DeFi & NFTs — with Tonya Evans

Tonya Evans, a professor of law at Penn State Dickinson Law School, joins Scott to discuss the intersection of intellectual property and the crypto space. We also hear her take on NFTs as tools of empowerment, and how DeFi serves as a viable way for people to build generational wealth. Follow Tonya on Twitter, @IPProfEvans. Scott opens with his thoughts on the billionaire space race, CNN+ and the streaming wars, as well as Zoom’s most recent acquisition. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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

• 0:01Scott Galloway?

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• 0:48Speaker 01

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• 1:18Scott Galloway?

  Episode 85, The Atomic Number of Acetine. Back to the Future was released in 1985. We went back to the future today with this inspiring billionaire space race. I'm having the equivalent of my own space race, where I am taking a yellow Corvette and crashing it into a hair plugs clinic. The midlife crisis is on overdrive, bitches. Go, go, go!

• 1:47Scott Galloway?

  Welcome to the 85th episode of the Prof G Pod. In today's episode, we speak with Tanya Evans, a professor at Penn State's Dickinson Law School whose research is focused on law. Innovation, academia, and entrepreneurship. We discussed with Tanya the intersection of intellectual property and the crypto space, as well as her take on NFTs as a tool of empowerment. Hmm, well then, okay, what's happening? What's happening? It appears that's... Fuck that, I gotta go off-script here. I have a script, then I go off-script, but I'm going off-off-script. I just watched this morning, Blue Origin, whatever it was called, Shepard, go into space, and I was asked to go on MSNBC and talk about it, because I'm kind of a big

• 2:28Scott Galloway?

  deal, kind of a big deal, grande deal, grande, dog, dog son, un deal grande. Anyways, and I felt like the guy on the shores of Spain saying, "It'll never work." Everyone was like, "Oh, this is so inspiring, and it's a great moment for humanity." No, it wasn't. We achieved much greater things technologically, from a courage standpoint, from an imagination standpoint, 50 fucking years ago. Why are we so enthralled with this space race? The only thing I can figure out, the only thing I can figure out, is that we have really rich people in the capsule, so we find it fascinating. This is, I think this reflects something very uncomfortable and strange.

• 3:10Scott Galloway?

  So first off, Jeff Bezos can spend money how he wants to spend his money. I'm not one of those people that says, "Oh, he should spend it on world hunger." It's his problem, there will always be societal problems that warrant greater investment, but that should no, in no way inhibit us from exploration and trying to push the boundaries of what we're capable of. I'm down with that. What I find is just so fucking ridiculous here is this, again, continued idolatry of money and billionaires and people pretending that they're doing something for humanity when all they're doing is running a commercial to try and juice the stock of their space-hauling company. Let's talk about space. There's space, there's scientific exploration, which will probably yield huge benefits.

• 3:54Scott Galloway?

  Difficult business requires a ton of prospective investment. That's probably the government and medical associations, et cetera, et cetera. There is space exploration. Let's colonize Mars. That's just ridiculously stupid. You want to go be a colonist on Mars? Well, sign up for a one-way trip to a fairly crisp, horrific death between the solar storms and the increased gravity. Yeah, good luck with that. Then there is space hauling. That's the good part of the business. There are 3,000 satellites going to 50,000. That is a very good business. Broadband, communications, there's just a need to take a lot of shit into space, a lot of equipment.

• 4:39Scott Galloway?

  And space hauling, rocket launches used to cost about 200 million bucks, now they're down to 60 million. So the ability to move things into space more economically should be hugely accretive. And also, there's probably a business there. Now, let's talk about the really, like, head-up-your-ass business, and that is space tourism. Okay, let me get this. Virgin Galactic, which didn't get to the Carmen line, and by the way, anyone who saw that video goes, "Okay, that doesn't look like that much fun. Would I pay 250,000 for it?" No. So they acknowledge that, and they say, "We're going to try and get it down to 40,000." They want to do up to 400 missions a year, which, by the way, would be no small feat for a company that's been around 17 years and hasn't hit any of its milestones. But let's assume they can. The capsule holds four people.

• 5:22Scott Galloway?

  That's 1,600 people times 40,000. That's $64 million in revenue for a company that even after losing 40% of its value over the last five trading days, has a $6.5 billion market cap. So 100 times revenue? I mean, what the fuck are we smoking here? Oh, and by the way, the people who really understand the company, maybe sat on its board, maybe got to see management, understand the technology, are super smart.

• 5:47Scott Galloway?

  And are the largest shareholders, specifically Chamath and Richard Branson. So Chamath sold his entire stake. He said, "Okay, I get this company. It's great. I see its prospects. I'm out." All of it. He didn't leave half of it in to get liquidity. He said, "No, no, I'm out." That is a negative forward-looking indicator. Richard Branson has sold $850 million of his stock in Virgin Galactic and reinvested it, not to get liquidity for himself, but reinvested in his other businesses. So he's basically decided his other businesses have better prospects than Virgin Galactic. This thing makes no sense. Virgin Galactic is going to be the poster child for SPACs and the space bubble. The worst thing that's going to happen to Virgin Galactic, and the reason why it's going

• 6:30Scott Galloway?

  to be sub $10 a share within 12 months, is it's starting to have metrics. "Oh, you say you're in the tourism business? Okay, let's look at hospitality. Let's look at airlines, whatever that might be." And all of a sudden, Virgin's made the mistake of saying, "Okay, we're sort of a tangible thing that has benchmarks. There aren't any airlines. There aren't any cruise companies. There aren't any online travel portals trading at 100 times projected revenues if everything works out." And what do we have today? Who did we used to put into space? Who did we used to put into space? Well, one, we used to fund our nation's space exploration with a progressive tax system. Jeff Bezos, the wealthiest man in the world, has paid approximately a 1% tax rate on his increases in wealth because we have a fucked-up tax system that only taxes people when they

• 7:15Scott Galloway?

  recognize a capital gain. So you borrow against your capital gain at 0.85% and just keep increasing your debt, but meanwhile, grow your assets tax-free or tax-deferred, sort of the buy, hold, and die strategy, or buy, hold, avoid, and die. Anyways, there's something there. There's probably an acronym in there. And we used to take that tax revenue and fund NASA. And who did NASA send into space? It sent the daughter of a minister. Who got a PhD in physics from Stanford, Sally Ride, who happened to be the youngest person and the first woman into space. It funded a woman who got a master's in chemical engineering and then went on to get her an MD from Cornell and then took her license to practice medicine and decided

• 7:59Scott Galloway?

  to go to Liberia and be in the Peace Corps and then applied to NASA and became an astronaut. I'm talking about Mia Jameson. This is who we sent into space. Who do we send into space now? The wealthiest man in the world and an 18-year-old son of a private equity billionaire out of Norway. Welcome to America.

• 8:19Speaker 02

  I want to thank every Amazon employee and every Amazon customer because you guys paid for all of this.

• 8:28Scott Galloway?

  Okay, what else is happening? A lot of business news. It appears CNN has been listening to the dog. Yes, they have. Yes, they have. The most trusted name in business. The company announced that it's launching its CNN Plus service in 2022. CNN Plus's digital officer, chief digital officer, Andrew Morse, said this development is the network's most important launch since Ted Turner founded the company in 1980. I actually agree with that. This is a big deal and they, they ladies and gentlemen are coming to play. This isn't some weird Fox Nation thing or Peacock repurposing SpongeBob and Trevor Noah. They are hiring 450 new people to work on the subscription service. The subscription network will offer eight to 12 hours of live programming a day and original series.

• 9:13Scott Galloway?

  According to Morse, the live programming will be different from what the network currently offers and instead stream more deep dives into various topics. So it'll be sort of a cross between the Situation Room and kind of live news that's tied to the clock and somewhere in between that and the original scripted Queen's Gambit that takes a year and tens of millions of dollars to produce. It seems to me that they're going to try and. If you will, bourdain the shit out of business with a subscription program. I think this is very exciting. News, politics, and to a certain extent, business news are the last frontier for over the top. And I think if they come to play, which it sounds like they are, it could win. It could be, I'm an enormous fan of CNN.

• 9:56Scott Galloway?

  I think they have the best talent of any media organization in the world, or at least any television organization. I would argue the New York Times is probably the most outstanding newsroom, so to speak. But anyways, I'm very optimistic. What not to do? Be the Peacock. Specifically, can you imagine NBC Universal's Peacock can't cut a break? Why? What's their big thing? Their big bet? The Olympics. Who are the stars? No one cares. All we hear about in the Olympics is that there's a new infection, or that the Japanese don't want, Japanese citizens don't want it. Anyways, unfortunate timing for Peacock, but it's sort of when it rains, it pours. According to a report published by Bloomberg reporter Jerry Smith, 14 million people actively

• 10:37Scott Galloway?

  use Peacock each month as of late April, but only about 20% were paying for it. So, okay, Netflix, what are they, 200 million people using it? What is Peacock right now? It sounds like there's about 3 million people paying for Peacock. Think about how much things have changed. Go back 10, 20 years. Must See Thursday, NBC, number one network, Comcast, The Player, right? And now, 3 million people have signed up. They're at about 1.5% of where Netflix is. That number doesn't sound too great when you compare it with the fact that Disney Plus, Disney Plus, the new kid, the rookie garnered more than 73 million paid subscribers in its first year. What is going on? You gotta go all in. You gotta have original content. You have to have a bank.

• 11:20Scott Galloway?

  Netflix, $17 billion content budget, and they sort of had Greenfield. They could lap everybody because no one was paying any attention to them. So let's break down domestic subs across the major players. Netflix is at 66 million. I think they're about 200 million globally. HBO Max, 20 million. Think about it. HBO kind of gave away. HBO was the original gangster here. Hulu, 42 million. Who knew Hulu? I think it's the name. Showtime at 9 million. Paramount Plus at 10 million. Was that Starship Commander Jean-Luc Picard? By the way, my Halloween outfit every year. Huge crowd pleaser. Huge crowd pleaser. Peacock at 3 million. Discovery Plus at 7 million. Think about that.

• 12:05Scott Galloway?

  It's going to be interesting to see what happens with this new multi-headed monster called Discovery. With how they're going to organize all that from a brand standpoint. Anyways, not my problem. Disney Plus is now at 38 million people. This is really interesting. We're going to see consolidation here. It's kind of interesting to see who's going to end up with who. You got to imagine somebody's going to buy someone else out of Hulu, whether it's Disney buying Comcast out or Comcast buying Disney out. Showtime can't survive at 9 million. Paramount Plus, I don't think can survive. Be interesting if Peacock. Peacock sits on a quarter of a trillion dollar market cap on Comcast, so they're probably going to be a consolidator versus a consolidati. But look for them to do something bold because the Roberts family out of Philadelphia.

• 12:50Scott Galloway?

  You don't become billionaires in Philadelphia unless you like are willing to make bold moves and throw people into the river, so to speak. Not that I'm accusing them of that. Anyways, my point is these are. I would not want to fuck with the Roberts family and I would expect them to make a very bold move and come and do some sort of deal with Roku or buy one of the other players or something. So anyways, let's move on. Earlier this week, Zoom made its largest acquisition yet. The company is acquiring Five9, a cloud contact center software for roughly 15 billion in an all-stock deal. I did not see that coming, did you? I did not know what Five9 was. I have never heard of Five9. Zoom said this acquisition will help the company enter the 24 billion. Contact center market, does contact center mean call center?

• 13:33Scott Galloway?

  We recently received an office hours question around what Zoom's next move should be, and I explained how the company essentially has two options. Start acquiring companies and offer a full suite of collaboration tools, or go vertical and offer some sort of other communications device. It's evident they're going with option one, as buying Five9 marks the company's fourth acquisition since the start of the pandemic, according to Bloomberg. The other acquisitions include Keybase, an encryption startup, and a German translation software maker. That sounds like a laugh a minute. Anyways, so let's think about this. Does this acquisition give Zoom a competitive advantage over Microsoft and Teams? I don't know. I think that Zoom has such incredible custody of the consumer, but they're kind of running up against Microsoft.

• 14:18Scott Galloway?

  And I wonder what's going to happen here. And they're sort of in a weird position. They have no choice but to make acquisitions because they are now so expensive, they're not really an acquisition candidate. But at the same time, they're bumping up against some formidable players. Microsoft has a relationship with an enterprise buyer in 98% of the corporate world that does over $10 or $50 million in revenue. So that is a pretty formidable incumbent. But Zoom is doing the right thing. I would have every investment banker working for me if I was working at Zoom or running Zoom, which could happen. The Zoom dog. So let's summarize all this. We have the mother of all midlife crises playing out in front of our eyes, where we're supposed to be inspired. And it's an opportunity for broadcast media to pretend

• 15:03Scott Galloway?

  there's something interesting going on here. I just don't get it. I think it is ridiculous. This isn't a space race, it's the lame race. We have Zoom sharpening their pencils and making a ton of acquisitions. It's a great time to be a small collaboration company with decent momentum. You're about to be taken out or get a ton of offers. It'll be interesting to see if in fact they can hold their own or if their market capitalization gets cut in half when we return or if some of us return to work and they're no longer able to sustain the kind of growth where their stock is really priced in that kind of... Amazing, amazing growth. And, and finally, the OTT landscape, the streaming landscape is about to get more interesting as the final frontier of news and politics is now

• 15:47Scott Galloway?

  about to be, have flags planted all over it that say CNN as they take their army of world-class journalists and a substantial amount of capital and quite frankly, a new company that needs to show real momentum in streaming. I think they're launching sometime in 2022. That is going to be super interesting. It'll be interesting to see if the other guys come up with their own news offerings and what happens. There's going to be tremendous consolidation in the space and oh my gosh, watch out for what Comcast does because they are a big player that is not doing well and that probably doesn't wash with them and they are not afraid to make bold moves and they have absolutely the bandwidth and the capital to go make a bold move. Look for a bold move from, from the peacock and then

• 16:30Scott Galloway?

  look for the little cocks to continue to go into space. Stay with us. We'll be right back for our conversation on decentralized finance, crypto and IP with Professor Tanya Evans, or those of us in the know call it DeFi. I feel younger already. Support for the show comes from Bilt. Most of us work hard to earn our keep, but usually there's no one around to hand you a cookie when you successfully pay your monthly housing bill. No one except Bilt, that is. Bilt has expanded from their original renter rewards program and they have a lot more going on for members now. For example, members can earn points on mortgage payments too. Every housing payment gets you points that get you a lot more than baked goods such as flights with top travel partners including

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• 19:12Scott Galloway?

  Professor Evans, where does this podcast find you?

• 19:15Speaker 03

  I'm in the great state of Pennsylvania.

• 19:18Scott Galloway?

  Where? Where in Pennsylvania?

• 19:20Speaker 03

  I'm in the crypto space, so I don't actually...I might not even be in the United States. You don't know that. But I grew up in Philadelphia, if that's helpful.

• 19:28Scott Galloway?

  Nice. And obviously at Penn State. So let's talk a little bit about this. So can you walk us through the intersection of intellectual property and the crypto space?

• 19:39Speaker 03

  So I guess to take a step back to even to say what intellectual property is, all intellectual property is property, but not all property is IP. And IP really focuses on three main areas. There are a few others, but the big three that most people hear about, copyright, trademark, patent, each is focused on protecting a different aspect of property that is created with the mind is a very loose way. It's intangible, personal property. And, and most often copyright comes into play when you're talking about creativity or collectibles, and I know we're going to get into that. But copyright in particular focuses on protecting

• 20:21Speaker 03

  an author, and we use that in a more general sense, a creator's work when it is independently created, meaning they didn't copy anybody else's work. And it is what we call fixed in a tangible medium, which is gobbledygook that basically focuses on something that is sufficiently permanent, either in writing or recording, somewhere where it's sufficiently permanent that it's even capable of being copied. And then copyright is actually a bundle of rights. It's the right to reproduce or the right to copy, obviously. Also, the right to distribute those copies, the right to prepare derivative works from that copy or to adapt it into something new. So if somebody writes a book and then they sell the film rights,

• 21:06Speaker 03

  for example, those film rights derived from or adapted from the book. And then finally, the right to perform a creative work publicly, if it's capable of being performed, or the right to publicly display if the work is capable of being displayed. So that actually makes up the bundle of rights. And therefore, it's really, really important that artists who are transitioning into the non-fungible token or the NFT space really fully appreciate the nature of those rights, not only to protect their own work, but also not to unknowingly, because there are a lot of theft out there. Hope we talk about that, too. But to not unknowingly or unwittingly fall, fall into

• 21:50Speaker 03

  copying someone else's work that could be considered copyright infringement if it's not a fair use. So there's a lot that artists really do have to think about above and beyond just the pure process of creation as they're moving into the digital space.

• 22:07Scott Galloway?

  So NFT, and I'm amongst this cohort, I think NFT is a term that we all pretend to understand better than we do. Can you give me your kind of cocktail party explanation of NFT? And what do you think the dynamics are at play here? Why they've become, you know, a big thing? And what you think the future or the prospects are of the NFT market?

• 22:30Speaker 03

  So the acronym NFT stands for non-fungible token. And so to get at the power and the potential of NFTs in the crypto asset space, you kind of take a step back to just figure out what this word fungible means. And fungibility is a technical term that comes out of the, on the economy side of things, that focuses on the interchangeability of an asset or commodity. For example, $1 is the same as any other dollar in terms of its value. Technically speaking, every dollar has its own serial number, but it doesn't impact

• 23:13Speaker 03

  the value of $1 for $1, apple to an apple, things that are interchangeable. The power and the real intrigue around non-fungible tokens is that each token represents a unique asset that is, it in and of itself is unique, and it's verifiably unique because of the technology that powers non-fungible tokens, crypto assets more broadly, and ultimately blockchain. Blockchains are basically the records of transactions and balances that if I sent you an NFT, I would have one, I send it to you, whatever it happens to represent, and we'll talk about that in a moment, in terms of the creative space. But the token itself represents value.

• 23:57Speaker 03

  And it also allows the presumptive owner of that token to exercise ownership and control over that token that represents some type of value. In the creative space, those tokens are connected to an underlying work that gets to your original question about intellectual property implications in the space. That token is representing ownership. Think of it more commonly as the way you might use a deed to represent ownership in a home. Each home on a parcel of land is actually unique, even if you live in a cookie cutter environment and every McMansion looks the same. But that unique parcel of land is represented by a specific deed.

• 24:39Speaker 03

  The token in, you know, rough analogy is the same way one might exercise ownership and control over the underlying asset. In our case for NFTs, in most cases, it's some type of digital creativity. It could also be physical work, but in most cases, it's talking about some type of underlying digital creativity.

• 25:02Scott Galloway?

  So tell me where I got this wrong. I think of NFTs as another layer of scarcity that's manmade, that basically, or artificial or a construct we've invented, that you had artisans creating one-off paintings. And then I said, well, there's an opportunity here. There's more than one person that wants to own this painting. So we'll create a lithograph or whatever it is, a steel plate mimicry of the piece of art. We'll stamp out just 200, we'll sign one of 200, two of 200, and we create a new layer that people can enjoy, but it still has scarcity attached to it, which creates more economic value in the ecosystem. Isn't this just another layer of scarcity where you said we're going to create a limited

• 25:47Scott Galloway?

  number one for a new medium, such that there can be additional economic value? Where do I have this wrong?

• 25:55Speaker 03

  I actually think that you are pretty spot on. And in the same way, you can have one with a slight distinction and an advantage. So it's not an incorrect statement, but I think that the technology takes it a step further. I think about, I'll take a slight in-run around this. In the late 90s, when you think about the Napsters and Groksters of the world, you have the advent in the late 90s of peer-to-peer technology, which is one of the three main technologies used in distributed ledger technology or blockchain technology. You have the internet, you have peer-to-peer technology, and encryption with digital signature. Peer-to-peer technology was a major problem from a creativity point of view.

• 26:40Speaker 03

  The entertainment industry, we thought it was going to fall down and become a shell of its former self. Some might argue that that actually did happen, but I think they're still making a couple of bucks. But the issue was that one person could sit in their home and make a perfect digital copy of an MP3 file, send it to a thousand of their not-so-closest friends, and still not exhaust that copy that they had, right? So that was of great concern in the creative space. And certainly, that's always going to be a concern when you're talking about digital money. Now, you know, focus more specifically on cryptocurrencies and the ability to make sure that if I have one big twin and then send it to you, I no longer have it. It avoids the idea of fraud or failure of a secure system.

• 27:25Speaker 03

  That same idea can be applied in the art space, certainly to create a one-of-one creative token or the one of 10 or the one of 200. I've seen that in the digital space as well. But to be able to verify the authenticity of that without relying on a human or an entity where, you know, I think of the art world as being very opaque. And I think about the asymmetry of information that pervades the financial world that certainly exists, maybe even more so in the art world. And so it's the ability of creating those secondary layer markets,

• 28:09Speaker 03

  which are really, really critical for the success of an artist. And in most cases, in the physical world, artists aren't participating in that. But they can participate in a very meaningful and real way in the NFT space by coding through smart contracts or self-executing code, the ability to direct payments, not only on that first sale, but in downstream revenue opportunities, which is really important for artists.

• 28:36Scott Galloway?

  And so you you mention the word utility. If if I own a Grace and Perry piece of art, there's utility around the fact that the scarcity offers me, and that scarcity has some credibility, you buy it through a quote unquote legitimate broker, you do believe that it's only one of 200 and they broke the mold. So I get signaling value. I get to say, hey, I own a Grace and Perry. It's a store of value, which has utility, ideally. I think art has outperformed almost every asset class. And I also have some consumption value in that as I can hang it on my wall and I can enjoy it.

• 29:17Scott Galloway?

  It strikes me that NFTs are, one, they use technology to create that scarcity credibility, which is utility. They can be stores of value. Is there, but I don't see any consumption. Like, if I download something off Spotify that has certain IP, someone gets paid, that's fine. I enjoy the music, I enjoy the art. Isn't the utility here going to be more about speculation than any sort of consumption? Isn't that what's different than NFTs, say, versus artwork?

• 29:47Speaker 03

  Well, it depends on the reason that a buyer is participating in the market. I think you're going to have, I know, not think, that, to your point, we just have way more speculation in some sense, because we're just in the gold rush of crypto more broadly. But I absolutely know that there are people who are speculating, and I would call them investors, right? And they're just going to spend money buying Bitcoin, ETH, and any altcoin, including NFTs, and they're just going to see what shakes out, right? But then you have those who do appreciate the subjective value of art for art's sake,

• 30:27Speaker 03

  or collectives that are individuals and collectives focused on supporting the creative ecosystem for the purpose of the expression of the art form and what art brings. So you have all sorts of people who are able, actually, to participate. I spend a lot of time focused on the empowerment of artists more broadly, and then specific communities in particular. But actually, as we're talking through this, I think this is empowering. Collectors who, particularly digital natives, who for the first time may have some additional subjective appreciation of the value of art, separate and apart from the economic value.

• 31:08Scott Galloway?

  And you've said that you think that NFTs are particularly empowering for Black and Brown creators and women. Why is that?

• 31:15Speaker 03

  When I think about the disintermediation of the financial world and the tech world, that has real power in this other microcosm that has captured, unfortunately, some of the systemic issues and concerns of what we've talked earlier about, the lack of transparency, certainly accessibility to the auction houses of the world and the galleries, the value that is placed on certain art forms and not art forms maybe from Black and Brown communities, from women, from the queer community and the like. And the ability to leverage that peer-to-peer technology that first, you know, came in vogue with, on the crypto side,

• 32:01Speaker 03

  and to see that happen in the NFT space as well, removing barriers to entry, removing the expensive, quote unquote, friction in the exploitation of creativity. And when I say exploitation, I mean the leveraging of it, not in a pejorative sense, access to global markets. So in the same way that is really, really powerful in the cryptocurrency realm, it's absolutely powerful in the creative and collectible space. And just like the liquidity that is injected into art, which can be somewhat illiquid because of the subjective value we talked about, and certainly in the collectibles market. And the interaction perhaps of other Web3 technologies

• 32:45Speaker 03

  that are just opening up and expanding the options and opportunities for creators is really, really important across the board, but even more important for those communities that are historically disenfranchised and maybe overlooked.

• 33:01Scott Galloway?

  So I like to pause a podcast when I think there's something that's worth pausing on that I think is real insight. And what you said there I thought was really powerful. As I think about it, if you think about banking, right, the branches, history of redlining, and a lot of people of color just aren't comfortable and don't trust the traditional supply chain or on traditional suppliers and finance. And one of the wonderful things about crypto is that 47% of the owners of crypto are people of color, not by dollar volume, but by the numbers of people. And this is dispersing the creative content, just the same way that TikTok says, "We don't care, we're not going to judge the pedigree or the certification of the creator, we're just going to look at the quality of the

• 33:44Scott Galloway?

  content." And if the end consumer likes it, our algorithm, which is not biased, not benign, but not malicious, is just going to distribute content based on the value of that, that this might represent the same sort of opportunity. I think that's super interesting. I want to pivot to decentralized finance or DeFi as a way for people to build generational wealth, specifically black entrepreneurs. Give us your thoughts.

• 34:09Speaker 03

  Yeah, so much of, I'm feeling like we are establishing some common themes for this episode because decentralized finance or DeFi also amplifies opportunity through access to opaque markets, transparency. So when you think of public permissionless blockchains, and when you think of decentralized autonomous organizations, and all of that public facing information that's pseudonymous, it's not anonymous, except in the case of some privacy coins, story for another day, but you can see the public record of the transactions

• 34:50Speaker 03

  and the balances in a way that is obscured in centralized or traditional finance. That brings opportunity, also self-sovereignty over one's own value. DeFi creates this opportunity for people to engage in the action or the activity that banks usually do, this direct resource transfer from the saver to the spender. When you're connecting savers and spenders, traditionally that relationship and those transactions are facilitated by banks. And it, you know, the banking system is highly regulated in some sense, but you've already identified the redlining and the, you know, the cost of taking out a loan at higher interest

• 35:35Speaker 03

  rates, even with all things being equal. It makes me think of the wealth gap that persists and how one begins to, to eke away at that when there's not equal participation in, in financial markets. So when I think of decentralized finance or DeFi, I really focus on the opportunity, I guess, to democratize finance and thereby decreasing the wealth inequality that, that persists in a pernicious way from generation to generation. And a final point, when I think of the black community in particular and how I was raised and in talking to some of my friends and relatives, the focus has always been on education

• 36:19Speaker 03

  and understandably so. And my education has been invaluable to me. We focus on the things that people can't take away because one day you can have something and the next day your entire town can be burned down. But as long as you're living, no one can take away your education. So that was, you know, a persistent theme. But the others are get good insurance, maybe a burial plot and a good government job and you'll be great. The problem with that is our white counterparts, to the extent that they have access to it as well, may be more inclined to have things passed down, may have more access to appreciating assets and capital assets, stocks, equities and things of that, that nature.

• 37:04Speaker 03

  And if you're not investing in that way, which is another thing that's really exciting in the crypto space, for those who are actually receiving payment for their art or in the decentralized finance ecosystem, you're dealing with capital assets. Taxes are capital assets, they're going up, they're going down. That's very different than receiving government issued currency, also known as fiat. If you have a dollar, by the time you put it in your wallet, and I'm sure it's not, the value is not the same. And that is a game changer for generational wealth creation as well.

• 37:38Scott Galloway?

  Coming up after the break.

• 37:41Speaker 03

  It's a complete mind shift to, to really embrace what it means to be self sovereign, to control your own money.

• 37:52Scott Galloway?

  Stay with us.

• 37:59Scott Galloway?

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• 39:36Scott Galloway?

  I would just love to get your kind of off-the-cuff thoughts on some, first off, let me just straight up. Are you a crypto bull or bear? Do you look at these, do you look at this market and think this is undervalued, overvalued? Bitcoin and Ethereum will do well, but the rest go to zero? What's your general viewpoint on this as a market?

• 39:59Speaker 03

  My personal sentiments are I'm bullish on crypto generally in particular. And I know the Bitcoin maxies are going to be mad. I love Bitcoin. Bitcoin is the OG. Bitcoin is scarce. Twenty million. I get all of that. I believe that the conversation and the narrative can be a both and, not an either or. I am the chair of the Maker Foundation, part of the Maker DAO community. I believe very much in Ethereum virtual machine and smart contracts and the things that you can run on top that it's really transforming finance. Then I think of the other 10,000 plus tokens and coins out there and things that we don't even know yet, right? I'm sure people were really excited about

• 40:44Speaker 03

  electronic mail, also known as email, as being the first use case for the internet. And now look what we're doing with this technology, doing things that no one could have imagined. And so I am bullish on the idea of having alternatives to government issued currency. I definitely see private coins from private entities. We know that there are big entities working on that, but there are always going to be alternatives. We'll see what sifts through, what makes it through. And I caution people to just make sure that they are, you know, D Y O R, doing your own research to compare, contrast, and distinguish how various coins,

• 41:26Speaker 03

  native coins or tokens built on top of other platforms, how they were created, their intended function. And it's really important not to aggregate all into one basket because they all just function so differently.

• 41:42Scott Galloway?

  What about the storage or the custodianship of these assets? Do you believe in disclosure? I'm an investor in a company called Ledger that makes the NanoX, which is sort of the premier crypto wallet. Do you think a company like Coinbase eventually has its own wallet and takes that market away, or that more and more people are going to take, are going to say, I need something that can't be hacked and move to more decentralized cold storage? What's your thought on how we store this?

• 42:11Speaker 03

  Oh, it's such a good question. There are a lot of shaky hands and necessarily so because it's not like just losing your wallet and being very sad about that, but maybe there's only a hundred dollars, not one million, right?

• 42:23Scott Galloway?

  Yeah, your life savings, yeah.

• 42:25Speaker 03

  And as an aside, but related point, it's a complete mind shift to, to really embrace what it means to be self sovereign, to control your own money, to not rely on intermediaries that can serve a function. That's why I say that, you know, both.

• 42:44Scott Galloway?

  Or they have FDIC insurance, right?

• 42:46Speaker 03

  Right, right? Even though that runs out at a certain point, too.

• 42:49Scott Galloway?

  Yeah, yeah.

• 42:50Speaker 03

  We'll give you some, but over that, you're on your own kid. So what does that mean? What does that feel like? The, the anxiety that that produces leads me to believe that there will be a whole core contingent of folks who believe in cold storage. And there is a great reason for people, even if they're not going to have a lot on a ledger, for example, that they would have some, some exercise that's like full autonomy and control. But obviously, we are going to see custodied solutions in the, you know, the, the multi-layered issue from a regulatory perspective means what, what is the regulation around that going to look like? I think there are a lot of companies chomping at the bit to get into custodied

• 43:35Speaker 03

  solutions and, and they are. Some of the, the biggest financial players in the world are after balking or saying this is a passing fad, or putting fear, uncertainty and doubt or fud into the headlines every day. Now it's kind of a, if you can't beat them, join them. And they want to provide access to their high net worth clients, right? Give them some exposure without, you know, and mitigating the risk. And that is what intermediaries certainly do. I think we're going to see even, you know, the, the improvement in the self custody wallet scenario. I think we're going to see some regulation about, around those wallets as well, from a, a know your customer, anti-money laundering point of

• 44:17Speaker 03

  view. And then you're going to see some robust custody solutions. My, my. My hope is that there will be so much competition that it forces these entities to not replicate the ills of the current system. Otherwise, we just end up where we are in Web 2.0 world. You know, Web 2.0 was supposed to be this decentralized panacea and we see that it has coalesced around five, six companies.

• 44:44Scott Galloway?

  Why do you think crypto is so male dominated? It feels so Dungeons and Dragons meets ESPN meets Fast and Furious. It just feels so. You think this new medium, in many ways, it feels more progressive. There's definitely an association with people of color. Why is it so male dominated?

• 45:05Speaker 03

  I think it was born out of the tech field and the financial world coming together and having a baby.

• 45:13Scott Galloway?

  Male and male, yeah, male and male equals male.

• 45:15Speaker 03

  Exactly. And so those early OGs in the space were working on that. This is one of those quadrants in life where many people didn't know that they didn't know.

• 45:27Speaker 03

  The first time it really started, the crypto, the idea of Bitcoin in particular, started coming into the public ethos a bit, was probably around 2015 when Ethereum first came on the scene. And it was, Bitcoin in particular, was immediately associated with nefarious activity and the Dow hack and all these other things. So most people, to the extent they even had heard about it, definitely wanted nothing to do with it. I came on the scene in 2017. I know people can't tell, but I am highly risk adverse. So I'm shocking myself every day by the work I'm doing. But it takes a long time from that mindset shift to even really appreciate the technology.

• 46:10Speaker 03

  I think that this area is improving and improving rapidly. I was doing some research for an article I'm writing and focused on some statistics about.

• 46:22Speaker 03

  Uh, used in Nigeria in particular. One third of citizens in Nigeria are actively using crypto, probably Bitcoin in particular. One third.

• 46:34Scott Galloway?

  And when you say actively, you mean using it as a form of payment? They're converting the local currency to crypto? What do you mean by that?

• 46:39Speaker 03

  That's correct. All of the above. So from the perspective of store of value to hedge against that, but also in regular transactions in ways, quite frankly, we're not doing in the United States. And now I feel like adoption from a day-to-day payments perspective, and I don't know a lot of people who are investors or speculators in the United States who have any desire to spend Bitcoin, for example, but maybe other types of crypto that they would use to exchange. And we see ETH is obviously a major player in the NFT space. So at a bare minimum, even if people don't want to hold crypto long-term, they have to get ETH if they want to buy NFTs or if they're receiving payments in ETH, they're going to have to offboard.

• 47:20Speaker 03

  So we see that kind of activity, but in other nations where it really, really matters, where the access or where the instability in markets means that you have to have an alternative to fiat, it's really taking off in an incredible way. So I say all that to say, black and brown communities throughout the diaspora, not just in the United States, are taking notice. I think this is very empowering for women. If you think of some religious approaches that would prevent women from earning money or holding their own value, this is a way that this has changed. I don't have the statistics in front of me, but certain countries in Africa in particular

• 48:02Speaker 03

  and communities, there's been this really great story around empowering women who are working as farmers and actually somewhere along the supply chain and actually being paid with their wallets and having some agency sovereignty and control there. So it's not a matter of if, but when. And every time there's some type of pump in price or dramatic drop in price, it just brings more people to, it brings crypto to the attention of more people, and that includes all people, not just the male-centered narrative around Bitcoin and crypto more broadly.

• 48:40Scott Galloway?

  Tonya Evans is a professor at Penn State's Dickinson Law School, where she continues to expand her work in blockchain and cryptocurrency, data, technology, entertainment law, and social justice. Professor Evans also owns the Advantage Evans Academy and hosts the Tech Intersect Podcast, a weekly podcast that highlights new and notable experts at the intersection of law, business, and technology. She joins us from Pennsylvania. Professor Evans, thank you so much. I really loved this conversation. One of my takeaways here is that you've kind of opened my eyes to some of the more positives around cryptocurrency. I think you're a fantastic evangelist for the space. Well done.

• 49:18Speaker 03

  Thank you. I appreciate it so much. I hope it's the first, but not the last.

• 49:22Scott Galloway?

  Yeah, 100%. Take care.

• 49:31Scott Galloway?

  Algebra of happiness. I think America is infected with a virus where we have conflated liberty with selfishness. I don't think we fully recognize and appreciate the sacrifices that others have made, such that we could sit around and decide that we're not going to wear a mask or that we don't want to take a vaccine. We want to see what the long-term effects are. We're just lazy about it. And we are now sitting here with vaccinations, or with, excuse me, with infections up 78% week on week. And we have decided that this is about to go away. We have decided that it is time for us to get back to our lives. Well, here's the thing, folks. COVID-19 didn't get the memo on what we expect and are planning for it.

• 50:14Scott Galloway?

  And we need to recognize, this could get worse. This could get worse. Viruses are incredible organisms. And this thing is bumping around, learning from every person it doesn't infect or every person it does infect, every person that gets sick. And these new variants are evolving. I mean, this shit, this thing is smart. The longer we let this thing bump around without putting a stake through its fucking heart, the stronger it gets, the more evasive it gets, the more shrewd it gets. And these little pockets of non-vaccination in the US... Are an incredible threat to our entire country, much less our entire economy. So what am I suggesting? I'm suggesting that our government needs to show more leadership.

• 50:57Scott Galloway?

  Specifically, specifically, I don't think you can require someone to put a foreign substance into their body that they don't want. Granted, you can be strapped to a gurney and have bodily fluid taken against your will if you're suspected of a DUI. Granted, we can ask you to get a vaccine if you want to take your kids to public school, and that's what I'm suggesting here. And that is, if you're the recipient of government payments, and I think a lot of these non-vaccinated hot zones, the transfer payments are enormous, whether it's Medicare, Social Security, unemployment. If you're going to cash a check from the government, then you have to show that you are a participant, that you are a citizen, you are not going to infect others, you're not going to be a strain on the healthcare system, much less a strain on the economy,

• 51:41Scott Galloway?

  and you need to get a goddamn vaccine. And I think it's time for our government to show some of the same backbone and leadership it's shown in the past. In 1941, we issued draft notices, and a lot of young men justifiably said the following: "My dad went over there," there being Europe, "23 years ago, 25 years ago, and didn't come back. And my mom is a widow, and we were impoverished, and now, just a couple decades later, you want me to go back for the same stupid reasons? No, I'm not going." You can understand that argument. You can understand it. And you know what we did? We put 5,000 men in prison, because we had decided, our leaders who were elected democratically,

• 52:25Scott Galloway?

  just as our leaders have been democratically elected now, that the Commonwealth was more important, and that it required a certain level of sacrifice. And what we have now are vaccines, where we've administered over 300 million doses, and we have trouble finding any, any negative outcomes. Any. And so the notion that people are gonna wait or give into this bullshit conspiracy theory, mostly from Facebook and Fox News, who, by the way, do you realize Rupert Murdoch was vaccinated in December? I mean, literally got it before people, emergency room doctors.

• 53:05Scott Galloway?

  Oh, oh, but there's profit. We can make money off of spreading this conspiracy theory bullshit. And then the algorithms on Facebook, by the way, you can bet every single executive there has been vaccinated, said, wait, our algorithms have found a way to make money by promoting this very controversial anti-vax misinformation. The government needs to step in here and show some backbone and say, fine, you want to cash a government check, you want to go to a government school, a public school, you want to get on a government sanctioned FAA flight, fine, fine. Like certain countries, like certain schools, like we have done repeatedly, repeatedly, then boss, you have to show some citizenship and you have to get vaccinated.

• 53:47Scott Galloway?

  We need vaccination passports. We need to put a stake through the fucking heart of this thing. It's time for us to act like citizens. It is time for the government to show some backbone. Mandatory vaccinations for people taking government transfer payments. Sounds so undignant. Anyways, algorithm happiness. That wasn't that happy. That wasn't that happy.

• 54:09Scott Galloway?

  Our producers are Caroline Chagrin and Drew Burrows. Claire Miller is our assistant producer. Hello, Claire. Hello, Claire. Assistant producer, AP. If you like what you heard, please follow, download and subscribe. Thank you for listening to the Prof G Pod from the Fox Media Podcast Network. We will catch you next week on Monday and Thursday.

• 54:35Scott Galloway?

  2,000 customers, including Under Armour, Lululemon, RIT. What the fuck is RIT? Where's my producer? RIT. They have RIT. What is RIT?

• 54:45Speaker 04

  Rochester Institute of Technology.

• 54:48Scott Galloway?

  Oh, okay. The Rochester. Thank you for that, Caroline. The RIT or the Rochester Institute of Technology? I don't know if I should know that.

• 54:56Speaker 05

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