance sheet. So

• 31:00Anthony Pompliano?

  It's incredible to think about, I think he's got three to $5 billion, depending on where the price is, right? The coin balance sheet. The company was a billion dollar business in August of last year.

• 31:11Speaker 02

  Yeah.

• 31:11Anthony Pompliano?

  Right? So in less than a year, it's now valued, you know, what, five, seven billion, whatever the number is on the market cap side. And you start thinking about, what business 500 to 700% increases the entire market cap of the business?

• 31:26Speaker 02

  At that size, at that market cap, yeah.

• 31:28Anthony Pompliano?

  I mean, it's incredible, right?

• 31:29Speaker 02

  It's nuts.

• 31:29Anthony Pompliano?

  And so it takes a bold bet, right? Is kind of the point.

• 31:33Speaker 02

  But I love how demonstrative it is because if it was a small bet, you just wouldn't see it in the numbers like you're seeing it. It's like, hey, here's the answer sheet. And if you guys want to, you know, copy it, feel free. And you don't have to do it the same way I copied it. You could do it as a 5% allocate. I mean, I would argue at today's price, you only need probably a 1% allocation to protect whatever retained earnings you have on a for a company.

• 32:01Anthony Pompliano?

  What do you think about Tesla and the way they did it? Like, forget Elon's tweets and all that.

• 32:06Speaker 02

  Yeah, yeah.

• 32:06Anthony Pompliano?

  Just Tesla's strategy in terms of buying, holding, I think it was like 7% maybe somewhere in that range, selling a little bit right before earnings, like, just what's your kind of analysis of the whole thing?

• 32:21Speaker 02

  So from the beginning, I was really skeptical that Tesla would have been a company to put Bitcoin on their balance sheet at all. If you would have said, here's all the big tech companies, Tesla would probably have been one of the last ones I would have told you, simply because they don't have the free cash flows that would warrant such a kind of a bold strategy. And

• 32:43Anthony Pompliano?

  By the way, that's exactly why I thought they would do it.

• 32:45Speaker 02

  Really?

• 32:48Anthony Pompliano?

  I've always thought that Elon, the energy network, the power wall.

• 32:55Speaker 02

  See, I never thought about it from that vantage point, yeah.

• 32:57Anthony Pompliano?

  And to be fair, if I'm trying to be as intellectually honest as possible, and I don't have it in front of me, so I'll have to go back and look at exactly what the tweets were. There was a time where, I think I tweeted something and I was like, if you said to me, pick the company that is going to be the first to launch their own coin, I said Tesla or Amazon. And my thought process was Tesla would use it within the energy network, right? Like it's like a credit or something, or Amazon would basically replace like gift cards or something like that. And part of it was just like, he's crazy enough to do it, right? Like, like, like he has that element of like, I'm willing to bet the house, I'm willing to whatever. Now, he didn't do that, or it was only 7%, but the way they did it seemed a little...

• 33:41Anthony Pompliano?

  I think it was exciting when they first put the position on, when he sold a piece of it. How much of it was like testing the market versus trying to cover, you know?

• 33:48Speaker 02

  Yeah, and I don't even know that I buy that that's why he's like, I guess it makes sense that he wants to know how much liquidity if he, you know, needed to get out of it, but.

• 33:57Anthony Pompliano?

  Yeah, but would you do it right around the earnings report?

• 33:59Speaker 02

  Yeah, it's just weird.

• 34:00Anthony Pompliano?

  And then just come in and blow out earnings?

• 34:02Speaker 02

  Yeah. No, it's, it was, it was... But in short, like, the, the reason I just didn't think that it was gonna be him was, you know, I guess I look at my own company, like, if my company wasn't making money, like, the last thing I'm gonna do is go buy a bunch of Bitcoin, and then have to sell it as, as I have my expenses the following month to have to pay. Cause at the end of the day, either your cash account is growing or it's, or it's contracting. And when I look at how volatile their, their quote unquote earnings are, and now I would say in the last, like, year, they've started demonstrating that they can be profitable, but it's still reliant on a lot of credits.

• 34:43Speaker 02

  And you start taking some of those things away, I mean, it's a completely different ballgame for the company. But I just... I was, I was surprised. And so the thing that surprised me even more is his energy comments and stuff that he's come out and the bigger block size stuff with Dogecoin. And I'm thinking, now I was talking with Jeff Booth and Lynn about it and Lynn Alden, and they're both like, hey, he's, he's a huge public figure and he's learning in public. And you know, that's, that's pretty much the only thing that I can kind of hang my hat on that makes sense is, is that he's learning as he goes, just like we did, right?

• 35:24Anthony Pompliano?

  There's a journey, right? And everyone goes through it. And you kind of think most people come in through Bitcoin or mining, or I think I can get rich on this, or whatever. And then you explore the entire totality of an industry.

• 35:39Speaker 02

  Mm hmm.

• 35:40Anthony Pompliano?

  Some of it's going to have value, some of it's not.

• 35:42Speaker 02

  Yeah.

• 35:43Anthony Pompliano?

  Some people stop along the journey and kind of get off the bus and they're like, all right, I found my home.

• 35:48Speaker 02

  Yeah.

• 35:49Anthony Pompliano?

  And then for the most part, most people go around the whole, you know, kind of track and they come back like, all right, Bitcoin is real, right?

• 35:54Speaker 02

  Yeah.

• 35:55Anthony Pompliano?

  It's weird when you are the second richest man in the world and you're doing it on Twitter. But yeah, I mean, yeah, I guess that's a pretty good explanation of just say something, right? Like, I mean, if you think back, how many dumb things did you or I say when we were first starting, learning about everything? And someone's like, ah, let me show you this, or let me, you know, go read this, or whatever. Like, that's how you learn.

• 36:15Speaker 02

  Yeah. You know, so I read his autobiography. We've studied Elon on the show. And one of the things that sticks out to me with the whole Dogecoin thing is, so he was, he was picked on really bad as a kid and like abused. There was one story in one of the books that we read where people literally threw him in high school, threw him down the steps at his high school and like he hurt himself and whatnot. So like, he was picked on extensively. And I think for him,

• 36:47Speaker 02

  When he started, you know, saying things in the Bitcoin space, I mean, you know, you know how painful the memes can get. I mean, the people in the Bitcoin space are ruthless on Twitter. If you say anything that's out of whack, right? Or you're just off on your comment. And so I think for Elon, maybe, and this is me, you know, psychoanalyzing Elon, Elon Musk, but I think for him, maybe he viewed that as bullying. And the whole Dogecoin thing is just a total middle finger to everybody online.

• 37:20Anthony Pompliano?

  I think he thinks it's funny.

• 37:21Speaker 02

  I think he thinks it's funny. And I think it's his way of saying, you know what? You're not going to get the best of me. And you might want to pick on me, but how about this? Doge to the moon, send, right? And he can see everyone just, just making everyone furious. And I think it's kind of his way to, it's his way to get back at people that are being rude, or maybe, you know, just roughing them up.

• 37:47Anthony Pompliano?

  Yeah.

• 37:48Speaker 02

  So, and it doesn't make it right. I'm just, I'm just trying to, yeah, I'm just trying to.

• 37:52Anthony Pompliano?

  He's an interesting one. Along with some of these, do you think that they're happy? Do you think most of these billionaires are happy? Or do you think they're just rich and lonely and not happy?

• 38:03Speaker 02

  You know, so Ray has a quote, he said, "You can have anything you want, but you can't have everything." And so when I think about, you know, some of these people that I've studied, it's become very evident to me that you are sacrificing something, and most likely it's your family. And most likely, it's, it's those things that are probably the most meaningful in your life that maybe are there for you, but you kind of take them for granted. And because I don't care what you say, like if anybody who has a billion dollars of net worth, it takes tremendous energy to achieve that. And the focus that's

• 38:47Speaker 02

  required to take all that energy and focus it into something in order to, to grow it to that, comes at an expense, you know, as an arrow guy, like you can't do an equation where you've got lift without drag being part of the equation. Right?

• 39:04Anthony Pompliano?

  It's a great way to look at it.

• 39:05Speaker 02

  And so when you look at it, you have to ask yourself, okay, so what is it that I'm giving up? And so when people, and I think it's important for people to have these accomplishments in their life, I'm not trying to say that people shouldn't try to achieve, but I think when you, when you map out what it is, what is it that I'm trying to accomplish? And then what is it that I'm trying to accomplish from a family standpoint? And then how can those two things coexist? Because if they can't coexist, that's failure. You might knock this one out of the ballpark, you might knock this one out of the ballpark, but you never accomplished anything, right? And you're going to have regrets in your life because you didn't.

• 39:45Speaker 02

  And so I think that the managing and the merging of and optimizing that balance between the two is something that I've personally learned from studying all these people and how, you know, you want me to run Tesla and SpaceX and everything else and Neuralink and all, like, get the hell out of here. No, thanks. Right? Never. Yeah. But I want to do that.

• 40:10Anthony Pompliano?

  It's incredible.

• 40:12Speaker 02

  It's amazing what he's done, but yeah.

• 40:14Anthony Pompliano?

  Just at the sacrifice of something else.

• 40:16Speaker 02

  That's right.

• 40:17Anthony Pompliano?

  Dalio, you said you're a big fan of him. What, uh, what's kind of his story and what's the fascination there?

• 40:24Speaker 02

  So the thing with Ray, I would have never found Bitcoin without Ray Dalio. But like, period, like ever.

• 40:31Anthony Pompliano?

  Up until a couple of weeks ago, that would be a bold statement because he wasn't even in Bitcoin. So explain.

• 40:36Speaker 02

  Yeah, so, um, because as a hardcore Warren Buffett person, almost religious devout Warren Buffett person, um, gold is just a non-starter.

• 40:54Speaker 02

  Because Warren looks at it like this, he, if you own equity, it's producing cash flows. Like, why would you own a lump of gold that literally produces and generates no free cash flows? Like, this thing over here has the potential to grow and expand and produce more. So like, like, gold was just like a laughable kind of topic, like, within any type of value investing community. And so then we were reading a book on Ray Dalio. In fact, it was a, it was a Tony Robbins book where he interviewed Money Master the Game, I think is the name of it, where he, just Ray Dalio was all through this book. And I'm thinking, my God, who the hell is it? Like, why is this guy so

• 41:37Speaker 02

  important to, to Tony Robbins? And so I started digging into why Ray was recommending that you should have gold exposure in any portfolio. And what it came down to was a currency collapse situation. And he, and the basement in general, and how gold will protect you. And, and Ray's thing is, is he's not trying to predict the ups and downs necessarily. What he's trying to look at is the correlation between asset classes. So typically, in the last five to 10 years, it really isn't the best example of this, but historically, if your bond market's bidding, your equity market's selling off and the money's going into the bond market because it's providing

• 42:19Speaker 02

  higher yields for the risk being assumed. And then vice versa, if the, if the equity market's booming, most likely the fixed income bond market's kind of going down in relative terms in, in price action to offset. And so the yields on those two were kind of like, almost like a sign,

• 42:36Anthony Pompliano?

  co-sign. Inversely related.

• 42:37Speaker 02

  Exactly. They're inversely related. And so Ray's thing was, let me take bonds, which is a much larger market cap. And when it's going down, stocks are going up, but it's not, it's not proportional. Like, if this one goes up one, this one's not going down one. It's like, this one's going up one, this one's going down like point two, right? Because the bond market was so big. So what Ray's like, if I lever that, and I own equities proportional to that, and then a similar thing happens between commodities and currencies. So when a currency's going up, the commodities kind of performing poorly and vice versa.

• 43:20Speaker 02

  So the way he would organize his all weather portfolio was based on this. And then the big movements of where you wanted to be positioned inside of that really kind of came down to inflation and growth within the broader market economy. So this was like, for me, when I started studying this and really trying to dig into it and understand it, it was so different than anything I'd ever learned with Warren Buffett's style. And I'm looking at Ray's performance, and I mean, his numbers are that of Buffett. And I think if Ray would entertain higher leverage, he would tell you he could outperform Buffett. Just mathematically, he could figure out a way to to design a portfolio to outperform him. Which all that I found fascinating and like way different than how I had learned.

• 44:05Anthony Pompliano?

  So. But they have a commonality in that neither one of them likes leverage.

• 44:10Speaker 02

  Well, I don't know that you could necessarily say that because because Ray had like always levered his fixed income side of his portfolio. So, but I think Ray understands how damaging leverage can be to a portfolio and specifically because Ray blew up.

• 44:32Speaker 02

  You know, back in the, I think it was the early 1980s, he completely blew up his fund. And that was an enormous part of why he became so systematic in the way that he that he treats the market. But in general, Ray's opinion on having gold in your portfolio was this moment for me like, I have to understand why. And when I dug and I really tried to start understanding it, it created, it answered a lot of questions for me that I had about the overall economy and the market that I felt was drastically broke. So like coming out of the 2008, 2009 crisis, I never felt like anything was ever fixed.

• 45:14Speaker 02

  I felt like they had just kept putting bandage after bandage on it. They kept pushing interest rates down to nothing. And I kept telling myself like, how in the world are they going to solve this? Right? And then you study Ray and you're looking at these big, long-term debt cycles. And it all started to like really kind of come together for me. I'm like. Holy crap, like, gold actually could be very important, especially if they get this debasement to a point where interest rates are, they try to go negative with interest rates, and what does that mean for the cost of capital? Because over here, I'm doing all these discount cash flows on equities, and you're using, you know, a cost of capital and a premium above that for the risk. And I'm saying, well, if, if cost of capital's

• 45:58Speaker 02

  zero, like, how the hell do I do these, these equations anymore, right? And so all that really started, like, really kind of clicked into place when I started studying Ray, and why gold was important. And then it was like Bitcoin. Well, what the hell is Bitcoin?

• 46:12Anthony Pompliano?

  Right? And had he talked about it?

• 46:14Speaker 02

  No, no, he didn't talk about it. But his opinions on why gold was important for the portfolio because of currency collapse was, for me, like, this, wow, okay, so that is important, and that could happen. And we are in this 80-year credit cycle, and interest rates are at nothing percent, cost of capital is completely broke, inflation's a total joke, right? And so, like, gold, like, for me, became something that I really started to study a whole lot more, which I was really kind of breaking off from the value investing community at this point.

• 46:50Anthony Pompliano?

  Did you buy gold during this period?

• 46:52Speaker 02

  I never owned physical gold. I would always just buy paper gold.

• 46:57Anthony Pompliano?

  But, but still, that was a break from?

• 46:59Speaker 02

  Totally break, like, you know?

• 47:01Anthony Pompliano?

  Can, can you, uh, can you still call yourself a value investor if you're buying gold?

• 47:05Speaker 02

  Hell, yeah.

• 47:06Anthony Pompliano?

  Yeah?

• 47:06Speaker 02

  I think that, I think-

• 47:07Anthony Pompliano?

  I think you should be able to, but there's, there's a religion, there's a religion aspect to Berkshire Hathaway.

• 47:12Speaker 02

  I call myself that, but I'd tell you, there's some people that, that would tell you that, you know, I'm the devil of the value investing community. Um, I, I think labels, and Jeff Booth's really big on this, too. I, I absolutely hate saying, I'm a value investor. I absolutely hate saying-

• 47:32Speaker 02

  To be honest with you, I don't like saying I'm a Bitcoiner. I like to tell people I'm a nothing. Like you should like, show me all the arguments at hand on like where like I enjoy investing. I love the math of investing. Um, you know, as, as an engineering background, like, like investing. But anyway, like when you tell yourself something, you are cognitively programming yourself to identify that you are this thing. And when you do that, it's very difficult that if the circumstances change or new facts arise, you've told yourself that I'm this thing for so long that you feel like you can't make a pivot or, or change to something else. Right? So I think it's extremely dangerous to say you're anything.

• 48:17Anthony Pompliano?

  I tend to agree with you. Um, Ro Paul, he, uh, at one point I saw, uh, he had this thread that, uh, I thought was very, um, interesting. Now you and I both know Ro, I think that he, uh, probably tweeted it, uh, similar to the Elon Musk, like little jab at Bitcoiners and some of the tribalism and all stuff. Uh, but at the same time, there's a lot of truth to what he said. And he basically said, look, I belong to no religion. I belong to no group. I belong to nothing. My job is to take wealth or value and grow it. And therefore I'm going to pursue the, uh, best way to do that.

• 48:54Speaker 02

  Yeah.

• 48:55Anthony Pompliano?

  Right? And

• 48:57Speaker 02

  And I completely agree with him on that.

• 48:59Anthony Pompliano?

  Yeah.

• 48:59Speaker 02

  So do I. But we see, but we see, uh, and if I was here, you know, we just see the technical solution for sound money in a digital space differently right now.

• 49:12Anthony Pompliano?

  Yeah.

• 49:12Speaker 02

  And it doesn't mean we might not be completely aligned in the future. If he becomes, you know, a hardcore Bitcoiner and Bitcoin becomes a thing like whatever, it doesn't matter to me. I'm just looking at the facts as they exist, looking at all the technical solutions that are out there. And I'm saying, hey, this is all about decentralization. Because if it's not decentralized, they're going to shut it down or, or attempt to do something in the future that could shut it down. And you're no better than often where you are today. You know, you get into the proof of stake stuff. I mean, it's, it's what you already have with the existing monetary policy.

• 49:46Anthony Pompliano?

  Do you think they know that? The preference of

• 49:49Speaker 02

  I don't know. I don't know how they can't see it.

• 49:53Anthony Pompliano?

  Like.

• 49:54Speaker 02

  I mean, think about it. If you're staking coins and you're getting paid interest and that gets bigger and bigger, but now you're like controlling whether that transaction can happen or not. Meanwhile, on Bitcoin, we have proof of stake. People don't think of it this way, but I look at layer two lightning. If you can buy a $250 full node, that's your stake. Right? And now I can route transactions. I don't even have to have coins in there. I don't even have to open a channel. But if you pay that one time fee of $250, you just staked your ability to run transactions. Right? No one's talking about that. Instead, they're talking about locking up coins on ETH two for

• 50:36Anthony Pompliano?

  All right, let's just

• 50:37Speaker 02

  two and a half years.

• 50:38Anthony Pompliano?

  All right, hold on. Let's just get into it. Ready? So. Let me put context. If this is your first time listening to the podcast, this is a familiar topic, a very popular topic. Bitcoin was created. It is a decentralized blockchain. There was people who wanted to do things on Bitcoin that they felt they couldn't do in terms of smart contracts, composability, etc. About 10 years ago. They decided to then go and build a variation of a blockchain that they felt like they could build in the composability and the smart contract functionalities. The first and most popular one is Ethereum. And the idea was they were going to scale to layer one.

• 51:18Anthony Pompliano?

  Now I think the consensus pretty much in Bitcoin world is, and it has always been, or for a long time has been, Bitcoin is not going to scale to layer one. You're going to need a layer two. Now, in the Ethereum community, I think people are waking up to the idea and accepting it and kind of working towards. You're not going to scale it layer one. You got to scale it layer two. I recently said in 2017 Bitcoiners learned this because transaction times were a mess and fees were astronomical. You know, we got to fix that, right? And so, okay, let's go with layer twos. Ethereum kind of went through that over the last like 12 months, right? Or really like last six months is really slow transaction times and fees exploded. It's okay. Hey, we got to go figure out a different scaling solution.

• 51:58Anthony Pompliano?

  In the pursuit of faster transaction times, lower fees, more efficiency, there's all kinds of competition going on in the Ethereum world. Some of it is other layer ones. So anything from, you know, NFTs, the Dapper Labs guys built Flow and kind of a use case specific blockchain to something like Matic, which is kind of like a side chain or like a layer two that the Ethereum world likes to say is built on top of Ethereum, kind of, but doesn't actually use Ether as like the base asset within the system. And then you get things like Binance Smart Chain, which is just like, I don't want to say copy and paste, but pretty damn close of like, hey, we're just going to take this. We're going to make it more centralized. We're going to speed up block times. We're going to make fees cheaper, etc.

• 52:42Anthony Pompliano?

  When you get in that whole world, Ethereum is being worked on by really smart people, right? Incredibly intelligent engineers, strategists, etc. They are not going to sit around and just let everyone else go try to be faster, cheaper, etc. They're going to do things. And so explain your understanding of how this ETH2 thing works, what is going on, and then like what the issues are that you see with some of the like structural components of Ethereum.

• 53:09Speaker 02

  And while I'm describing this, you have all these competitors on the side, call it Binance, or Donna, whatever, that are trying to outpace them with their own more centralized, I would argue more centralized solution set, but they're, they're able to do all these things that they're trying to catch up with that's in place and meanwhile, the market cap's exploding, right? So for ETH2, so you have a beacon chain. So you've got ETH1, which is what we know now, right? You got your, your beacon chain, which the beginning of December of 2020, they launched their beacon chain, and this is now how they're going to do store or how they're

• 53:51Speaker 02

  going to do proof of stake. The chain that they've got right now, similar to Bitcoin, is proof of work. Okay. Which in my opinion, and I assume you agree with me, is a lot better solution for they're actually being worked to produce monetary units, right?

• 54:08Speaker 02

  Anyway, so they launched this beacon chain and it's think of it like a skeleton that then there's going to be even more, there's going to be eventually 64 blockchains that are going to be underneath of this. The reason they're doing all this is so that they can scale it because as it exists right now, the the size is going to get too big. Five, 10 years from now, it can't scale. So that's their solution. They've got this beacon chain. So to get this thing going, they have to have coins that are there that can then validate the blocks because with proof of stake, you're using people with large position sizes are able to validate the transaction because they have an incentive to do so.

• 54:50Anthony Pompliano?

  Yeah. So it's important to say like, the argument for proof of stake is I own a lot of this asset that is dependent on this chain and therefore I have an economic interest in telling the truth on chain in terms of validating transactions, etc.

• 55:01Speaker 02

  So that I can get more of the coin, just like?

• 55:04Anthony Pompliano?

  Yes.

• 55:05Speaker 02

  So you want to understand?

• 55:06Anthony Pompliano?

  The downside is not so great.

• 55:07Speaker 02

  You want to understand proof of stake, just look at the existing monetary system and you'll understand it quite well. So, um, anyway, so they, in December, they had all these people stake their coins and the exchanges are a huge part of this. The exchanges get a cut of the interest that's being paid. Well, the interest is 7% that they're paying for these stakes.

• 55:29Anthony Pompliano?

  So I take my, we'll call them ETH1 coins and I now I'm staking them on the beacon chain or ETH2.

• 55:35Speaker 02

  Yep.

• 55:35Anthony Pompliano?

  Uh, I'm getting paid 7% interest and if I am an exchange, I'm not using only my own ether. I'm using all my deposits.

• 55:45Speaker 02

  That's right.

• 55:45Anthony Pompliano?

  To go ahead and go over here and stake it as well.

• 55:48Speaker 02

  Well, you're, you're offering it up to all the customers if they want to stake it. Here's, here, we'll, we'll help you stake it. And so then, once it goes in there, it's not coming out until the powers that be release the, uh, release the tokens. The interest that's being paid is coming out of the new beacon chain.

• 56:06Anthony Pompliano?

  Okay, this is the most important part. So in lending, you earn interest when you lend out your assets. In crypto, there is the ability to do staking or airdrops or some of these other things where you can actually earn yield, but it doesn't come from I lent it, you pay me interest, right? Yeah. What we're talking about here specifically is a kind of a combination of a couple of things. So one is, this is not lending where somebody's borrowing and going and doing something within their paying you interest. No. That's not how the yield is generated. It's not really an airdrop, right? Because it's got an element of, it's the same system where you put in a amount, let's say 10 ETH,

• 56:50Anthony Pompliano?

  and you're going to get paid 7% on that 10 ETH.

• 56:54Anthony Pompliano?

  But where the actual ETH is coming from, you're saying, these are ETH1 coins that are being staked in the ETH2 system, but there's now 7% being paid out from ETH2 into, that remain on the ETH2 beacon chain that are coming from that protocol. Okay. But as- So is there, there's basically a disagreement between ETH1 and ETH2 in terms of the supply? Well, that'll, that'll work itself out when it eventually gets ported out, when ETH1 gets ported over. Okay. Okay. And then all the coins are going to then be materialized. But the reason you're not seeing that inflationary impact kind of being realized into the market

• 57:38Anthony Pompliano?

  is because that interest is being pegged into the staked, you know, address and isn't allowed to be withdrawn. So it's, so ETH1 is basically getting debased against those ETH2 coins, but it's not being realized in the market because those coins never hit the market. So really what's happening is-

• 58:00Anthony Pompliano?

  It's almost like money's being printed at the central bank, but they're not putting it into the system. And they told people they were doing it, but no one actually understands what's happening. And then at some point in the future.

• 58:10Speaker 02

  Instead, it's going to all the bondholders.

• 58:11Anthony Pompliano?

  Yeah. In the future, they're gonna give it out.

• 58:16Speaker 02

  Yes. Eventually, when the, when the, when the PIN is released and it's ported, right? Like all those coins now, you know, have been released with, with the additional interest and they'll be all realized at once. Now, what, what you hear in the ETH community right now is this 1559 update where in the, for the proof of work.

• 58:38Anthony Pompliano?

  EIP 1559.

• 58:40Speaker 02

  Correct. So, um, and I think they're trying to do this in the July timeframe. And what they're doing is the miners, the people that are mining Ethereum right now, from what I understand, it's very profitable for, for miners. And their fees are high. And so what they're doing is they're breaking the fee into two portions. It's a base fee that you're gonna pay. And once you pay that, if this, if this 1559 goes through, once you pay that, it gets burnt, not to come back on to the market ever again. And then if you want your transaction to get included faster, you have the option to basically put a kicker or a fee on top of that to get your, your transaction included into the next block. So what I think they're

• 59:24Speaker 02

  trying to do, and at least, and I might be mis-selling this, and I don't want to misrepresent it, but, um, anything that I see online is talking about, oh, well, ETH's gonna do 1559 and it's gonna jack the price because there's gonna be less and less coins after each block's mined. Um, but what's not being said is the 7% debasement over on ETH2 that's gonna drop into the market all at once. Now, are they trying to do this to offset the two, right? To, to keep the supply?

• 59:55Anthony Pompliano?

  Basically, if we're gonna add 7%, can we take 7% out?

• 59:57Speaker 02

  Do, are they doing that in, in, in an interest to sustain? Yeah, maybe. I don't know. Um, and I want to be fair in the way that I'm representing it. It could be. My bigger concern is like, why are you porting or why are you staking coins in December of 2020? And yesterday I just saw that, I think it was Vitalik announced that they're not going to port until the end of 2022. And from what I understand, I might be wrong about this, but I think they're not even going to release the state coins until they have the sharding

• 1:00:37Speaker 02

  set up underneath of the port, which is 1.5, which is happening not at the end of 2022. It's going to be months after that before they even stand up the 64 blockchains that are underneath of the beacon chain.

• 1:00:50Anthony Pompliano?

  So we're like two years away now, which is two and a half years since it got.

• 1:00:53Speaker 02

  So why did you stake the coins and pay this at 7% to basement so soon?

• 1:00:58Anthony Pompliano?

  Yeah, because basically you're talking about, you know, almost 20%.

• 1:01:02Speaker 02

  I mean, I don't know, but for me, when I'm looking at this, okay, then and I didn't suspect you and I would be having an Ethereum conversation, but hey.

• 1:01:10Anthony Pompliano?

  I didn't either, but let's do it.

• 1:01:12Speaker 02

  But when I look at this from a technical standpoint, right? Can, can this all happen? Absolutely. Do I see a high probability of success when you're trying to take something that is a proof of work? Massive in size. I think the last thing that I saw it was like 10 terabytes to run a full node. And it's growing at like two terabyte, or I'm sorry, I think it's one terabyte every two months is how fast it's growing right now in size. Think about it, this, this thing branches off. I mean, it's, it's an area kind of equation, not a linear kind of equation.

• 1:01:53Speaker 02

  And so like, where's that going to be by the end of December of 2022 as far as node size? How many people can run a 20 tera node? And at what cost? Right?

• 1:02:06Anthony Pompliano?

  So I want to be fair to the Ethereum.

• 1:02:09Speaker 02

  Yeah, I do too.

• 1:02:10Anthony Pompliano?

  And what I want to, what I want to say is you and I probably see this as low probability of success. If it works and they pull it off, it will create value for the ecosystem.

• 1:02:24Speaker 02

  Yeah.

• 1:02:25Anthony Pompliano?

  But the probability of it working as we know the facts today are much lower than maybe the confidence level that some people are labeling this with, right? So it's, it's

• 1:02:36Speaker 02

  Yeah, that's the issue. Yeah.

• 1:02:37Anthony Pompliano?

  I think it's just like, there's a lot of people talking about it as like, this is happening, it's gonna work, you know, maybe not, there's no risk, but just like way more confidence than you or I have that is actually

• 1:02:47Speaker 02

  I'm not a hater, to be honest with you, like I

• 1:02:49Anthony Pompliano?

  I started out mining ether, by the way.

• 1:02:51Speaker 02

  Really?

• 1:02:52Anthony Pompliano?

  Yeah.

• 1:02:52Speaker 02

  Yeah, I've never mined anything. I've always just bought the coins.

• 1:02:57Speaker 02

  But I'm, I'm not a hater on this. In fact, I, I actually really enjoy studying the engineering and trying to understand how they're going about it. But at the, at the same time, I'm an investor. Like I'm looking at what's the reward and what's the risk associated with achieving the reward? And when I'm looking at the tech, the technicalities of trying to port this in an open source environment, it's not like one person's there with a integrated master schedule and saying, on this day, we need to have this achieved and this is a parallel task. This is a serial task. Like, these are the milestones we gotta hit in order to hit that day. Like, no. They're doing, there's people that are doing it, but there's another person doing the same thing and maybe their, their schedules are different and their tasks are different and

• 1:03:40Speaker 02

  like, like in an open source environment, trying to do what they're trying to do is

• 1:03:46Anthony Pompliano?

  It's hard.

• 1:03:47Speaker 02

  Extremely hard and very challenging. And they might knock it out of the ballpark, right? They might knock it out of the ballpark. I'm, I'm, I'm looking at the price action. I'm saying, I think that's because everyone's staked their coins and those coins are now off the market. The scarcity of the coins, right? That's what's driving the price action that maybe you've seen the outperformance recently. I'm thinking it's much more attributed to that than any type of technical solution. And I think the biggest concern for, oh, there's Peter McCormick.

• 1:04:20Speaker 02

  But anyway, I think the bigger

• 1:04:23Speaker 02

  I think the bigger concern like long term for for them is these other chains, the Binance, the Cardano, Cardano, competing with them and maybe offering an even more centralized solution set than what Ethereum has. But because they have that, maybe from a technical standpoint, they're able to get these things in place. Now, while I'm saying all of this, this is really important. This is really important. In the back of my head, the thing I'm concerned about isn't any of that DeFi, like all this. The thing I'm concerned about is this hundred trillion plus bond market

• 1:05:04Speaker 02

  that's been bid down to 0% manipulated for decades down to 0%. And as the price of this starts to run, I'm thinking to myself, if I'm sitting on a fixed income desk on Wall Street, I'm ready to like crap my pants, right? And I'm saying to myself, what if this becomes the new form of value, right? And you're hearing Stan and Ray talking about the dollar is going to eventually fail. Like, come on, dude. Like, we never heard anything like this years ago.

• 1:05:40Anthony Pompliano?

  Stanley Drucker Miller went on CNBC and said, in 15 years, I think there's a high probability of the dollar not being the global currency.

• 1:05:46Speaker 02

  So where the hell is all that buying power that's the hundred trillion plus going to get stuffed into? Is it going to get stuffed into some protocol that's kind of centralized, kind of not? That the monetary policy has kind of been changing and now it's tightening, but then once these coins get dropped because it gets ported, there's more like, they're not going there with $100 trillion of low yielding debt, because the people that are putting it into that are looking for a return that is really reliable, right? They're going to go to something that just preserves it, like on the spot.

• 1:06:27Speaker 02

  Right? And so like, that's what I'm looking at like, people are looking at the price action in a very myopic kind of way. They're saying, hey, this one's doing good. Oh, Dogecoin's up 30%, right? Let me chase all over this place. Meanwhile, their capital gains are exploding, that they're gonna have to pay the taxes on all their trading and everything else. Meanwhile, I'm just sitting over here, and I just keep buying what I feel has tremendous upside, and has miniscule technical risk relative to all the other things out there. And so, from an investing standpoint-

• 1:06:59Anthony Pompliano?

  Boomercoin. That's what they call it. All the, all the people who are operating at the fringes of innovation, they call it Boomercoin, which means it's the safest, most conservative thing on the market.

• 1:07:08Speaker 02

  But it's just, when, when you, when you look at people that have created enormous wealth in their life, they take giant asymmetrical bets, where the risk is actually just like, miniscule, but the reward is massive. And there's, you might have, you might have three of them in a lifetime, right? And so like, that's, that's the lens that I'm looking at Bitcoin through. It's not that I'm a hater on these other things. I think, especially as an engineer, I'm telling you, I'm looking at, I'm just like, holy hell, that's ambitious, right? And I hope they're successful. I hope they can do whatever. But for me, it's just real easy to like, like Bitcoin is just-

• 1:07:46Anthony Pompliano?

  What do you think happens to Bitcoin over the next five years?

• 1:07:49Speaker 02

  I mean, I think the run we're in right now is about to get-

• 1:07:53Anthony Pompliano?

  Crazy?

• 1:07:53Speaker 02

  Pretty interesting, yeah.

• 1:07:55Anthony Pompliano?

  Are you a subscriber to like, the super cycle theory?

• 1:07:58Speaker 02

  I, I am. But I don't know if it's gonna be this cycle, or maybe the next cycle. I'd be really shocked if it could go longer, like, the central banks could keep the lid on this insanity for more than five years. I'd be really surprised.

• 1:08:14Anthony Pompliano?

  I agree with you. How do you look at the institutions coming into the market? I think there's some people who would argue, oh, institutions are here. They have strong hands. There won't be a big, you know, 80, 85% drawdown after a blow off top in the current cycle that we're in. Other people argue, uh, no, they're the weakest hands around and they're going to dump this stuff and they're actually going to accelerate a drawdown. Once they get any sort of 20, 30%, you know, deleveraging and they're actually going to make it go faster and

• 1:08:42Speaker 02

  I think so much of it comes down to what we were talking about earlier, which, which is the voting rights and the boards, like to convince the board that they need to do this. Is, is, is challenging. I mean, I, I look at Square as a perfect example. Jack Dorsey's like running that company, but he doesn't have the majority of the voting rights or a substantial portion of it. And so I think he's struggling to, cause I suspect, I might be wrong, but I would suspect that he would want to put more of that on their balance sheet than what he's done. But I don't think he can do it just because of the, the composition of the board and what he's up against. So I think that that's probably the bigger picture. And I think is, is the price, I think once the price goes through

• 1:09:26Speaker 02

  about a hundred thousand, I think it's just going to get such a, such a wire brush scrub of scrutiny as to what the hell is this thing? And why are there people trading a hundred thousand dollars for an imaginary token? Why? There's something I'm missing, I think is what happens. Once you kind of get through that price level and

• 1:09:51Anthony Pompliano?

  And it hasn't died. I thought it was died 20 times before.

• 1:09:53Speaker 02

  That too.

• 1:09:54Anthony Pompliano?

  Yeah.

• 1:09:54Speaker 02

  Yeah.

• 1:09:55Anthony Pompliano?

  It's basically not only does it not die, but it keeps going up higher and higher in price over time. What the hell's going on?

• 1:10:00Speaker 02

  What's going on?

• 1:10:00Anthony Pompliano?

  Yeah.

• 1:10:01Speaker 02

  Yeah. I think, I think we're starting to get there. So for me, if I was going to say, you know, I, I think five years is, I don't know how they can keep the lid on this for another five years. You might see it even sooner. Um, and so for me, like trying to time, whether like, how do I position myself through all this? The thing that I'm really paying much more attention to than Bitcoin is just like the macro backdrop of what's happening in the fixed income market. What's happening in the commodities market?

• 1:10:26Anthony Pompliano?

  Yep.

• 1:10:26Speaker 02

  Oil's at $70 a barrel right now. If it's anything like 2008, by the end of the summer, you're at a hundred and $50 a barrel. And people hearing that now would be like, that's totally nuts.

• 1:10:36Anthony Pompliano?

  It's possible.

• 1:10:37Speaker 02

  And it's possible. It's way more possible than I think people realize.

• 1:10:41Anthony Pompliano?

  In March of last year, I wrote a piece and I picked four assets and I said, here's how I think they're going to perform. I said equities, I think it was over a two-year period, if I remember correctly. Equities, eight out of 10. Oil, five out of 10. Gold, two out of 10. Bitcoin, 11 out of 10.

• 1:10:57Speaker 02

  Yeah.

• 1:10:57Anthony Pompliano?

  Those were the rankings.

• 1:10:58Speaker 02

  Yeah.

• 1:11:00Anthony Pompliano?

  Directionally correct on almost all of them. Oil and equities. Should have swapped them, right? In terms of oil has outperformed the equities just because it was so depressed.

• 1:11:12Anthony Pompliano?

  But I actually look at it as that's probably the right way to keep looking at it. Like we're a year after, right? But like, I don't think anything's changed.

• 1:11:19Speaker 02

  Nothing's changed. If anything, it's only intensified.

• 1:11:21Anthony Pompliano?

  It's Bitcoin, you know, oil slash equities are kind of be, you know, similar, but oil probably outperforms equities and then you have gold.

• 1:11:27Speaker 02

  Yeah.

• 1:11:28Anthony Pompliano?

  And so it's this crazy world of like, has gold failed?

• 1:11:32Speaker 02

  Yeah.

• 1:11:34Speaker 02

  Well, let's put it this way. Gold has always failed.

• 1:11:39Speaker 02

  There's a lot of people that I'm going to get so much crap for that. But, uh, think about it. Throughout time, currencies have always failed. Again, a gold peg, let me rephrase that. A gold peg has always failed. Why? Because it requires trust. Okay? You've got to have a vault. You've got to trust somebody to maintain that vault. More importantly, there's a multiple of how much currency is in circulation against that gold. And you've got to trust that somebody's not going to put more into circulation against what's in the vault. Okay? Between those two pieces. They both require trust.

• 1:12:21Speaker 02

  So like, go back to when we did Bretton Woods, right up until we came off the gold standard. Why did we come off the gold standard? It wasn't like we just miraculously decided one day we were going to come off it. It's because we kept adjusting that money multiplier, that, that ratio. We kept adjusting that money multiplier for decades. Until it got so high that if people came back with that currency and wanted their gold, we couldn't fulfill all the orders. So gold has always failed as a, as a, as a peg.

• 1:12:52Speaker 02

  But, but here's where gold, so, so I'm talking about it in a sovereign way. Okay. Gold has failed in a sovereign way to protect the buying power of the currencies that ride on top of it. Every time. From an individual standpoint, gold has preserved buying power throughout time. I will say that. So if you had an ounce of gold today and you had it back in the Roman Empire, the buying power that you were able to go out there and achieve or whatever, you know.

• 1:13:23Anthony Pompliano?

  The difference, the way I look at it is, uh, gold preserves buying power. It's up 5%, you know, the last 12 months or so. Uh, Bitcoin grows the purchasing power, right? One, it, one is being a, a kind of a repricing of the asset. It, it's accelerating your purchasing power. Things are getting cheaper around you. Gold simply, uh, keeps the prices the same around you, right? It, it doesn't have any symmetry to it.

• 1:13:48Speaker 02

  That's right. And Bitcoin will, in my opinion, Bitcoin, Bitcoin will eventually be that.

• 1:13:53Anthony Pompliano?

  Correct.

• 1:13:53Speaker 02

  Right? It'll serve the same preservation of buying power. And when that day comes, I'll become a hardcore value investor, kind of like, you know, I'll be doing the, you know, discount cash flows on, on that, but I'll be using Bitcoin as, as the, I mean, I'm, I'm already doing that. That's why I'm pretty much in Bitcoin, right? But that, as that transition occurs and that comes to become the unit of account, there's tremendous opportunity in front running that event that I would argue is a once in a lifetime event.

• 1:14:27Anthony Pompliano?

  I agree. Before I let you go, I have three questions. You could ask me one to end it. Uh, you're a very, very well read guy. What's your most important book you've ever read?

• 1:14:39Speaker 02

  Well.

• 1:14:45Speaker 02

  This is a strange book, so I'm kinda like hesitant.

• 1:14:47Anthony Pompliano?

  Say it, say it.

• 1:14:48Speaker 02

  I'm hesitant to recommend this book. There's a book called The Seed of the Soul.

• 1:14:52Anthony Pompliano?

  The Seed of the Soul, okay.

• 1:14:53Speaker 02

  The seat, like you're sitting in a seat of the soul. And this is Oprah Winfrey's favorite book of all time. And it's, uh,

• 1:15:04Speaker 02

  it, I would argue, and I just, I actually got, uh, Robert Breed loved to read this book. Um, and he loved it. And he says, you know, it kinda changed me a bit. And I said, well, yeah, welcome to the club. It changed me too. Um, but it, I felt like it just made me a better person. Um, and the book gets into a lot of, um, what are your intentions? And kinda like karmic obligation that's associated with your intentions, especially when you act upon them. Um, and I'm gonna just warn you, like, if, if, if you read this book, it's a strange book.

• 1:15:37Anthony Pompliano?

  All right.

• 1:15:38Speaker 02

  But.

• 1:15:38Anthony Pompliano?

  The seat of the soul.

• 1:15:39Speaker 02

  The seat of the soul. Yeah, Oprah Winfrey's favorite book.

• 1:15:42Anthony Pompliano?

  I'm gonna go buy it today.

• 1:15:43Speaker 02

  Dude, it's, it's, uh, it was, it was a profound book for me.

• 1:15:47Anthony Pompliano?

  All right.

• 1:15:47Speaker 02

  Um, and the other book, um, I really like learning about the brain and I like learning about habits. So like The Power of Habit was a really profound book for me. Um, Atomic Habits is another one. Um, uh, there's a book called The Brain by David Eagleman. I think it's fantastic. Um, there's some, there's some other ones on the brain that I would tell you are really good. Um, investing wise, I think you can get this on PDF because it's not even in print, but Margin of Safety is probably one of the best investing books out there. Way better than The Intelligent Investor and Security Analysis.

• 1:16:30Anthony Pompliano?

  Um. All right, second question. Sleep schedule. My friends at Eight Sleep, uh, I've got a thermo-regulated bed. I sleep on it's freezing cold. I used to sleep like five, maybe six hours. Wolves don't sleep, the whole nine yards, right? Like Point of Pride. I sleep like eight or nine hours now. I love it. Completely changed my life. Better mood, more energy, all, all, everything you're referring about. What's your sleep schedule?

• 1:16:57Speaker 02

  Uh, it's pretty predictable. Um.

• 1:17:01Speaker 02

  I usually go to bed, I don't know, 10 or 11 o'clock and then up at 6.

• 1:17:09Anthony Pompliano?

  It's like seven, eight hours.

• 1:17:10Speaker 02

  Yeah.

• 1:17:10Anthony Pompliano?

  Yeah, it's not bad.

• 1:17:11Speaker 02

  It's pretty generic. There's nothing special to it. But that's another good book. The guy from Stanford wrote it.

• 1:17:18Anthony Pompliano?

  Why We Sleep?

• 1:17:19Speaker 02

  Yeah, really good book.

• 1:17:21Anthony Pompliano?

  Was it Matthew Walker? I think it was his name or something.

• 1:17:23Speaker 02

  I don't, yeah, I can't remember his name.

• 1:17:25Anthony Pompliano?

  All right. Third question, aliens believer or non believer?

• 1:17:28Speaker 02

  Oh, yeah.

• 1:17:29Anthony Pompliano?

  Why?

• 1:17:30Speaker 02

  Um, I just, when I look at just how massive everything is and almost where,

• 1:17:43Speaker 02

  you know, when you look at what life is, it's just assembling and organizing things and everything else is entropy and chaos. It just, for me, seems like it's a natural part of the universe. Life is somehow part of the natural part of the universe. And like if you'd go to even planets within our own solar system, it wouldn't surprise me in the least bit to find some type of bacteria or life form that's, that has matured or developed itself. Based on the organic substance of that planet.

• 1:18:20Speaker 02

  Wouldn't surprise me in the least bit. And so when you look at all the other solar systems, all the other galaxies, like, I don't know, man, it's just from a statistical standpoint. It just seems very natural.

• 1:18:32Anthony Pompliano?

  Yeah, I think it's a no brainer.

• 1:18:33Speaker 02

  Yeah.

• 1:18:34Anthony Pompliano?

  What question you have for me to finish up?

• 1:18:37Speaker 02

  Oh, man.

• 1:18:41Speaker 02

  I guess how you got your start in this? Cause I don't know, I don't know your backstory. So like you were in the military, I know.

• 1:18:49Anthony Pompliano?

  Oh, in like in.

• 1:18:50Speaker 02

  In the podcasting, yeah.

• 1:18:52Anthony Pompliano?

  Oh, podcasting.

• 1:18:52Speaker 02

  Yeah.

• 1:18:53Anthony Pompliano?

  I was in the military, came back. I had two like small startups that I tried to build, varying levels of success, went out to Facebook, ran some product and growth teams there. Uh, I always say that, uh, the pro, like the quintessential example of showing up. Up, being surrounded by amazing people, right time, right place. You get way too much credit when things go right. And if things had gotten wrong, you'd get all the blame, right? But like literally, uh, couldn't have been a better situation. Uh, started investing full time in 2016. And a kid that I had met when he was in high school, uh, was a freshman in college and he came up to me and I'd heard about Bitcoin. Went in before in 2014 at Facebook, uh, David Marcus, when we hired him, he'd talked about a little bit.

• 1:19:36Anthony Pompliano?

  But 2016 kid didn't even pitch me on cryptocurrency or anything. He was like, hey, man, like there's basically this thing called mining. You like buy a computer, you plug it in and like money shows up. And I was like, you like print money like, like, you know what I mean? Like what? And so he like explained it to me and it was GPU mining, uh, which is what he had been doing. Uh, and to his credit, he could show me like, look, I bought this, this is how much it costs. This is what I earned, like

• 1:19:58Speaker 02

  I'm making money.

• 1:19:59Anthony Pompliano?

  Yeah, like all the stuff, right? And, uh, my dad had been in the data center business for like 40 years.

• 1:20:03Speaker 02

  Oh.

• 1:20:04Anthony Pompliano?

  So when I saw this, I was like, wait a minute, it's like better than data centers, like persistent demand for power, no sales team. You don't need a SOC two, tier three center, you know what I mean? Like all the thing. And I was just like, okay, fine. And, uh, the first big bet that I made was I sold all my Facebook stock and I took about 50% of it and I put it in cash and put it in the bank. And the other 50% I bought equipment.

• 1:20:25Speaker 02

  Wow. I had no idea you got your start kinda in the money.

• 1:20:28Anthony Pompliano?

  Well, and to be clear, the very first foray was like, I bought equipment and like went to other facilities. Somebody else was like hosting it for me and had like a dashboard. So it wasn't like I was like doing much, right? Other than just, uh, the capital allocation. Uh, but then from there, it's like, okay, like now how do I get started to do more and more? Uh, and so Jason Williams, who I think you've probably interacted with online, uh, Jason and I met in 2016. And, uh, there's this famous car ride that we took from Raleigh to Charlotte. We were going to see a company we had invested in. And, uh, it's probably like the beginning of 2017 and I was like telling him about this and he's like, this is nuts. Like, what are these like fake, like shut up, right? So, you know, two and a half hours down, two and a half hours back. And by the time we got back, he was like, all right, like, but let's like do like, this is interesting.

• 1:21:12Anthony Pompliano?

  And, uh, we'd both invested in a power generation company, uh, and he had stepped in as a CEO at this point. And so, uh, the power generation company literally took car tires and turned it into

• 1:21:24Speaker 02

  I've heard about it.

• 1:21:25Anthony Pompliano?

  Commodities, oil, steel, uh, syn gas, carbon, et cetera. And you should have seen the faces on the people when we showed up and we were like, all right, we're going to build a cryptocurrency mine here on the facility. They were like, what is a cryptocurrency? Like, what is a mine?

• 1:21:37Speaker 02

  Who are these weirdos?

• 1:21:38Anthony Pompliano?

  Yeah, just like, this is like wild. And it was like, yeah, like, we're going to take the car tires. We're going to do the exact same process, but rather than sell that power into the grid, we're going to like mine it here on site. And like, here's the math, like, you know, we're going to sell for three cents or we can mine it like 35 cents or whatever. And they were like, that sounds like a scam, right? Like, what do you mean? You could 10x the, you know, revenue.

• 1:21:58Speaker 02

  Totally.

• 1:21:58Anthony Pompliano?

  And we're just like, yeah, it's just a different thing. And so to their credit, uh, I mean, we tried a lot of different things. People were like, oh, I built a mine. Like, cool. You ever tried to figure out air conditioning and like cooling and the cost? And like, I mean, you just get into like, it's just a nightmare.

• 1:22:13Speaker 02

  Yeah.

• 1:22:13Anthony Pompliano?

  Ended up getting it built. And then that was like, uh, while all this is going on, I've got the mines running and Ether went from 10 to 30 to a hundred dollars between like February and May of 2017. And I was like, stop the press it. Like, what is going on? Uh, and I just went down the rabbit hole and here we are.

• 1:22:33Speaker 02

  Wow, dude, I had no idea.

• 1:22:35Anthony Pompliano?

  Yeah, it was, uh,

• 1:22:37Speaker 02

  I love how Jason's involved in that. I didn't realize that he was.

• 1:22:40Anthony Pompliano?

  Jason and I are very good friends. We've known each other now for a while and, uh,

• 1:22:45Anthony Pompliano?

  we're very similar.

• 1:22:47Speaker 02

  And now, you know, Dave Portnoy loves them.

• 1:22:49Anthony Pompliano?

  Yeah.

• 1:22:50Speaker 02

  Can't get enough of them.

• 1:22:50Anthony Pompliano?

  Well, cause Jason understands that, you know, people who talk shit like to talk shit to somebody. You need somebody to go back and forth. It's not as fun doing it to a wall.

• 1:22:58Speaker 02

  Every time he says parabolic guy, I just die.

• 1:23:01Anthony Pompliano?

  All right. Where can, uh, where can we send people to find you on the internet or find the podcast?

• 1:23:05Speaker 02

  I'm on Twitter, just first and last name Preston Pysh. And, uh, the podcast is called We Study Billionaires, the Bitcoin show that I, that I run. It comes out on Wednesdays and then we still run a traditional show on Saturdays for people that are interested in the traditional investing stuff.

• 1:23:20Anthony Pompliano?

  Awesome. Thank you so much for doing this.

• 1:23:22Speaker 02

  Hey, thanks for having me over. This is awesome.